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Lou Dobbs Tonight

Al Qaeda Suspect Had Classified Information; Jobs Created Slowed to a Trickle

Aired August 06, 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, troubling new information about an al Qaeda suspect in Britain. Prosecutors say he had classified information about a U.S. Navy battle group.
(BEGIN VIDEO CLIP)

KEVIN O'CONNOR, U.S. ATTORNEY: The documents specifically describe the battle group's vulnerability to terrorist attack.

(END VIDEO CLIP)

PILGRIM: President Bush defends the color-coded terror alert, but does the warning confuse or help?

Plus, a shocking report on job creation in this country. Businesses hired only 32,000 new workers last month.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're not satisfied with the level of job creation we saw today.

(END VIDEO CLIP)

PILGRIM: President Bush and Senator Kerry fight for the Latino vote. We'll have a special report from Arizona, one of the key battleground states.

And in Heroes, the inspiring story of an Army specialist who was badly wounded in Iraq and is rebuilding a new life as an athlete.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, August 6. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, new and disturbing details about a terror suspect held in custody in Britain and wanted in the United States. Prosecutors say the suspect had classified data about American warships. The man is just one of more than a dozen terrorists suspected rounded up by authorities in the United States, Britain and Pakistan.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Days after the government warned that several U.S. financial institutions were potential terrorist targets comes a global roundup of terror suspects.

Thursday night, British police arrested 30-year-old Babar Ahmad accused by the United States of trying to use the Internet to raise money for terrorist activities.

O'CONNOR: The main purpose of all of these sites was to solicit financial support for terrorist organizations, including the Taliban and the Chechen Mujahadeen as well as recruit individuals to travel to Afghanistan and Chechnya for the purpose of waging jihad against the perceived enemies of Islam, including the United States.

PILGRIM: A floppy disc found in Ahmad's home included classified data about a U.S. Navy battle group in the Persian Gulf region, including its potential vulnerabilities to attack.

The arrest also links Ahmad to a Chechen Islamic militant involved with a siege of a Moscow theater two years ago. One hundred and sixty people died in that attack.

Earlier this week, British authorities picked up suspected al Qaeda operative Eisa al-Hindi. Considered a senior figure by U.S. officials, it's believed that he conducted firsthand surveillance in early 2001 of the same buildings that were listed as possible targets in the United States, according to law-enforcement officials. Investigators say he was also eying Heathrow Airport in London.

Hindi was arrested when notes of his reconnaissance were found on computer discs in Pakistan. These connections show the global reach of the al Qaeda terrorist network. And the arrests, some say, prove what can be accomplished with the global will to combat it.

ERICK STAKELBECK, THE INVESTIGATIVE PROJECT: I think this shows a greater cohesiveness, greater communication between the intelligence community around the world, which is, frankly, what we need. This is a global threat. The war against al Qaeda is global, and we did -- we need to work very closely together.

(END VIDEOTAPE)

PILGRIM: Now anti-terrorism experts say this week's arrests have dealt a severe blow to al Qaeda, but law-enforcement agencies have not arrested anyone in this country who is a member of an active al Qaeda cell.

Justice Correspondent Kelli Arena reports.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Security remains tight, and, in some cases, it's getting tighter. In the nation's capital, for example, police are now inspecting some cars and trucks in nearby Virginia and Maryland before they enter the district. It all follows warnings that financial buildings are being targeted by al Qaeda.

Arrests in Pakistan led investigators to very detailed surveillance notes of potential targets found in computers and documents. While most of the surveillance was done before the September 11 attacks, officials say some of the information was updated as recently as January.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The threats we're dealing with are real, and, therefore, we must do everything we can to ferret out the truth and follow leads.

ARENA: Operations in Pakistan and Britain also resulted in the nabbing of two alleged senior members of al Qaeda. One, Eisa al- Hindi, has been identified as the man who was sent to the U.S. in 2001 by Osama bin Laden to personally case potential targets, according to sources. The other, Muhammad Naeem Noor Khan is said to have contacted individuals in the United States.

Interrogations of both continue. Officials say their arrests generated thousands of leads in the United States, including a series of phone numbers and e-mail addresses. The main objective: to track down any al Qaeda operatives in the U.S.

GEORGE BAURIER, FORMER FBI COUNTERTERRORISM AGENT: For every thousand leads that go out, you're probably going to get a good percentage that come back and warrant much deeper investigation.

ARENA: In the midst of all this, sources say the level of chatter or intercepted communications between suspected terrorists has dropped off. It could mean nothing, but that's exactly what happened before the September 11 attacks.

BAURIER: What it indicates is that the individuals associated with al Qaeda have potentially been given information or orders on how to execute missions.

(END VIDEOTAPE)

ARENA: Still, officials offer no definitive evidence that al Qaeda is ready to execute an attack. No evidence on exactly when this could occur, and no evidence on the method terrorists would use.

Kelli Arena, CNN, Washington.

PILGRIM: President Bush today defended the color-coded national terror alert system. The president said the government has an obligation to tell Americans about terrorist threats. Some Democrats have accused the White House of using terror alerts to gain political advantage.

Jill Dougherty is traveling with the president tonight and reports from Kennebunkport, Maine -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Kitty, as you know, Kennebunkport is the family retreat here in Maine for the Bush family, and President Bush is here for the weekend for the wedding of his nephew. That is George P. Bush. That's the son of Jeb Bush, governor of Florida. Mr. Bush, the president, headed for the water almost immediately as soon as he got here, and he was out in a boat with his father and his brother, giving a quick wave to reporters as they streaked by.

The president had two stops today, Washington, D.C. was his first. And then he went on to New Hampshire before coming to Maine. And, at both of those stops, he spoke about the key issues now that you hear at every stop the president makes, and that is domestic issues and terrorism.

In Washington, D.C., at the Unity Conference -- the Unity Conference is a meeting of minority journalists. The president spoke about those terror alerts that have come up this week, and he defended them very strongly.

(BEGIN VIDEO CLIP)

BUSH: When we find out intelligence that is real that threatens people, I believe we have an obligation as government to share that with people, and imagine what happened if we didn't share that information with the people in those buildings and something were to happen. Then what would you write? What would you say?

(END VIDEO CLIP)

DOUGHERTY: And the president also now is bringing up in almost every stump speech an answer to Senator John Kerry and that comment by Kerry earlier this week in which he said that terrorists are using U.S. actions as a means of recruitment. The president is saying that that shows, as he put it, upside down logic and a misunderstanding, as he put it, of the enemy -- Kitty.

PILGRIM: All right. Thanks very much.

Jill Dougherty.

In Iraq, U.S. Marines say they've killed 300 radical Islamist gunmen in two days of fierce fighting in Najaf. The insurgent casualties are among the heaviest in any single battle since the fall of Saddam Hussein's regime. Gunmen loyal to the radical cleric Muqtada al-Sadr have also attacked British and Italian troops.

Matthew Chance reports from Baghdad.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT (voice-over): The holy city of Najaf now the scene of pitched battles and bloodshed. Fighters of the Mehdi Army loyal to the firebrand cleric Muqtada al- Sadr have taken positions in the heart of the ancient city.

U.S. Marines are fighting street to street near the Shrine of Iman Ali, one of the holiest sites in Shia Islam. And casualties are high. The Mehdi Army denies it, but the Marines say they've killed 300 of the militia in just two days. LT. COL. GARY JOHNSTON, U.S. MARINE CORPS: There is no end state or end -- really end time that we'll place on this one. I think, at this point in time, it will be effects based. when, in fact, we believe that those attacking Iraqis and Iraqi civilians are no longer capable of doing that.

And so we'll continue to press and continue to address these anti-Iraqi forces until we feel that they're no longer capable of these type of attacks in the future.

CHANCE: Fighting has flared elsewhere, too. Overnight, violence engulfs the mainly Shiite Sadr City district of Baghdad. Health ministry officials say at least 20 Iraqis have been killed in the clashes. Amaran and Basra in the South have also seen confrontations involving the Mehdi Army and British forces.

Now Muqtada al-Sadr is again the center of growing Shia unrest. U.S. officials say his militia overtly violated a cease-fire agreed in June. His own spokesman, Sheikh Mahmud al-Sadani insists they're ready for a truce.

"Najaf has strong relations with other cities," he warns. "The tension in Najaf will be reflected there. But our people are willing to establish stability," he says. "It's what the Iraqi government and the U.S.-led coalition say they want, too."

A general uprising among Iraq's majority Shia could spell disaster.

(on camera): To make matters worse, one powerful voice of moderation among Iraqi Shias has left the country. Grand Ayatollah Ali al-Sistani is in London being treated for a suspected heart condition. His advisers insist he will return. But, in his absence, there are concerns that those with a more violent agenda will come to the fore.

Matthew Chance, CNN, Baghdad.

(END VIDEOTAPE)

PILGRIM: There was dramatic new evidence today at the military hearing on Private Lyndie England's role in the Iraqi prisoner abuse scandal.

Susan Candiotti reports from Fort Bragg, North Carolina -- Susan.

SUSAN CANDIOTTI, CNN CORRESPONDENT: Good evening.

More government witnesses appear to be helping prosecutors build their case against pregnant reservist Lyndie England. She sat stone faced listening to testimony, including some testimony from another guard from her Reserve unit who testified by phone from an undisclosed location.

Specialist Joseph Darby became the whistleblower who turned his friends in. He said it was a hard call, but he told the court it was the moral thing to do.

Darby testified he was given a CD with photos from fellow guard Charles Graner, identified by prosecutors as a ringleader. These photos by now very familiar: Lyndie England holding a detainee on a leash; a pyramid of naked prisoners; some posed to simulate a sex act.

At the time, according to Darby, Graner explained one photo of a hooded prisoner chained to a cell like this. "The Christian in me knows it was wrong, but the corrections officer in me can't help but love to make a grown man urinate on himself."

