Return to Transcripts main page

Lou Dobbs Tonight

Ridge Defends Terror Warnings; Nine Million in U.S. Lose Company Health Coverage

Aired August 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 on Alert. Homeland Security Secretary Tom Ridge says the terror warning was essential.
(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: We don't do politics in the Department of Homeland Security.

(END VIDEO CLIP)

PILGRIM: The secret war against al Qaeda. Tonight, I will talk with Steve Coll, author of "Ghost Wars: The Secret History of the CIA, Afghanistan and bin Laden."

The Pentagon will spend as much as $6 billion on new spy planes, but much of the money will go to Brazil. We'll have a special report.

In Middle Class Squeeze, millions of Americans have lost health insurance from their employers.

(BEGIN VIDEO CLIP)

JOAN CLAYBROOK, PRESIDENT, PUBLIC CITIZEN: The lack of health- care coverage is a tremendous burden on families.

(END VIDEO CLIP)

PILGRIM: And NASA launches a spacecraft on a five-billion-mile journey to Mercury for the first time in 30 years. Astrophysicist Charles Liu will join me.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, August 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.

Homeland Security Secretary Tom Ridge today strongly defended his decision to increase security in New York, New Jersey and Washington. Ridge said it was essential to issue the terror warning, even though some of the intelligence dated back to the year 2000. He insisted the warning has nothing to do with politics.

Deborah Feyerick is here with a report -- Deborah.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Kitty, he was in town to reassure the financial community, talk to them about the newest intelligence. But when Secretary Ridge stepped in front of the press microphones, it wasn't about reassurance, it was about reaching out to the skeptics.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): With armed guards patrolling financial institutions in New York...

RIDGE: When you get a call about something like that, you get everybody else on the horn and review it.

FEYERICK: ... the head of Homeland Security met with corporate executives and security directors from major banking firms. Tom Ridge later defending intelligence that has thrown parts of New York, New Jersey and Washington, D.C., into a kind of lockdown.

RIDGE: Al Qaeda often plans well, well in advance. We also know that they like to update their information before a potential attack. So I don't want anyone to disabuse themselves from the seriousness of this information simply because there's some reports that much of it is dated, it might be 2 or 3 years old.

FEYERICK: Secretary Ridge saying intelligence shows terror operatives were updating details of potential targets as recently as January, saying also the terrorists are patient and will strike when they can be successful.

RIDGE: We just assume that there are operatives here. I mean, obviously, the law-enforcement community has their eyes on people they believe are connected or sympathetic to the cause.

FEYERICK: Missing in the latest intelligence is the timing of the possible attack. But officials, citing several sources, have added concern about the Republican National Convention in New York starting in late August.

RIDGE: There has been an expressed intention to disrupt the democratic process. It could be interpreted throughout the election year. It could be interpreted to Election Day.

(END VIDEOTAPE)

FEYERICK: Now the Homeland Security chief was asked whether the release of intelligence was somehow politically motivated. He answered, "This isn't about politics. It's about people having confidence in government." And New York City's mayor added that officials would have been criticized had they not released the intelligence -- Kitty.

PILGRIM: Deborah, what are the Democrats saying about it?

FEYERICK: You know, it's interesting. Hillary Clinton was in town today, and she said that she has good faith that, in fact, this is real intelligence. She does not doubt the quality of this intelligence. This is the first time they've had so much in hand that they could look at.

PILGRIM: Thanks very much.

Deborah Feyerick.

Much of the intelligence behind the terror warnings comes from an al Qaeda suspect arrested in Pakistan. And, tonight, there are new details about possible terrorist targets in this country.

Justice Correspondent Kelli Arena reports from Washington -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Last night, as you know, we reported there were more targets than the five publicly mentioned by officials. Sources now tell us there are about 20.

They're broken down into three categories, depending on how much information was gathered on them. For example, officials say the New York Stock Exchange is in category one. Al Qaeda had collected a lot of detail and conducted expensive surveillance. The Bank of America in San Francisco is in category two, meaning that there's less information in al Qaeda databases.

Now, while the potential targets have received a lot of attention, U.S. and Pakistani officials say that the real intelligence coup is coming from interrogations of alleged al Qaeda computer expert Muhammad Naeem Noor Khan.

(BEGIN AUDIO CLIP)

SHEIKH RASHID AHMED, PAKISTANI INFORMATION MINISTER: We have some valuable information from them, and we are interrogating an investigation in this case, and I think this is a great achievement of our security forces.

(END AUDIO CLIP)

ARENA: As one source put it, Khan is emerging as a key player in the communications network of al Qaeda.

According to intelligence officials, Khan told interrogators that al Qaeda used couriers to get messages and computer disks to him. He then posted coded messages on Web sites and then quickly deleted the files.

According to Khan, he used e-mail addresses in Turkey, Nigeria and some tribal areas of Pakistan to send the information, but those addresses were used just a few times to avoid detection.

Now Khan's arrest is significant because it gives investigators a look into how al Qaeda has adapted to the war on terror. It's also a reminder that dangerous terror cells remain intact even in countries like Pakistan where experts say officials have been especially aggressive -- Kitty.

PILGRIM: Thanks very much. Kelli Arena.

Anti-terrorist police in Britain tonight arrested 13 men in raids in the London area and northwest England. Scotland Yard said the men are suspected of being involved in terrorist acts.

On Capitol Hill today, lawmakers held new hearings on how to reform our intelligence communicating, and they are considering two sets of proposals, one from the September 11 commission and the other from President Bush.

Now Congressional Correspondent Ed Henry has our report -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good evening, Kitty.

In fact, these new terror threats that you were just reporting about -- they are giving new impetus for the 9/11 commissioners to really push Congress hard, to go further than President Bush did yesterday when the president endorsed this new national director of intelligence as well as the new national counterterrorism center.

And, so far, it has seemed that there is so much momentum behind the 9/11 commission's final report that it might be on a glide path through Congress, but it hit a rough patch today. There were some political battles developing. There were also some very tough questions raised at these hearings.

First of all, at the House hearing that you mentioned, Democratic Congressman Henry Waxman was suggesting that perhaps this new director of national intelligence has not gotten enough power. The way that President Bush has mapped it out he would -- this director would not have budget authority, and, basically Congressman Waxman and other Democrats, as well as some 9/11 commissioners from both parties who were testifying there, suggested that this could become a figurehead, not the kind of quarterback calling the plays, really taking charge, as the commission has suggested.

Now another development as well is that Commissioner Bob Kerrey, the former senator -- he was testifying at this house hearing. He said that he thinks there could be a problem as well with this new director in terms of turf battles. Defense Secretary Donald Rumsfeld and others might not want to cede authority to this director, and, in fact, Bob Kerrey, used some colorful language to make his point.

(BEGIN VIDEO CLIP)

BOB KERREY (D), 9/11 COMMISSION MEMBER: I know that Secretary Rumsfeld is going to oppose this, and I just -- if they win one more time, if DOD wins one more time, the next time there's a dust-up and there's a failure, don't call the director of Central Intelligence up here! Kick the crap out of DOD!

(END VIDEO CLIP)

HENRY: And at the Senate hearing, you also heard a lot of lawmakers raising tough questions about this new national counterterrorism center, wondering about civil liberties questions, wondering about the makeup of it, exactly what this counterterrorism center will do.

And John Brennan testified. He is the current head of the National Threat Assessment Center that would be replaced by this new center. And, in fact, Mr. Brennan testified that he thinks the new center could actually create some new problems.

(BEGIN VIDEO CLIP)

JOHN BRENNAN, TERRORIST THREAT INTEGRATION CENTER: The system today works better than it ever has before. The status quo on 9/11 was certainly insufficient. It could have worked better. You betcha.

We can improve yourselves, and we need to, and that's why continuing to change and to go through transformation of government is important, but moving precipitously does not take into account the tremendous interconnectedness that is the result of legacy, practices and procedures, and statutes over the past 50 years.

(END VIDEO CLIP)

HENRY: Kitty, normally in August, lawmakers are in recess, they're vacationing, but those plans are canceled in order to deal with all of these hearings. There's obviously going to be some quick action in the fall. At least, that's where it's all headed.

And noting all of those canceled vacations, Bob Kerrey also wanted to note at this House hearing that he thinks Congress should not move too fast. He thinks they should hold some hearings, but then take a break, come back after all the heads have cooled and actually work on this in the fall.

Here's what he said.

(BEGIN VIDEO CLIP)

KERREY: One of the unfortunate things is you've had a lot of pressure to hold these hearings during recess, which is -- God bless you for doing it, for being willing to do it. But take some time off. Rename it to vacation, say, you know, we need vacation, too.

We've got to go away and shut down and throw our cell phones away and our Blackberries away and not make contact with anybody other than the fiction that we're going to take with us and read.

(END VIDEO CLIP)

HENRY: So the bottom line here, Kitty, is that this -- there clearly is still a lot of momentum behind reform, but there are people on both sides of the aisle saying maybe caution should be the advice, that maybe everyone should go slow, not rush anything through.

But I can tell you that some House Republican leaders have been privately saying that right after the Republican National Convention, they'd like to bring up a reform package, deal with it the first week in September. That's one scenario that's being floated.

Significance there -- it would be right on the eve of the third anniversary of the 9/11 attacks -- Kitty.

PILGRIM: All right. Thanks very much.

Ed Henry.

In Iraq, insurgents targeted American and Iraqi troops in the latest attacks. Two American soldiers and two Marines were killed in Baghdad and in al-Anbar province. In Baqubah, a suicide bomber killed four soldiers in the Iraqi National Guard. Six other Guardsmen were wounded. In Baghdad, insurgents killed an Iraqi police colonel in a bomb attack, and three of his bodyguards were wounded. And in northern Iraq, a bomb explosion damaged an oil pipeline. It is not clear whether the blast will disrupt Iraqi oil exports.

Today, an Army investigator said that Private Lynndie England humiliated Iraqi prisoners for fun. Now the investigator gave testimony to a military hearing that will determine whether Private England should be court-martialed.

