Return to Transcripts main page

CNN Late Edition with Wolf Blitzer

Specter, Bayh Discuss War on Terror; Butler, Lang Talk About War With Iraq; Interview With Daniel Ayalon

Aired August 04, 2002 - 12:00   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.
WOLF BLITZER, HOST: It's noon in Washington, 9:00 a.m. in Los Angeles, 7:00 p.m. in Jerusalem and 8:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks for joining us for LATE EDITION.

We'll talk with two leading United States senators about the Bush administration's plans for Iraq in just a few minutes, but first this news alert.

(NEWSBREAK)

BLITZER: Before heading home this week for the August recess, members of the United States Congress made it clear they want to have a say in approving U.S. plans to remove the Iraqi president, Saddam Hussein, from power.

Joining me now to talk about that, the war on terror and much more are two key United States senators: in Philadelphia, the Pennsylvania Republican Arlen Specter, and in Indianapolis, the Indiana Democrat Evan Bayh.

Senators, welcome back to LATE EDITION, to both of you.

Let me begin with you, Senator Specter. First of all, on this latest wave of terror in the Middle East, what's going on right now? Is there anything else that the United States should or can be doing to try to end this?

SEN. ARLEN SPECTER (R), PENNSYLVANIA: A couple of things, Wolf. One is that the meeting with Secretary of State Powell has with Palestinian leaders, I think is a positive step forward. It is in line with President Bush's effort to circumvent Arafat. There no doubt that there is an urgent need to have some leadership among the Palestinians which can rein in Hamas on these terrible suicide bomber attacks which are so repetitive.

The other thing that we can do is to try to put pressure on other countries not to be supporting Hamas. For sometime now, really going back to the time that I chaired the Senate Intelligence Committee in 1996, I've had grave doubts about the Saudis really being our friends.

They did not cooperate with us on our investigation of Khobar Towers. I've always wondered there was a connection that al Qaeda had to Khobar Towers. There had been a car bombing a few weeks before Khobar Towers, where the Saudis did not allow us to question those suspects.

And I believe that the Saudis continue to support Hamas. Others do as well, but we ought to get the Saudis to stop that kind of financial aid.

BLITZER: All right. Senator Bayh, what about that? What else should President Bush be doing now to try to end the terror in the Middle East that he isn't doing?

SEN. EVAN BAYH (D), INDIANA: Well, it's a tough situation, Wolf, obviously. And I agree with what Arlen just said. We need to reach out to more moderate elements in the Palestinian community and tell them that we're willing to cooperate with them in putting into place the basic building blocks of a civil society -- writing a constitution, have police forces that are able to control criminals and terrorists, things of that nature .

But that needs to be coupled with a very clear message, as well, to both the Palestinian leadership, the Saudis and others in that part of the world, that there cannot be a Palestinian state until renounces the use of terror, suicide bombings, things of that nature.

Statehood and any meaningful renouncement of terror and steps to prevent terror have to go hand in hand.

BLITZER: Senator Specter, a week ago on this program, I interviewed Jordan's King Abdullah. And he made clear that as far as the U.S. trying to do anything militarily against the Iraqi president, Saddam Hussein, that that would be a mistake in advance of any easing, any resolution of the Israeli-Palestinian conflict.

Listen to what King Abdullah said.

(BEGIN VIDEO CLIP)

KING ABDULLAH OF JORDAN: The problem is even trying to take on the question of Iraq with the lack of positive movement on the Israeli-Palestinian, Israeli-Arab track, seems at this point somewhat ludicrous.

(END VIDEO CLIP)

BLITZER: Do you agree with the king's assessment?

SPECTER: No, I do not. But I do believe that we have to listen carefully to King Abdullah, because he's been a good friend and he's wise. But I do not think that we can tie prospective action as to Iraq for a resolution of the Israeli-Palestinian issues because that may take much too long.

But I do think, Wolf, that we need to have very careful consideration by the Congress to make the decision on what to do as to Iraq. Several weeks ago I introduced a resolution, along with Senator Tom Harkin, bipartisan, to require that, before a war started as to Iraq, that that decision be authorized by the Congress, because only the Congress has the constitutional authority to declare war.

BLITZER: But, Senator Specter...

SPECTER: But if there was an emergency...

BLITZER: But, Senator Specter, you know your leader, Senator Lott, said this week that there is such a resolution already on the books, the resolution authorizing the president to take any military action against al Qaeda.

SPECTER: Well, I don't always agree with Senator Lott. I do much of the time, but the resolution which we passed on September 14th to act against al Qaeda does not apply to Iraq unless there is some evidence that al Qaeda and Iraq are tied together, and that hasn't been forthcoming.

But what I believe we have to do is to get into the details. What will it cost us in terms of casualties to go to war with Iraq? What will we do after we topple Saddam?

I believe that there are strong reasons to go after Saddam Hussein. We learned a bitter lesson by letting bin Laden hang around after he was under indictment and threatened a worldwide jihad. We should have taken action before 9/11, but 20/20 hindsight is always perfect.

But if the president has to act in an emergency, that's his authority as commander in chief. If the Congress has time to deliberate and decide, that's our constitutional authority and responsibility.

BLITZER: All right. Senator Bayh, you're a member of the Senate Intelligence Committee. You're privy to all the most sensitive information. Listen precisely to what the Senate Republican leader, Trent Lott, said on this specific issue earlier this week.

(BEGIN AUDIO CLIP)

SEN. TRENT LOTT (R-MS), MINORITY LEADER: I suspect that al Qaeda elements are in Iraq. The resolution we passed made it very clear the president has the authority to pursue the al Qaeda wherever they may be found, and in whatever country, which could very well include Iraq.

(END AUDIO CLIP)

BLITZER: Is the Senate Republican leader right?

BAYH: Well, he may be. Roughly speaking, Wolf, he is not right to suggest, because as you've asked me repeatedly and I've asked our intelligence officials repeatedly, there is no, at least as far as we know, connection between the September 11th attack on our country, perpetrated by al Qaeda, and the nation of Iraq. There simply is no evidence to make that case.

Now, it's possible that a few elements of al Qaeda, as they've disbursed from Afghanistan, had made their way into northern Iraq -- not the area controlled by Saddam, but perhaps some of the Kurdish area -- and may be seeking to reconstitute themselves there.

But again, whether the Iraqi central government is playing any sort of role in coordinating that effort is very sketchy and, at this point, cannot be established. So I would disagree respectfully with Senator Lott's assertion to the contrary.

And also disagree with his assertion that the -- and I agree with Senator Specter that the resolution that the Congress passed enabling the president to go into Afghanistan to pursue al Qaeda would reach to any nation under any set of circumstances. Al Qaeda has operatives in probably 30 or 40 nations. We didn't authorize a declaration of war on all those places.

So I would advise the president to come to Congress. I think he has a good case to make. I think he will receive the support from Congress and the American people he needs. I would advise him that that's the best course of action.

BLITZER: Senator Bayh, where do you come down on the intelligence reports that Mohammed Atta, the ringleader of the September 11th attacks, did in fact meet not once but maybe twice with a senior Iraqi intelligence official in Prague in the Czech Republic before September 11th? A, is that true? And B, what does that suggest about September 11th, if anything?

BAYH: Well, Wolf, as you know, under the rules of the Intelligence Committee, we're not authorized to get into specific examples like that. I can, however, say that that has been published in several reputable news organizations.

But the problem we have here, whether it's Atta and a potential meeting in Prague or other things of this nature, is that this is a very -- oh, how should I say -- these people operate at the margins, all of them. And they operate in the same sort of world. And there may be overlaps and connects among individuals from different groups and even different countries.

But suggesting that they are involved in coordinating an attack or participating in the attack on September the 11th, and saying that there might have been a casual meeting of some kind in Prague, those are two entirely different things. And I think it's important to make that distinction.

And I would repeat to you again, I have asked repeatedly, just as you've asked me repeatedly, as far as I know, there is no case linking the government of Iraq to the September 11th attack.

In my opinion -- and I do, as you know, I'm fairly hawkish on Iraq. I'm inclined to support going in there and dealing with Saddam. But I think that case needs to be made on a separate basis -- his possession of biological and chemical weapons, his desire to get nuclear weapons, his proven track record of attacking his neighbors and others. It needs to be made on that basis, not attempting to link him to September the 11th, because the information there is simply, as far as I know, does not warrant it.

BLITZER: Senator Specter, when you say you want the Senate to approve -- to authorize military action against Iraq, do you have in mind what happened before the Gulf War, a similar kind of resolution?

SPECTER: Precisely. President Bush in 1991 came to the Congress and said, "I want authorization to use force," and we gave it to him.

Look here, Wolf, if you have a debate in Congress, if you go into a lot of these questions, on this date of the record, there is no evidence that al Qaeda is connected to Iraq, but if there should be evidence, let's find out about it. And it can be given to senators in closed secret session.

But if the Congress picks up the issue and you have people who are established and reputable, people like Dick Lugar or John Warner or Joe Biden and Arlen Specter and Evan Bayh and there is support, that will give assurance to our European allies, who are very much concerned about President Bush's unilateralism, so that there is a lot of strength to be gained.

But the case has to be made, and this debate should inform the American people about what is involved. That public support has to be developed. We learned a very bitter lesson in Vietnam that you can't go it alone without the public and without the Congress.

BLITZER: All right. Senators, stand by. We have to take a short break.

We have much more ground to cover with Senators Specter and Bayh. Plus, your phone calls. LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I also want to make it clear to the killers, they won't stop us from rallying the world to fight their kind of terror. Nor will they stop us from having a vision of peace.

(END VIDEO CLIP)

BLITZER: President Bush emphasizing the U.S. resolve in the war against terrorism and his determination to try to find a peaceful settlement between the Israelis and the Palestinians.

Welcome back to LATE EDITION. We're continuing our discussion now with Republican Senator Arlen Specter of Pennsylvania and Democratic Senator Evan Bayh of Indiana.

Senator Bayh, the Iraqis seem to suggest that openness, a readiness to discuss bringing back those U.N. weapons inspection teams into Iraq after almost four years of absence. It drew, let us say, a cool response from the Bush administration. Listen to what the secretary of state said.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: The Iraqis have constantly tried to find a way around their obligations, with respect to inspections. They have met several times now with Kofi Annan and with Hans Blix. They understand what is required of them. There is no need for further clarification or discussion of comprehensive approaches.

(END VIDEO CLIP)

BLITZER: There are some, Senator Bayh, who say that bringing those weapons inspection teams back in might simply be a waste of time, would allow Saddam Hussein to buy time to develop his weapons of mass destruction. What do you say?

BAYH: I agree with that entirely, Wolf. These are the same inspectors that he ran off four years ago, in violation of the agreements that we reached to end the Persian Gulf War, flagrant violations. These are the same inspectors that he basically played a game of hide-and-seek with for several years before that.

This is only a stalling tactic to try and allow him to continue to develop his weapons of mass destruction or a hope that the world's attention will turn somewhere else or events will intercede to divert our attention.

So, I think a very high level of skepticism is in order when it comes to anything Saddam says about weapons inspectors.

BLITZER: Senator Specter, as you know, the U.S. is pretty much isolated on this issue. The Europeans, the Russian, the Chinese, the Arab world, they want those inspectors to go back in, and they say give that road a chance before any military action is taken.

SPECTER: I would take Saddam Hussein up on his offer, but I wouldn't allow taking him up on his offer to delay us in anything else we are going to do.

I doubt very much that it would produce anything, but it's time that we have. If we were saying, as we did with Iraq in 1991, January 15th is the date, we set a deadline, I would not defer any deadline which we set. But we don't have a deadline. So there is some time. And I would utilize the time to play out that strain.

I've talked to high-ranking U.S. intelligence officials, and there is some thread of hope that if we had unlimited discretion to inspect, if we could move in on a surprise basis -- and it is true that he moves a lot of his equipment around. But let's try that.

I think when you have so many of the other nations of the world saying this is something we ought to explore, well, let's explore it. Let's give him some sway, so long as it doesn't delay us in our plans otherwise.

BLITZER: Senator Bayh, the French president, Jacques Chirac, goes further, saying that the United States should not do any military action against Iraq without U.N. Security Council approval. Listen to what he says. He says, "I do not want to imagine an attack against Iraq, an attack which, were it to happen, could only be justified if it were decided on by the U.N. Security Council."

Does the United States need that authorization to invade Iraq?

BAYH: I don't believe we do, Wolf, but I do think it's important that we try and bring as many allies along as we can. I mean, the French could be helpful. Others could be helpful, certainly the British. But we don't want to get into a situation, as we had in Bosnia, where the French and others are micro-managing individual bombing runs and things of that nature.

So, I don't think unilateral action should be our first course, but we should reserve that as an option as the final course, when it comes to protecting the national security interests of the United States.