Darby told the court he waited a month to tell investigators, but finally he had to stop the abuse. "It violated everything I personally believed in and everything I had been taught about war. England, according to another witness, said that the leash photo to her was funny and a way to humiliate and intimidate other detainees.

However, according to this witness she was never, ever able to back up her claim or name anyone who had, as she said, given her these orders. Back to you.

PILGRIM: Susan, what's the next step in this case?

CANDIOTTI: Well, Kitty, once this hearing is over -- and it might extend to the weekend -- it's up to the military judge here, the hearing officer because this is like a grand jury hearing, to decide whether to recommend Lyndie England face a full court-martial. If she does and if Lyndie England does go to trial, she could, if convicted, spend up to 38 years in prison.

PILGRIM: Thanks very much.

Susan Candiotti.

Still to come, America on Alert. Do the color-coded terror warnings simply cause public anxiety? Ivan Eland, director of the Center on Peace and Liberty, is my guest.

Hiring Shock. Job creation slowed to a trickle last month, raising new questions about the president's economic policies.

And in News Makers, three leading journalists will join me to discuss jobs, politics and the war on terror.

(COMMERCIAL BREAK)

PILGRIM: The Department of Homeland Security recently placed New York and Washington, D.C., on a heightened state of alert due to new terror information. Officials, however, urged Americans not to change their routines, but to go about normal business.

Well, my next guest says frequent changes to the color alert system have left Americans justifiably skeptical about the heightened threat, and he says the government has cried wolf too many times. Ivan Eland is the director of the Center on Peace and Liberty at the Independent Institute in California, and joins us tonight from San Francisco.

Thanks very much joining us.

IVAN ELAND, DIRECTOR, CENTER ON PEACE AND LIBERTY: Thanks for having me on.

PILGRIM: So you fall on the side of the argument that it's a hysterical response rather than a realistic response? Is that what you're saying?

ELAND: Well, I think that these alert levels, these colors really don't mean much because it's sort of been politicized. I mean, the government tend to overwarn us because they don't want to be held responsible if there's an attack and they didn't over -- you know, they didn't warn us.

So we never see the alert system go to blue or green because, you know, they would -- they'd be in danger of, you know, having the defenses down, letting the terrorists attack, and then they would be blamed after the fact.

On the other end of the spectrum, it never goes to red because people will be too panicked. So we toggle between yellow and orange, and we don't always toggle when they get these intelligence warnings. It seems to be, you know, every so often.

So the public really doesn't know what to do on yellow versus orange. So it seems to be a little like the government just coming along and saying be alert, but keep shopping.

PILGRIM: Yes. What -- do you think in this last alert they should have gone to red? Do you think they should have...

ELAND: No, I don't think so. I don't think so. I don't think they should have gone off yellow, frankly, because I think -- first, they said it was based on new information. Then they said it was based on old information, and then they got criticized for that.

So now they're trying to stress that it was based on new information and that they got this British guy who -- the guy in Britain, but -- and that's all well and good. Let's catch al Qaeda. But what does that have to do with warning our citizens here at home?

And I think they really need to do a better job. The last time they did this, John Ashcroft, the attorney general, strangely, did it instead of Tom Ridge, and the information that he gave us was from a Web site which -- of a group that never attacks anybody but just puts out different disinformation. So he was discredited in the last thing.

So the government hasn't had a very good track record on this, and so many citizens are saying, well, is this just for politics or is this real? And there's a legitimate question with an election coming up, I think.

PILGRIM: You're charging, basically, the administration with politicizing the terrorism threats, but aren't both candidates doing it at this point? Isn't it...

ELAND: Well, I think...

PILGRIM: Is it not a campaign issue?

ELAND: Yes, I'm not saying it's just Bush. But it's been thrown into the political arena, and, frankly, security is mixing with politics. And that's normal for an election year, but even more so this year because national security is such a big issue in the campaign.

PILGRIM: Ivan, let me ask you, though, in the method of operation of al Qaeda seems to be collect -- to collect data over a period of years, and they have proven that they were collecting a long time before this September 11 attack. So isn't it legitimate that some old information is also still valid, that old data is not useless data?

ELAND: Oh, certainly, I think -- but I think you have to have new data and an imminent threat before you warn the people because this is a serious business and people get scared and they alter their routines and that sort of thing. I mean, they're not so much anymore because I think most people are saying this is a cry wolf situation.

But, nonetheless, some people do get spun up, and the other hidden cost is municipal police departments really have to pay a lot of money to go on heightened alerts. So it costs local governments a lot of money, which the federal government doesn't give them back.

PILGRIM: Ivan, what would you suggest though? I mean, it's something to criticize the current system. What would you prefer to see?

ELAND: Well, I think -- I don't -- I never thought this color- coded system was very effective because it doesn't really tell the public what to do.

I would just say let's go back to the old system where, if the intelligence authorities in Washington find a localized threat to New York, Washington, Cleveland, Miami, what city, you identify the threat, you call the local police, and you get the security beefed up there. But we don't have to have this system.

This system is mainly to show that the government's doing something about the problem. What we really want to do is see what the government does, and I don't mind them alerting local police forces, but I think we have to be careful about spinning up entire cities, states, and maybe even the whole country over some of these things. We need to quit doing that.

PILGRIM: All right. Thanks very much for your comments this evening.

Ivan Eland.

Thank you. ELAND: Thank you.

PILGRIM: Coming up, our panel of news makers.

Plus, more mixed messages for millions of out-of-work Americans. Inside the shocking new job numbers.

And then, taking outsourcing to the air waves. A new Democratic ad stakes direct aim at the president over the exporting of American jobs.

And a grizzly discovery in a Florida home as authorities are baffled tonight. We'll report on the bizarre multiple murder.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: A shocking report today on the job market. Businesses hired only 32,000 new workers last month. That is far fewer than expected. Economists say it takes 150,000 new jobs a month just to keep up with population growth.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): The American job creating engine is stalling out again, a measly 32,000 new jobs in July, a pace that surprised investors who were betting on 200,000 jobs or more. "Stunning," said one economist. "A huge disappointment," said another.

PHIL FLYNN, ALARON TRADING: It was unbelievable. It was like somebody ran a truck through here. It was blindsided. I can tell you that.

VILES: One likely culprit, the spike in energy prices which taxes all economic activity.

FLYNN: Something bad happened to this economy in June, and it probably is spelled O-I-L, oil, and it's had a major impact on the economy.

VILES: Weak spots in the job market, financial services; notably mortgage banking -- 23,000 jobs disappeared in a month; the auto industry -- 21,000 transportation-related jobs disappeared. The report did show a tick down in the jobless rate to 5.5 percent.

BUSH: Our economy has been through a lot. Today's employment report shows our economy is continuing to move forward, and it reminds us that we're in a changing economy, and we've got more to do. I'm not going to be satisfied until everybody who wants to work can find a job.

VILES: The Bush administration claims 1.5 million new jobs in the past year, but that leaves out jobs lost earlier in the recovery. So, over the course of the current recovery, the nation's payrolls have added 401,000 jobs in 32 months, no longer a jobless recovery, but a historically weak one. In the first 32 months of the Bush- Clinton recovery, the economy claimed 3.4 million payroll jobs.

(on camera): Now even if hiring picks up in August and September, this report is so weak, it now appears very likely that the president will face voters in November having to defend a net loss of jobs during his term in office.

Peter Viles, CNN, Los Angeles.

(END VIDEOTAPE)

PILGRIM: Senator Kerry said the jobs report proves that President Bush's economic policies are on the wrong track.

Dana Bash, following the Kerry campaign, reports tonight from Kansas City, Missouri -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, hi, Kitty.

You know, the message of the day from the Kerry campaign was supposed to be the fact that they released some new details of their energy plan. They were on a farm not too far from here in Kansas City in Missouri, and the two on the Democratic ticket, though, did talk about the fact that these job numbers were certainly not as high as anybody expected, and, of course, the political reality is that the bad news on the job front is good political news for the Democratic ticket.

So the senator sort of took a swipe. He played up or played on a new Bush slogan on the campaign trail, and that is that America has turned the corner and they're not turning back.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: In the last few days, you've heard people in positions of leadership on the other side saying America has turned the corner. Well, it must have been a U- turn, or else they're continually turning and going around in circles and ending up right back where they started from.

(END VIDEO CLIP)

BASH: Now the Democratic line isn't just that the job numbers are bad. It's that the wages for the people who actually have jobs are also incredibly low, lower than historic highs, lower than they should be. That's what Senator Kerry and his running mate said.

And just to make sure this news is not lost on the viewing public, the Democratic National Committee had an ad ready to go on the job numbers today, playing up the fact they say, under President Bush's watch, there have been millions of manufacturing jobs lost to plant closings in America and to jobs gone overseas. Now President Bush, as we heard earlier, was campaigning today in New Hampshire. He tried to put a sunny face on these numbers, but, also, I should tell you, Kitty, privately his campaign aides certainly understand that it's hard to spin these numbers in a good way politically for them.

But what the president did say today and what his aides are also pointing out today is that in states that matter, like New Hampshire where President Bush was, like Missouri, here in Missouri where Senator Kerry has been campaigning, those job growth numbers have been looking pretty good lately, and that's something that they are certainly counting on over at the Bush campaign -- Kitty.

PILGRIM: All right. Thanks very much.

Dana Bash.

Well, joining me you for tonight's News Makers are three of the nation's top political journalists. And from Washington, joining us now Ron Brownstein, national political correspondent for the "Los Angeles Times." Roger Simon joins us, national political editor for "U.S. News & World Report," and here in New York, we have Steve Shepard, the editor in chief of "BusinessWeek."

And thanks for joining us, gentlemen.

Let me start with you, Steve. The jobs numbers. How -- is there any way to look at this in any kind of optimistic light, or perhaps is it a blip?