Bob Franken reports from Fort Bragg, North Carolina -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: According to the investigators, she called it a joke. She said that she and the others were doing this just out of frustration over the conditions and their plight in Abu Ghraib Prison in Iraq.

Lynndie England is 21 years old, seven months pregnant, came to this, what they call, Article 32 hearing today. It was a pretrial to see which of the 19 charges, which, by the way, add up to 38 years in prison, she might have to face in a court-martial.

Now, as far as the infamous picture of her holding a detainee on a leash, she says that was done at the behest of Corporal Charles Bremer, who is the person who is identified by many as one of the ringleaders of this effort to humiliate the prisoners and also is identified as the father of her baby.

As far as other charges are concerned, they have to do with very sexually explicit pictures which have come up with a bunch of indecency charges leveled against her, and that brought a comment from her lawyer that it was really off the point.

(BEGIN VIDEO CLIP)

RICHARD HERNANDEZ, ATTORNEY FOR LYNNDIE ENGLAND: She's as stressed as anyone else would be, if you were a 21-year-old young lady who's facing 30 years for pictures, intimate photographs that are -- you would see at Mardi Gras on spring break, but not in this case. She's facing 30 years.

(END VIDEO CLIP)

FRANKEN: To try and make his case that Lynndie England was simply following orders, her attorney says she would like to call some of the higher-ups like Vice President Cheney or Secretary of Defense Rumsfeld. He didn't have very much optimism that the presiding judge would allow that to happen, at least in this pretrial -- Kitty.

PILGRIM: Thanks very much.

Bob Franken.

Still to come, America on Alert. Terrorism expert James Carafano says we should take the new al Qaeda threat seriously. James Carafano is my guest.

Plus, a plane crashes into a mansion in Texas. We'll have the dramatic story.

And Democrats say America is a divided nation, but those divisions may not be as clear-cut as some Democrats think.

(COMMERCIAL BREAK)

PILGRIM: In Texas, at least six people were killed when a plane crashed into a home near Austin. Four adults and two children on the plane were killed. Three people in the house were able to escape unharmed. The Now the house is on a golf course in the Austin suburbs of Lakeway, less than two miles from a landing strip. There are conflicting reports about whether the pilot was attempting to land at the airstrip when the plane crashed.

Let's return to the top story tonight. The Department of Homeland Security today said much of the al Qaeda intelligence leading to the latest terror warnings dates back to 2000, Homeland Secretary Tom Ridge denied claims that the warnings were politically motivated, saying the Department of Homeland Security "does not do politics."

Joining me tonight from Washington is James Carafano, a senior research fellow for defense and homeland security at the Heritage Foundation.

And nice to see you, Jim.

JAMES CARAFANO, HERITAGE FOUNDATION: Good to be with you.

PILGRIM: Let's get into this old information-new information. What's your view? You are a terrorism expert. What's your view on the carbon dating of this information?

CARAFANO: Well, the most important factor, the most chilling factor is not the fact that these files were several years old. It's the fact they were updated as recently as January and April of this year. So that means they were active case operations going on.

And the other thing you have to realize is if you sat down and read through the 9/11 report of the 9/11 commission, which is a great chronology of how the 9/11 attacks were planned and executed, and you sat down and you look at the intelligence and the planning that's gone on for these operations, they are just parallels. Anybody that would just dismiss this as an old thing not to worry about just doesn't understand how these guys operate.

PILGRIM: And the detailed cataloging of information that eventually is used. So you think all of this information is highly relevant?

CARAFANO: Absolutely. I mean, it's a typical pattern of how al Qaeda did operations before 9/11, which is they looked at targets for long time, they surveiled them, they found the gaps and vulnerabilities. Then they went low. They laid the base for the operation. They got people in place. Then you see a quick spurt of operational planning and communication and then execution. The fact that there's a lull is not a sign that nothing's happening. It -- there could well be an operation.

Now the difference, of course, is a lot of the al Qaeda infrastructure has been attacked since 9/11. Funding's gone after leadership, communications. So that's -- some of that's been disrupted, and I think the good news is they now know that we know what they know, which means that we know where the gaps and vulnerabilities are that they found, and I'm sure all those are being plugged. So, whether these things are really good targets for them anymore, I think that's a fair question.

PILGRIM: Yes. What about the fact that people are becoming desensitized and don't we need the population of this country to be ultra aware?

CARAFANO: Well, that's a fact of life. I mean, if you look -- there's lots of data on this and -- from research for natural disasters and stuff. People typically remain unprepared.

The only people that really prepare for stuff is people who are -- intimately have experience with it. So like people that live in an earthquake area, a tornado area, they worry about that that kind of stuff.

Most Americans never see a terrorist act in their life. It's hard to really get them motivated. But what it really says is, you know, we need Homeland Security that's going to be good when Americans are excited and when they're not, you know, when we're complacent, when we're not.

We need homeland security that's there all the time. The best analogy is, you know, people worry about a burglary in the neighborhood, and then, a couple months later, they forget to check their doors and lock their windows, but, you know, the cops are always there, and that's the kind of homeland security we need.

PILGRIM: That's a great analogy.

You know, many experts are saying that the next attack may involve large vehicles, such as truck bombs. What's your view on that? CARAFANO: Well, you know, we have to remember that bombs have always been the terrorists' weapon of choice, you know, since Nobel invented dynamite, and car bombs have -- are historically and traditionally the weapon because you can get a lot of explosive, you can get it in a very precise place and use it in a very precise, predictable way. So car bombs are always going to be a threat, even if al Qaeda never existed.

PILGRIM: John Kerry has been a bit critical of President Bush, saying he's been too slow to embrace the recommendations of the 9/11 commission. What's your view as a terrorism expert on how fast we're moving forward in protecting ourselves?

CARAFANO: Well, you know, in fact, you know, if you look at the 9/11 commission recommendations, there's about, if I remember, 41 of them. Most of them are things that we're already doing, we want to do, we're trying to do, we'd like to do if we could, we're going to do. So, I mean, really I look at the 9/11 commission report as really kind of a validation of the strategy that's come up with since 9/11.

On offense, you know, we're being preemptive, we're taking out sanctuaries, we're taking down networks, we're beginning to begin -- do the struggle of ideas, I think, that's important.

On defense, we've got layered defensive systems, we're not relying on any one silver bullet, but a combination of measures, and these things take time to develop.

You know, my -- you know, we created -- in 1947, the National Security Act creates what becomes the Department of Defense and the CIA. You know, nobody thought the Cold War was going to be over by 1948. I mean, everybody realized it was going to take time to get these organizations up and running and do it right, but you needed to because it was going to be a long, protracted conflict, like this one will be, and we need instruments for the long term.

PILGRIM: Thanks very much.

James Carafano.

CARAFANO: Thanks for having me.

PILGRIM: The Statue of Liberty today reopened to the public for the first time since September 11. Officials went ahead with plans to re-open the statue. That's despite the recent terror warnings in New York and New Jersey.

Visitors are allowed to go as high as the statue's feet. A glass ceiling has been installed between the pedestal and the statute itself. Now the inside of the statute, including stairways to the crown and the torch, do remain closed to the public.

Coming up, squeezing the middle class. More and more American workers forced to work more for less. Some forced to do without even the most basic benefits.

Also ahead, whatever happened to Buy America? The latest America spy plane will be made of foreign parts.

And Hurricane Alex gains strength and speed as it hurdles off the Carolina coast.

Those stories and more ahead.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: The Pentagon has awarded a massive defense contract to a consortium that includes a Brazilian aerospace company. The Brazilian company will supply new spy planes to the Army and the Navy. This contract raises new questions about whether the Pentagon should only buy American products.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The new spy plane for the Army and the Navy will be a military version of this Brazilian regional jet. The Brazilian company called Embraer will make the fuselage for the new Aerial Common Sensor reconnaissance plane. The planes wings will be made in Spain.

Other components coming from Chile. Machinists and aerospace workers call it piecemeal outsourcing.

FRANK LARKIN, ASSOCIATION OF AEROSPACE WORKERS: This is a government contract, and we're concerned anytime taxpayer dollars are used to create good-paying jobs in countries like Brazil or Chile that are desperately needed here in the U.S.

SYLVESTER: The military awarded the contract, estimated to be worth up to $6 billion, to Lockheed Martin, who has partnered with Embraer to build the plane.

The Lockheed-Embraer team beat out Northrup Grumman who would have used a Gulfstream plane made by American-based General Dynamics. Defense contractors still rely on American firms to build the electronics systems, but they have increasingly been tapping foreign companies to supply more low-tech components like a plane's airframe.

JOHN PIKE, GLOBAL SECURITY.ORG: A good chunk of what is driving this is price, that, when you look at what you can build here in the United States versus what can be fabricated in other countries, you're going to be able to offer, in some cases, a better price by having some of it coming from other countries.

SYLVESTER: Lockheed Martin says less than 17 percent of the plane will be built outside of the United States. In a statement, the company said "ACS aircraft will be built in America by Americans with American parts. The aircraft is fully 'Buy America' compliant." But critics, including many labor groups, see this as a sign of things to come. They worry that, as more defense work moves overseas, the United States will not only shed jobs, but will also permanently lose some of its industrial military base.

(END VIDEOTAPE)

SYLVESTER: A spokesman for Embraer says the company is not taking away U.S. jobs but adding them. The company plans to build an assembly plant in Jacksonville, Florida, and will hire up to 200 new workers -- Kitty.

PILGRIM: Thanks very much.

Lisa Sylvester.

And that brings us to the subject of tonight's poll. Do you believe the Pentagon should only buy American? Cast your vote at cnn.com/lou, and we will bring you the results later in the show.

Now tonight, in the Middle Class Squeeze, more and more Americans are finding a traditional benefit of employment no longer available. The sluggish economy and rising health-care costs have caused many companies to stop offering health insurance.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): American workers under siege. Their jobs at risk of being shipped off to foreign countries, and now traditional health-care insurance less likely to come with the job. Between 2001 and 2003, nine million fewer workers were covered by employer-sponsored health insurance plans. Those hardest hit were the poorest.