BLITZER: Senator Specter, the Iraqis, as you well know, are defiant in standing up to these latest U.S. threats. The Iraqi foreign minister saying this week, "The United States will be defeated and it will be kicked out of the region if it attacks Iraq. It will be the end of the United States in the region."

Are you concerned about what a U.S. -- almost a near unilateral attack might do to U.S. interests in that part of the world?

SPECTER: I wouldn't pay any attention to what the Iraqi foreign minister said. But, frankly, Wolf, I wouldn't pay much attention to what French President Chirac says. For him to ask us to wait on a U.N. Security resolution which France can veto would be absolutely preposterous. The French drag their feet at every turn. So I welcome another opportunity to disagree with the French president.

But there are many things we can do to try to bring our allies along. We have a good start with Great Britain, good relations there. I think that if we play out the string on the inspections, as I say, emphatically not delaying anything else we want to do, perhaps the relationship between President Bush and Russian President Putin might get us a little support there. Every effort ought to be made.

And if the Congress supports the president on a resolution, stands behind him after a debate and after the disclosure of a factual basis for proceeding as to Iraq, I think then, if some of our allies see that we're going to do it and that we have a reason to do it, they may come along. Perhaps grudgingly, but I'd build that up.

BLITZER: Finally, very briefly, Senator Bayh, how close, based on what you know, is Iraq to developing a crude nuclear device?

BAYH: Well, that's hard to say with precision, Wolf. We do believe they have chemical and biological weapons. It could be a matter of just a few years. It depends how much outside assistance they get. And, you know, they've had several years here to work, without the benefit of any sort of foreign inspection.

So the real question is we know that he's trying to get it, we know that he's making progress, and what kind of a risk do we run by waiting? Do we really want to wait and wake up one morning and find out that they've developed such a weapon? And with all the changes that that would mean for the Middle East and for the national security of our country, I don't think we do.

So the best I can tell you is, we know that he's moving forward. We know he's making progress. And at some point in the next several years, he'll be successful, unless we do something about it.

BLITZER: Senator Bayh, Senator Specter, thanks to both of you for spending some time with us on LATE EDITION.

SPECTER: Thank you, Wolf.

BAYH: Good to be with you.

BLITZER: Thank you.

And coming up next, details of a plan created in the last days of the Clinton administration to try to take out al Qaeda. Plus, is Saddam Hussein really a clear and present danger to the rest of the world? And what are the stakes if the United States goes to war with Iraq?

We'll get perspective from the former U.N. weapons inspector Richard Butler, the former U.S. defense intelligence officer Patrick Lang, General Wesley Clark and the retired U.S. Brigadier General David Grange, all coming up on LATE EDITION.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

We'll continue our conversation on Iraq in just a moment. But first, a new report in "TIME" magazine is coming out today. It includes details of a plan created in the waning days of the Clinton administration to eliminate the al Qaeda terrorist network.

We're joined now by "TIME" magazine's diplomatic correspondent, Massimo Calabresi. He's joining us here in Washington.

Give us the headline, the thrust of this new information, Massimo.

MASSIMO CALABRESI, "TIME" MAGAZINE: Well, in the last days, as you say, of the Clinton administration, the national security principals considered a plan that would have aggressively gone after al Qaeda, using covert action in Afghanistan, in an attempt to, as the plan said, eliminate the sanctuary. It also would have gone after al Qaeda in other countries outside Afghanistan, where they were launching attacks against other governments. This was handed off in a series of briefings to the new administration, but was then put into a lengthy policy review process, which lasted all the way through until, in fact, the week before September 11th.

BLITZER: Well, if the Clinton administration was so interested in destroying al Qaeda, why did they wait until the waning days of the administration? They had eight years to do it.

CALABRESI: It's a fair point. And we say in the article that, in some ways, this is an admission of failure on their part, that what they had been doing hadn't worked.

What was the immediate instigator for this plan, though, was the attack in October 2000, right before the election against the USS Cole. That had promised senior Clinton administration officials, they say, to come up with a more aggressive plan to go after al Qaeda, and this was the product of that.

BLITZER: The Bush administration, the incoming team during the transition and afterwards, they got this information from the Bush team, but they sat on it for a while. What was the explanation for that?

CALABRESI: Well, they say that any administration coming in, looking at all the different issues that they face on a national security front around the world, will naturally undertake policy reviews. And there are several people who defend them on this score.

However, in comparison to other issues that they acted on, this got slower treatment and was -- made a very slow path through the system.

BLITZER: A fascinating article in the new issue of "TIME" magazine. Massimo Calabresi, thanks for giving us the headlines on LATE EDITION. We'll be reading the full report. I actually already have read it, but our viewers, I'm sure, will be interested in reading it in the new issue of Time magazine.

Let's move on now and continue the discussion on Iraq and the stakes of a possible new U.S. war against Saddam Hussein. Joining us now from New York, the former chief United Nations weapons inspector Richard Butler. Here in Washington, the former U.S. defense intelligence analyst for the Middle East, Pat Lang. In Little Rock, Arkansas, the former NATO supreme allied commander, retired General Wesley Clark. And in Madison, Wisconsin, the retired U.S. Brigadier General David Grange. He's also the CNN military analyst, as is General Clark.

Gentlemen, welcome to LATE EDITION.

Let me begin with you, Ambassador Butler. What do you make of this latest offer from the Iraqis to consider allowing U.N. weapons inspection teams back in?

RICHARD BUTLER, FORMER U.N. CHIEF WEAPONS INSPECTOR: Sadly, Wolf, it's not what it purports to be. The Iraqis have dusted off a proposal that was put to them almost four years ago, under my watch -- sorry, which they raised almost four years ago, which was set aside because it was empty.

This is the so-called comprehensive review of their weapons status. We know what their weapons status is. When they threw UNSCOM out, we furnished a final report to the Security Council, which the council accepted, even with great Russian hostility to doing so at that time.

So when Iraq says, "Come along and have a talk toward a comprehensive review, and maybe after that you may be able to come and inspect," it's a tired old proposal. It means nothing. It is not a serious response to the incredibly serious situation in which they find themselves.

The only serious response would have been to open the doors, to say to Dr. Hans Blix, my successor, to say, "Come now, bring your inspectors, with their equipment, with their Geiger counters, with their shovels, come and dig and look." And that's exactly what Iraq is not saying, so it's very disappointing.

BLITZER: But in order to win international support from the European allies, the Arab world, the Russians, the Chinese, doesn't the United States have to at least give the Iraqis one more chance?

BUTLER: Oh, yes. And in the Senate hearings, in which I was very happy to take part, I actually ended up on that point. I said, we need one more truly serious shot at getting proper inspections mounted -- not phony inspections, real inspects.

Wolf, the core of this is Iraq's weapons of mass destruction. They have those weapons; they know it. We don't now know in what orders of magnitude, because we don't know what has happened in these almost four years without inspections. There's an inner logic here, Wolf. You cannot know what you are not allowed to look at.

BUTLER: Now, Iraq says it has no such weapons. That's a lie. That's wrong. It does. What we need to know is the correct order of magnitude, and we need to have inspectors go in there to find that out.

I strongly recommend that the administration pursue that with the Russians, with the French, as hard as possible. And if Saddam, for the last time says, "no" -- not this phony offer they made last week. If it says, "No, we are not prepared to have you come now and look anywhere, any time," to prove their case that they have no weapons, or if we find weapons to destroy and remove them, if they say no to that, then we have to look to another solution.

One more try, Wolf, that's what I suggest.

BLITZER: All right. Stand by, Ambassador, I want to bring in Pat Lang.

Pat Lang, you remember precisely, exactly 12 years ago, before the Iraqis invaded Kuwait, you were a defense intelligence analyst at the Pentagon. I was covering the Pentagon. You were one of the few, if not the only, U.S. intelligence analysts who accurately predicted that the Iraqis were going to invade Kuwait. Unfortunately, a lot of other U.S. policymakers at the time didn't pay much attention to what your assessment was.

What is Saddam Hussein about to do now if he anticipates a U.S. military strike?

PAT LANG, FORMER U.S. DEFENSE INTELLIGENCE ANALYST FOR THE MIDDLE EAST: Well, the first thing he's doing is exactly what Ambassador Butler was talking about is that, however stupid and ham- handed Saddam's government may be on making really large political decisions, they're very good at some operational things having to do with deception, misdirection of your intention, camouflage, things like this.

So they would -- I'm sure they would, at this point, think it would be a great idea to get started with a limited inspection regime and seek to guide the inspectors around and see those things that they want them to see and not to see the things they don't want them to see. And you would learn, in fact, precisely nothing about the real state of his weapons programs at this time. Because as the Iraqi nuclear physicist who testified the other day before the Senate said...

BLITZER: Khidir Hamza.

LANG: ... yes, they have spent a great of time building false governmental structures institutionally and hiding these various programs.

Even the old pictures of the facilities they use for weapons production today in the old days, if you hit them today, that would not in any way assure you of the fact that you had gotten their capability, because it's probably gone somewhere else. You're going to have to go in there and look for it.

BLITZER: But would Saddam Hussein, in your assessment, lash out if he thought a U.S. strike was imminent by using weapons of mass destruction, whether chemical of biological, or he has some sort of crude nuclear device, a nuclear? That's the big wildcard.

LANG: He probably something in the area of 20 Scud missiles that he managed to keep after the inspectors got through looking for them. And he has some chemical capability. He may have some biological capability.

And given the fact that he's a man who's totally centered on himself, it's quite possible that in a desperate attempt to defend his regime against all comers, he might in fact try to use those, most likely against Israel.

BLITZER: What about that, General Clark? If Saddam Hussien were to launch a Scud missile with some sort of chemical or biological agents in a warhead against Israel, what does the U.S. do about that? GEN. WESLEY CLARK (RET.), CNN MILITARY ANALYST: Well, I think before we would come to that point, we'd be sure that the Israeli capability to defend themselves would be augmented.

We've done this in the past. We have more modern systems now, more powerful radars, better missiles. The Israelis also have more capabilities. And so we'd strengthen our defenses.

If he were to fire such a missile then I think the United States would probably, as it has in the past, try to restrain the Israeli reaction, especially if we were successful in intercepting such a missile, and then move on from there.

BLITZER: General Clark, as you remember, the last time around the U.S. in the name of the then-defense secretary, Dick Cheney, now the vice president, issued a strong warning: "All options are on the table if the Iraqis use weapons of mass destruction." And the assessment is that that deterred the Iraqis from using poison gas against U.S. troops or other chemical or biological weapons.

What does the U.S. do now to try to deter the Iraqis if in fact the U.S. is about to try to get rid of Saddam Hussien, not only politically but presumably physically as well?

CLARK: Well, this is a strategic flaw in the way that this operation is unfolding, because we've already announced our determination to end his regime and get rid of him. So we've taken away any incentive he might have to be deterred.

So the alternative now is we've got to use military means, if we go through with this, and attack very, very quickly right into the heart of whatever weapons complexes he might have to try to prevent his actually, physically being able to use the weapons.

BLITZER: General Grange, you know a lot about special operations. You were a special operator when you were in the military.

Is the Afghan model, heavy use of special operations, paramilitary forces, the CIA, backed up by extensive air power to overthrow Saddam Hussein, is that applicable in this particular case?

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, I believe it's applicable, but it's not going to be the only means to do this operation. I think that will be a part of the operation. It may be the up front part, most likely. But I think you also need some type of heavy armored maneuver force to take care of other aspects in Iraq, as well as the consolidation phase right after the fight.

BLITZER: And so what does that mean, a massive U.S.-led invasion to try to overthrow the Iraqi regime?

GRANGE: No, I think you have special ops up front to take care of some of the weapons of mass destruction targets, command and control targets like Saddam himself or some of his trusted lieutenants, key facilities of the infrastructure that would be required to operate in the country.

But I think that either from the northwest or south or a combination thereof, you would also have some maneuver units to take care of some hardcore units like some, let's say, Republican Guard units that would not turn coat or surrender.

You need that type of capability also to deter anyone that may try to influence the fight after we start it.

BLITZER: All right. Gentlemen, stand by. We're going to take a quick commercial break.

We have much more to talk about with Richard Butler, Patrick Lang, General Wesley Clark and General David Grange. They'll also be taking your phone calls, your questions on Iraq and Saddam Hussein.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: There have always been, on the shelf, plans. Sometimes they're called war plans. Sometimes they're called contingency plans. Sometimes they're called operations plans.

(END VIDEO CLIP)

BLITZER: Welcome back to LATE EDITION. That was the U.S. defense secretary, Donald Rumsfeld, on the Bush administration's consideration of military options against Iraq.

Let's continue our conversation.

Ambassador Butler, when you testified on Wednesday before the Senate Foreign Relations Committee, I heard every word that you said. One of the most fascinating and disturbing, almost alarming, comments you made was on Iraq's nuclear potential.