STEVE SHEPARD, EDITOR IN CHIEF, "BUSINESSWEEK": Well, there were really two sets of numbers today about employment. One was the payroll jobs number, which was the 32,000 jobs, very, very weak compared to expectations and compared to what we need in the economy.

But there was also another number based on the household survey, and that was a very strong number, 600,000 new jobs created. That -- and the reason is that that number includes small businesses that are doing hiring which are not in the payroll number which tend to be about larger corporations.

PILGRIM: So the mixed picture that's presented -- is it mostly negative or most...

SHEPARD: It's mostly negative. I don't want to overstate it, but I do think there's some good news in there as well.

PILGRIM: All right. Let's ask Ron. This does not play well politically, as we've just heard. What are your views on the numbers, Ron?

RON BROWNSTEIN, POLITICAL CORRESPONDENT, "L.A. TIMES": Kitty, I'm just struck. A few weeks on this very broadcast, Jim Ellis has said the president had gotten the best news he was going to get out of the economy this year, and, from here on in, it was going to be a little tougher. Look, the president has enjoyed some improvement in his economic approval numbers over the last few months as the job numbers have been doing better, but that improvement has been modest, and now, with these numbers, I think he is once again, obviously, vulnerable as the incumbent to any kind of economic discontent.

What's striking to me is this comes on the heels of a Democratic convention where this issue was mentioned hardly at all. The Democrats really put all their eggs in the basket of national security. I don't remember a single prime time speaker talking about the possibility of President Bush suffering a net loss of jobs over his term. Obviously, they will try to focus on this again as these numbers suggest in opening. But, they didn't really use the opportunity at the convention to drive home an economic message.

PILGRIM: But they didn't have the data at that time.

Roger?

BROWNSTEIN: They had last month.

PILGRIM: Well, yes, that's true.

SIMON: Yes, I'm sorry. Do you have a different question, Kitty?

PILGRIM: No, no, no. Go ahead.

SIMON: The Democrats have handled the economy ticklishly because they don't know where the figures are going to go. Now, that they're continuing to do badly, in terms of job production, I suspect the Democrats will ratchet up their message. And we just heard that the DNC has a new ad out.

Presidents running for re-election love to talk about the jobs they've created. To this day, Bill Clinton can't open his mouth without telling us that he created 22 million new jobs in the eight years that he was president. And George Bush can't do that. He can't do anything like that and that hurts him.

PILGRIM: Yes. Let's move on to another worrisome thing in the economy and that's oil prices. And I want to start with Steve. We've had a rough week in the oil markets. Do you see that turning around any time soon? It will certainly damage business at some point.

SHEPARD: Yes, I think that this is a factor in the bad employment number today, because it hurt consumers obviously; it's like a tax on consumers. But it also hurts business. This is an added cost to business and it may explain why they've gotten more cautious about hiring and about spending.

And it's very hard to see that improvement is going to come in the short run. We don't know what's going to happen with Yukos Oil in Russia, we don't know what the hedge fund operators are doing about speculating. So, I don't see it coming much down from $44, $45 a barrel in the short run and indeed, there's some risk it'll go even higher. PILGRIM: Ron, we haven't seen much political hay made of this in the campaign yet, though have we?

BROWNSTEIN: Well, you know, I was out last weekend with John Kerry on the early stages of his bus tour and one of the biggest applause line was the reprise from the convention speech about increasing our own energy independence so that we're not dependent on the Saudi Royal Family. There is a place at which energy concerns and cost concerns intersect with national security anxieties in this unsettling era of global terror.

And I am struck throughout this year, although there really, as you say, has not been a great resonance, yet. How much time Kerry has invested in emphasizing his energy alternatives, particularly the promotion of alternative energy sources, renewable energy sources.

PILGRIM: All right. Roger?

SIMON: It's another potentially damaging issue for the President. Americans not only hate to pay more at the pump, but it has a ripple effect that damages the entire economy and society. Every time gasoline goes up a few pennies a gallon, school districts pay thousands, and if it's a big school district, tens of thousands or more in the cost of getting to kids to school on school buses every day. And they can't pass those costs on to the consumer. They can't charge the kids an extra fee to come to school in the morning. So, rising oil prices are politically very dangerous for an incumbent president.

PILGRIM: All right. On that note, we're going to take a quick break.

We have much more coming up with our panel of leading journalists and we'll include the latest on the terror threats and foreign policy: great deal more. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: As we reported, President Bush today reached out to minority voters speaking to the Unity 2004 Convention of Minority Journalists. Senator Kerry and Senator Edwards will campaign in the Southwest this weekend. Now, both parties plan to spend a lot of time and money reaching out to a key group of voters, who could have a defining effect on this election: Latino-Americans.

Ed Lavandera reports from Phoenix, Arizona.

(BEGIN VIDEO CLIP)

ED LAVANDERA, CNN REPORTER: Ask a Latino Democrat in Arizona what issues they care about most and you're likely to hear about education and the economy. John Kerry hits the right notes for them.

JOHN KERRY, DEMOCRATIC PRESIDENTIAL NOMINEE: I have fought to try to do what is right. JESSIE MONTANO, KERRY SUPPORTER: I feel that he would help because the Democratic Party has always been for the underdog and middle class and poor, than the Republican.

LAVANDERA: Ask a Latino Republican what issues they find most important, and you're likely to hear about values and character.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: This is my heart. This is what I believe.

UNIDENTIFIED MALE BUSH SUPPORTER: I think that the Latino vote is very family-oriented as well and very moral, morally oriented. And you can see that Bush focuses a lot on the family.

LAVANDERA: That message works well for Republicans and helped President Bush garner about 35 percent of the Hispanic vote in Arizona four years ago. But take a look at the television advertisements targeting Hispanic voters in this state, and you'll notice a subtle change.

JOHN KERRY TV AD, IN SPANISH.

LAVANDERA: The ad describes Kerry as the man of faith, family, and honor. Bush hits the themes of education, healthcare and the economy. It's a subtle change that illustrates how the Latino vote is evolving.

According to a nonpartisan research group, only 12 percent of Hispanics in Arizona called themselves Republican back in 1990. Now, Republicans make up almost 30 percent of this state's voting Latino population.

EARL DEBERGE, POLITICAL ANALYST: The whole concept that it's a monolithic voter group: that all thing's are the same; it's all Democrat, it's all liberal, it all does what it's told to do by Latino leaders is just bunk.

LAVANDERA: This means there can be pitfalls for candidates courting Latino voters. John Kerry recently discovered that even talking about immigration, a topic labeled a Latino issue can unite, and just as easily, alienate Hispanic voters at the a same time.

Kerry was touting his immigration reform plan recently in Phoenix. The plan would give illegal immigrants a chance to earn U.S. citizenship.

Earl DeBerg is an analyst that studies Hispanic voting trends in Arizona. He says the speech cost Kerry to fall six points in the polls. Suprisingly, the drop came almost entirely from Independent Hispanic voters.

DEBERG: He believed that that was going to be a home run with the Latino population here. Indeed, it was the reverse.

LAVANDERA: DeBerg says this snapshot from the campaign trail should remind politicians that it won't be easy winning the support of Latino voters this year.

UNIDENTIFIED POLLSTER OF REGISTERED VOTERS: You registered to vote, right?

OK. Gracias.

LAVANDERA: Ed Lavandera, CNN, Phoenix.

(END VIDEO CLIP)

PILGRIM: We have more now with tonight's newsmakers. Ron Brownstein, the national political corresondent from the "Los Angeles Times," Roger Simon, national political editor for "U.S. News and World Report," both from Washington. And here in the studio with me is Steve Shepard, editor-in-chief of "Business Week."

Gentlemen, I'd like to talk about the Defense Spending Bill that went through: $416 billion, $25 billion in supplemental for Afghanistan and Iraq. Let's start with you Steve. Do you think it's a good bill; do you think it's sufficient; and do you think it's allocated in a proper manner?

SHEPARD: Well, it's hard to know. But I think the main deficiency is it doesn't address the manpower problem. We got money for this weapons system and that weapons system and so on, but we're really stretched very thin in terms of our military personnel. And I didn't see too much in there that addresses that and whether we have to call up more Reservists; whether we have to expand the military, as Senator Kerry is arguing or what. There was very little about that in there today.

PILGRIM: Ron, under President Bush, defense spending up 35 percent. Where does this play in the political campaign?

BROWNSTEIN: Sign of the times that it doesn't. In fact, Senator Kerry has never raised an objection to the steady and substantial increase in defense spending that has not only gone on so far, but that is projected out through the budget documents of the Bush administration through the rest of this decade.

In fact, as Steve suggested, he wants to go further in some ways, by increasing the size of the active military, increasing the Special Forces. Democrats, at least at the national level, have essentially accepted this allocation of resources. Kerry talked about this week, measures to reduce the deficit, he talked about holding discretionary spending to inflation, except defense.

PILGRIM: Yes. The support in Iraq has not been quite as much as internationally as the President would have liked. We're spending about half the world's defense spending is spent here in the United States. How does this play internationally? We are picking up the burden of defense. Roger?

SIMON: Well, we're picking up the burden of defense; we're picking up the burden of Iraq, which is why we said we wanted American companies to share in these mythical profits for the development of Iraq, so far mythical anyway. And it's one reason that President Bush has had difficulty in forming an international coalition.

Back in the days when it looked like the occupation of Iraq was going to be easy, we locked out a lot of nations and said, "Well, you didn't fight in the war, so you're not going to share in the profits." This did not play well around the world.

PILGRIM: You know, it struck me that in the discussion of foreign policy in the campaign context, it's really centered around Vietnam, which seems a little bit retro. Why are we not looking forward a bit more, or will we in the future?

Ron, can I call on you to answer?

BROWNSTEIN: Well, interesting. I mean, obviously, the dispute about Vietnam is because Senator Kerry is relying on it so heavily to establish his credentials as commander-in-chief. But I did interview the Senator last Sunday night on the bus trip. And he, in a looking- forward vein, made sort of, a set of goal that I thought was striking. He said that he thought it would be reasonable that within a first- term as president he could attract enough international support that a majority of the foreign troops in Iraq would come from countries other than the U.S.