The decline cut across all age groups, with young adults showing the sharpest decline.

BRAD STRUNK, CENTER FOR STUDYING HEALTH SYSTEM CHANGE: History tells us that there's been a pretty sustained and fairly slow, but sustained decline in employer coverage for many years, and, at the same time, a sustained but slow increase in the number of uninsured people.

TUCKER: But, for now, the number of uninsured is being alleviated slightly by state-funded Medicare and child health-care programs. With the number of children on taxpayer-funded plans rising by 6-1/2 percent. However, with many states struggling with tight budgets, those programs are at risk of losing funding.

Why are there fewer employee-sponsored plans? A sluggish economy and, during the two years of the study, health-care insurance premiums rose 28 percent.

CLAYBROOK: The cost of health care is going so astronomically that it's unpredictable and it's very, very difficult for particularly smaller companies to carry that burden. Thus, they're discontinuing their health-care coverage for even their employees.

(END VIDEOTAPE)

TUCKER: In the words of one business owner, health insurance companies are raising the premiums faster than he can raise his prices. The loser in that formula is fairly easy to figure out -- his workers and this company, Kitty.

PILGRIM: Thanks very much.

Bill Tucker.

In tonight's Campaign Journal, President Bush is campaigning in a state he knows fairly well, Texas. The president attended a fund- raiser in Dallas and he later spoke to the Knights of Columbus convention in Dallas and praised that Catholic group.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You're helping this nation build a culture of life in which the sick are comforted, the aged are honored, the immigrant is welcomed, and the weak and vulnerable are never overlooked.

(END VIDEO CLIP)

PILGRIM: Senator John Kerry today campaigned in the battleground state of Wisconsin. He held a town hall meeting and told voters that he would be a more fiscally responsible president.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D), PRESIDENTIAL NOMINEE: I am determined that as president, I'm not going to be responsible for piling debt on our children's heads and taking Social Security away from the people who have it today and ought to get it in the future.

(END VIDEO CLIP)

PILGRIM: Vice President Cheney and his challenger, Senator John Edwards, also hit the campaign trail today. Senator Edwards told voters in Louisiana that the country is divided into "two Americas." It's a theme that Democrats have been talking a lot about lately, and Bill Schneider has the report.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): We heard a lot of talk at the Democratic convention about two Americas, but which two Americas? John Edwards talked about two Americas divided by class, the haves and the have-nots.

SEN. JOHN EDWARDS (D), VICE PRESIDENTIAL NOMINEE: The truth is we still live in a country where there are two different Americas. One, for all those people who have lived the American dream and don't have to worry, and another for most Americans, everybody else, who struggle to make ends meet every single day.

SCHNEIDER: That works for Democrats because as Edwards said, most Americans identify with the have nots. But the division that dominates American politics right now isn't class, its culture. Red versus blue doesn't mean haves versus have nots. It means liberals versus conservatives.

Polls show more people call themselves conservatives than liberals. So, it's a division Democrats are quick to denounce.

BARACK OBAMA (D), ILLINOIS SENATE CANDIDATE: There is not a liberal America and a conservative America. There is the United States of America.

SCHNEIDER: But listen to Bill Clinton who sees values at the core of today's politics; more precisely, the '60s.

BILL CLINTON, FORMER U.S. PRESIDENT: If you look back on the '60s and on balance you think there was more good than harm in it you're probably a Democrat, and if you think there's more harm than good you're probably a Republican.

SCHNEIDER: It's a split between two figures who came of age in the '60s. Bill Clinton who sees more good than harm and George W. Bush who sees more harm than good. Where does John Kerry fit in?

SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: When I was in high school a junior, John Kennedy called my generation to service. It was the beginning of a great journey, a time to march for civil rights, for voting rights, for the environment, for women, for peace. We believed we could change the world, and you know what? We did.

SCHNEIDER: But notice how Kerry defines those values.

KERRY: ... not narrow values that divide us, but the shared values that unite us: family, faith, hard work, opportunity and responsibility for all.

(END VIDEOTAPE)

SCHNEIDER: Faith, hard work, opportunity, responsibility. They don't sound like the values of the '60s. Could there be some repackaging going on -- Kitty.

PILGRIM: All right. Thanks very much. Bill Schneider.

Tonight's thought is on national unity. Here it is: "Let us put an end to self-inflicted wounds. Let us remember that our national unity is the most priceless asset." Those are the words of President Gerald Ford.

Let's take a look now at some of your thoughts. Many of you wrote in on whether a national intelligence czar would improve U.S. security. Kyle Keith of Gresham, Oregon writes: "I think the intelligence czar should work in the White House but be briefed by the intelligence officials. What good is this position if the President's strongest source of intelligence isn't even on-site?"

And Jack Peaco of Kingman, Arizona wrote: "Spend the money on patrolling our borders. If we can't stop the illegal aliens, how are we going to stop the terrorists?"

Amanda of South Shore, Kentucky: "If I were a terrorist, I certainly would not bother trying to get here with a passport or visa. I would just pay someone to sneak me across the Mexican border. If millions of poor Mexicans can do it without any resources backing them, just think how easily someone with a fountain of resources from these terrorist groups could manage to infiltrate our nation."

We absolutely love hearing from you. E-mail us at LouDobbs@cnn.com.

When we come back: the first hurricane of the season. Hurricane Alex continues to hover off the Atlantic coast. We'll have a live report.

And the secret war against Osama Bin Laden before September 11th. Journalist Steve Coll will tell us about his book, "Ghost Wars." That's next.

The third rock from the sun sends a messenger to the first rock. We'll have a special report. That, and much more, still ahead here tonight.

(COMMERCIAL BREAK)

PILGRIM: Hurricane Alex today brought winds reaching 100 miles an hour to the coast of North Carolina. And joining me now from CNN affiliate WRAL, with details, is Kelsey Carlson in Nags Head, North Carolina. Kelsey?

KELSEY CARLSON, WRAL CORRESPONDENT: Hi, Kitty.

The rain has stopped. But as you can see, it's still pretty windy out here, and some pretty tall waves are still crashing on the shore here in southern Nags Head.

To the south of here in the Outer Banks, it's a little bit worse. They're looking at some serious flooding after Hurricane Alex passed through: two to three feet of flooding. A lot of the roads are impassable right now.

Plus, this area was hit really hard by Hurricane Isabel last year. So, a lot of the locals were very frustrated with this weather forecast because this is also a very busy tourist time for this area. I think the second week of August is one of the busiest times.

So, they don't want to miss out on any of those dollars. You can see that the sun is starting to come out here and so are the people tonight. A lot of people weathered the storm indoors; sort of watched the rain from the window, and now a lot of people are coming out to take pictures probably for their scrapbooks so that they can go home with some memories of this vacation and the first hurricane of the season.

There were no mandatory evacuations for any of the Outer Banks communities. So, people were allowed to stay in the area. Of course, they were advised to stay off the roads. And we did see wind gusts of over 40 miles per hour here today.

So even though Hurricane Alex sort of brushed the shoreline, it was still a pretty rough storm. We are looking at some damage, things like shingles, canopies and signs, we're hearing, are turned over and, of course, the flooding.

We'll have a better idea tomorrow morning, Kitty, of what the damage really looks like when the experts get out and assess it.

PILGRIM: All right. Thanks very much.

Kelsey Carlson in Nags Head, North Carolina. Thanks, Kelsey.

Turning now to the war on terror, the September 11 Commission has provided the most detailed account yet of the events that led up to the September 11th attack. And the report raised troubling questions about America's failure to destroy Al Qaeda before the hijackings.

One of this country's leading independent experts on Al Qaeda is Steve Coll, managing editor of "The Washington Post," and Steve Coll is also the author of "Ghost Wars: The Secret History of the CIA, Afghanistan and Bin Laden." Steve, thanks so much for joining us tonight.

STEVE COLL, MANAGING EDITOR OF "THE WASHINGTON POST" AND AUTHOR: Kitty, thanks for having me.

PILGRIM: You know this is a litany of lost opportunity. Where did we go wrong in not stopping Osama Bin Laden? Where was our biggest mistake?

COLL: Well, I think there were two different turning points, very different points in our history. One was in the early 1990s after the Soviet Union had withdrawn from Afghanistan, the United States faced the question of whether it had sufficient interest to justify staying in Afghanistan, trying to build stable politics, isolate extremists like Bin Laden. And we decided, at that time, to withdraw from the region. In the vacuum we left, the Taliban rose, and Al Qaeda found sanctuary.

Later, in the three years before September 11, the United States had multiple opportunities to try to attack Bin Laden directly in Afghanistan, it looked too daunting. There was no will, no context to go after him in a serious way, and so he continued to thrive and operate until he struck on September 11.

PILGRIM: Steve, you have studied this in-depth and this book is astonishing. If we had caught Osama Bin Laden, would it be any different? If we capture him now, will it be any different?

COLL: Well, let's talk about history and then currently. In the past, I think it would have depended on when it happened. Al Qaeda metastasized gradually between 1997 and 2001. The earlier Bin Laden was disrupted, captured or killed, the more difference it would have made to the kind of organization Al Qaeda became.

Today, it's a very different matter. Al Qaeda is a very different organization. Bin Laden's leadership is less important. His capture or death would be a very important symbolic event, but as to the operational effectiveness of Al Qaeda, would make less difference. This is more of a movement today than a hierarchical organization.

PILGRIM: We're getting very specific information in the last few days about another Al Qaeda attack. How do you think we can stop it? How can we fight Al Qaeda now?

COLL: Well, this recent case is, I think, a pretty good example of what Al Qaeda has become. First of all, Pakistan remains very important to the organization, although it can't operate in as plain sight as it did in Afghanistan in the earlier period. That's one thing that's highlighted by this case.

Secondly, their communications are very difficult to break up. They take advantage of code, the Internet, they communicate globally and their cells are dispersed and very difficult to track down.

Overall, Al Qaeda is a much more diverse and more elusive adversary, I think, than it was when it was headquartered in Afghanistan before September 11.

PILGRIM: Do you think our collaborative relationship with Pakistan is working?