You cited an IAEA assessment two years ago, the International Atomic Energy Agency assessment, how close the Iraqis were to developing nuclear weapons. What was the assessment two years ago?

BUTLER: Wolf, when they were stopped after the Gulf War, IAEA, the international agency, said they were six months away. Then we went through the seven years of inspection, and in that time, Iraq always refused to hand over some key components of its bomb, the bomb that it was working on putting together.

Then at the end, when they threw us out, the IAEA furnished a report to the Security Council in which it said, if Saddam started again to make that bomb, he'd have one within two years.

Wolf, that was over three years ago. We don't know whether he started to do that again. I believe he has. I believe he's brought his nuclear scientists back together. And we don't know when he started again, so we don't know if that two years is up, but that was the IAEA assessment.

And just a quick final word on this central problem of a nuclear weapon, we don't know whether he's leapt over his indigenous problems of having poor-quality uranium and sought to obtain it externally, buy black-market stuff from the former Soviet Union or indeed a fully fabricated nuclear weapon, some of which apparently have gone missing. This is the big imponderable, and I think it's gravely serious.

BLITZER: Pat Lang, when you were in the U.S. intelligence community, you spent a lot of time studying Iraq and the potential for nuclear capability. What is your assessment right now? How close is he?

LANG: Well, my assessment, based on my experience back in those days, would be that I think Ambassador Butler is very close to the truth on this. In fact, we believed at the time in the community, those analysts who dealt with the Arab world countries believed at the time of the invasion of Kuwait, the Iraqis were within a year and a half or so of detonation or a first device. It might have been the size of a boxcar out in the desert. But I think the time lines he displays are the correct ones.

And you have to remember that Iraq has and had this tremendous stockpile of human talent for working on these things. We used to believe that he had about 5,000 nuclear scientists, engineers, people like that who were Iraqis who have been brought together to work on this problem. Those people didn't go away. They weren't removed from the country. They're still there, and I'm sure they've been brought back together.

There's also the issue of his guided missile program, which at one point just before the war, had achieved the ability to field two- stage rockets. Now, those things are dangerous and lead down the road to big delivery systems.

BLITZER: General Clark, if the Iraqis were to successfully test a nuclear device in their desert at some point in the next few weeks or months, that changes the entire geostrategic equation in that part of the world, doesn't it?

CLARK: Well, I think it certainly adds an element of deterrence to the military options that we'd be preparing to use against him. I think it would strengthen those in the United States, for example, who would say, contain the problem.

But remember, Wolf, in all of this debate on Iraq, don't lose sight -- we can't lose sight of the fact that Iran is also developing nuclear weapons. And it won't be just Iraq, it will be Iran, and perhaps other states after that who have access to these weapons.

So what we're deciding upon here is not a one fix to a problem. It's the first step in dealing with a longer-term problem.

BLITZER: Let's take a caller from California. Go ahead, please, with your question.

CALLER: Hi, good morning, Wolf. This is for General Clark. I would like his opinion on whether he thinks that it is actually realistic for us to mount a military strike, seeing as how that our resources are stretched so thin in the Middle East as it is.

BLITZER: General Clark? And then I'll bring General Grange in after that.

CLARK: Sure, it is realistic to do this. We've got an opportunity here to rebuild some of our precision weapons arsenals. We can bring back special forces troops and rest them. Many of them are back in the United States now. We've got adequate military ground strength to do this. We can get aircraft carriers in the Persian Gulf.

It is a matter of, what are the objectives and what are the risks we're willing to take to gain those objectives first? And then it's all of the attendant (ph) questions. What do we do afterwards? What about other states in the region? What if Saddam Hussein strikes out with his weapons against our friends and allies in the region while we're doing this?

BLITZER: General Grange, do you want to weigh in on that point? Does the United States now, with all of its other responsibilities around the world have the wherewithal, the military capability, to get the job done in Iraq?

GRANGE: I agree with General Clark, we have the capability. But let me just add a point of different slant to this. And that is, I think the whole world is watching in how we conclude Afghanistan. And we're in a transition point that everybody is watching how well we truly support this country to get back on its feet. And I think that will affect this part of the region of the world on our acceptance, and go ahead and carrying out war in Iraq.

BLITZER: Ambassador Butler, explain to me and to our viewers in the United States and around the world, why the U.S. may be isolated when it comes to Iraq, why many of the European allies have such a different assessment of the threat, the potential threat from the Iraqis. Most of the Arab world has a different assessment. The Russians certainly do. The Chinese do.

Why is the United States so alarmed and the rest of the world apparently isn't that alarmed?

BUTLER: Goodness me, Wolf, if I had a simple answer to that question, I'd be a very happy man, indeed. I sat for a couple of years at the table of the Security Council and was exposed daily to real puzzles about exactly the question you ask.

Why, why did the Russians, for example, think they had a profound interest in giving comfort to Saddam Hussein when he was seeking to get rid of the weapons inspectors? Why did the French tag along in the way that they did? And, indeed, are still today expressing the sorts of concern that they have?

It's hard to know a simple answer, Wolf. All one can do is just disaggregate, unpack what each of these countries see as their interests. Russia had some financial interests in Baghdad. France has some geopolitical interests, always has had, in the Middle East region.

I came to a conclusion a couple of years ago that one of the things that was operating was a discomfort amongst other powers with the world of only one superpower. But you know, a lot of that discomfort has been taken away by September 11. There's a much stronger sense in the world that we're in a common boat in a fight against terrorism.

I'm not sure why that commonality of purpose isn't now extending to the manifest fact that Saddam remains in violation of some major pieces of international law with respect to weapons of mass destruction. And we should have all have an interest in getting him out of that business, if it means including getting him out of everyone's life, starting with the Iraqi people who are having a terrible time under him.

I don't know, Wolf, a very clear simple answer as to why we're having this problem. But I do know we have this problem and we need to address it. We need to put our case much more persuasively than we have up to the present time.

BLITZER: All right. Now, the Iraqis seem to be winning at least in much of the world, that diplomatic war.

We're going to continue this conversation. We have a lot more to talk about. Gentlemen, stand by.

Coming up in the next hour of LATE EDITION, we'll focus in again on Target: Saddam, with our distinguished panel. More of your phone calls for them, as well.

Beyond that, we'll talk about the Middle East. It is trying to regroup after a new round of terror. We'll get the Israeli and Palestinian perspective. What lies ahead?

Plus, an unsolved mystery.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Whoever produced that had significant technical ability. We feel they had some experience. And they had access to some pretty sophisticated equipment.

(END VIDEO CLIP)

BLITZER: An anthrax terrorist remains at large. We'll find out where the investigation stands. Stay with us.

(COMMERCIAL BREAK) BLITZER: Welcome back to LATE EDITION. We'll get to the Middle East and the anthrax mystery and continue our discussion about a possible U.S. attack on Iraq in just a moment, but first, here CNN's Fredricka Whitfield in Atlanta with a news alert.

(NEWSBREAK)

BLITZER: Now back to our conversation on Iraq and the stakes for the United States, indeed for the world, of a possible new war.

Joining us once again, from New York, the former chief United Nations weapons inspector, Richard Butler. Here in Washington, the former U.S. defense intelligence analyst for the Middle East, Pat Lang. In Little Rock, Arkansas, the former NATO supreme allied commander, retired General Wesley Clark. And in Madison, Wisconsin, the retired U.S. Brigadier General David Grange. He's a CNN military analyst, as is General Clark.

Let's take a quick caller from West Virginia. Please go ahead with your question.

CALLER: Anyone can answer this question. We have been to war with Saddam Hussein before and we didn't get him. And what can we do differently this time to assure that we get him out of there, to make sure we never have to go back again?

BLITZER: Pat Lang, what's your assessment?

LANG: Well, the answer to that is actually pretty simple. Last time there was a clear decision on the part of the United States government that we were not going to go farther into Iraq than the areas south of Basra, which is the southernmost big city.

And the object of the game was not to remove Saddam Hussein. It was, in fact, to expel the Iraqis from Kuwait. That was basis of the U.N. resolutions under which we had advanced into Iraq, and the government of the United States didn't want to do anything more than that.

There was a profound belief around town at that time -- and by that, I mean Washington -- that, in fact, after four, five, six months, Saddam would be gone anyway, because the effect of defeat on him would be such that Iraqi military would decide to remove him from power. That did not happen. There were a few people thought that would not happen, and they proved to be correct.

BLITZER: General Clark, one of the key questions that has to be answered, what happens the day after, assuming Saddam Hussein is overthrown, given the fact the Shi'ites are the big populated area in the south? The Kurds in north, they want their own state. The Turks, the Turkish government will strongly oppose that. A lot of Arab countries do not want to see Iraq dismembered into various kinds of independent states.

What happens after Saddam Hussein is overthrown, if in fact he is overthrown? CLARK: Well, that's a big question, Wolf. And I think to address it, you've got to have a planning process that looks at putting in place some authorities, not just troops. But how do you deal with all the legal issues, the economic issues, the humanitarian issues that are going to come bubbling right up to the surface as soon as this repressive regime is removed?

And what we found in every other similar case, for example in Kosovo, is that this planning process is difficult to do. And it's very difficult to get the planning focused on exactly what you are trying to do, get the authorities and international organizations together with national organizations to really make it work. We've got to do that in this case if we are going to succeed.

BLITZER: General Grange, Secretary Rumsfeld seems to be pretty frustrated in the plans coming forward, especially special operation plans, not being dynamic enough, not being creative enough, not enough new thinking right now. A lot of people engaged in old thinking.

What do you make of all these reports that we're reading about?

CLARK: Well, it's really hard to say. I'm sure there's a variety of plans to take down Iraq or a combination thereof. There is this big issue on the leakage of plans out to the public. But I can assure that you there is a multitude of plans just like we do in all military operations. And if one is compromised, the other one becomes the reality, and that's now a deception.

But I think that he's just challenging everybody to come up with some new ideas, some innovative thinking on how to do this, and not do an Afghan model, not do a model from last war, and just use some initiative on coming up with some innovative thoughts.

BLITZER: Ambassador Butler, when you testified before Senator Biden's Foreign Relations Committee, one of the points you made -- I believe you made it, correct me if I'm wrong -- you said there is no evidence Saddam Hussein has ever handed over any kind of weapons of mass destruction capability to terrorists. He may give them money. He may give other kinds of support. But he doesn't give them chemical or biological agents, for example.

What was the thrust of your testimony?

BUTLER: Wolf, it is clear that Iraq has supported terrorism in the sense of training terrorists, for example. There is a training facility just outside Baghdad. My inspectors visited it because it was also a place where they were making biological weapons.

It is clear that Iraq has maintained links with groups like al Qaeda. Some senior Iraqi intelligence officials have had meetings with senior representatives of al Qaeda, and possibly including Osama bin Laden.

I think too that it's extremely likely, and there is some evidence for this, that they have discussed with terrorist groups how to make biological weapons, how to make chemical weapons. Indeed, some crude designs of nuclear weapons where were found in Kabul.

But the point I made, at its core, Wolf, was this: I do not have any evidence, and I don't think anyone does, of Saddam having handed over WMD, weapons of mass destruction, to terrorist groups.

And at the Senate, I went on to say, I strongly doubt that he would do that. Because Wolf, he so is attached to these weapons, he sees them, and my word was "as the indelible" source of his power. And I don't think he would share that lightly with anyone.

BLITZER: All right. Let me bring back Pat Lang for the last word.

Do you agree with that bottom-line assessment?

LANG: I think the Iraqis are most -- are fascinated with the whole issue of weapons mass destruction, and ultimately, of course, the nuclear weapon, for the reason that they see themselves as the standard bearers of Arab nationalism in the present day. And that the possession of such weapons would give them a kind of international status and a weight in the deliberations of world powers that they feel they have to be respected.

They feel they've been disrespected, as they saying goes, and they feel that this will make them a major player. So I don't think they're likely to hand over their major toys to anybody.

BLITZER: All right. Pat Lang, I want to thank you.

Ambassador Butler, it's always good to have to you on the program, as well.

BUTLER: Thank you.

BLITZER: General Grange, General Clark, thanks for sticking around. Thanks for helping our viewers around the world better understand the mood here in the United States, as far as Iraq is concerned. Appreciate it very much.

Up next, the anthrax mystery. Investigators focus on a former U.S. Army scientist in the anthrax letter attacks. We'll discuss where the case stands with three guests.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

The anthrax investigation in the United States returned to the headlines this week with news that the FBI, for a second, time has searched the apartment of a former U.S. Army researcher. Investigators are calling the man in question a potential suspect.

Let's get three perspectives now on this case, where it might be heading and the overall situation, including involving biological warfare.