Now, obviously, today we supply almost nine in 10 of the non- Iraqi troops, the foreign troops. But he argued that by reaching out to other nations he could substantially change that equation very quickly. What's striking of course, is that he's asking the voters to accept kind of, a personal bet on this that simply changing Presidents will change the atmosphere enough to do it.

That's one of the things I guess voters will measure over the next couple of months.

PILGRIM: Steve, anything to add on this?

SHEPARD: Well, yes, you could be a multi-lateralist, as Senator Kerry is and that's great, but multilateral institutions have to work a lot better than they've worked recently. The Sudan is just the latest example. So, we've got a lot of work to do in getting our allies to work together, either through the U.N. or through NATO, or some mechanism.

PILGRIM: Let's talk about what they're going to do going forward. And in fact, they're now on the road. The road show starts. And how will the message change and how will it be substantially different going forward?

Let me ask you, Ron.

BROWNSTEIN: Well, I think the first thing we're going to see different is the President's advisors have said that in the month of August, he's going to begin to lay out more of his second term agenda. I mean, so far, the campaign from the Bush side has been primarily focused on defending his decisions during the first term and criticizing Senator Kerry's voting record. The hole, really has been, giving voters much of a sense of what he's going to do in a second term. I think that is going to be their signaling and, in all likelihood, it should be a big emphasis leading into the Republican convention.

PILGRIM: Roger, the message has to go play in the small towns. That will really color it, won't it?

SIMON: It will. You can see the emphasis this week on small- town America, rural America, where the Democrats have not done particularly well in the past. Each candidate looking to pick up a few percentage points among groups where they've been weak.

We just heard a report saying Bush is looking to make some gains among Hispanics. Kerry would love to do better among rural voters, he would love to do better among married voters. But the difficulty in all this is that very few Americans, if we believe the polls, are actually undecideded about these two men. Most Americans have made up their minds and the campaign has been going on for a very a long time. And I think a certain weariness factor, if it hasn't already set in, will set in soon. And I think Americans will just begin to turn off from this extended campaign.

PILGRIM: All right.

We'll have to leave it right there. Thank you very much for joining us this week. It has been an incredible week. Ron Brownstein, Roger Simon and Steve Shepard, thank you.

Turning now to tonight's poll on the disappointing jobs report: does this feel like an economic recovery to you? Cast your vote at cnn.com/lou and we'll bring you results a little bit later in the show.

Still ahead: heroes. The inspiring story of a young Army specialist who is rebuilding her life after being attacked by insurgents in Iraq.

And a gruesome discovery in a Florida home. Authorities tonight say an extreme level of violence was involved in this mysterious multiple murder.

(COMMERCIAL BREAK)

PILGRIM: It was another brutal day on Wall Street. Stocks closed at the lowest levels of the year following that weak jobs report. The Dow tumbled nearly 148 points; the NASDAQ fell nearly 45; and the S&P 500 lost nearly 17.

Christine Romans is here with the market -- Christine.

CHRISTINE ROMANS, CNN REPORTER: Kitty, puny, paltry, pathetic: These are the words that economists use to describe jobs growth in this country. And Wall Street responded with a sell-off that was anything but puny. Stocks reeled to the lowest levels of the year capped a terrible week on Wall Street. The Dow tumbled 3 percent this week. It's down 6 percent this year. Technology stocks have been hit really hard; the NASDAQ fell 6 percent this week; it's below 1800, at the lowest since last August.

Now, the stock market is caught between a soft patch in the economy and an oil patch. Oil prices near $44, still near record highs. The dollar today crumbled, bond prices soared. Ironically, with the Fed set to possibly raise interest rates next week, interest rates in the bond market today tumbled. The 10-year note yield plunged to the lowest since April, Kitty. It's now 4.16 percent at its lowest today.

Unbelievable.

PILGRIM: Well, hopefully next week will be better. Have a great weekend in the meantime.

ROMANS: Sure.

PILGRIM: Christine Romans.

Let's take a look at some of your thoughts and many of you wrote about whether you felt safer following the latest terror warnings.

Tony Martell of Florida writes, "I can't feel safer when my government keeps playing the scare game and reminding us they are working hard to protect me. Why have they waited until the election year to get serious?"

And Janet Moore of Dayton, Ohio writes, "The threat warnings do make us feel safer. It shows the administration is seriously working to find those who would like to destroy us. We are so tired of our public officials saying this is all about politics."

Well, we love hearing from you: e-mail us at loudobbs@cnn.com.

Now, "Heroes" our salute to the men and women who defend this country.

And tonight, the story of a young Army specialist who was wounded in Iraq but is, literally, bouncing right back. Bill Tucker has her remarkable story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): That's Danielle Green, playing basketball at Notre Dame, known as "D-Smooth" for her smooth, left hand style.

And here's Green now.

DANIELLE GREEN, ARMY SPECIALIST: It's the footwork.

TUCKER: Still smooth, even without her left hand; relearning to play.

D. GREEN: I think my mind still thinks I'm left-handed.

TUCKER: After college b-ball, she joined the Army, went to Iraq. The 27-year-old specialist was hit by a rocket-propelled grenade in Baghdad in May.

UNIDENTIFIED MALE: But it is looking excellent.

TUCKER: Now, at Walter Reed Hospital, she learns how to function as a rightie, when she used to be a leftie: basics like writing with the wrong hand.

D. GREEN: That's an ugly two.

TUCKER: She's a newlywed. Husband Willie, a basketball coach, now her life coach, too.

D. GREEN: He's my left hand now and he has to learn how to use this pressing iron and put my ponytail in and my earrings.

WILLIE GREEN, HUSBAND OF DANIELLE GREEN: I would be upset. I don't know what I would be if I was in that position, but I couldn't be as high spirited as she is.

TUCKER: Green will be medically discharged from the Army for an athletic career again. She wants to compete in the 2008 Paralympics.

D. GREEN: I'm just so motivated to try different things now, to play tennis, to play golf. Last week we went skeet shooting. I really enjoyed that, so now I want to buy a shotgun and start going to the range and skeet shooting. This injury it's just opened up so many different doors.

TUCKER: And she isn't wasting any time. Two months after being injured, she's running in her first race.

D. GREEN: I never been a part of this when I did have both my hands.

TUCKER: An hour later she crosses the finish line, not first, but still a winner.

D. GREEN: I think this is the beginning to my new athletic career.

TUCKER: Bill Tucker, CNN.

(END VIDEOTAPE)

PILGRIM: A remarkable story. We wish her well.

Coming up: Six people are dead tonight. Authorities believe their killer is on the loose. We'll have the very latest on this bizarre story.

And, the anthrax investigation leads to a New York-area doctor. Stay with us. (COMMERCIAL BREAK)

PILGRIM: A judge in Seattle today lifted a court order that prevented a convicted rapist from seeing her former student. Mary Kay Letourneau was just released from prison on Wednesday. She was sentenced in 1997 for her relationship with her 13-year-old student, Vili Fualaau. Fualaau is now 21 years old; he petitioned the court to lift the no-contact order; the court determined there was no legal basis to prevent contact between the pair.

We have more details tonight on the doctor under investigation for the deadly anthrax attacks of 2001. Federal investigators searched three homes linked to Dr. Kenneth Berry. Now, Dr. Berry has a background in bioterror response planning. Just days after the anthrax attacks, Berry applied for a patent and for a system to identify chemical and biological attacks. That patent was approved back in March. He also objected to a decision not to vaccinate U.S. citizens against anthrax.

A bizarre and gruesome murder mystery in Florida tonight. Six bodies were discovered in a Deltona home after one of the victims failed to show up for work. Jim Piggott, a CNN affiliate, WXJT, reports from Deltona.

(BEGIN VIDEOTAPE)

JIM PIGGOTT, WXJT CORRESPONDENT (voice-over): It's hard to stop the tears, as family and friends are still learning what happened to loved ones at this house. All they know is six young adults are dead, brutally murdered during the night. And the sheriff of Volusia County says it's one of the worst crime scenes he's ever witnessed.

SHERIFF BEN JOHNSON, VOLUSIA COUNTY POLICE: A lot of trauma was involved. I'm not going to say what kind of trauma, but there was a lot of trauma done to the bodies and the house is a mess. It's just a very, very brutal crime scene.

UNIDENTIFIED MALE: Six people died, I know you guys know that.

PIGGOTT: What led to the murders is still not known. The six were found this morning by a co-worker who went to the house when several of the victims didn't show up for work at a nearby Burger King. Clyde Little says he knows one of the victims and was just talking to him yesterday.

CLYDE LITTLE, FRIEND OF ONE OF THE VICTIMS: He was telling me this last night: "Yes, I'm going to work in the morning with Anthony to do a paint job and I'll be at Burger King, I guess, tomorrow or later today, after this job."

PIGGOTT: People who live in this neighborhood say they didn't hear anything unusual. But this woman talking to police officers, said she saw a suspicious car parked near the house all night. In fact, the sheriff said they've had reports of minor crimes at this house. They're still investigating a second home where many of these victims had once lived, but he says there are no bodies at that house. JOHNSON: We have some subjects of interest, but at the moment we have no formal suspects. But we are pursuing some leads.

(END VIDEOTAPE)

PILGRIM: That was Jim Piggott of WXJT reporting from Deltona, Florida.

We'll be right back.

(COMMERICAL BREAK)

PILGRIM: Now, the results of tonight's poll: 3 percent of you say this feels like an economic recovery and 97 percent do not.

That's our show for tonight. Please join us Monday. New Mexico Governor Bill Richardson will join us to talk about NAFTA and illegal immigration. And Senator Chuck Hagel of Nebraska will talk about intelligence reform and false urgency.

For all of us here, have a great weekend. Good night from New York.