COLL: It's certainly much different than it was before September 11 when the interest of the United States and the interest of the Pakistan army were really not much in alignment. At that time, Pakistan's army supported the Taliban and indirectly used Al Qaeda to promote Jihadism across the border in India.

Today, Pakistan interests and the United States interests are much more closely aligned. The collaboration is much more active. But there are still problems in the relationship, and still a lot of suspicion, I think, on both sides of the lines from time to time.

PILGRIM: You know you've looked at the flow of information and action over the course of time in tracking Al Qaeda and fighting it. Do you think that appointing an intelligence czar will help the situation?

COLL: Well, it depends on what kind of authority the new intelligence director would have and really whether that appointment is given the operational and budgetary authority that might bring the bureaucracies together, encourage them to share information, force them to do so when they don't want to. There are different proposals for how the national intelligence director would be set up and empowered. And, I think this is a case where the details matter and those are yet to be sorted out.

PILGRIM: All right. Thanks very much. Steve Coll, author of "Ghost Wars," a very excellent book on Al Qaeda. Thank you, Steve.

A reminder now to vote in tonight's poll: do you believe the Pentagon should really buy American or only buy American? Cast your vote at cnn.com/Lou. We'll bring you the results in just a few minutes.

Still ahead, its mission accomplished for the crew of the International Space Station as it prepares for company.

And NASA sends a messenger to Mercury for the first time in decades. And we'll talk with Charles Liu, Astrophysicist at the American Museum of Natural History.

(COMMERCIAL BREAK)

PILGRIM: Well, a successful mission tonight for the crew of the International Space Station. The Russian cosmonaut and the American astronaut today took care of a little maintenance outside the Space Station.

This was the crew's third space walk in over a month. And today they installed some antennas and laser reflectors to prepare for the incoming Automated Transfer Vehicle. That is a cargo ship that will be launched next fall.

NASA, today, launched a messenger to Mercury, a five billion mile trip. It's been nearly 30 years since NASA has made that journey. And if all goes as planned, the Messenger Space Probe will become the first space craft to orbit the hot planet.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Three; main engine start, two; one and zero and lift off of Messenger on NASA's mission to Mercury.

(END VIDEO CLIP)

PILGRIM: In the early hours of the morning, Messenger headed to Mercury. Its mission, get as much data as possible about the closest planet to the sun.

(BEGIN VIDEO CLIP)

ORLANDO FIGUEROA, NASA: It will collect images of the entire planet and gather highly detailed information on its geology, the nature of the atmosphere and magnetosphere, the makeup of its core, and the character of its pole materials.

(END VIDEO CLIP) PILGRIM: Being so close to the sun, Mercury's year is just 88 days, but it has such a slow rotation that each day equals six earth months. Even more interesting to scientists, Mercury's core is 65 percent iron; that's twice the percentage of the earth's core. And Mercury is the only other rocky planet with a magnetic field. Scientists say Mercury will teach us more about our own planet.

(BEGIN VIDEO CLIP)

MICHELLE DOUGHERTY, IMPERIAL COLLEGE, LONDON: We don't understand Mercury's interior, and we need to understand it to be able to know how the solar system formed. We have a vague understanding of how the earth formed. To be able to understand that better, we need to compare and contrast it to Mercury itself.

(END VIDEO CLIP)

PILGRIM: But we won't find out that information for at least six years. That's how long it will take the Messenger to get to Mercury, at which point it will spend another year orbiting the planet to get that data.

Now, joining me now to talk about more of the exploration of Mercury is Charles Liu, an Astrophysicist at the American Museum of Natural History. Thanks very much for joining us, Charles.

CHARLES LIU, AMERICAN MUSEUM OF NATURAL HISTORY: Always a pleasure.

PILGRIM: Why didn't we go back? Thirty years is a long time between road trips for a...

LIU: It's true. There are two basic reasons. One is the first time we went, Mercury seemed relatively straightforward. It doesn't have an atmosphere or so we thought. It looked like the moon, or so we thought.

So, we put it on hold while we studied Mars, Jupiter, Saturn and these other stations. Now we're ready to go back. The other thing is the technology to withstand the 700 degree heat in the area of the solar system, around Mercury, made it impossible for us to send a sustained mission there until now.

PILGRIM: It is very hot. It doesn't sustain life. So there's no hope for that.

LIU: Don't think so.

PILGRIM: Why is it so interesting?

LIU: Imagine baking a rock at 700 degrees for 4.5 billion years. It's a remarkable laboratory to understand how planets formed and how they survived over long periods of time. So, by studying Mercury we're really studying the moon, we're studying ourselves. We're trying to understand how the entire solar system's put together.

PILGRIM: Tell us a little bit about this flight. The Messenger is not flying directly to Mercury. Right?

LIU: That's right. As I said earlier, it's going to take over six years to get there. If it went straight, the trip would be only 50 or 60 million miles, not too far. But it's going around and around in long loops to conserve fuel. And in the process, it will fly by earth and Venus a few times as well. So, it's going to pick up a lot of very interesting scientific information before it even reaches to Mercury.

PILGRIM: What are we hoping to learn?

LIU: There's lots to know. But one of the most interesting questions is: is there ice on Mercury? You wouldn't imagine there would be because it's so hot there.

PILGRIM: Ice at 700 degrees, right?

LIU: That's right. But there have been some tantalizing suggestions that there might be ice deep at the bottoms of craters near the polar regions of Mercury that have survived for over 4 billion years.

So, if we find that out, that would be great. But beside that, just understanding what Mercury is like, understanding its magnetic structure, its magnetic field and taking really close good maps of a planet that is so close to us is an exciting prospect.

PILGRIM: Charles, I have to ask you a separate topic. Today, China announced that it would start to develop its lunar exploration craft. They hope to be on the moon quite shortly, in a few years. How do we put this in context with the American space program?

LIU: It's very interesting. In about 10 to 15 years' time, China's space program has gone from almost zero to something containing thousands of factories, tens of thousands of skilled engineers and workers.

China is really booming as an economy, as you know. But it's also made a very strong national commitment to explore space. Right now we have three space powers in the world; United States, Russia and China.

PILGRIM: The United States is not currently trying to go to the moon, is it?

LIU: There is the long-range plan that we're going to go to the moon as a stepping stone to go to mars and beyond. That's definitely something.

So, in a sense, going to the moon itself alone as a destination is not precisely the United States' high national priority. But that technology development is a critical part of what we would consider our high tech base, infrastructure and our economy.

So China is definitely right there. And we have a historic opportunity to try to influence and shape that plan to make us part of that program, as well, so that we also will benefit from that kind of technology advancement over the coming years.

PILGRIM: Very interesting development. Thank you very much, Charles Liu.

LIU: Thank you.

PILGRIM: Back to earth. The owner of an ice cream shop in Ohio is trying an unusual route to retirement. She's trying to raffle off her business. Now the owner of Mackinac Island Creamery in Washington Township is selling those raffle tickets for $100 apiece, in case you're interested.

And she said she checked with the sheriff first to make sure that raffle is legal. The owner says she will only go through with the raffle if she can sell 1,500 tickets and maybe some ice cream while she's at it.

When we return, a multi-million dollar settlement over accounting charges of Halliburton. Vice President Cheney was involved in the SEC probe. That is next.

Plus, oil prices surge to a new record. We'll have that and much more still ahead here tonight.

(COMMERCIAL BREAK)

PILGRIM: Vice President Cheney's former company, Halliburton, has agreed to pay $7.5 million to settle charges related to a 1998 accounting charge.

The SEC today said Vice President Cheney gave sworn testimony as part of the investigation into his former company. The SEC brought charges against the company, the former chief financial officer and former controller. Vice President Cheney, who served as chairman from 1995 to 2000, was not charged.

On Wall Street, stocks fell. The Dow lost almost 59 points and NASDAQ dropped almost 33 and the S&P fell seven. A new record for oil prices sparked the selling and Christine Romans is here with the report. Christine?

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, oil prices are up an incredible 35 percent this year and today they topped $44 a barrel for the first time ever. Supplies are stretched, demand red-hot, and OPEC says, "Sorry, it has no spare oil."

Great news for the earnings of energy companies and many of those oil stocks are at five-year highs. But not so great for the consumer, who is already paying more for food and health care and whose family budget is stretched.

More evidence of that today. The government said consumer spending in June was the weakest since the September 11 attacks. And wages barely budged. Income grew a meager two-tenths of a percent. After inflation and taxes, workers were no better off than the prior month, struggling to hold even. Wages and salaries unchanged in June, the weakest reading since December. Another report showed employers hesitant to hire, and job cut announcements rose 8 percent last month.

Kitty, the Fed chief has said that any weakness in the second quarter was transitory, there are high hopes pinned on Friday's jobs report for July. In the meantime, already stretched family budgets stretched some more.

PILGRIM: Remember when Iraqi oil was supposed to glut the market? Well that's a long way gone. How long do they think the tightness in the oil market may last?

ROMANS: At this point, we're pulling 82 million barrels out of the ground, we're using 82 million barrels a day and we can refine 82 million barrels a day. So, everyone says that we're right on the line. We have maximum demand and maximum output at this point.

PILGRIM: All right. Thanks very much. Christine Romans.

Let's take a look at more of your thoughts on the nation's intelligence.

And Laura McCabe of Kansas City, Missouri writes: "I'm glad that President Bush has decided to act on our national security. However, why did it take so long? Nearly three years after 9/11, we still don't have border security, port security, or nuclear security."

And Nancy of Raleigh, North Carolina offered her thanks: "Great job by the 9/11 Commission, great job by President Bush for holding meetings within a matter of days on the recommendations, great job by those in Congress who are still there hashing through the particulars of proposals. I'd say we're moving in the right direction, fighting terrorism abroad and at home."

Do send us your thoughts at LouDobbs@cnn.com.

Still ahead, the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Now, the results of tonight's poll: 90 percent of you believe the Pentagon should only buy American, 10 percent do not.

Thanks for joining us tonight. Please join us tomorrow. Robert Kennedy, Jr. will be here to talk about his new book; "Crimes Against Nature."