Joining us from Long Island is the Republican Congressman Chris Shays of Connecticut. Here in Washington, the former U.S. ambassador for counterterrorism Paul Bremer. And Stan Bedlington, he's a former senior analyst with CIA Center for Counterterrorism.

Gentlemen, welcome to LATE EDITION.

And, Chris Shays, let me begin with you. What is taking so long in finding this anthrax terrorist out there?

REP. CHRISTOPHER SHAYS (R), CONNECTICUT: Oh, I think that the very people who are doing the investigation are potential suspects. The FBI, I think, doesn't have the same kind of expertise that they need to go after biological as they do other types of evidence gathering. They're great at evidence gathering, but this also requires intelligence gathering.

BLITZER: But some are thinking, are suggesting, some experts are suggesting that the FBI seems to be dragging its heels, it's wasting a lot of time, it's not being as aggressive in this investigation as it should be. Where do you come down on that?

SHAYS: Well, I mean, I think part of it not having the confidence they need in this kind of work. You know, the FBI needs to marry up with the local and state officials, law enforcement, but also now with public health officials. They're asking the very people to help solve the crime -- and it's not a crime, these terrorist acts -- who in fact may be the perpetrators.

So it's just a little bit more difficult than that way. And also, let me say this, I don't think the FBI has confidence that the intelligence community, the CIA, has leveled with them as to whether there are any other sites out there. I don't think there's this confidence level. Has the CIA been involved in other areas that the FBI doesn't know of?

BLITZER: Well, let me bring Ambassador Bremer in. You chaired a commission on this very problem, the rivalries, the capabilities of the law enforcement versus the intelligence community. What's going on in this anthrax investigation?

PAUL BREMER, FORMER U.S. AMBASSADOR FOR COUNTERTERRORISM: Very hard to know. I think we all should be frustrated that almost a year on we don't seem to have a break. Now, maybe this guy, Hatfill, will turn out to be...

BLITZER: Steven Hatfill, this former U.S. Army researcher...

BREMER: ... maybe he'll give us a break.

But it is the case, as the congressman points out, that there is a major problem, longstanding, goes way beyond anthrax, of getting good intelligence moved around between the law enforcement and intelligence communities, a problem the national commission pointed out. It's still there. BLITZER: Tell our viewers, Stan Bedlington, you know Steven Hatfill. And he has not been accused of anything. He has not been charged with anything. He's, of course, innocent until proven guilty. But the focus of attention, an enormous amount of attention. This week the FBI came and searched his apartment for a second time with a search warrant.

Why are they interested in him?

STAN BEDLINGTON, FORMER SENIOR ANALYST WITH CIA CENTER FOR COUNTERTERRORISM: Well, he's talked about the prospect for a biological terrorist attack taking place in the United States for a number of years and, in fact, has articles published in newspapers, et cetera.

My own knowledge of Steve, which goes back a number of years, I've always found him to be almost a super-patriot. He was not in any way angry at the U.S. government, although he did say he held with some contempt whatever measures the U.S. government had put in place to counter a potential biological attack.

BLITZER: But a month before those letters were mailed -- this doesn't necessarily mean anything, but it is suspicious and investigators are focused on it -- for some reason, he lost his security clearance, as the CIA took those clearances away.

BEDLINGTON: Yes, that is -- I really know the reason for that. He was working at the time for SAIC, the Science Application Institute, I think the...

BLITZER: Applied Institute.

BEDLINGTON: ... Applied Institute. And for some reason they took his -- I think last October, they took his clearances away. The reason for that, I really have no idea.

BLITZER: What about the letters? And I want to go through some specifics with you, Congressman Shays. Let's take a look at the letters in this particular case. The handwriting was pretty distinctive. It's obviously all these people's handwriting are the same.

Would it be that difficult to get a handwriting sample from Steven Hatfill or a lot of other potential suspects and determine who wrote, who addressed those letters to Senator Daschle, Senator Leahy, Tom Brokaw?

SHAYS: Well, I would think clearly they could get any government employee, they could get a handwriting example. And they should be able to compare it. So you know, that is a bit puzzling.

I just happen to think whoever did this could've made it far worse. And so it does kind of make you believe that it might have been someone internal and not someone external, who would have -- could, potentially, have mailed to 5,000 addresses, instead of just a few. BLITZER: And you have to be, Congressman Shays, pretty sophisticated to deal with that kind of very fine anthrax that was placed in that -- in those letters. It's not any run-of-the mill anthrax out there.

SHAYS: No. We have 17 government sites we think that could potentially this could have come from. It's the Ames strain, so it puts a number of government employees on the list. And at very same time, we are going to those government employees and saying, "Can you help us?" So it's a challenge there.

I just really think the FBI doesn't have the toxicologists, it doesn't have the kinds of people it needs to be really good at biological investigations and counterintelligence.

BLITZER: Stan Bedlington, take a look at this, I want to put it up on the screen, the return address of one of the letters. Look at this, fourth grade, Greendale School, Franklin Park, New Jersey, then the zip code. Greendale School -- there is no Greendale School in Franklin Park, New Jersey. But, Greendale, as far as you know, did ring an alarm bell, when you heard that mention of that word.

BEDLINGTON: Yes, it did. Steve Hatfill got his MD at what is now the University of Zimbabwe. It had another name in those days. And I looked it up on the Internet. And, in fact, it is located in Greendale, which is a suburb of Harare. So you have what I think is an amazing coincidence between the two names.

BLITZER: You know, you listen -- you hear these kinds of coincidences, what goes through your mind, Ambassador Bremer? You've spent a career studying counterterrorism and looking for these potential terrorists out there.

BREMER: Well, I think the information that Stan turned up is important and, I presume, by now, is in the hands of the FBI.

I think we also have to not yet exclude the possibility that there could have been foreign involvement in the anthrax attack. I think the hypothesis the FBI is working on is logical, but it shouldn't be the only answer. We need to go wherever the evidence takes us.

Whoever did this attack had that anthrax ready before September 11th, because the first letters were mailed within seven days of the attack. So, you cannot exclude the possibility that whoever did it also knew about the attacks beforehand; it can't be eliminated.

BLITZER: Let's take a quick caller from Tennessee. Go ahead, Tennessee.

CALLER: Yes. I got a question. I remember, during the Olympic Park bombing in Atlanta, there was a cry for the FBI to hurry up and find somebody before it happened again. They did so, and they arrested Mr. Jewell, who ended up not being the right guy. They were severely lambasted for being so inept and so incompetent. And this guy, you know -- I mean, now we're expecting them to rush and find us, you know, the anthrax mail sender, or whatever you want to call him. And I just don't see a problem with them being as deliberate and trying to make sure they've got the right guy and the right connections.

I understand the urgency of the matter. But again, what do we really want from these FBI officials?

BLITZER: All right...

CALLER: Do we want...

BLITZER: ... let me bring Congressman Shays in. Is the FBI gunshy because of that incident, the Summer Olympic Games, and the Wen Ho Lee case in Los Alamos?

SHAYS: Two good examples why they might be gunshy.

You know, one of the points, Wolf, is that you-- we could have had anthrax attacks before 9/11. I mean, we became sensitive to this. But I don't have any confidence, that there haven't -- that we've discovered every case of anthrax and that it only happened after 9/11.

BLITZER: Well, what do you mean by that? Could you flesh that out?

SHAYS: Well, what I mean is that, you know, we became sensitive to the symptoms and so on, but is it possible that there were deaths caused before 9/11 that we wrote off to something else, the flu, et cetera?

BLITZER: And you know that there was a doctor -- one of the hijackers who was involved in 9/11, earlier in Florida, he went to see an emergency room physician who only after 9/11 began to suspect that the lesion that he spotted on this guy's leg was really cutaneous skin anthrax.

Congressman Shays...

SHAYS: Exactly.

BLITZER: ... you've heard about that.

SHAYS: Well, I just can tell you, based on previous hearings that we've had, there could be no certainty that, all of a sudden, we became wise to anthrax. I think we became sensitive after 9/11 and we looked for the symptoms. But if doctors weren't, you know, basically, well-versed on what to look for, they may have written it off as something else.

BLITZER: They did write it off at that point.

And very briefly, Ambassador Bremer, that suspicious -- you're talking about potential foreign sources for the anthrax attacks. BREMER: Yes, it is, but I have to say that I've spoken with some experts on anthrax about that precise case that was in, I think, in July last year, who are absolutely convinced that this did not meet their definition of what cutaneous anthrax would look like. So you have to say case not proven, it seems me, at this point.

BLITZER: Still up in the air. All right, we're going to continue this conversation, but we'll take a quick break.

We'll continue with our anthrax guests. They'll be taking more of your phone calls, as well.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Beautiful but hot day here in Washington, D.C. Welcome back to LATE EDITION.

We're talking about the anthrax attacks with Republican Congressman Chris Shays of Connecticut, the former U.S. ambassador for counterterrorism Paul Bremer, and the former CIA analyst Stan Bedlington.

Stan, you obviously know this Steven Hatfill, and he hasn't been accused, hasn't been charged with anything, only law enforcement sources say he's a potential suspect.

I want you and our viewers to look at this picture that we're going to put up on the screen. It was early 1998. It was published in the weekly magazine, Insight, here in Washington. You see Steven Hatfill in his kitchen, he's dressed up in all sorts of bio-warfare protection gear. And the caption on the picture was, "Cooking Up the Plague At Home."

What do you make of that picture when you see that picture today?

BEDLINGTON: He was very proud of those photographs. In fact, he showed them to me personally, had an album with them contained in them, and showed them to me and said, "This is what I know about anthrax."

He also showed me, at the same time, plans that he had devised to what to do after an anthrax attack took place. He had sort of devised different type ambulants which would filter out anthrax spores.

He'd also devised what he called a disaster train, which would be standing by in the case of a biological attack, that would cope with the victims of it.

BLITZER: And he spoke about it -- we don't have videotape, but in 1998, around the same time, he was on the Armstrong Williams television show. He's a radio talk show host, but he was also on a TV program. And he spoke openly about the threat of anthrax at that time.

So this has obviously been a subject -- letters, anthrax -- that's been on his mind, in the mail, for some time.

BEDLINGTON: No doubt about it. He also gave a talk to the Potomac Institute on the same topic, where he described these various measures that he had himself devised, that the government should be using. He was somewhat, I think, unhappy that the U.S. government did not take on his warnings to heart.

BLITZER: Congressman Shays, I want our viewers once again to focus in on the text of what was in those letters that were sent to the senators, to the media personalities. Here's one letter, for example, that was sent to Senator Daschle. It was identical to the letter sent to Senator Leahy. "You cannot stop us. We have this anthrax. You die now. Are you afraid? Death to America. Death to Israel. Allah is great."

And then there was another letter sent to the NBC anchor Tom Brokaw which says simply this: "This is next. Take penicillin now," penicillin misspelled. "Death to America. Death to Israel. Allah is great." And you look at the date, where it says 9/11 on that, 9/11/01, the way it's written with the zeros there.

What do you make of those warnings in those handwritten letters?

SHAYS: Wolf, you know, I don't know what to make of them.

But, you know, I was thinking, there's obviously a bad news/good story in this. The bad news is five people were killed, 13 people were injured, billions of dollars spent to try to now compensate and protect in the future. The good news we can derive from this is, it wasn't as widespread as it should be, and it gave us some practice on what we will have to do when there is a truly serious threat.

And what I think, really, this anthrax debate should lead to is, where are we vulnerable on all other biological agents -- the bacteria, the viruses -- and what are we doing about it? That's really the big story that I think we need to take away from this.

BLITZER: Good point.

Let's take another caller from New York. Go ahead, New York.

CALLER: Hi, Wolf Blitzer, pleasure to speak with you this morning. Is there any connection with the anthrax, September 11th and Don and Mike not getting support in New York?

BLITZER: I think we got a weird caller. That obviously made no sense.

But the point that Chris Shays was making, the point that Chris Shays was making about the good news, the bad news, that yes, there is some good news out of this. The United States and the American public presumably are better protected from this threat than they were before this anthrax letter attack occurred.

BREMER: Well, that's true.

SHAYS: And, Wolf, if I could jump in...

(CROSSTALK)

BLITZER: Hold on one second, Congressman. I'll let Ambassador Bremer...

BREMER: I think that's true.

On the other hand, I think there is a long way to go. We've got to get this Department of Homeland Security up. We've got to find a way better to integrate the knowledge we have in the Department of Health and Human Services on biological into that Department of Homeland Security. We've got to link it better with the Center for Disease Control down in Atlanta. And we've got to get another sense of urgency into all of this war before we get hit again.

BLITZER: Go ahead, Congressman Shays.

SHAYS: Well, I was just going to say, one of the other good news is that we learned in inhaling anthrax isn't certain death, which we didn't know before.