"Anderson Cooper 360" is next.

END

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 6, 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, troubling new information about an al Qaeda suspect in Britain. Prosecutors say he had classified information about a U.S. Navy battle group.
(BEGIN VIDEO CLIP)

KEVIN O'CONNOR, U.S. ATTORNEY: The documents specifically describe the battle group's vulnerability to terrorist attack.

(END VIDEO CLIP)

PILGRIM: President Bush defends the color-coded terror alert, but does the warning confuse or help?

Plus, a shocking report on job creation in this country. Businesses hired only 32,000 new workers last month.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're not satisfied with the level of job creation we saw today.

(END VIDEO CLIP)

PILGRIM: President Bush and Senator Kerry fight for the Latino vote. We'll have a special report from Arizona, one of the key battleground states.

And in Heroes, the inspiring story of an Army specialist who was badly wounded in Iraq and is rebuilding a new life as an athlete.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, August 6. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, new and disturbing details about a terror suspect held in custody in Britain and wanted in the United States. Prosecutors say the suspect had classified data about American warships. The man is just one of more than a dozen terrorists suspected rounded up by authorities in the United States, Britain and Pakistan.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Days after the government warned that several U.S. financial institutions were potential terrorist targets comes a global roundup of terror suspects.

Thursday night, British police arrested 30-year-old Babar Ahmad accused by the United States of trying to use the Internet to raise money for terrorist activities.

O'CONNOR: The main purpose of all of these sites was to solicit financial support for terrorist organizations, including the Taliban and the Chechen Mujahadeen as well as recruit individuals to travel to Afghanistan and Chechnya for the purpose of waging jihad against the perceived enemies of Islam, including the United States.

PILGRIM: A floppy disc found in Ahmad's home included classified data about a U.S. Navy battle group in the Persian Gulf region, including its potential vulnerabilities to attack.

The arrest also links Ahmad to a Chechen Islamic militant involved with a siege of a Moscow theater two years ago. One hundred and sixty people died in that attack.

Earlier this week, British authorities picked up suspected al Qaeda operative Eisa al-Hindi. Considered a senior figure by U.S. officials, it's believed that he conducted firsthand surveillance in early 2001 of the same buildings that were listed as possible targets in the United States, according to law-enforcement officials. Investigators say he was also eying Heathrow Airport in London.

Hindi was arrested when notes of his reconnaissance were found on computer discs in Pakistan. These connections show the global reach of the al Qaeda terrorist network. And the arrests, some say, prove what can be accomplished with the global will to combat it.

ERICK STAKELBECK, THE INVESTIGATIVE PROJECT: I think this shows a greater cohesiveness, greater communication between the intelligence community around the world, which is, frankly, what we need. This is a global threat. The war against al Qaeda is global, and we did -- we need to work very closely together.

(END VIDEOTAPE)

PILGRIM: Now anti-terrorism experts say this week's arrests have dealt a severe blow to al Qaeda, but law-enforcement agencies have not arrested anyone in this country who is a member of an active al Qaeda cell.

Justice Correspondent Kelli Arena reports.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Security remains tight, and, in some cases, it's getting tighter. In the nation's capital, for example, police are now inspecting some cars and trucks in nearby Virginia and Maryland before they enter the district. It all follows warnings that financial buildings are being targeted by al Qaeda.

Arrests in Pakistan led investigators to very detailed surveillance notes of potential targets found in computers and documents. While most of the surveillance was done before the September 11 attacks, officials say some of the information was updated as recently as January.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The threats we're dealing with are real, and, therefore, we must do everything we can to ferret out the truth and follow leads.

ARENA: Operations in Pakistan and Britain also resulted in the nabbing of two alleged senior members of al Qaeda. One, Eisa al- Hindi, has been identified as the man who was sent to the U.S. in 2001 by Osama bin Laden to personally case potential targets, according to sources. The other, Muhammad Naeem Noor Khan is said to have contacted individuals in the United States.

Interrogations of both continue. Officials say their arrests generated thousands of leads in the United States, including a series of phone numbers and e-mail addresses. The main objective: to track down any al Qaeda operatives in the U.S.

GEORGE BAURIER, FORMER FBI COUNTERTERRORISM AGENT: For every thousand leads that go out, you're probably going to get a good percentage that come back and warrant much deeper investigation.

ARENA: In the midst of all this, sources say the level of chatter or intercepted communications between suspected terrorists has dropped off. It could mean nothing, but that's exactly what happened before the September 11 attacks.

BAURIER: What it indicates is that the individuals associated with al Qaeda have potentially been given information or orders on how to execute missions.

(END VIDEOTAPE)

ARENA: Still, officials offer no definitive evidence that al Qaeda is ready to execute an attack. No evidence on exactly when this could occur, and no evidence on the method terrorists would use.

Kelli Arena, CNN, Washington.

PILGRIM: President Bush today defended the color-coded national terror alert system. The president said the government has an obligation to tell Americans about terrorist threats. Some Democrats have accused the White House of using terror alerts to gain political advantage.

Jill Dougherty is traveling with the president tonight and reports from Kennebunkport, Maine -- Jill.

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Kitty, as you know, Kennebunkport is the family retreat here in Maine for the Bush family, and President Bush is here for the weekend for the wedding of his nephew. That is George P. Bush. That's the son of Jeb Bush, governor of Florida. Mr. Bush, the president, headed for the water almost immediately as soon as he got here, and he was out in a boat with his father and his brother, giving a quick wave to reporters as they streaked by.

The president had two stops today, Washington, D.C. was his first. And then he went on to New Hampshire before coming to Maine. And, at both of those stops, he spoke about the key issues now that you hear at every stop the president makes, and that is domestic issues and terrorism.

In Washington, D.C., at the Unity Conference -- the Unity Conference is a meeting of minority journalists. The president spoke about those terror alerts that have come up this week, and he defended them very strongly.

(BEGIN VIDEO CLIP)

BUSH: When we find out intelligence that is real that threatens people, I believe we have an obligation as government to share that with people, and imagine what happened if we didn't share that information with the people in those buildings and something were to happen. Then what would you write? What would you say?

(END VIDEO CLIP)

DOUGHERTY: And the president also now is bringing up in almost every stump speech an answer to Senator John Kerry and that comment by Kerry earlier this week in which he said that terrorists are using U.S. actions as a means of recruitment. The president is saying that that shows, as he put it, upside down logic and a misunderstanding, as he put it, of the enemy -- Kitty.

PILGRIM: All right. Thanks very much.

Jill Dougherty.

In Iraq, U.S. Marines say they've killed 300 radical Islamist gunmen in two days of fierce fighting in Najaf. The insurgent casualties are among the heaviest in any single battle since the fall of Saddam Hussein's regime. Gunmen loyal to the radical cleric Muqtada al-Sadr have also attacked British and Italian troops.

Matthew Chance reports from Baghdad.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT (voice-over): The holy city of Najaf now the scene of pitched battles and bloodshed. Fighters of the Mehdi Army loyal to the firebrand cleric Muqtada al- Sadr have taken positions in the heart of the ancient city.

U.S. Marines are fighting street to street near the Shrine of Iman Ali, one of the holiest sites in Shia Islam. And casualties are high. The Mehdi Army denies it, but the Marines say they've killed 300 of the militia in just two days. LT. COL. GARY JOHNSTON, U.S. MARINE CORPS: There is no end state or end -- really end time that we'll place on this one. I think, at this point in time, it will be effects based. when, in fact, we believe that those attacking Iraqis and Iraqi civilians are no longer capable of doing that.

And so we'll continue to press and continue to address these anti-Iraqi forces until we feel that they're no longer capable of these type of attacks in the future.

CHANCE: Fighting has flared elsewhere, too. Overnight, violence engulfs the mainly Shiite Sadr City district of Baghdad. Health ministry officials say at least 20 Iraqis have been killed in the clashes. Amaran and Basra in the South have also seen confrontations involving the Mehdi Army and British forces.

Now Muqtada al-Sadr is again the center of growing Shia unrest. U.S. officials say his militia overtly violated a cease-fire agreed in June. His own spokesman, Sheikh Mahmud al-Sadani insists they're ready for a truce.

"Najaf has strong relations with other cities," he warns. "The tension in Najaf will be reflected there. But our people are willing to establish stability," he says. "It's what the Iraqi government and the U.S.-led coalition say they want, too."

A general uprising among Iraq's majority Shia could spell disaster.

(on camera): To make matters worse, one powerful voice of moderation among Iraqi Shias has left the country. Grand Ayatollah Ali al-Sistani is in London being treated for a suspected heart condition. His advisers insist he will return. But, in his absence, there are concerns that those with a more violent agenda will come to the fore.

Matthew Chance, CNN, Baghdad.

(END VIDEOTAPE)

PILGRIM: There was dramatic new evidence today at the military hearing on Private Lyndie England's role in the Iraqi prisoner abuse scandal.

Susan Candiotti reports from Fort Bragg, North Carolina -- Susan.

SUSAN CANDIOTTI, CNN CORRESPONDENT: Good evening.

More government witnesses appear to be helping prosecutors build their case against pregnant reservist Lyndie England. She sat stone faced listening to testimony, including some testimony from another guard from her Reserve unit who testified by phone from an undisclosed location.

Specialist Joseph Darby became the whistleblower who turned his friends in. He said it was a hard call, but he told the court it was the moral thing to do.

Darby testified he was given a CD with photos from fellow guard Charles Graner, identified by prosecutors as a ringleader. These photos by now very familiar: Lyndie England holding a detainee on a leash; a pyramid of naked prisoners; some posed to simulate a sex act.

At the time, according to Darby, Graner explained one photo of a hooded prisoner chained to a cell like this. "The Christian in me knows it was wrong, but the corrections officer in me can't help but love to make a grown man urinate on himself."

Darby told the court he waited a month to tell investigators, but finally he had to stop the abuse. "It violated everything I personally believed in and everything I had been taught about war. England, according to another witness, said that the leash photo to her was funny and a way to humiliate and intimidate other detainees.