And, is Wal-Mart good for the American economy? Two opposing views will face off.

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 August 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 on Alert. Homeland Security Secretary Tom Ridge says the terror warning was essential.
(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY: We don't do politics in the Department of Homeland Security.

(END VIDEO CLIP)

PILGRIM: The secret war against al Qaeda. Tonight, I will talk with Steve Coll, author of "Ghost Wars: The Secret History of the CIA, Afghanistan and bin Laden."

The Pentagon will spend as much as $6 billion on new spy planes, but much of the money will go to Brazil. We'll have a special report.

In Middle Class Squeeze, millions of Americans have lost health insurance from their employers.

(BEGIN VIDEO CLIP)

JOAN CLAYBROOK, PRESIDENT, PUBLIC CITIZEN: The lack of health- care coverage is a tremendous burden on families.

(END VIDEO CLIP)

PILGRIM: And NASA launches a spacecraft on a five-billion-mile journey to Mercury for the first time in 30 years. Astrophysicist Charles Liu will join me.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, August 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.

Homeland Security Secretary Tom Ridge today strongly defended his decision to increase security in New York, New Jersey and Washington. Ridge said it was essential to issue the terror warning, even though some of the intelligence dated back to the year 2000. He insisted the warning has nothing to do with politics.

Deborah Feyerick is here with a report -- Deborah.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Kitty, he was in town to reassure the financial community, talk to them about the newest intelligence. But when Secretary Ridge stepped in front of the press microphones, it wasn't about reassurance, it was about reaching out to the skeptics.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): With armed guards patrolling financial institutions in New York...

RIDGE: When you get a call about something like that, you get everybody else on the horn and review it.

FEYERICK: ... the head of Homeland Security met with corporate executives and security directors from major banking firms. Tom Ridge later defending intelligence that has thrown parts of New York, New Jersey and Washington, D.C., into a kind of lockdown.

RIDGE: Al Qaeda often plans well, well in advance. We also know that they like to update their information before a potential attack. So I don't want anyone to disabuse themselves from the seriousness of this information simply because there's some reports that much of it is dated, it might be 2 or 3 years old.

FEYERICK: Secretary Ridge saying intelligence shows terror operatives were updating details of potential targets as recently as January, saying also the terrorists are patient and will strike when they can be successful.

RIDGE: We just assume that there are operatives here. I mean, obviously, the law-enforcement community has their eyes on people they believe are connected or sympathetic to the cause.

FEYERICK: Missing in the latest intelligence is the timing of the possible attack. But officials, citing several sources, have added concern about the Republican National Convention in New York starting in late August.

RIDGE: There has been an expressed intention to disrupt the democratic process. It could be interpreted throughout the election year. It could be interpreted to Election Day.

(END VIDEOTAPE)

FEYERICK: Now the Homeland Security chief was asked whether the release of intelligence was somehow politically motivated. He answered, "This isn't about politics. It's about people having confidence in government." And New York City's mayor added that officials would have been criticized had they not released the intelligence -- Kitty.

PILGRIM: Deborah, what are the Democrats saying about it?

FEYERICK: You know, it's interesting. Hillary Clinton was in town today, and she said that she has good faith that, in fact, this is real intelligence. She does not doubt the quality of this intelligence. This is the first time they've had so much in hand that they could look at.

PILGRIM: Thanks very much.

Deborah Feyerick.

Much of the intelligence behind the terror warnings comes from an al Qaeda suspect arrested in Pakistan. And, tonight, there are new details about possible terrorist targets in this country.

Justice Correspondent Kelli Arena reports from Washington -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Last night, as you know, we reported there were more targets than the five publicly mentioned by officials. Sources now tell us there are about 20.

They're broken down into three categories, depending on how much information was gathered on them. For example, officials say the New York Stock Exchange is in category one. Al Qaeda had collected a lot of detail and conducted expensive surveillance. The Bank of America in San Francisco is in category two, meaning that there's less information in al Qaeda databases.

Now, while the potential targets have received a lot of attention, U.S. and Pakistani officials say that the real intelligence coup is coming from interrogations of alleged al Qaeda computer expert Muhammad Naeem Noor Khan.

(BEGIN AUDIO CLIP)

SHEIKH RASHID AHMED, PAKISTANI INFORMATION MINISTER: We have some valuable information from them, and we are interrogating an investigation in this case, and I think this is a great achievement of our security forces.

(END AUDIO CLIP)

ARENA: As one source put it, Khan is emerging as a key player in the communications network of al Qaeda.

According to intelligence officials, Khan told interrogators that al Qaeda used couriers to get messages and computer disks to him. He then posted coded messages on Web sites and then quickly deleted the files.

According to Khan, he used e-mail addresses in Turkey, Nigeria and some tribal areas of Pakistan to send the information, but those addresses were used just a few times to avoid detection.

Now Khan's arrest is significant because it gives investigators a look into how al Qaeda has adapted to the war on terror. It's also a reminder that dangerous terror cells remain intact even in countries like Pakistan where experts say officials have been especially aggressive -- Kitty.

PILGRIM: Thanks very much. Kelli Arena.

Anti-terrorist police in Britain tonight arrested 13 men in raids in the London area and northwest England. Scotland Yard said the men are suspected of being involved in terrorist acts.

On Capitol Hill today, lawmakers held new hearings on how to reform our intelligence communicating, and they are considering two sets of proposals, one from the September 11 commission and the other from President Bush.

Now Congressional Correspondent Ed Henry has our report -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good evening, Kitty.

In fact, these new terror threats that you were just reporting about -- they are giving new impetus for the 9/11 commissioners to really push Congress hard, to go further than President Bush did yesterday when the president endorsed this new national director of intelligence as well as the new national counterterrorism center.

And, so far, it has seemed that there is so much momentum behind the 9/11 commission's final report that it might be on a glide path through Congress, but it hit a rough patch today. There were some political battles developing. There were also some very tough questions raised at these hearings.

First of all, at the House hearing that you mentioned, Democratic Congressman Henry Waxman was suggesting that perhaps this new director of national intelligence has not gotten enough power. The way that President Bush has mapped it out he would -- this director would not have budget authority, and, basically Congressman Waxman and other Democrats, as well as some 9/11 commissioners from both parties who were testifying there, suggested that this could become a figurehead, not the kind of quarterback calling the plays, really taking charge, as the commission has suggested.

Now another development as well is that Commissioner Bob Kerrey, the former senator -- he was testifying at this house hearing. He said that he thinks there could be a problem as well with this new director in terms of turf battles. Defense Secretary Donald Rumsfeld and others might not want to cede authority to this director, and, in fact, Bob Kerrey, used some colorful language to make his point.

(BEGIN VIDEO CLIP)

BOB KERREY (D), 9/11 COMMISSION MEMBER: I know that Secretary Rumsfeld is going to oppose this, and I just -- if they win one more time, if DOD wins one more time, the next time there's a dust-up and there's a failure, don't call the director of Central Intelligence up here! Kick the crap out of DOD!

(END VIDEO CLIP)

HENRY: And at the Senate hearing, you also heard a lot of lawmakers raising tough questions about this new national counterterrorism center, wondering about civil liberties questions, wondering about the makeup of it, exactly what this counterterrorism center will do.

And John Brennan testified. He is the current head of the National Threat Assessment Center that would be replaced by this new center. And, in fact, Mr. Brennan testified that he thinks the new center could actually create some new problems.

(BEGIN VIDEO CLIP)

JOHN BRENNAN, TERRORIST THREAT INTEGRATION CENTER: The system today works better than it ever has before. The status quo on 9/11 was certainly insufficient. It could have worked better. You betcha.

We can improve yourselves, and we need to, and that's why continuing to change and to go through transformation of government is important, but moving precipitously does not take into account the tremendous interconnectedness that is the result of legacy, practices and procedures, and statutes over the past 50 years.

(END VIDEO CLIP)

HENRY: Kitty, normally in August, lawmakers are in recess, they're vacationing, but those plans are canceled in order to deal with all of these hearings. There's obviously going to be some quick action in the fall. At least, that's where it's all headed.

And noting all of those canceled vacations, Bob Kerrey also wanted to note at this House hearing that he thinks Congress should not move too fast. He thinks they should hold some hearings, but then take a break, come back after all the heads have cooled and actually work on this in the fall.

Here's what he said.

(BEGIN VIDEO CLIP)

KERREY: One of the unfortunate things is you've had a lot of pressure to hold these hearings during recess, which is -- God bless you for doing it, for being willing to do it. But take some time off. Rename it to vacation, say, you know, we need vacation, too.

We've got to go away and shut down and throw our cell phones away and our Blackberries away and not make contact with anybody other than the fiction that we're going to take with us and read.

(END VIDEO CLIP)

HENRY: So the bottom line here, Kitty, is that this -- there clearly is still a lot of momentum behind reform, but there are people on both sides of the aisle saying maybe caution should be the advice, that maybe everyone should go slow, not rush anything through.

But I can tell you that some House Republican leaders have been privately saying that right after the Republican National Convention, they'd like to bring up a reform package, deal with it the first week in September. That's one scenario that's being floated.

Significance there -- it would be right on the eve of the third anniversary of the 9/11 attacks -- Kitty.

PILGRIM: All right. Thanks very much.

Ed Henry.

In Iraq, insurgents targeted American and Iraqi troops in the latest attacks. Two American soldiers and two Marines were killed in Baghdad and in al-Anbar province. In Baqubah, a suicide bomber killed four soldiers in the Iraqi National Guard. Six other Guardsmen were wounded. In Baghdad, insurgents killed an Iraqi police colonel in a bomb attack, and three of his bodyguards were wounded. And in northern Iraq, a bomb explosion damaged an oil pipeline. It is not clear whether the blast will disrupt Iraqi oil exports.

Today, an Army investigator said that Private Lynndie England humiliated Iraqi prisoners for fun. Now the investigator gave testimony to a military hearing that will determine whether Private England should be court-martialed.

Bob Franken reports from Fort Bragg, North Carolina -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: According to the investigators, she called it a joke. She said that she and the others were doing this just out of frustration over the conditions and their plight in Abu Ghraib Prison in Iraq.