But Mr. Bremer, Ambassador Bremer was at one of our hearings. And one of the unsettling things we had was a noted scientist of a major medical magazine said his biggest fear is that a group of dedicated scientists will be able to alter a biological agent such that there is no antidote, and wipe out humanity as we know it.

That's kind where I think we need to recognize our attention needs to be drawn. There are so many refrigerators in the world where scientists and doctors have accumulated incredible destructive biological agents. We need to track these down, and we need to destroy them.

BREMER: I think that's absolutely right. Now that the human genome has been sequenced and is available on the Internet, we really do face a possibility of evil microbiologists doing this. And in fact, two microbiologists, you may recall, two weeks ago announced that they had produced a polio strain out of basically chemicals.

BLITZER: This is frightening stuff.

Stan Bedlington, if, in fact, the anthrax killer out there, whoever he or she may be, was a super-patriot and wanted to scare the country into doing something about anthrax and other biological warfare, he or she may have succeeded.

BEDLINGTON: In a sentence, but I think at a very high price, Wolf. I mean, there were five people killed and, what was it, 15 or 16...

BLITZER: Thirteen.

BEDLINGTON: ... 13 people injured. I mean, that's a high price to pay for an experiment of that nature. I'd like to make another point of that question of anthrax. You may remember that Ken Alibek, who was a defector from the Soviet program, talked about the Russians being involved in anthrax experimentation at Yekaterinburg, or Sverdlovsk it was then, and there was an anthrax released that killed about 60 or 70 people. So we need to know, from our friends nowadays, the Russians, what exactly they learned about their anthrax experiments.

BLITZER: All right. We're going to leave it right there.

Stan Bedlington, thanks for joining us. Ambassador Bremer. Chris Shays, who's had more hearings on biological warfare than any other member of Congress, knows a great deal about this subject. Thanks to you for joining us, as well.

And just ahead...

(BEGIN VIDEO CLIP)

BUSH: I still believe peace is possible.

(END VIDEO CLIP)

BLITZER: But is it really possible? Israel jolted by a new round of deadly terror earlier today. Can peace prospects with the Palestinians be revived, as the two sides face the threat of more bloodshed? We'll get perspectives from both sides.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

Israel is reeling from more terror attacks today, this after a bomb at the Hebrew University in Jerusalem this past week killed seven people, including five Americans.

Joining us now in his first interview on LATE EDITION since arriving in Washington as Israel's new ambassador to the United States is Daniel Ayalon.

Mr. Ambassador, welcome to Washington. Congratulations on your new post. You have your hands full, as I'm sure you fully understand.

What can Israel effectively do now -- it seems to have tried to do everything -- to stop this wave of terror?

DANIEL AYALON, ISRAELI AMBASSADOR TO U.S.: Well, we can do much more, and we are doing, Wolf. Today's a very sad day in Israel, as we mourn the death of 11 Israeli victims yet killed by another terrorist attack of the Palestinians. We are filled with sorrow, but yet, we are determined not to let this terror prevail. Terror will not prevail. We are determined to fight the terror and also, to look for a way for peace.

BLITZER: Well, when you say there's a lot more that Israel can do to deal with counterterrorism, what else?

AYALON: Well, Wolf, you know we have hot alerts, which mount to 50 or 60 a day, and if we were less effective, we could have had bus blown, you know, by the dozens, every day, every week.

It's not -- there's no quick fix and there's no magic solution. You have to have a determined, an effective and long-term campaign against the terror.

And we have to do it in the absence of any Palestinian action against terror. They have shirked all their responsibilities against all the commitments they took after they received the most generous offer for peace. They are inspiring the attacks, they're encouraging them, and we will have to fight it.

BLITZER: The Hamas organization has claimed credit for these latest waves of terrorism at the Hebrew University and the Galilee, elsewhere. Was it a mistake for Israel to kill the Hamas leader in Gaza, what, about two weeks ago?

AYALON: No, not at all, because this master terrorist that was killed was in the midst of preparing mega-terror which could have resulted in the killing of thousands of Israelis. He killed before. He was going kill after. And the terror attempts that we saw today has nothing to do with our attempts to intercept the terror.

BLITZER: But nine children were killed in that attack, the killing of that Hamas leader, as well.

AYALON: For that, we are very sorry and regret. And Prime Minister Sharon said had he known that they were there, we probably would have postponed the operation. But this guy had to be stopped, and we are very glad he was stopped.

And the fact that the terror continues now just shows the unwillingness of the Palestinian leadership to really move forward.

BLITZER: But your critics, not only Palestinians but others, say you drop a 2000-pound bomb in a heavily populated area, in a housing area, going after one individual, you know you're going to kill a lot of innocent civilians.

AYALON: Not necessarily, because there were operations like that before. The problem is that, with this guy, with this master terrorist, that he resides purposefully in a populated, in a densely populated area. But we have some, to the best of our capabilities, we have some ways to also avoid that. Sometimes, unfortunately, you know, we have mistakes, and we very, very much regret it.

However, and this is the point, now we have a situation where the Palestinian people are hijacked by a corrupt and terroristic leadership that is not willing to make any move toward peace. In fact, they are very much committed to the destruction of Israel.

BLITZER: The Palestinian Authority president, Yasser Arafat, this week did come up with a proposal that he says could reduce the level of terrorism, the counterterrorism, all the action going on. I want you to listen to what Arafat said on Friday.

(BEGIN VIDEO CLIP)

YASSER ARAFAT, PRESIDENT, PALESTINIAN AUTHORITY: Why there are not accepting to send international forces, they had sent in (UNINTELLIGIBLE) of Lebanon and in Sinai and in Golan Heights. Why? Give an (ph) answer.

(END VIDEO CLIP)

BLITZER: Says if the United States were to dispatch international forces, together with rest of the world, to the West Bank and Gaza, the security situation for Israel would improve.

Is Israel ready to accept in the West Bank and Gaza what it accepted in Lebanon, the Golan Heights, in Sinai, international peacekeepers?

AYALON: Again, Wolf, we see here talks but no action. The problem is not international force, one type or another. The problem is the strategy of terror and the actions that the Palestinians have to take. And they have proved very effective when they really wanted to stop the terror, which comes from their midst.

Now, no international peacekeeping force could be more effective than Palestinian Authority and the Israeli force to stop the terror.

AYALON: So what the Palestinians want is really to internationalize the process, to pressure, put pressure on Israel with dodging the real issues. The real issues is to achieve peace, peace with security.

BLITZER: But as you know, the Palestinians, the Palestinian Authority, the security apparatus, has been severely disrupted by the Israeli military action over these past several months, and they say they can't do it. They simply don't have the wherewithal right now to get the job done.

AYALON: Well, that's the wrong assumption. First of all, they do have the capabilities. Take, for instance, Gaza. We didn't go and operate in Gaza. They have their operations there, their security forces intact. Yet, we have daily attacks, mortars and suicide bombing attempts from Gaza. It's a matter of a political will and strategic decision that they have not taken yet.

So once they really are serious -- we are very serious. We have offered them, you know, since Prime Minister Sharon took office, he has offered, time and again, and made gestures of a unilateral cease- fire, and we stopped our fire, but to no avail. They kept coming at us.

And the problem is, again, that they have to understand that no political gains will they get out of terror.

BLITZER: The Jordanian King Abdullah was in Washington this past week. As you know, he was on this program last week. His foreign minister wrote an article in the op-ed page of The Washington Post this week. Among other things, he said this, and this from a country, Jordan, which does have relations with Israel, a peace treaty with Israel: "We continue to condemn these suicide bombings as morally and politically wrong. But the only response we receive from the Israeli side is seizure of Palestinian land, deliberate delays to vital humanitarian relief efforts and promises, not of a return to negotiations, but of more such actions."

Tough words, from a friend of Israel.

AYALON: Well, Wolf, let me set the record straight. The reason we are here in the areas, the terror cities of the Palestinians, is simply because to defend ourselves, because the terror comes from there. It's not that we went in and terror began. It's because of the terror we are in there. And we will get out the minute we can have a partner who we know, effectively, will try to stop the terror. And here again, Wolf, the tragedy of the region is, we do not lose hope. We have lived with Arabs and Palestinians centuries, Jews and Arabs live together, and they will keep living together in the future. The problem right now that we have a current leadership who is taking over the Palestinian interests, and they are -- I don't think they are serving their national interests.

We do care. And I do join here Mr. Muashar's concerns about plight, the humanitarian plight of the Palestinian people. And we're doing everything we can to alleviate it, even taking risks. And we will keep doing that. On the other hand, we will not succumb to terror. Terror should never be prevailing.

And I think here, it's time for the Palestinians to realize that by keep killing Israelis, not only they commit crimes against humanity, they are also killing their own aspirations and political ambitions.

BLITZER: Ambassador Ayalon, thanks for joining us. Welcome to Washington. Former national security adviser to prime minister, now the Israeli ambassador to United States. Hope you'll be joining us frequently.

AYALON: Thank you for inviting me.

BLITZER: Thank you.

Up next, the Palestinian perspective. We'll go live to Gaza and talk with the Palestinian cabinet minister, Nabil Sha'ath.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

Joining us now from Gaza City is the Palestinian cabinet minister, Nabil Sha'ath.

Mr. Sha'ath, always good to have you on our program. Thanks for joining us.

NABIL SHA'ATH, PALESTINIAN CABINET MINISTER: Thank you.

BLITZER: You heard the Israeli ambassador to the United States say the Palestinian Authority was simply sitting on its hands, not doing enough to stop these terror attacks, including the attacks today, at the Hebrew University earlier in the week.

What is your response to that?

SHA'ATH: Well, my response, Wolf, is very simple. The Palestinian Authority has, as you have really indicated, a totally destroyed police force. The West Bank doesn't exist anymore. All our policemen are either killed, imprisoned or decommissioned by the Israelis. We have absolutely no security installations whatsoever in the West Bank.

In Gaza, there has not been a total destruction as happened in the West Bank, but no Palestinian policeman can move from Gaza to Hanunis (ph) or any other part of the Gaza Strip. And every physical installation has been destroyed, as well. We're are also under siege in the Gaza Strip, although not as serious as that of the West Bank.

The Palestinian Authority has tried, nevertheless, to talk and to try to negotiate with all of those who still claim they are doing violent operations. Our objective was to stop all of these operations and move back to the peace table. Unfortunately, an agreement that was almost in the making was destroyed by the Israeli bombing of Gaza and the killing of 17, 12 of them children.

BLITZER: Well, what about the Israeli argument that the Palestinian Authority security forces in Gaza, which is where you are right now, could clamp down on Hamas if it really wanted to?

SHA'ATH: Well, I just said that the presence of these forces here are forces really operating almost out of their homes. There are no police stations. There are no jails. There are no detention centers. There's not even -- criminology labs have been destroyed, and police hospitals have been destroyed. There is a human presence, but a totally disorganized and incapable presence of doing much.

And furthermore, the Israelis have not complained that any of these suicidal bombings inside Israel have come from Gaza. This is a true -- an Israeli statement that is true and correct. Gaza is under absolute, total siege. It's almost impenetrable from Gaza to Israel and back.

BLITZER: The bombing at the Hebrew University in Jerusalem this week resulted in seven people killed, five of them Americans, suggesting to some that Americans were indeed targeted, targeted by the bomber, a remotely controlled device in this particular case.

I want you to listen to what President Bush said in response.

(BEGIN VIDEO CLIP) BUSH: I'm just as angry as Israel is right now. I'm furious that innocent life lost. However, through my fury, even though I am mad, I still believe peace is possible.

(END VIDEO CLIP)

BLITZER: Minister Sha'ath, were Americans deliberately targeted in Jerusalem?

SHA'ATH: I don't think so. Although we condemned the operation in every way possible, whether it was Americans or Israelis, innocent human lives were lost including all -- many injured Arab-Israelis who were in the campus at that time.

I don't think the target was Americans. I don't think so.

BLITZER: One thing the president did say in the Oval Office this week, as I'm sure you saw, in the presence of King Abdullah of Jordan, he also suggested -- he reiterated what he said several weeks ago, that it's time for new leadership to emerge in the Palestinian community, time for Yasser Arafat to go. Listen precisely to what the president said.

(BEGIN VIDEO CLIP)

BUSH: Now, they are some who say, well, you know, there's only one person that could conceivably make this happen from the Palestinians. I just simply don't believe that.

(END VIDEO CLIP)

BLITZER: Is there any indication that Yasser Arafat will step aside?

SHA'ATH: This is really not an issue in the Palestinian ranks at this time. President Arafat has been elected by the people with a massive force of observers making sure it was a free election. He's willing to run again for election. He has never been a dictator who took over by a coup d'etat.

So how is Mr. Bush going to get him out, if not through the ballot? And President Arafat is willing to go to the ballot again.

I don't think this is really an issue. The Palestinians who are really mad at an attempt just to change the leadership from outside. If left to themselves, they will have an opportunity in three or four months to go to the election again.