However, according to this witness she was never, ever able to back up her claim or name anyone who had, as she said, given her these orders. Back to you.

PILGRIM: Susan, what's the next step in this case?

CANDIOTTI: Well, Kitty, once this hearing is over -- and it might extend to the weekend -- it's up to the military judge here, the hearing officer because this is like a grand jury hearing, to decide whether to recommend Lyndie England face a full court-martial. If she does and if Lyndie England does go to trial, she could, if convicted, spend up to 38 years in prison.

PILGRIM: Thanks very much.

Susan Candiotti.

Still to come, America on Alert. Do the color-coded terror warnings simply cause public anxiety? Ivan Eland, director of the Center on Peace and Liberty, is my guest.

Hiring Shock. Job creation slowed to a trickle last month, raising new questions about the president's economic policies.

And in News Makers, three leading journalists will join me to discuss jobs, politics and the war on terror.

(COMMERCIAL BREAK)

PILGRIM: The Department of Homeland Security recently placed New York and Washington, D.C., on a heightened state of alert due to new terror information. Officials, however, urged Americans not to change their routines, but to go about normal business.

Well, my next guest says frequent changes to the color alert system have left Americans justifiably skeptical about the heightened threat, and he says the government has cried wolf too many times. Ivan Eland is the director of the Center on Peace and Liberty at the Independent Institute in California, and joins us tonight from San Francisco.

Thanks very much joining us.

IVAN ELAND, DIRECTOR, CENTER ON PEACE AND LIBERTY: Thanks for having me on.

PILGRIM: So you fall on the side of the argument that it's a hysterical response rather than a realistic response? Is that what you're saying?

ELAND: Well, I think that these alert levels, these colors really don't mean much because it's sort of been politicized. I mean, the government tend to overwarn us because they don't want to be held responsible if there's an attack and they didn't over -- you know, they didn't warn us.

So we never see the alert system go to blue or green because, you know, they would -- they'd be in danger of, you know, having the defenses down, letting the terrorists attack, and then they would be blamed after the fact.

On the other end of the spectrum, it never goes to red because people will be too panicked. So we toggle between yellow and orange, and we don't always toggle when they get these intelligence warnings. It seems to be, you know, every so often.

So the public really doesn't know what to do on yellow versus orange. So it seems to be a little like the government just coming along and saying be alert, but keep shopping.

PILGRIM: Yes. What -- do you think in this last alert they should have gone to red? Do you think they should have...

ELAND: No, I don't think so. I don't think so. I don't think they should have gone off yellow, frankly, because I think -- first, they said it was based on new information. Then they said it was based on old information, and then they got criticized for that.

So now they're trying to stress that it was based on new information and that they got this British guy who -- the guy in Britain, but -- and that's all well and good. Let's catch al Qaeda. But what does that have to do with warning our citizens here at home?

And I think they really need to do a better job. The last time they did this, John Ashcroft, the attorney general, strangely, did it instead of Tom Ridge, and the information that he gave us was from a Web site which -- of a group that never attacks anybody but just puts out different disinformation. So he was discredited in the last thing.

So the government hasn't had a very good track record on this, and so many citizens are saying, well, is this just for politics or is this real? And there's a legitimate question with an election coming up, I think.

PILGRIM: You're charging, basically, the administration with politicizing the terrorism threats, but aren't both candidates doing it at this point? Isn't it...

ELAND: Well, I think...

PILGRIM: Is it not a campaign issue?

ELAND: Yes, I'm not saying it's just Bush. But it's been thrown into the political arena, and, frankly, security is mixing with politics. And that's normal for an election year, but even more so this year because national security is such a big issue in the campaign.

PILGRIM: Ivan, let me ask you, though, in the method of operation of al Qaeda seems to be collect -- to collect data over a period of years, and they have proven that they were collecting a long time before this September 11 attack. So isn't it legitimate that some old information is also still valid, that old data is not useless data?

ELAND: Oh, certainly, I think -- but I think you have to have new data and an imminent threat before you warn the people because this is a serious business and people get scared and they alter their routines and that sort of thing. I mean, they're not so much anymore because I think most people are saying this is a cry wolf situation.

But, nonetheless, some people do get spun up, and the other hidden cost is municipal police departments really have to pay a lot of money to go on heightened alerts. So it costs local governments a lot of money, which the federal government doesn't give them back.

PILGRIM: Ivan, what would you suggest though? I mean, it's something to criticize the current system. What would you prefer to see?

ELAND: Well, I think -- I don't -- I never thought this color- coded system was very effective because it doesn't really tell the public what to do.

I would just say let's go back to the old system where, if the intelligence authorities in Washington find a localized threat to New York, Washington, Cleveland, Miami, what city, you identify the threat, you call the local police, and you get the security beefed up there. But we don't have to have this system.

This system is mainly to show that the government's doing something about the problem. What we really want to do is see what the government does, and I don't mind them alerting local police forces, but I think we have to be careful about spinning up entire cities, states, and maybe even the whole country over some of these things. We need to quit doing that.

PILGRIM: All right. Thanks very much for your comments this evening.

Ivan Eland.

Thank you. ELAND: Thank you.

PILGRIM: Coming up, our panel of news makers.

Plus, more mixed messages for millions of out-of-work Americans. Inside the shocking new job numbers.

And then, taking outsourcing to the air waves. A new Democratic ad stakes direct aim at the president over the exporting of American jobs.

And a grizzly discovery in a Florida home as authorities are baffled tonight. We'll report on the bizarre multiple murder.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: A shocking report today on the job market. Businesses hired only 32,000 new workers last month. That is far fewer than expected. Economists say it takes 150,000 new jobs a month just to keep up with population growth.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): The American job creating engine is stalling out again, a measly 32,000 new jobs in July, a pace that surprised investors who were betting on 200,000 jobs or more. "Stunning," said one economist. "A huge disappointment," said another.

PHIL FLYNN, ALARON TRADING: It was unbelievable. It was like somebody ran a truck through here. It was blindsided. I can tell you that.

VILES: One likely culprit, the spike in energy prices which taxes all economic activity.

FLYNN: Something bad happened to this economy in June, and it probably is spelled O-I-L, oil, and it's had a major impact on the economy.

VILES: Weak spots in the job market, financial services; notably mortgage banking -- 23,000 jobs disappeared in a month; the auto industry -- 21,000 transportation-related jobs disappeared. The report did show a tick down in the jobless rate to 5.5 percent.

BUSH: Our economy has been through a lot. Today's employment report shows our economy is continuing to move forward, and it reminds us that we're in a changing economy, and we've got more to do. I'm not going to be satisfied until everybody who wants to work can find a job.

VILES: The Bush administration claims 1.5 million new jobs in the past year, but that leaves out jobs lost earlier in the recovery. So, over the course of the current recovery, the nation's payrolls have added 401,000 jobs in 32 months, no longer a jobless recovery, but a historically weak one. In the first 32 months of the Bush- Clinton recovery, the economy claimed 3.4 million payroll jobs.

(on camera): Now even if hiring picks up in August and September, this report is so weak, it now appears very likely that the president will face voters in November having to defend a net loss of jobs during his term in office.

Peter Viles, CNN, Los Angeles.

(END VIDEOTAPE)

PILGRIM: Senator Kerry said the jobs report proves that President Bush's economic policies are on the wrong track.

Dana Bash, following the Kerry campaign, reports tonight from Kansas City, Missouri -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, hi, Kitty.

You know, the message of the day from the Kerry campaign was supposed to be the fact that they released some new details of their energy plan. They were on a farm not too far from here in Kansas City in Missouri, and the two on the Democratic ticket, though, did talk about the fact that these job numbers were certainly not as high as anybody expected, and, of course, the political reality is that the bad news on the job front is good political news for the Democratic ticket.

So the senator sort of took a swipe. He played up or played on a new Bush slogan on the campaign trail, and that is that America has turned the corner and they're not turning back.

(BEGIN VIDEO CLIP)

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL NOMINEE: In the last few days, you've heard people in positions of leadership on the other side saying America has turned the corner. Well, it must have been a U- turn, or else they're continually turning and going around in circles and ending up right back where they started from.

(END VIDEO CLIP)

BASH: Now the Democratic line isn't just that the job numbers are bad. It's that the wages for the people who actually have jobs are also incredibly low, lower than historic highs, lower than they should be. That's what Senator Kerry and his running mate said.

And just to make sure this news is not lost on the viewing public, the Democratic National Committee had an ad ready to go on the job numbers today, playing up the fact they say, under President Bush's watch, there have been millions of manufacturing jobs lost to plant closings in America and to jobs gone overseas. Now President Bush, as we heard earlier, was campaigning today in New Hampshire. He tried to put a sunny face on these numbers, but, also, I should tell you, Kitty, privately his campaign aides certainly understand that it's hard to spin these numbers in a good way politically for them.

But what the president did say today and what his aides are also pointing out today is that in states that matter, like New Hampshire where President Bush was, like Missouri, here in Missouri where Senator Kerry has been campaigning, those job growth numbers have been looking pretty good lately, and that's something that they are certainly counting on over at the Bush campaign -- Kitty.

PILGRIM: All right. Thanks very much.

Dana Bash.

Well, joining me you for tonight's News Makers are three of the nation's top political journalists. And from Washington, joining us now Ron Brownstein, national political correspondent for the "Los Angeles Times." Roger Simon joins us, national political editor for "U.S. News & World Report," and here in New York, we have Steve Shepard, the editor in chief of "BusinessWeek."

And thanks for joining us, gentlemen.

Let me start with you, Steve. The jobs numbers. How -- is there any way to look at this in any kind of optimistic light, or perhaps is it a blip?

STEVE SHEPARD, EDITOR IN CHIEF, "BUSINESSWEEK": Well, there were really two sets of numbers today about employment. One was the payroll jobs number, which was the 32,000 jobs, very, very weak compared to expectations and compared to what we need in the economy.