Lynndie England is 21 years old, seven months pregnant, came to this, what they call, Article 32 hearing today. It was a pretrial to see which of the 19 charges, which, by the way, add up to 38 years in prison, she might have to face in a court-martial.

Now, as far as the infamous picture of her holding a detainee on a leash, she says that was done at the behest of Corporal Charles Bremer, who is the person who is identified by many as one of the ringleaders of this effort to humiliate the prisoners and also is identified as the father of her baby.

As far as other charges are concerned, they have to do with very sexually explicit pictures which have come up with a bunch of indecency charges leveled against her, and that brought a comment from her lawyer that it was really off the point.

(BEGIN VIDEO CLIP)

RICHARD HERNANDEZ, ATTORNEY FOR LYNNDIE ENGLAND: She's as stressed as anyone else would be, if you were a 21-year-old young lady who's facing 30 years for pictures, intimate photographs that are -- you would see at Mardi Gras on spring break, but not in this case. She's facing 30 years.

(END VIDEO CLIP)

FRANKEN: To try and make his case that Lynndie England was simply following orders, her attorney says she would like to call some of the higher-ups like Vice President Cheney or Secretary of Defense Rumsfeld. He didn't have very much optimism that the presiding judge would allow that to happen, at least in this pretrial -- Kitty.

PILGRIM: Thanks very much.

Bob Franken.

Still to come, America on Alert. Terrorism expert James Carafano says we should take the new al Qaeda threat seriously. James Carafano is my guest.

Plus, a plane crashes into a mansion in Texas. We'll have the dramatic story.

And Democrats say America is a divided nation, but those divisions may not be as clear-cut as some Democrats think.

(COMMERCIAL BREAK)

PILGRIM: In Texas, at least six people were killed when a plane crashed into a home near Austin. Four adults and two children on the plane were killed. Three people in the house were able to escape unharmed. The Now the house is on a golf course in the Austin suburbs of Lakeway, less than two miles from a landing strip. There are conflicting reports about whether the pilot was attempting to land at the airstrip when the plane crashed.

Let's return to the top story tonight. The Department of Homeland Security today said much of the al Qaeda intelligence leading to the latest terror warnings dates back to 2000, Homeland Secretary Tom Ridge denied claims that the warnings were politically motivated, saying the Department of Homeland Security "does not do politics."

Joining me tonight from Washington is James Carafano, a senior research fellow for defense and homeland security at the Heritage Foundation.

And nice to see you, Jim.

JAMES CARAFANO, HERITAGE FOUNDATION: Good to be with you.

PILGRIM: Let's get into this old information-new information. What's your view? You are a terrorism expert. What's your view on the carbon dating of this information?

CARAFANO: Well, the most important factor, the most chilling factor is not the fact that these files were several years old. It's the fact they were updated as recently as January and April of this year. So that means they were active case operations going on.

And the other thing you have to realize is if you sat down and read through the 9/11 report of the 9/11 commission, which is a great chronology of how the 9/11 attacks were planned and executed, and you sat down and you look at the intelligence and the planning that's gone on for these operations, they are just parallels. Anybody that would just dismiss this as an old thing not to worry about just doesn't understand how these guys operate.

PILGRIM: And the detailed cataloging of information that eventually is used. So you think all of this information is highly relevant?

CARAFANO: Absolutely. I mean, it's a typical pattern of how al Qaeda did operations before 9/11, which is they looked at targets for long time, they surveiled them, they found the gaps and vulnerabilities. Then they went low. They laid the base for the operation. They got people in place. Then you see a quick spurt of operational planning and communication and then execution. The fact that there's a lull is not a sign that nothing's happening. It -- there could well be an operation.

Now the difference, of course, is a lot of the al Qaeda infrastructure has been attacked since 9/11. Funding's gone after leadership, communications. So that's -- some of that's been disrupted, and I think the good news is they now know that we know what they know, which means that we know where the gaps and vulnerabilities are that they found, and I'm sure all those are being plugged. So, whether these things are really good targets for them anymore, I think that's a fair question.

PILGRIM: Yes. What about the fact that people are becoming desensitized and don't we need the population of this country to be ultra aware?

CARAFANO: Well, that's a fact of life. I mean, if you look -- there's lots of data on this and -- from research for natural disasters and stuff. People typically remain unprepared.

The only people that really prepare for stuff is people who are -- intimately have experience with it. So like people that live in an earthquake area, a tornado area, they worry about that that kind of stuff.

Most Americans never see a terrorist act in their life. It's hard to really get them motivated. But what it really says is, you know, we need Homeland Security that's going to be good when Americans are excited and when they're not, you know, when we're complacent, when we're not.

We need homeland security that's there all the time. The best analogy is, you know, people worry about a burglary in the neighborhood, and then, a couple months later, they forget to check their doors and lock their windows, but, you know, the cops are always there, and that's the kind of homeland security we need.

PILGRIM: That's a great analogy.

You know, many experts are saying that the next attack may involve large vehicles, such as truck bombs. What's your view on that? CARAFANO: Well, you know, we have to remember that bombs have always been the terrorists' weapon of choice, you know, since Nobel invented dynamite, and car bombs have -- are historically and traditionally the weapon because you can get a lot of explosive, you can get it in a very precise place and use it in a very precise, predictable way. So car bombs are always going to be a threat, even if al Qaeda never existed.

PILGRIM: John Kerry has been a bit critical of President Bush, saying he's been too slow to embrace the recommendations of the 9/11 commission. What's your view as a terrorism expert on how fast we're moving forward in protecting ourselves?

CARAFANO: Well, you know, in fact, you know, if you look at the 9/11 commission recommendations, there's about, if I remember, 41 of them. Most of them are things that we're already doing, we want to do, we're trying to do, we'd like to do if we could, we're going to do. So, I mean, really I look at the 9/11 commission report as really kind of a validation of the strategy that's come up with since 9/11.

On offense, you know, we're being preemptive, we're taking out sanctuaries, we're taking down networks, we're beginning to begin -- do the struggle of ideas, I think, that's important.

On defense, we've got layered defensive systems, we're not relying on any one silver bullet, but a combination of measures, and these things take time to develop.

You know, my -- you know, we created -- in 1947, the National Security Act creates what becomes the Department of Defense and the CIA. You know, nobody thought the Cold War was going to be over by 1948. I mean, everybody realized it was going to take time to get these organizations up and running and do it right, but you needed to because it was going to be a long, protracted conflict, like this one will be, and we need instruments for the long term.

PILGRIM: Thanks very much.

James Carafano.

CARAFANO: Thanks for having me.

PILGRIM: The Statue of Liberty today reopened to the public for the first time since September 11. Officials went ahead with plans to re-open the statue. That's despite the recent terror warnings in New York and New Jersey.

Visitors are allowed to go as high as the statue's feet. A glass ceiling has been installed between the pedestal and the statute itself. Now the inside of the statute, including stairways to the crown and the torch, do remain closed to the public.

Coming up, squeezing the middle class. More and more American workers forced to work more for less. Some forced to do without even the most basic benefits.

Also ahead, whatever happened to Buy America? The latest America spy plane will be made of foreign parts.

And Hurricane Alex gains strength and speed as it hurdles off the Carolina coast.

Those stories and more ahead.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: The Pentagon has awarded a massive defense contract to a consortium that includes a Brazilian aerospace company. The Brazilian company will supply new spy planes to the Army and the Navy. This contract raises new questions about whether the Pentagon should only buy American products.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The new spy plane for the Army and the Navy will be a military version of this Brazilian regional jet. The Brazilian company called Embraer will make the fuselage for the new Aerial Common Sensor reconnaissance plane. The planes wings will be made in Spain.

Other components coming from Chile. Machinists and aerospace workers call it piecemeal outsourcing.

FRANK LARKIN, ASSOCIATION OF AEROSPACE WORKERS: This is a government contract, and we're concerned anytime taxpayer dollars are used to create good-paying jobs in countries like Brazil or Chile that are desperately needed here in the U.S.

SYLVESTER: The military awarded the contract, estimated to be worth up to $6 billion, to Lockheed Martin, who has partnered with Embraer to build the plane.

The Lockheed-Embraer team beat out Northrup Grumman who would have used a Gulfstream plane made by American-based General Dynamics. Defense contractors still rely on American firms to build the electronics systems, but they have increasingly been tapping foreign companies to supply more low-tech components like a plane's airframe.

JOHN PIKE, GLOBAL SECURITY.ORG: A good chunk of what is driving this is price, that, when you look at what you can build here in the United States versus what can be fabricated in other countries, you're going to be able to offer, in some cases, a better price by having some of it coming from other countries.

SYLVESTER: Lockheed Martin says less than 17 percent of the plane will be built outside of the United States. In a statement, the company said "ACS aircraft will be built in America by Americans with American parts. The aircraft is fully 'Buy America' compliant." But critics, including many labor groups, see this as a sign of things to come. They worry that, as more defense work moves overseas, the United States will not only shed jobs, but will also permanently lose some of its industrial military base.

(END VIDEOTAPE)

SYLVESTER: A spokesman for Embraer says the company is not taking away U.S. jobs but adding them. The company plans to build an assembly plant in Jacksonville, Florida, and will hire up to 200 new workers -- Kitty.

PILGRIM: Thanks very much.

Lisa Sylvester.

And that brings us to the subject of tonight's poll. Do you believe the Pentagon should only buy American? Cast your vote at cnn.com/lou, and we will bring you the results later in the show.

Now tonight, in the Middle Class Squeeze, more and more Americans are finding a traditional benefit of employment no longer available. The sluggish economy and rising health-care costs have caused many companies to stop offering health insurance.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): American workers under siege. Their jobs at risk of being shipped off to foreign countries, and now traditional health-care insurance less likely to come with the job. Between 2001 and 2003, nine million fewer workers were covered by employer-sponsored health insurance plans. Those hardest hit were the poorest.

The decline cut across all age groups, with young adults showing the sharpest decline.