BLITZER: When is the Palestinian delegation coming to Washington to meet with Secretary Colin Powell?

SHA'ATH: Well, we were given a tentative appointment on the 5th and 6th of this month, and then it was delayed to the 8th and 9th, and it was still waiting for to it be confirmed. We are ready to come anytime there's a confirmed date. We'd like to continue the dialogue with the United States. BLITZER: Well, what's the point, though, if the United States, the Bush administration, says find a different Palestinian leadership, and you say -- the Palestinian authorities say there will be elections and presumably Yasser Arafat will remain the leader of the Palestinians?

SHA'ATH: Well, he will run. Whether he will remain or not is really up to the Palestinian people. I don't think there's a better test for him than to really take that risk of running again in a very closely watched and observed, free and fair election.

In the meanwhile, he does not go to the United States. He chooses delegations.

BLITZER: So this will be a delegation that will be Yasser Arafat's selection of the people who will be going to meet with the secretary of state.

Let me ask you this question, because a lot of people, a lot of my view e-mail me this question. The Palestinian Authority may not necessarily be able to control Hamas, but it can control the Fatah movement, including the Al-Aqsa Martyrs Brigade, which is associated with Yasser Arafat.

Several of the suicide bombers were associated with the Al-Aqsa Martyrs Brigade. Why isn't the Palestinian Authority doing more to stop those terrorists?

SHA'ATH: It did more. These are not official branches of the Fatah movement. These are people who probably originally were Fatah cadres who decided to go their own way, in a decentralized way under occupation in which every city on its own, every little village is on its own.

And yet, as you can see in the last at least two, three weeks, the actions by the Al-Aqsa Brigades have gone down considerably, almost to a halt. All these operations that have been take place are the making of Hamas.

BLITZER: Nabil Sha'ath, thanks for spending some time with us from Gaza. Appreciate it very much. And coming up next, your letters to LATE EDITION, plus Bruce Morton's essay.

(BEGIN VIDEO CLIP)

BRUCE MORTON, CNN CORRESPONDENT: Can Mr. Bush just order an invasion? Senate Republican Leader Trent Lott says yes, the Constitution, Article I, Section 8, gives Congress the power to declare war.

(END VIDEO CLIP)

BLILTZER: What to make of the mixed messages about taking on Iraq? Stay with us.

(COMMERCIAL BREAK) BLITZER: Time now for Bruce Morton's thoughts on the possibility of a new war between the United States and Iraq.

(BEGIN VIDEOTAPE)

MORTON (voice-over): The administration said last week it will set up a new office to coordinate its foreign policy message. But on Iraq, nobody seems to know what that is.

President Bush and polls say most Americans would like to get rid of Saddam Hussein. But then the questions start.

Can Mr. Bush just order an invasion? Senate Republican Leader Trent Lott says yes, the Constitution, Article I, Section 8, gives Congress the power to declare war.

And how comfortable would Americans be as aggressors, the ones who struck the first blow?

Next, is the war a good idea? When this president's father led the attack which drove Saddam out of Kuwait, he had many allies. His troops were based in Saudi Arabia. This time, no European state publicly supports an invasion. No Arab state does. If the invading force had to be supplied only by air and sea, wouldn't that be difficult?

How many troops would it take? Reports say Secretary of State Colin Powell and senior Pentagon generals are wary, saying an invasion would take a large force and would cost lives. Civilian advisers reportedly think smaller, high-tech strikes could work. But they, unlike Powell and the generals, have never been to war, never had to ship body bags home.

Then what does the United States do if it wins? Install a government? Love Saddam or hate him, Iraq is the Iraqis' country. Would they welcome a government led by what critics would surely call the U.S. puppets?

As a candidate, President Bush said he didn't want to get involved in nation-building.

BUSH: I just don't think it is the role of the United States to walk into a country and say, "We do it this way, so should you."

MORTON: He is already involved in Afghanistan. Does he now want to try installing democracy in another place which has no experience of it?

Would one result of victory be to enrage Arabs in other countries, leading to more calls for jihad against Israel and it's ally, the United States? Would the U.S. be worse off in the region than it is now? Would gasoline prices soar or plummet? Hard to know.

One note of good news in this sea of hard-to-answer questions: The Senate Foreign Relations Committee, this past week, held two days of hearings on Iraq and what U.S. policy toward it should be. Now, before the decisions are made, is a good time to learn as much about the choices as we can, so that we -- voters, congressmen, everyone -- do whatever we do with our eyes open, not drifting casually, as a generation ago, into a quagmire named Vietnam.

I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Thank you very much, Bruce.

Let's listen to some of the letters that we have been getting to LATE EDITION. Many of you weighing in on the U.S. position on Iraq.

Abraham from Belton (ph), Missouri, writes this: "Saddam Hussein has used weapons of mass destruction against both his own people as well as the Iranians. There is no doubt in my mind that if he acquires nuclear capabilities, he would not hesitate to use them against us, or at least try to blackmail us with them. He must be stopped before it is too late to stop him."

But Mary in New York writes this: "Personally, I think the U.S. has a lot of nerve, presuming to know what and who is best for another country. Take care of this country first. There is lots to do."

We always welcome your comments. Our e-mail address is lateedition@cnn.com. If you would like to receive my weekly e-mail previewing the program, go to cnn.com/lateedition and sign up.

It's time now to say goodbye to our international viewers. Thanks very much for watching.

Coming up for our North American audience, the next hour of LATE EDITION.

(BEGIN VIDEO CLIP)

JOHN ASHCROFT, ATTORNEY GENERAL: Corrupt corporate executives are no better than common thieves.

(END VIDEO CLIP)

BLITZER: But will a corporate crackdown bolster consumer confidence in the economy? We'll get three perspectives.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We'll talk about your money and the impact of the new crackdown on corporate crime in just a moment. But first, here is CNN's Fredricka Whitfield in Atlanta with a news alert

(NEWSBREAK) BLITZER: New rules are in play for corporate executives. President Bush, this past week, signed a new corporate reform measure into law. Meanwhile, two former WorldCom executives have now joined the parade of business executives charged with fraud, and surrendered to the FBI.

Here to offer insight into these dramatic developments and their possible impact on your money and the overall U.S. economy are three special guests: In Los Angeles, the former Clinton economic adviser Gene Sperling. In New York, the former Republican presidential candidate Steve Forbes. And also in New York, Margaret Popper of "Business Week" magazine.

Welcome, all three of you, to LATE EDITION.

Steve Forbes, are we in a recession right now?

STEVE FORBES, FORMER REPUBLICAN PRESIDENTIAL CANDIDATE: We're still barely recovering from the recession of last year.

I think there are several things that are going to have to be done in the coming weeks. One is the Federal Reserve is going to have to do another interest rate cut and do a little more easing. They're still a little too tight.

There are other things that are going to have to be done in the aftermath of that legislation, the prime one being not letting trial lawyers turn this into a circus, where no justice is done and their pockets are lined. In other words, blurring the distinction between genuine risk-taking, which is often fraught with failure, and outright fraud and corruption. That's going to be critical.

BLITZER: Gene Sperling, same question to you, are we in a recession?

GENE SPERLING, FORMER CLINTON ECONOMIC ADVISER: I don't think we're in a recession right now. I think that we have a recovery that is very much plagued by oversupply and uncertainty -- uncertainty due to the stock market, the corporate troubles, the Mideast. And I think somewhat, too, to the loss of investor climate that we're seeing from the deterioration of our fiscal situation.

So, I think what you're seeing is people are holding back. Companies are holding back their capital investments. That means less people are getting hired. That means there is more concern and less spending.

So I'd say we're in a very slow recovery right now. I still remain optimistic about the long term, but how long it is going to take to get there is a big question.

BLITZER: Margaret, we keep hearing from the treasury secretary, Paul O'Neill, from other Bush economic advisers that the fundamentals of the economy are strong out there right now and that people have to appreciate that. But the message doesn't, apparently, seem to be getting through. Is there a disconnect? MARGARET POPPER, BUSINESS WEEK: Absolutely. I think one big issue here is that the stock market is a discounting mechanism for future earnings. And until we start to get the actual effect of earnings restatements, which isn't going start happening really until the September quarter, we are not going to know what earnings are. So what does the stock market have to discount? They don't have their normal signals.

So the stock market is definitely disconnected from what's happening to the economy.

BLITZER: Are you suggesting, Margaret, that since the markets have been in almost a freefall, there's been a little bit of a comeback, that people assume that, as the markets go, the overall U.S. economy goes?

POPPER: Well, what's interesting is the consumer, although they've expressed in the surveys that their confidence is down, the consumer is continuing to spend. So that tells you that there's a disconnect there between the data on consumer confidence and what people actually do.

Consumers actually spend according to the money in their pockets. And if you look at disposable income over the last quarter, it's actually risen. So that's good news.

BLITZER: Steve Forbes, all of the optimistic talk coming from Paul O'Neill, other Bush administration officials, led Paul Krugman of the New York Times, an op-ed columnist, to write this this past Friday. He says, "I just don't understand the grounds for optimism. Who exactly is about to start spending a lot more? At this point, it's a lot easier to tell a story about how the recovery will stall than about how it will speed up. And while I like movies with happy endings as much as the next guy, a movie isn't realistic unless the story line makes sense."

Do you agree with Mr. Krugman?

FORBES: No. And unfortunately, throughout the '90s, he was a sourpuss about the economy, so his dour warnings are not to be taken, I think, with too much seriousness.

But he does bring up a very valid point in this sense, that people are worried about what is going to happen next in the aftermath of this anti-corruption legislation. Will it be abused?

I do think we need another tax cut, a big tax cut, unlike the one of last summer. The Federal Reserve has got to get its act together, in terms of stable money.

And also, internationally, we have a disaster brewing with Brazil and other countries, thanks to the depredations, the destructiveness of the International Monetary Fund, which keeps telling these countries to devalue their money and raise taxes. And that's going to hurt our economy. It's...

BLITZER: Well...

FORBES: ... going to hurt us not only economically but politically.

BLITZER: Gene Sperling, I assume you don't want to see another major tax cut anytime soon. But do you want to see that $1.6 trillion tax cut that was signed into law revoked or at least scaled back in the short term?

SPERLING: Well, Wolf, I think what is hurting our economy right now is confidence.

Margaret's right that the consumer has been strong so far, but we're starting to see some weakening there. As we saw in the New York Times today, there's a lot of weakening in our investment climate and foreigners willing to put our money there.

And a lot of that is because of the long-term loss of fiscal discipline, the fact that we've gone from being on a path to paying down the debt to large surpluses as far as the eye can see.

We don't need contraction now, but we do need to delay those tax cuts in the long run. I think what President Bush should do is call for a grant compromise. Say he's willing to free some of the tax cuts on the most well off, if Congress is willing to hold back spending. That would instill much more confidence.

You don't do it right now while the economy is weak. But you delay those things in the future to give confidence that we're back on a path of fiscal discipline, low interest rates and high investment again.

BLITZER: All right, let's take a caller from Georgia. Go ahead, Georgia.

CALLER: Ah, yes, Wolf, wonderful show.

Mr. Forbes, would not a cut in the capital gains tax, say, from 20 to 10 percent effective immediately, not energize the stock market and the investors to invest? And are you buying stocks at the present time?

FORBES: On the first part of your question, a cut in the capital gains tax would be a good tonic for the market, both for investors and for business investors, getting more investment in plant and equipment. Every time we've done a reduction in capital gains tax rates, revenues have gone up immediately, not a few months or a few years down the road.

As for my own participation in the market, I have been going in the market in recent weeks. I think you make money going against the crowd, not with the crowd. And these kind of uncertainties, while they're stomach-wrenching, I have faith in the future, and so yes, I'm buying more than I'm selling.

BLITZER: Margaret, if people have some cash lying around right now, what do you think they should be doing with it?

MARGARET: Well, I think that's a difficult question to answer right now.

I think that people -- the real answer is, you have to extend your investing horizon. And for people who don't have that option, like retirees who have to liquidate their portfolios to actually pay their bills, it's going to be a tough period.

I think for other people, this is actually a good time to buy stocks. I think that they are probably fairly valued right now.

It's possible that we'll see some volatility down as well as up from here. But I think we're bouncing along a bottom right now. And so the stockmarket, if you can hang in there for a couple of a years, is a good place to put your money right now.

BLITZER: Is that good advice, Gene Sperling, to look for some bargains in the stockmarket? A lot of people have lost a ton of money in there. They're pretty nervous about reinvesting in equities right now.

SPERLING: You know, moderation is the best, I think, here. Certainly, if you know when you hit the bottom, that's a valuable thing to know.

I would advise people to act moderately. There's still a lot of risk out there in the market. There's a lot of risk in the Mideast. We are getting at levels where I think it may make sense to put a little in the market, but I would say gently does it, moderation is the best course.