But there was also another number based on the household survey, and that was a very strong number, 600,000 new jobs created. That -- and the reason is that that number includes small businesses that are doing hiring which are not in the payroll number which tend to be about larger corporations.

PILGRIM: So the mixed picture that's presented -- is it mostly negative or most...

SHEPARD: It's mostly negative. I don't want to overstate it, but I do think there's some good news in there as well.

PILGRIM: All right. Let's ask Ron. This does not play well politically, as we've just heard. What are your views on the numbers, Ron?

RON BROWNSTEIN, POLITICAL CORRESPONDENT, "L.A. TIMES": Kitty, I'm just struck. A few weeks on this very broadcast, Jim Ellis has said the president had gotten the best news he was going to get out of the economy this year, and, from here on in, it was going to be a little tougher. Look, the president has enjoyed some improvement in his economic approval numbers over the last few months as the job numbers have been doing better, but that improvement has been modest, and now, with these numbers, I think he is once again, obviously, vulnerable as the incumbent to any kind of economic discontent.

What's striking to me is this comes on the heels of a Democratic convention where this issue was mentioned hardly at all. The Democrats really put all their eggs in the basket of national security. I don't remember a single prime time speaker talking about the possibility of President Bush suffering a net loss of jobs over his term. Obviously, they will try to focus on this again as these numbers suggest in opening. But, they didn't really use the opportunity at the convention to drive home an economic message.

PILGRIM: But they didn't have the data at that time.

Roger?

BROWNSTEIN: They had last month.

PILGRIM: Well, yes, that's true.

SIMON: Yes, I'm sorry. Do you have a different question, Kitty?

PILGRIM: No, no, no. Go ahead.

SIMON: The Democrats have handled the economy ticklishly because they don't know where the figures are going to go. Now, that they're continuing to do badly, in terms of job production, I suspect the Democrats will ratchet up their message. And we just heard that the DNC has a new ad out.

Presidents running for re-election love to talk about the jobs they've created. To this day, Bill Clinton can't open his mouth without telling us that he created 22 million new jobs in the eight years that he was president. And George Bush can't do that. He can't do anything like that and that hurts him.

PILGRIM: Yes. Let's move on to another worrisome thing in the economy and that's oil prices. And I want to start with Steve. We've had a rough week in the oil markets. Do you see that turning around any time soon? It will certainly damage business at some point.

SHEPARD: Yes, I think that this is a factor in the bad employment number today, because it hurt consumers obviously; it's like a tax on consumers. But it also hurts business. This is an added cost to business and it may explain why they've gotten more cautious about hiring and about spending.

And it's very hard to see that improvement is going to come in the short run. We don't know what's going to happen with Yukos Oil in Russia, we don't know what the hedge fund operators are doing about speculating. So, I don't see it coming much down from $44, $45 a barrel in the short run and indeed, there's some risk it'll go even higher. PILGRIM: Ron, we haven't seen much political hay made of this in the campaign yet, though have we?

BROWNSTEIN: Well, you know, I was out last weekend with John Kerry on the early stages of his bus tour and one of the biggest applause line was the reprise from the convention speech about increasing our own energy independence so that we're not dependent on the Saudi Royal Family. There is a place at which energy concerns and cost concerns intersect with national security anxieties in this unsettling era of global terror.

And I am struck throughout this year, although there really, as you say, has not been a great resonance, yet. How much time Kerry has invested in emphasizing his energy alternatives, particularly the promotion of alternative energy sources, renewable energy sources.

PILGRIM: All right. Roger?

SIMON: It's another potentially damaging issue for the President. Americans not only hate to pay more at the pump, but it has a ripple effect that damages the entire economy and society. Every time gasoline goes up a few pennies a gallon, school districts pay thousands, and if it's a big school district, tens of thousands or more in the cost of getting to kids to school on school buses every day. And they can't pass those costs on to the consumer. They can't charge the kids an extra fee to come to school in the morning. So, rising oil prices are politically very dangerous for an incumbent president.

PILGRIM: All right. On that note, we're going to take a quick break.

We have much more coming up with our panel of leading journalists and we'll include the latest on the terror threats and foreign policy: great deal more. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: As we reported, President Bush today reached out to minority voters speaking to the Unity 2004 Convention of Minority Journalists. Senator Kerry and Senator Edwards will campaign in the Southwest this weekend. Now, both parties plan to spend a lot of time and money reaching out to a key group of voters, who could have a defining effect on this election: Latino-Americans.

Ed Lavandera reports from Phoenix, Arizona.

(BEGIN VIDEO CLIP)

ED LAVANDERA, CNN REPORTER: Ask a Latino Democrat in Arizona what issues they care about most and you're likely to hear about education and the economy. John Kerry hits the right notes for them.

JOHN KERRY, DEMOCRATIC PRESIDENTIAL NOMINEE: I have fought to try to do what is right. JESSIE MONTANO, KERRY SUPPORTER: I feel that he would help because the Democratic Party has always been for the underdog and middle class and poor, than the Republican.

LAVANDERA: Ask a Latino Republican what issues they find most important, and you're likely to hear about values and character.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: This is my heart. This is what I believe.

UNIDENTIFIED MALE BUSH SUPPORTER: I think that the Latino vote is very family-oriented as well and very moral, morally oriented. And you can see that Bush focuses a lot on the family.

LAVANDERA: That message works well for Republicans and helped President Bush garner about 35 percent of the Hispanic vote in Arizona four years ago. But take a look at the television advertisements targeting Hispanic voters in this state, and you'll notice a subtle change.

JOHN KERRY TV AD, IN SPANISH.

LAVANDERA: The ad describes Kerry as the man of faith, family, and honor. Bush hits the themes of education, healthcare and the economy. It's a subtle change that illustrates how the Latino vote is evolving.

According to a nonpartisan research group, only 12 percent of Hispanics in Arizona called themselves Republican back in 1990. Now, Republicans make up almost 30 percent of this state's voting Latino population.

EARL DEBERGE, POLITICAL ANALYST: The whole concept that it's a monolithic voter group: that all thing's are the same; it's all Democrat, it's all liberal, it all does what it's told to do by Latino leaders is just bunk.

LAVANDERA: This means there can be pitfalls for candidates courting Latino voters. John Kerry recently discovered that even talking about immigration, a topic labeled a Latino issue can unite, and just as easily, alienate Hispanic voters at the a same time.

Kerry was touting his immigration reform plan recently in Phoenix. The plan would give illegal immigrants a chance to earn U.S. citizenship.

Earl DeBerg is an analyst that studies Hispanic voting trends in Arizona. He says the speech cost Kerry to fall six points in the polls. Suprisingly, the drop came almost entirely from Independent Hispanic voters.

DEBERG: He believed that that was going to be a home run with the Latino population here. Indeed, it was the reverse.

LAVANDERA: DeBerg says this snapshot from the campaign trail should remind politicians that it won't be easy winning the support of Latino voters this year.

UNIDENTIFIED POLLSTER OF REGISTERED VOTERS: You registered to vote, right?

OK. Gracias.

LAVANDERA: Ed Lavandera, CNN, Phoenix.

(END VIDEO CLIP)

PILGRIM: We have more now with tonight's newsmakers. Ron Brownstein, the national political corresondent from the "Los Angeles Times," Roger Simon, national political editor for "U.S. News and World Report," both from Washington. And here in the studio with me is Steve Shepard, editor-in-chief of "Business Week."

Gentlemen, I'd like to talk about the Defense Spending Bill that went through: $416 billion, $25 billion in supplemental for Afghanistan and Iraq. Let's start with you Steve. Do you think it's a good bill; do you think it's sufficient; and do you think it's allocated in a proper manner?

SHEPARD: Well, it's hard to know. But I think the main deficiency is it doesn't address the manpower problem. We got money for this weapons system and that weapons system and so on, but we're really stretched very thin in terms of our military personnel. And I didn't see too much in there that addresses that and whether we have to call up more Reservists; whether we have to expand the military, as Senator Kerry is arguing or what. There was very little about that in there today.

PILGRIM: Ron, under President Bush, defense spending up 35 percent. Where does this play in the political campaign?

BROWNSTEIN: Sign of the times that it doesn't. In fact, Senator Kerry has never raised an objection to the steady and substantial increase in defense spending that has not only gone on so far, but that is projected out through the budget documents of the Bush administration through the rest of this decade.

In fact, as Steve suggested, he wants to go further in some ways, by increasing the size of the active military, increasing the Special Forces. Democrats, at least at the national level, have essentially accepted this allocation of resources. Kerry talked about this week, measures to reduce the deficit, he talked about holding discretionary spending to inflation, except defense.

PILGRIM: Yes. The support in Iraq has not been quite as much as internationally as the President would have liked. We're spending about half the world's defense spending is spent here in the United States. How does this play internationally? We are picking up the burden of defense. Roger?

SIMON: Well, we're picking up the burden of defense; we're picking up the burden of Iraq, which is why we said we wanted American companies to share in these mythical profits for the development of Iraq, so far mythical anyway. And it's one reason that President Bush has had difficulty in forming an international coalition.

Back in the days when it looked like the occupation of Iraq was going to be easy, we locked out a lot of nations and said, "Well, you didn't fight in the war, so you're not going to share in the profits." This did not play well around the world.

PILGRIM: You know, it struck me that in the discussion of foreign policy in the campaign context, it's really centered around Vietnam, which seems a little bit retro. Why are we not looking forward a bit more, or will we in the future?

Ron, can I call on you to answer?

BROWNSTEIN: Well, interesting. I mean, obviously, the dispute about Vietnam is because Senator Kerry is relying on it so heavily to establish his credentials as commander-in-chief. But I did interview the Senator last Sunday night on the bus trip. And he, in a looking- forward vein, made sort of, a set of goal that I thought was striking. He said that he thought it would be reasonable that within a first- term as president he could attract enough international support that a majority of the foreign troops in Iraq would come from countries other than the U.S.