BRAD STRUNK, CENTER FOR STUDYING HEALTH SYSTEM CHANGE: History tells us that there's been a pretty sustained and fairly slow, but sustained decline in employer coverage for many years, and, at the same time, a sustained but slow increase in the number of uninsured people.

TUCKER: But, for now, the number of uninsured is being alleviated slightly by state-funded Medicare and child health-care programs. With the number of children on taxpayer-funded plans rising by 6-1/2 percent. However, with many states struggling with tight budgets, those programs are at risk of losing funding.

Why are there fewer employee-sponsored plans? A sluggish economy and, during the two years of the study, health-care insurance premiums rose 28 percent.

CLAYBROOK: The cost of health care is going so astronomically that it's unpredictable and it's very, very difficult for particularly smaller companies to carry that burden. Thus, they're discontinuing their health-care coverage for even their employees.

(END VIDEOTAPE)

TUCKER: In the words of one business owner, health insurance companies are raising the premiums faster than he can raise his prices. The loser in that formula is fairly easy to figure out -- his workers and this company, Kitty.

PILGRIM: Thanks very much.

Bill Tucker.

In tonight's Campaign Journal, President Bush is campaigning in a state he knows fairly well, Texas. The president attended a fund- raiser in Dallas and he later spoke to the Knights of Columbus convention in Dallas and praised that Catholic group.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You're helping this nation build a culture of life in which the sick are comforted, the aged are honored, the immigrant is welcomed, and the weak and vulnerable are never overlooked.

(END VIDEO CLIP)

PILGRIM: Senator John Kerry today campaigned in the battleground state of Wisconsin. He held a town hall meeting and told voters that he would be a more fiscally responsible president.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D), PRESIDENTIAL NOMINEE: I am determined that as president, I'm not going to be responsible for piling debt on our children's heads and taking Social Security away from the people who have it today and ought to get it in the future.

(END VIDEO CLIP)

PILGRIM: Vice President Cheney and his challenger, Senator John Edwards, also hit the campaign trail today. Senator Edwards told voters in Louisiana that the country is divided into "two Americas." It's a theme that Democrats have been talking a lot about lately, and Bill Schneider has the report.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): We heard a lot of talk at the Democratic convention about two Americas, but which two Americas? John Edwards talked about two Americas divided by class, the haves and the have-nots.

SEN. JOHN EDWARDS (D), VICE PRESIDENTIAL NOMINEE: The truth is we still live in a country where there are two different Americas. One, for all those people who have lived the American dream and don't have to worry, and another for most Americans, everybody else, who struggle to make ends meet every single day.

SCHNEIDER: That works for Democrats because as Edwards said, most Americans identify with the have nots. But the division that dominates American politics right now isn't class, its culture. Red versus blue doesn't mean haves versus have nots. It means liberals versus conservatives.

Polls show more people call themselves conservatives than liberals. So, it's a division Democrats are quick to denounce.

BARACK OBAMA (D), ILLINOIS SENATE CANDIDATE: There is not a liberal America and a conservative America. There is the United States of America.

SCHNEIDER: But listen to Bill Clinton who sees values at the core of today's politics; more precisely, the '60s.

BILL CLINTON, FORMER U.S. PRESIDENT: If you look back on the '60s and on balance you think there was more good than harm in it you're probably a Democrat, and if you think there's more harm than good you're probably a Republican.

SCHNEIDER: It's a split between two figures who came of age in the '60s. Bill Clinton who sees more good than harm and George W. Bush who sees more harm than good. Where does John Kerry fit in?

SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE: When I was in high school a junior, John Kennedy called my generation to service. It was the beginning of a great journey, a time to march for civil rights, for voting rights, for the environment, for women, for peace. We believed we could change the world, and you know what? We did.

SCHNEIDER: But notice how Kerry defines those values.

KERRY: ... not narrow values that divide us, but the shared values that unite us: family, faith, hard work, opportunity and responsibility for all.

(END VIDEOTAPE)

SCHNEIDER: Faith, hard work, opportunity, responsibility. They don't sound like the values of the '60s. Could there be some repackaging going on -- Kitty.

PILGRIM: All right. Thanks very much. Bill Schneider.

Tonight's thought is on national unity. Here it is: "Let us put an end to self-inflicted wounds. Let us remember that our national unity is the most priceless asset." Those are the words of President Gerald Ford.

Let's take a look now at some of your thoughts. Many of you wrote in on whether a national intelligence czar would improve U.S. security. Kyle Keith of Gresham, Oregon writes: "I think the intelligence czar should work in the White House but be briefed by the intelligence officials. What good is this position if the President's strongest source of intelligence isn't even on-site?"

And Jack Peaco of Kingman, Arizona wrote: "Spend the money on patrolling our borders. If we can't stop the illegal aliens, how are we going to stop the terrorists?"

Amanda of South Shore, Kentucky: "If I were a terrorist, I certainly would not bother trying to get here with a passport or visa. I would just pay someone to sneak me across the Mexican border. If millions of poor Mexicans can do it without any resources backing them, just think how easily someone with a fountain of resources from these terrorist groups could manage to infiltrate our nation."

We absolutely love hearing from you. E-mail us at LouDobbs@cnn.com.

When we come back: the first hurricane of the season. Hurricane Alex continues to hover off the Atlantic coast. We'll have a live report.

And the secret war against Osama Bin Laden before September 11th. Journalist Steve Coll will tell us about his book, "Ghost Wars." That's next.

The third rock from the sun sends a messenger to the first rock. We'll have a special report. That, and much more, still ahead here tonight.

(COMMERCIAL BREAK)

PILGRIM: Hurricane Alex today brought winds reaching 100 miles an hour to the coast of North Carolina. And joining me now from CNN affiliate WRAL, with details, is Kelsey Carlson in Nags Head, North Carolina. Kelsey?

KELSEY CARLSON, WRAL CORRESPONDENT: Hi, Kitty.

The rain has stopped. But as you can see, it's still pretty windy out here, and some pretty tall waves are still crashing on the shore here in southern Nags Head.

To the south of here in the Outer Banks, it's a little bit worse. They're looking at some serious flooding after Hurricane Alex passed through: two to three feet of flooding. A lot of the roads are impassable right now.

Plus, this area was hit really hard by Hurricane Isabel last year. So, a lot of the locals were very frustrated with this weather forecast because this is also a very busy tourist time for this area. I think the second week of August is one of the busiest times.

So, they don't want to miss out on any of those dollars. You can see that the sun is starting to come out here and so are the people tonight. A lot of people weathered the storm indoors; sort of watched the rain from the window, and now a lot of people are coming out to take pictures probably for their scrapbooks so that they can go home with some memories of this vacation and the first hurricane of the season.

There were no mandatory evacuations for any of the Outer Banks communities. So, people were allowed to stay in the area. Of course, they were advised to stay off the roads. And we did see wind gusts of over 40 miles per hour here today.

So even though Hurricane Alex sort of brushed the shoreline, it was still a pretty rough storm. We are looking at some damage, things like shingles, canopies and signs, we're hearing, are turned over and, of course, the flooding.

We'll have a better idea tomorrow morning, Kitty, of what the damage really looks like when the experts get out and assess it.

PILGRIM: All right. Thanks very much.

Kelsey Carlson in Nags Head, North Carolina. Thanks, Kelsey.

Turning now to the war on terror, the September 11 Commission has provided the most detailed account yet of the events that led up to the September 11th attack. And the report raised troubling questions about America's failure to destroy Al Qaeda before the hijackings.

One of this country's leading independent experts on Al Qaeda is Steve Coll, managing editor of "The Washington Post," and Steve Coll is also the author of "Ghost Wars: The Secret History of the CIA, Afghanistan and Bin Laden." Steve, thanks so much for joining us tonight.

STEVE COLL, MANAGING EDITOR OF "THE WASHINGTON POST" AND AUTHOR: Kitty, thanks for having me.

PILGRIM: You know this is a litany of lost opportunity. Where did we go wrong in not stopping Osama Bin Laden? Where was our biggest mistake?

COLL: Well, I think there were two different turning points, very different points in our history. One was in the early 1990s after the Soviet Union had withdrawn from Afghanistan, the United States faced the question of whether it had sufficient interest to justify staying in Afghanistan, trying to build stable politics, isolate extremists like Bin Laden. And we decided, at that time, to withdraw from the region. In the vacuum we left, the Taliban rose, and Al Qaeda found sanctuary.

Later, in the three years before September 11, the United States had multiple opportunities to try to attack Bin Laden directly in Afghanistan, it looked too daunting. There was no will, no context to go after him in a serious way, and so he continued to thrive and operate until he struck on September 11.

PILGRIM: Steve, you have studied this in-depth and this book is astonishing. If we had caught Osama Bin Laden, would it be any different? If we capture him now, will it be any different?

COLL: Well, let's talk about history and then currently. In the past, I think it would have depended on when it happened. Al Qaeda metastasized gradually between 1997 and 2001. The earlier Bin Laden was disrupted, captured or killed, the more difference it would have made to the kind of organization Al Qaeda became.

Today, it's a very different matter. Al Qaeda is a very different organization. Bin Laden's leadership is less important. His capture or death would be a very important symbolic event, but as to the operational effectiveness of Al Qaeda, would make less difference. This is more of a movement today than a hierarchical organization.

PILGRIM: We're getting very specific information in the last few days about another Al Qaeda attack. How do you think we can stop it? How can we fight Al Qaeda now?

COLL: Well, this recent case is, I think, a pretty good example of what Al Qaeda has become. First of all, Pakistan remains very important to the organization, although it can't operate in as plain sight as it did in Afghanistan in the earlier period. That's one thing that's highlighted by this case.

Secondly, their communications are very difficult to break up. They take advantage of code, the Internet, they communicate globally and their cells are dispersed and very difficult to track down.

Overall, Al Qaeda is a much more diverse and more elusive adversary, I think, than it was when it was headquartered in Afghanistan before September 11.

PILGRIM: Do you think our collaborative relationship with Pakistan is working?