BLITZER: A new CNN-USA Today Gallup Poll, Steve Forbes, had this interesting statistic out there, and I'll put it up on the screen. "Did the stock market decline shake your confidence in the U.S. economy?" Thirty four percent say yes, but 65 percent say no. They are still pretty bullish on the overall U.S. economy.

Where do you come down on that?

FORBES: Oh, long term, I'm very bullish on the U.S. economy, Wolf. I think the fundamentals of the American economy today are absolutely fantastic. If we must avoid some policy errors on the dollar and taxes and other areas, this thing can pick up very quickly.

Even with the high-tech boom in telecommunications, and the high technology, we've got some fantastic technology coming along. We forget that in every advance of major technologies, there have been these spectacular busts, but the technology moves forward. In the early 1980s, personal-computer makers like Atari and Commodore went under, but the technology went forward.

So the key is, don't mess up on policy. Federal Reserve, keep the dollar stable. No more deflation. Do a real tax cut, unlike we got last summer, the kind that Ronald Reagan and John Kennedy gave us, and restraint on spending. Outside of the war effort...

BLITZER: Well, Steve...

FORBES: ... outside of the war effort there's been a spending binge. And that's kind of a little bit unnverving.

BLITZER: Steve Forbes, when I covered you, your presidential aspirations, you were very concerned about the deficit. There is a deficit right now after a few years of budget surpluses.

If you go ahead and cut taxes once again, as you're repeatedly advocating, isn't the deficit, at least in the short term, going to go up?

FORBES: You always get a deficit in the aftermath of a recession. The key is, the way you get government finances in order, at least a chance to get them in order, is to have a vibrant economy. And by reducing the tax burden on the American people, you will get a more vibrant economy in the future.

Next year, Wolf, almost every state in the union, with a handful of exceptions, is going to put in major tax increases because they're raided every reserve fund possible.

So if we get the economy moving, long term we're going to be a healthier nation and a wealthier nation.

BLITZER: Why doesn't that make sense to you, Gene Sperling?

SPERLING: Let me offer a compromise. Let's give some relief right now just this year to states so they don't have to raise taxes and cut education. But on the other hand, let's pull back the tax cut for the well-off, so we can restore fiscal discipline.

Wolf, on July 16th, Chairman Greenspan, at the end of his testimony, said very explicitly that the loss of fiscal discipline was hurting the investor climate and that the previous fiscal discipline we had in the '90s was responsible for lower long-term interest rates and stronger investment, which Steve is forgetting is what really helped fuel things in the 1990s was a strong investment climate, confidence in the U.S., confidence in our fiscal situation, better savings, lower long-term interest rates.

That's the recipe I'd rather see us go back to in the long term. In the short term, maybe Steve and I can agree we should give a little stimulus to the states right now.

BLITZER: Margaret, does Wall Street, does big business have confidence in the economic team that President Bush has assembled?

POPPER: Well, I think it gives mixed reviews, and I think the Bush administration has had some PR problems.

But I think one of the issues here is it's not as simple as, we cut taxes and, therefore, all that money goes flooding into the economy. We know, in fact, that when you cut taxes, people save some of it. So you don't get the full effect of that tax cut immediately in the economy today.

On the other hand, we have seen an increase in government spending, which, I agree with Gene, as you're coming out of a recession, it's a good thing, actually, to increase spending to make up for the shortfall in the private sector that hasn't been producing the way it was producing in the past.

So increases in unemployment benefits and things like that actually do tend to get spent by a broader segment of the economy than the income class that gets affected when you cut, say, the capital gains tax.

BLITZER: All right. We're just starting this conversation, Margaret. Stand by. Gene Sperling, Steve Forbes.

We have a lot more to talk about. More of your phone calls, as well. LATE EDITION will return right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: The era of low standards and false profits is over. No boardroom in America is above or beyond the law.

(END VIDEO CLIP)

BLITZER: President Bush speaking at the signing ceremony of the corporate reform bill.

Welcome back to LATE EDITION. We're continuing our discussion with former Clinton economic adviser Gene Sperling, former Republican presidential candidate Steve Forbes, and Margaret Popper of Business Week magazine.

Let's take another caller. Georgia, go ahead.

CALLER: Hello?

BLITZER: Go ahead, Georgia.

CALLER: Hi. I have a -- my question is, do you think that these corporate reforms are going to affect any kind of real change without some sort of investigation and possible discipline for our leaders, who have themselves indulged in these quasi-legal financial maneuverings?

BLITZER: All right. Gene Sperling, I think the caller's referring potentially to what President Bush was up to when he was a business executive a dozen years ago and what Vice President Cheney was up to when he was chairman and CEO of Halliburton much more recently.

What do you say to the caller? SPERLING: Three points. One, the most important thing is to get these larger systemic things right. Greater independence, less conflict of interest among equity analysts, among the accountants, more independence on the boards. Those are the systemic things that will give people more confidence.

Two, I actually agree with Steve Forbes that we have to make sure we don't go overboard and discourage the type of risk-taking and innovation and just plain errors of judgment that are part of our free-enterprise system.

Three, on the issue of President Bush and Vice President Cheney, politically I would encourage them to be forthcoming. I think one always learns that's better. I think the most important thing is that the SEC and the Justice Department try to deal with it in the most independent way so that, whatever comes out, people believe that it is devoid of any political taint.

BLITZER: Steve Forbes, in our new CNN-USA Today Gallup poll, the question was asked, can this new legislation, which the president signed into law, have a major effect on corporate corruption? Look at this: 66 percent of the American public believe it can; 30 percent are not so convinced.

Do you think this new law will have that kind of effect?

FORBES: I think there's some very good points in that new law, such as having more independent directors, genuinely independent directors, on critical committees such as the audit committee, and having some options reforms and sensible things like that.

The key, though, is not going overboard and having trial lawyers make sure that any kind of failure or any kind of risks in the past that didn't work become fodder for the courtroom and massive awards. That's going to inhibit risk-taking, inhibit entrepreneurs, inhibit start-ups, which is going to hurt the future. And I think that's what really roiled the stock market in July, was the fear that Congress might go overboard.

So a lot's going to depend on how the regulators interpret this new law, how the courts interpret this new law. If the sensible reforms are allowed to stand and we don't go overboard, then yes, it will be very much of a net positive. But if we do go overboard, then we're going to do real long-term damage to this economy.

BLITZER: Margaret, the Enrons, the WorldComs, the Adelphia, were they just a few rotten apples, or are they just the tip of the iceberg?

POPPER: I think that they are a couple of rotten apples, and I think that what's kind of interesting is, if you look at the market reaction to these guys getting carted away finally, it wasn't that great. The market didn't shoot up on this news, although they seemed to have been begging for a hanging for a long time now.

One of the things that I think investors have to keep in mind is, a lot of this gets down to how you interpret accounting. And one thing that the Bush reforms have not done, and really I don't think can do, is change the accounting rules significantly.

Really, what we're in right now is a period where conservative accounting is in fashion, investors are demanding it. Guess what? Between '94 and 2000, investors were demanding aggressive accounting. You couldn't show earnings going up fast enough. So, I think it's a change in fashion. BLITZER: Gene Sperling, the president was at a fundraiser in Maine on Saturday night, last night. He took a swipe at you, not necessarily personally at you, but at your administration and what he inherited when he took office.

BLITZER: Listen to President Bush.

(BEGIN VIDEO CLIP)

BUSH: Turns out Vice President Cheney was right. He said when we first got here it looked like we might be in a recession. Of course some people didn't appreciate him saying that.

And then all of a sudden the statistics came out recently, which showed that the first three quarters of my administration were negative growth. We did, in fact, inherit a economic slowdown.

(END VIDEO CLIP)

BLITZER: That means he inherited it from the Clinton administration. So you guys created this mess. Is that what you heard him say?

SPERLING: Hey, Wolf, I have a message for President Bush. We'll take this deal. He wants to give us responsibility for everything that went wrong. We'll take that, as long as he gives us responsibility for the longest expansion in history, a doubling of productivity, the lowest unemployment, and the most dramatic and positive turnaround in our fiscal situation.

But really, this type of talk is never helpful. What matters is how a president deals with the hand that is dealt him. And he was dealt low unemployment, high surpluses, a lot of strong things. And I think that they haven't shown credibility in their communication to the market and the public. I think they've had irresponsible fiscal policies.

And I think they should focus on what their own policies are. I think this blame Clinton, blame Daschle stuff, that's not quite the era of responsibility I think the president had been calling for.

BLITZER: Well, Steve Forbes, the House Democratic leader, Richard Gephardt, seems blaming the president for a lot of this mess. No great surprise, politics, of course, being a factor in this political season.

Listen to what Congressman Gephardt said.

(BEGIN VIDEO CLIP) REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: We can read this president's lips, but we don't hear any new ideas and we don't see any real action.

(END VIDEO CLIP)

BLITZER: All right, what do you say about that, Steve Forbes?

FORBES: Well, whatever real action we've seen, Richard Gephardt has done his best to block. The latest being trade promotion authority, which he tried to kill.

But in terms of action, there has to be more action. There has to be more action on the tax front, on the IMF front, the international front. The Federal Reserve has got to stop this slow deflation which seems to be beginning again.

And we do need genuine legal reform. We have what we might call in this country, Wolf, legal fear. Whether it is coaching little league, or now running corporation, you are always look over your shoulder, how is this going look in a courtroom? And that's not healthy anywhere.

BLITZER: All right. Let's take another caller from Washington, D.C., the nation's capitol.

Go ahead, please.

CALLER: Hi. This question is for Steve Forbes and his support of an invasion and seizure of Iraqi oil fields. Does he actually believe that that will improve the economy, or is it possible that the backlash might actually hurt the economy even more?

FORBES: Well, if we don't win the war on terror -- and Iraq is the source, major source of financing for terror -- then we're not going have a good economy because we're not going to have freedoms to pursue our dreams. So this a matter of fundamental safety and security, and the sooner we take Saddam out, the better.

BLITZER: Margaret Popper, there's a lot of concern out there, if U.S. goes to war against Iraq, it could have an enormous economic impact right here at home, including the disruption of oil shipments to the United States. The price of gasoline, for example, could go up.

What is the assessment that you are hearing?

POPPER: Well, I think that is a big fear, and I think that that's quite a realistic fear. One, I guess if you want to call it that, advantage of a war is that it will create some employment, obviously, as companies both gear up to supply it and, also, as soldiers have to go overseas. So in that sense, in a short-term way, it can be good for the economy.

But overall, for productivity -- and we've had these wonderful productivity gains even through this recession -- it's a terrible thing, because it basically diverts productive resources from industry. So you're not building. You don't have companies building for the future and building the platform on which they can continue to grow.

BLITZER: On that sour note, unfortunately, we have to leave it.

Margaret Popper, thanks for joining us. Gene Sperling, Steve Forbes, always good to have both of you on our program as well. Appreciate it very much.

Coming up next, our Final Round. Our panel weighs in on the heavy political debates of this week. Our Final Round, right after a news alert.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Time now for our Final Round. Joining me, Donna Brazile, the democratic political strategist, Terry Neal of the washingtonpost.com, Jonah Goldberg of the National Review Online, and Robert George of The New York Post.

We begin with the growing talk of war with Iraq. Earlier today a key Republican on the Senate Foreign Relation Committee, Chuck Hagel of Nebraska, warned of the high stakes for the United States, while the chairman of that committee, Joe Biden of Delaware, said he thinks a military campaign is a near certainty.

(BEGIN VIDEO CLIPS)

SEN. JOSEPH BIDEN (D), DELAWARE: I believe there probably will be a war in Iraq. The only question is, is it alone, is it with others, and how long and how costly will it be?

SEN. CHUCK HAGEL (R), NEBRASKA: If we are going to go in there, we need to go in there with all the might we can to finish the job and do it right, and that's going to require ground troops. And then you expose those ground troops to the possibility of chemical and biological weapons.

(END VIDEO CLIPS)

BLITZER: Terry, is war with Iraq inevitable?

TERRY NEAL, WASHINGTONPOST.COM: It certainly sounds like it is. And I think that the risks are real. I think the problem is that the president hasn't made the case for an attack yet. He's going to have to do that before it happens.

But people should probably remember two things about Saddam Hussein. Number one, he's a brutal megalomaniac, I think, who aspires to deification in the Arab world, number one. And number two, he gassed his own people. And anybody that did that, I think it is completely legitimate to think that he would conspire, perhaps, with our enemies and terrorists, people who hate us, to use weapons of mass destruction against us. But the president's going to need more than that kind of conjecture. He's going to need proof, if he's going to be able to actually pull this off.

ROBERT GEORGE, NEW YORK POST: Yes. The irony is, actually, that Senator Biden today, I think, actually made probably one of the best cases of anybody on why a war with Iraq is inevitable.