Now, obviously, today we supply almost nine in 10 of the non- Iraqi troops, the foreign troops. But he argued that by reaching out to other nations he could substantially change that equation very quickly. What's striking of course, is that he's asking the voters to accept kind of, a personal bet on this that simply changing Presidents will change the atmosphere enough to do it.

That's one of the things I guess voters will measure over the next couple of months.

PILGRIM: Steve, anything to add on this?

SHEPARD: Well, yes, you could be a multi-lateralist, as Senator Kerry is and that's great, but multilateral institutions have to work a lot better than they've worked recently. The Sudan is just the latest example. So, we've got a lot of work to do in getting our allies to work together, either through the U.N. or through NATO, or some mechanism.

PILGRIM: Let's talk about what they're going to do going forward. And in fact, they're now on the road. The road show starts. And how will the message change and how will it be substantially different going forward?

Let me ask you, Ron.

BROWNSTEIN: Well, I think the first thing we're going to see different is the President's advisors have said that in the month of August, he's going to begin to lay out more of his second term agenda. I mean, so far, the campaign from the Bush side has been primarily focused on defending his decisions during the first term and criticizing Senator Kerry's voting record. The hole, really has been, giving voters much of a sense of what he's going to do in a second term. I think that is going to be their signaling and, in all likelihood, it should be a big emphasis leading into the Republican convention.

PILGRIM: Roger, the message has to go play in the small towns. That will really color it, won't it?

SIMON: It will. You can see the emphasis this week on small- town America, rural America, where the Democrats have not done particularly well in the past. Each candidate looking to pick up a few percentage points among groups where they've been weak.

We just heard a report saying Bush is looking to make some gains among Hispanics. Kerry would love to do better among rural voters, he would love to do better among married voters. But the difficulty in all this is that very few Americans, if we believe the polls, are actually undecideded about these two men. Most Americans have made up their minds and the campaign has been going on for a very a long time. And I think a certain weariness factor, if it hasn't already set in, will set in soon. And I think Americans will just begin to turn off from this extended campaign.

PILGRIM: All right.

We'll have to leave it right there. Thank you very much for joining us this week. It has been an incredible week. Ron Brownstein, Roger Simon and Steve Shepard, thank you.

Turning now to tonight's poll on the disappointing jobs report: does this feel like an economic recovery to you? Cast your vote at cnn.com/lou and we'll bring you results a little bit later in the show.

Still ahead: heroes. The inspiring story of a young Army specialist who is rebuilding her life after being attacked by insurgents in Iraq.

And a gruesome discovery in a Florida home. Authorities tonight say an extreme level of violence was involved in this mysterious multiple murder.

(COMMERCIAL BREAK)

PILGRIM: It was another brutal day on Wall Street. Stocks closed at the lowest levels of the year following that weak jobs report. The Dow tumbled nearly 148 points; the NASDAQ fell nearly 45; and the S&P 500 lost nearly 17.

Christine Romans is here with the market -- Christine.

CHRISTINE ROMANS, CNN REPORTER: Kitty, puny, paltry, pathetic: These are the words that economists use to describe jobs growth in this country. And Wall Street responded with a sell-off that was anything but puny. Stocks reeled to the lowest levels of the year capped a terrible week on Wall Street. The Dow tumbled 3 percent this week. It's down 6 percent this year. Technology stocks have been hit really hard; the NASDAQ fell 6 percent this week; it's below 1800, at the lowest since last August.

Now, the stock market is caught between a soft patch in the economy and an oil patch. Oil prices near $44, still near record highs. The dollar today crumbled, bond prices soared. Ironically, with the Fed set to possibly raise interest rates next week, interest rates in the bond market today tumbled. The 10-year note yield plunged to the lowest since April, Kitty. It's now 4.16 percent at its lowest today.

Unbelievable.

PILGRIM: Well, hopefully next week will be better. Have a great weekend in the meantime.

ROMANS: Sure.

PILGRIM: Christine Romans.

Let's take a look at some of your thoughts and many of you wrote about whether you felt safer following the latest terror warnings.

Tony Martell of Florida writes, "I can't feel safer when my government keeps playing the scare game and reminding us they are working hard to protect me. Why have they waited until the election year to get serious?"

And Janet Moore of Dayton, Ohio writes, "The threat warnings do make us feel safer. It shows the administration is seriously working to find those who would like to destroy us. We are so tired of our public officials saying this is all about politics."

Well, we love hearing from you: e-mail us at loudobbs@cnn.com.

Now, "Heroes" our salute to the men and women who defend this country.

And tonight, the story of a young Army specialist who was wounded in Iraq but is, literally, bouncing right back. Bill Tucker has her remarkable story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): That's Danielle Green, playing basketball at Notre Dame, known as "D-Smooth" for her smooth, left hand style.

And here's Green now.

DANIELLE GREEN, ARMY SPECIALIST: It's the footwork.

TUCKER: Still smooth, even without her left hand; relearning to play.

D. GREEN: I think my mind still thinks I'm left-handed.

TUCKER: After college b-ball, she joined the Army, went to Iraq. The 27-year-old specialist was hit by a rocket-propelled grenade in Baghdad in May.

UNIDENTIFIED MALE: But it is looking excellent.

TUCKER: Now, at Walter Reed Hospital, she learns how to function as a rightie, when she used to be a leftie: basics like writing with the wrong hand.

D. GREEN: That's an ugly two.

TUCKER: She's a newlywed. Husband Willie, a basketball coach, now her life coach, too.

D. GREEN: He's my left hand now and he has to learn how to use this pressing iron and put my ponytail in and my earrings.

WILLIE GREEN, HUSBAND OF DANIELLE GREEN: I would be upset. I don't know what I would be if I was in that position, but I couldn't be as high spirited as she is.

TUCKER: Green will be medically discharged from the Army for an athletic career again. She wants to compete in the 2008 Paralympics.

D. GREEN: I'm just so motivated to try different things now, to play tennis, to play golf. Last week we went skeet shooting. I really enjoyed that, so now I want to buy a shotgun and start going to the range and skeet shooting. This injury it's just opened up so many different doors.

TUCKER: And she isn't wasting any time. Two months after being injured, she's running in her first race.

D. GREEN: I never been a part of this when I did have both my hands.

TUCKER: An hour later she crosses the finish line, not first, but still a winner.

D. GREEN: I think this is the beginning to my new athletic career.

TUCKER: Bill Tucker, CNN.

(END VIDEOTAPE)

PILGRIM: A remarkable story. We wish her well.

Coming up: Six people are dead tonight. Authorities believe their killer is on the loose. We'll have the very latest on this bizarre story.

And, the anthrax investigation leads to a New York-area doctor. Stay with us. (COMMERCIAL BREAK)

PILGRIM: A judge in Seattle today lifted a court order that prevented a convicted rapist from seeing her former student. Mary Kay Letourneau was just released from prison on Wednesday. She was sentenced in 1997 for her relationship with her 13-year-old student, Vili Fualaau. Fualaau is now 21 years old; he petitioned the court to lift the no-contact order; the court determined there was no legal basis to prevent contact between the pair.

We have more details tonight on the doctor under investigation for the deadly anthrax attacks of 2001. Federal investigators searched three homes linked to Dr. Kenneth Berry. Now, Dr. Berry has a background in bioterror response planning. Just days after the anthrax attacks, Berry applied for a patent and for a system to identify chemical and biological attacks. That patent was approved back in March. He also objected to a decision not to vaccinate U.S. citizens against anthrax.

A bizarre and gruesome murder mystery in Florida tonight. Six bodies were discovered in a Deltona home after one of the victims failed to show up for work. Jim Piggott, a CNN affiliate, WXJT, reports from Deltona.

(BEGIN VIDEOTAPE)

JIM PIGGOTT, WXJT CORRESPONDENT (voice-over): It's hard to stop the tears, as family and friends are still learning what happened to loved ones at this house. All they know is six young adults are dead, brutally murdered during the night. And the sheriff of Volusia County says it's one of the worst crime scenes he's ever witnessed.

SHERIFF BEN JOHNSON, VOLUSIA COUNTY POLICE: A lot of trauma was involved. I'm not going to say what kind of trauma, but there was a lot of trauma done to the bodies and the house is a mess. It's just a very, very brutal crime scene.

UNIDENTIFIED MALE: Six people died, I know you guys know that.

PIGGOTT: What led to the murders is still not known. The six were found this morning by a co-worker who went to the house when several of the victims didn't show up for work at a nearby Burger King. Clyde Little says he knows one of the victims and was just talking to him yesterday.

CLYDE LITTLE, FRIEND OF ONE OF THE VICTIMS: He was telling me this last night: "Yes, I'm going to work in the morning with Anthony to do a paint job and I'll be at Burger King, I guess, tomorrow or later today, after this job."

PIGGOTT: People who live in this neighborhood say they didn't hear anything unusual. But this woman talking to police officers, said she saw a suspicious car parked near the house all night. In fact, the sheriff said they've had reports of minor crimes at this house. They're still investigating a second home where many of these victims had once lived, but he says there are no bodies at that house. JOHNSON: We have some subjects of interest, but at the moment we have no formal suspects. But we are pursuing some leads.

(END VIDEOTAPE)

PILGRIM: That was Jim Piggott of WXJT reporting from Deltona, Florida.

We'll be right back.

(COMMERICAL BREAK)

PILGRIM: Now, the results of tonight's poll: 3 percent of you say this feels like an economic recovery and 97 percent do not.

That's our show for tonight. Please join us Monday. New Mexico Governor Bill Richardson will join us to talk about NAFTA and illegal immigration. And Senator Chuck Hagel of Nebraska will talk about intelligence reform and false urgency.

For all of us here, have a great weekend. Good night from New York.

"Anderson Cooper 360" is next.

END

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