COLL: It's certainly much different than it was before September 11 when the interest of the United States and the interest of the Pakistan army were really not much in alignment. At that time, Pakistan's army supported the Taliban and indirectly used Al Qaeda to promote Jihadism across the border in India.

Today, Pakistan interests and the United States interests are much more closely aligned. The collaboration is much more active. But there are still problems in the relationship, and still a lot of suspicion, I think, on both sides of the lines from time to time.

PILGRIM: You know you've looked at the flow of information and action over the course of time in tracking Al Qaeda and fighting it. Do you think that appointing an intelligence czar will help the situation?

COLL: Well, it depends on what kind of authority the new intelligence director would have and really whether that appointment is given the operational and budgetary authority that might bring the bureaucracies together, encourage them to share information, force them to do so when they don't want to. There are different proposals for how the national intelligence director would be set up and empowered. And, I think this is a case where the details matter and those are yet to be sorted out.

PILGRIM: All right. Thanks very much. Steve Coll, author of "Ghost Wars," a very excellent book on Al Qaeda. Thank you, Steve.

A reminder now to vote in tonight's poll: do you believe the Pentagon should really buy American or only buy American? Cast your vote at cnn.com/Lou. We'll bring you the results in just a few minutes.

Still ahead, its mission accomplished for the crew of the International Space Station as it prepares for company.

And NASA sends a messenger to Mercury for the first time in decades. And we'll talk with Charles Liu, Astrophysicist at the American Museum of Natural History.

(COMMERCIAL BREAK)

PILGRIM: Well, a successful mission tonight for the crew of the International Space Station. The Russian cosmonaut and the American astronaut today took care of a little maintenance outside the Space Station.

This was the crew's third space walk in over a month. And today they installed some antennas and laser reflectors to prepare for the incoming Automated Transfer Vehicle. That is a cargo ship that will be launched next fall.

NASA, today, launched a messenger to Mercury, a five billion mile trip. It's been nearly 30 years since NASA has made that journey. And if all goes as planned, the Messenger Space Probe will become the first space craft to orbit the hot planet.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Three; main engine start, two; one and zero and lift off of Messenger on NASA's mission to Mercury.

(END VIDEO CLIP)

PILGRIM: In the early hours of the morning, Messenger headed to Mercury. Its mission, get as much data as possible about the closest planet to the sun.

(BEGIN VIDEO CLIP)

ORLANDO FIGUEROA, NASA: It will collect images of the entire planet and gather highly detailed information on its geology, the nature of the atmosphere and magnetosphere, the makeup of its core, and the character of its pole materials.

(END VIDEO CLIP) PILGRIM: Being so close to the sun, Mercury's year is just 88 days, but it has such a slow rotation that each day equals six earth months. Even more interesting to scientists, Mercury's core is 65 percent iron; that's twice the percentage of the earth's core. And Mercury is the only other rocky planet with a magnetic field. Scientists say Mercury will teach us more about our own planet.

(BEGIN VIDEO CLIP)

MICHELLE DOUGHERTY, IMPERIAL COLLEGE, LONDON: We don't understand Mercury's interior, and we need to understand it to be able to know how the solar system formed. We have a vague understanding of how the earth formed. To be able to understand that better, we need to compare and contrast it to Mercury itself.

(END VIDEO CLIP)

PILGRIM: But we won't find out that information for at least six years. That's how long it will take the Messenger to get to Mercury, at which point it will spend another year orbiting the planet to get that data.

Now, joining me now to talk about more of the exploration of Mercury is Charles Liu, an Astrophysicist at the American Museum of Natural History. Thanks very much for joining us, Charles.

CHARLES LIU, AMERICAN MUSEUM OF NATURAL HISTORY: Always a pleasure.

PILGRIM: Why didn't we go back? Thirty years is a long time between road trips for a...

LIU: It's true. There are two basic reasons. One is the first time we went, Mercury seemed relatively straightforward. It doesn't have an atmosphere or so we thought. It looked like the moon, or so we thought.

So, we put it on hold while we studied Mars, Jupiter, Saturn and these other stations. Now we're ready to go back. The other thing is the technology to withstand the 700 degree heat in the area of the solar system, around Mercury, made it impossible for us to send a sustained mission there until now.

PILGRIM: It is very hot. It doesn't sustain life. So there's no hope for that.

LIU: Don't think so.

PILGRIM: Why is it so interesting?

LIU: Imagine baking a rock at 700 degrees for 4.5 billion years. It's a remarkable laboratory to understand how planets formed and how they survived over long periods of time. So, by studying Mercury we're really studying the moon, we're studying ourselves. We're trying to understand how the entire solar system's put together.

PILGRIM: Tell us a little bit about this flight. The Messenger is not flying directly to Mercury. Right?

LIU: That's right. As I said earlier, it's going to take over six years to get there. If it went straight, the trip would be only 50 or 60 million miles, not too far. But it's going around and around in long loops to conserve fuel. And in the process, it will fly by earth and Venus a few times as well. So, it's going to pick up a lot of very interesting scientific information before it even reaches to Mercury.

PILGRIM: What are we hoping to learn?

LIU: There's lots to know. But one of the most interesting questions is: is there ice on Mercury? You wouldn't imagine there would be because it's so hot there.

PILGRIM: Ice at 700 degrees, right?

LIU: That's right. But there have been some tantalizing suggestions that there might be ice deep at the bottoms of craters near the polar regions of Mercury that have survived for over 4 billion years.

So, if we find that out, that would be great. But beside that, just understanding what Mercury is like, understanding its magnetic structure, its magnetic field and taking really close good maps of a planet that is so close to us is an exciting prospect.

PILGRIM: Charles, I have to ask you a separate topic. Today, China announced that it would start to develop its lunar exploration craft. They hope to be on the moon quite shortly, in a few years. How do we put this in context with the American space program?

LIU: It's very interesting. In about 10 to 15 years' time, China's space program has gone from almost zero to something containing thousands of factories, tens of thousands of skilled engineers and workers.

China is really booming as an economy, as you know. But it's also made a very strong national commitment to explore space. Right now we have three space powers in the world; United States, Russia and China.

PILGRIM: The United States is not currently trying to go to the moon, is it?

LIU: There is the long-range plan that we're going to go to the moon as a stepping stone to go to mars and beyond. That's definitely something.

So, in a sense, going to the moon itself alone as a destination is not precisely the United States' high national priority. But that technology development is a critical part of what we would consider our high tech base, infrastructure and our economy.

So China is definitely right there. And we have a historic opportunity to try to influence and shape that plan to make us part of that program, as well, so that we also will benefit from that kind of technology advancement over the coming years.

PILGRIM: Very interesting development. Thank you very much, Charles Liu.

LIU: Thank you.

PILGRIM: Back to earth. The owner of an ice cream shop in Ohio is trying an unusual route to retirement. She's trying to raffle off her business. Now the owner of Mackinac Island Creamery in Washington Township is selling those raffle tickets for $100 apiece, in case you're interested.

And she said she checked with the sheriff first to make sure that raffle is legal. The owner says she will only go through with the raffle if she can sell 1,500 tickets and maybe some ice cream while she's at it.

When we return, a multi-million dollar settlement over accounting charges of Halliburton. Vice President Cheney was involved in the SEC probe. That is next.

Plus, oil prices surge to a new record. We'll have that and much more still ahead here tonight.

(COMMERCIAL BREAK)

PILGRIM: Vice President Cheney's former company, Halliburton, has agreed to pay $7.5 million to settle charges related to a 1998 accounting charge.

The SEC today said Vice President Cheney gave sworn testimony as part of the investigation into his former company. The SEC brought charges against the company, the former chief financial officer and former controller. Vice President Cheney, who served as chairman from 1995 to 2000, was not charged.

On Wall Street, stocks fell. The Dow lost almost 59 points and NASDAQ dropped almost 33 and the S&P fell seven. A new record for oil prices sparked the selling and Christine Romans is here with the report. Christine?

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, oil prices are up an incredible 35 percent this year and today they topped $44 a barrel for the first time ever. Supplies are stretched, demand red-hot, and OPEC says, "Sorry, it has no spare oil."

Great news for the earnings of energy companies and many of those oil stocks are at five-year highs. But not so great for the consumer, who is already paying more for food and health care and whose family budget is stretched.

More evidence of that today. The government said consumer spending in June was the weakest since the September 11 attacks. And wages barely budged. Income grew a meager two-tenths of a percent. After inflation and taxes, workers were no better off than the prior month, struggling to hold even. Wages and salaries unchanged in June, the weakest reading since December. Another report showed employers hesitant to hire, and job cut announcements rose 8 percent last month.

Kitty, the Fed chief has said that any weakness in the second quarter was transitory, there are high hopes pinned on Friday's jobs report for July. In the meantime, already stretched family budgets stretched some more.

PILGRIM: Remember when Iraqi oil was supposed to glut the market? Well that's a long way gone. How long do they think the tightness in the oil market may last?

ROMANS: At this point, we're pulling 82 million barrels out of the ground, we're using 82 million barrels a day and we can refine 82 million barrels a day. So, everyone says that we're right on the line. We have maximum demand and maximum output at this point.

PILGRIM: All right. Thanks very much. Christine Romans.

Let's take a look at more of your thoughts on the nation's intelligence.

And Laura McCabe of Kansas City, Missouri writes: "I'm glad that President Bush has decided to act on our national security. However, why did it take so long? Nearly three years after 9/11, we still don't have border security, port security, or nuclear security."

And Nancy of Raleigh, North Carolina offered her thanks: "Great job by the 9/11 Commission, great job by President Bush for holding meetings within a matter of days on the recommendations, great job by those in Congress who are still there hashing through the particulars of proposals. I'd say we're moving in the right direction, fighting terrorism abroad and at home."

Do send us your thoughts at LouDobbs@cnn.com.

Still ahead, the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Now, the results of tonight's poll: 90 percent of you believe the Pentagon should only buy American, 10 percent do not.

Thanks for joining us tonight. Please join us tomorrow. Robert Kennedy, Jr. will be here to talk about his new book; "Crimes Against Nature."

And, is Wal-Mart good for the American economy? Two opposing views will face off.

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