I do think the administration actually has to be a little bit more focused, in terms of publicly setting up the war as well at explaining it. And I don't think they can just say, oh, well, it looks like Mohammed Atta met with an Iraqi agent or something like that. I think they really have to give the entire picture.

BLITZER: Donna, were you surprised that the Democrat, in this particular case, Joe Biden, seems to be gung-ho, whereas the Republican, Chuck Hagel, much more cautious, let's be concerned about the consequences?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, I think the Democrats -- many Democrats on Capitol Hill are resigned to the fact that we need a regime change. However, I think many Democrats are openly questioning some of the tactics and perhaps the timing.

And the Bush administration must makes its case, not only to the American people, but to Congress, to go in there and get an act of war, as well as build international support, so we don't go in there alone.

BLITZER: On this program earlier, Arlen Specter, the Republican, said he wants a resolution. He wants a formal resolution to be approved, before the U.S. goes to war.

JONAH GOLDBERG, NATIONAL REVIEW ONLINE: Yes, well, I want one, too. I think Congress -- you know, there's an important role for Congress to play here, and Congress needs to step up to the plate.

What they want to be able do is, if there is a war, they want to be able to say -- and it's successful -- they want to be able to say we were 100 percent behind it. And it it's unsuccessful, they want to say, well, we had reservations all along. It doesn't work that way in a democracy, and it doesn't work that way under our Constitution. They have an obligation to put their fingerprints on this thing.

And I would add one other thing about, not only is war inevitable, I think war is already going on. We've been bombing Iraq for the last four or five years. We already have hostilities there. The question is, do we want to just sustain the status quo, or do we actually want to foment real change for the better?

BLITZER: All right. Let's move on and talk about something else. Congress' summer recess is now officially under way, but there's concern about unfinished business. For example, the New York Times' editorial page this weekend criticized the Senate majority leader, Tom Daschle, for what it called "a shaky performance on key issues." Earlier today, Daschle defended the Senate's accomplishments under his leadership.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: We've had an incredible year and a half -- a year and a couple of months now. We passed the patients' bill of rights. We've passed election reform. We passed campaign reform. We passed a good education bill. We passed the trade promotion authority now.

(END VIDEO CLIP)

BLITZER: Robert, are things as rosy as the Senate majority leader would have us believe?

GEORGE: Oh, I don't think so, I mean, since they had the prescription drugs deal just collapse earlier this week.

The interesting story, frankly, is that, you know, despite all the, you know, the criticism that Bush has received in the last few months, is that he has actually had a rather remarkable year and a half. I mean, even putting the war situation aside, he's gotten tax relief, he's gotten -- he's got education reform. He will mostly likely have the Homeland Security Department made in the next -- over the next couple of months.

So I think, actually, the president is able to say that he's pushing forward things and that the House is supporting him, and he makes the case that the Senate stands in the way.

BRAZILE: Well, Robert, I'm going to defend Tom Daschle, not because he's a Democrat, but because I think he's been a magician and perhaps a miracle worker.

Look, he has a one-vote majority in the United States Senate. He's been able to bridge the divide that we have in the Democratic caucus with liberals, from Paul Wellstone to Zell Miller of Georgia. I think he's done a remarkable job with the one-vote majority that he has in the Senate, looking for 10 Republicans to get the 60 votes required on most controversial issues.

And look, as you all know, one monkey can change the whole show and dynamics in the Senate, and Tom Daschle has been the ring leader in trying to cajole all of those characters to work together.

BLITZER: You agree? Will you agree?

GOLDBERG: We certainly learned that monkeys can ruin things, with what Senator Jeffords did.

But I would say that, you know, look, when the New York Times criticizes a Democratic majority leader for having shaky leadership, that means he must be doing something right.

And I think generally the legislative year's been a wash. There were a lot of good things -- you know, fast track is a big deal. Yucca Mountain finely got settled. There were some good things in there.

And if you're a liberal Democrat there is some, you know, big, porky, silly things in there too that you could like also.

So it's a wash. Everyone's going to have their issues to campaign on. I would rather no prescription benefit than a bad one, so, you know, I think, all in all, it was a good year.

BLITZER: I think there were some pretty impressive achievements on both sides, didn't you think, Terry? They didn't get the prescription drug benefits for the elderly, but they came sort of close.

NEAL: Right, but that's a big one, and I think that they need that accomplishment. I mean, the Democrats have been talking for years about this, as well as a patients' bill of rights. We still have neither. And I think that they need to be able to take some accomplishments back to the voters.

On the other hand, politically speaking though, they could take those issues and use them on the campaign trail this year. August, this month is going to be a big month, and Democrats are planning on using those issues as kind of the core of their (OFF-MIKE).

BLITZER: Many lawmakers, as our viewers know, aren't happy about the FBI investigation into the congressional probe, the 9/11 leaks. Members of the House-Senate Intelligence Committee balked at the FBI's request that they take polygraphs to determine who leaked information about intercepted messages relating to September 11th.

The Republican leader in the Senate, Trent Lott, weighed in on this issue earlier today.

(BEGIN VIDEO CLIP)

LOTT: I think I do agree they shouldn't be polygraphed, members of Congress. But I have to say that the thing for members of Congress to do is to keep their mouths shut when it involves sensitive and classified information.

(END VIDEO CLIP)

BLITZER: What's wrong with letting members of Congress take polygraphs? If you or I and every other American citizen was asked by the FBI to take a polygraph, why not members of Congress?

GOLDBERG: Well, first of all, I don't think there's a polygraph machine in existence that wouldn't burst into flames...

(LAUGHTER)

... 100 feet from a U.S. senator. I mean, those guys will be able to say two plus two is an aardvark and pass on those things. So, but -- look, there are constitutional issues, and I understand those things. This was an investigation that was invited by the legislative branch, so some of that water's already been muddied by them.

To me, I think there's nothing wrong with having these guys take polygraph's. Figure out a compromise with the Capitol Police or someone else administers them. But, you know, they invited this, and they're leaking, so we should get to the bottom of it.

BRAZILE: Well, I agree with Jonah, and I hope we don't cause lightening to strike the set right now.

(LAUGHTER)

Look, if we decide to polygraph members of Congress, we need to get a new appropriation, open up another jail in Washington, D.C.

(LAUGHTER)

It will not be a pretty picture.

I believe in separation of powers, as a former congressional staffer, and I believe that these members of Congress should volunteer with their own conscious to do what's right for the American people.

BLITZER: It's a little ridiculous, when you think about it, Terry, just for a second. The joint House-Senate Intelligence Committee is investigating the executive branch, what they knew, when they knew it, was there a lapse. Then there's a leak, and so the FBI, the executive branch, says, well, we're going to investigate the committee that's supposed to be investigating the FBI. It is a little weird.

NEAL: Yes, it is weird. It's -- and that's really my concern on the whole thing. I mean, you got the oversight committees being investigated by the people that they are investigating. And I don't think that -- I think there's a real question about, number one, whether the FBI, considering the fact that they are being investigated for lapses around 9/11, can then turn around and do an impartial investigation of the people who are investigating them.

BLITZER: It is intimidating to the investigators, in this case the intelligence committee investigators, to have to worry about the FBI investigating them.

GEORGE: Yes, I mean, it's a farce, really. I mean, it's a case -- we can agree, actually, that there is a war going on, except it's between the legislative and the administrative -- the legislative and the executive and the FBI and NSA and the CIA. I mean, it's a little -- it's a little bit absurd.

And you have to admit, I mean, Cheney actually just kind of blew a gasket and insisted that Goss ask the FBI to do this investigation. I think that everybody should just kind of pull back. I don't think there should be a polygraph of members of Congress. BLITZER: For one of two of our viewers who don't know Porter Goss, chairman of the House Intelligence Committee.

GEORGE: Who's a former CIA agent.

(LAUGHTER)

It tells you all you need to know right there.

(LAUGHTER)

BLITZER: We have to take a quick break. Much more to chew on in our Final Round, including the former vice president, Al Gore. He's on the offensive. We'll also be looking at your e-mails. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our Final Round.

During the week, the Connecticut Democratic senator and 2000 vice presidential candidate, Joe Lieberman, told fellow Democrats the Gore campaign's populous tilt may have been a mistake. But the former vice president is defending his message in a editorial, op-ed page article that he wrote in the New York Times today.

Gore writes this, quote: "Standing up for the people, not the powerful, was the right choice in 2000, and in fact, it is the Democratic Party's meaning and mission." He goes on to say, "The suggestion from some of our party that we should no longer speak the truth, especially at a time like this, strikes me as bad politics, and worse, wrong in principal."

Donna, is Al Gore using the same script, preparing a run in 2004?

BRAZILE: I think that Al Gore has given the Democratic Party a much needed message for 2002 elections, to basically say, you have to frame this election, once again, on power versus powerful. And on the patients' bill of rights, you can frame that one. Prescription drugs, (UNINTELLIGIBLE) whole corporate accountability.

I think he was right to go back after those who've been critical of him...

BLITZER: So basically abandoning the DLC, the Democratic Leadership Council, the so-called New Democrat approach of Bill Clinton and Joe Lieberman?

BRAZILE: Well, that's a new Democratic approach. In 1992, Bill Clinton ran as a people's candidate. So I don't believe that there has been any inconsistency, with Al Gore, Joe Lieberman on the message.

And by the way, Joe Lieberman was a little uncomfortable during the campaign when that message was formulated. But look, it energized the Democratic Party. We were able to attract -- and I say "we" because I was part of it -- we attracted independents. We won the popular vote. And if all of the votes had been counted in Florida, I wouldn't be on this show today.

BLITZER: The...

(LAUGHTER)

Where would you be?

BRAZILE: I...

GOLDBERG: (OFF-MIKE)

(LAUGHTER)

BLITZER: The fact is that Al Gore effectively snubbed the DLC, the Democratic Leadership Convention, this past week in New York. All the other potential Democratic candidates showed up, including somebody who's not a candidate, Hillary Rodham Clinton. We'll get to that part maybe later.

But is Gore making a mistake back to this populist approach?

GOLDBERG: On the DLC thing, the reason why he didn't have to go speak is he has already got huge name approval and name recognition numbers and all that kind of thing. I think it is a mistake.

I thought in 2000, all due deference to Donna, I though it was a terrible message. I thought it was deeply cynical, where he basically accused any opponent of his policies of caring about the greedy or their own self interests and that kind of thing. I don't like populism of any kind from the right or the left.

But I thought the cynicism and disingenuousness -- especially reflected in today's op-ed. Al Gore is talking about people born to certain station in life. This is a guy whose presidential bid was announced in his birth announcement on the front page of his local newspaper because his father, the senator, put it there. This guy's been training all his life, he thinks he's entitled to the presidency. And the idea that somehow he's going to start, you know, taking those kinds of shots I think is deeply cynical.

NEAL: Can I say something?

BLITZER: One second, Terry. Let's Robert go first.

GEORGE: Well, I'm a little bit surprised here, because I'm actually going to disagree with Johah.

Everything you said is quite right, but however the circumstances have changed. We're in this climate now, where we're talking about corporate malfeasance, et cetera, et cetera. And Gore's message actually resonates more in 2002 than it does in 2000.

And I will also add, frankly, that the point he made in the New York Times editorial about Cheney and the energy task force, et cetera, et cetera, that's another reason why I think the administration should get that information out as well. Because that's going to stick around.

GOLDBERG: Being right in principal and being right politically are two very different things.

NEAL: Right. And that's why I said, I don't know if anyone has ever actually done this on the show or if this is even possible, but I agree with both of you.

(LAUGHTER)

And the reason is this. The bottom line is, that I think that you are right, the majority of -- most people don't buy this sort of class warfare. And I don't think that most -- a lot of people in this country buy, you know, Al Gore as necessarily a representative of the people, but the bottom line is most people don't vote in Democratic primaries. And if Al Gore is going to be president of the United States again, he has got to become the nominee. And it excites the base.

BRAZILE: Mr. Al Gore was concerned that middle-class Americans -- he wasn't talking about poor versus rich. He was saying middle- class Americans are being squeezed.

NEAL: But that's not what he said in the editorial.

BRAZILE: Well, I don't -- he was speaking in terms of the message itself. We were aiming this message at middle-class Americans who felt that things had gotten out of control. And they wanted someone to stand up and fight for them. And that's the message that resonated from Al Gore.

BLITZER: Let's see if another message may have resonated from a guy who used to be Al Gore's boss, Bill Clinton.

Bill Clinton, this week, provides our quote of the week. At a Jewish charity fundraiser in Toronto, the former president said, while in office, get this, he was always ready to put his life on the line for Israel.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: When it comes right down to it, America is the only big country that cares whether they live or die. That is why I can say give up the West Bank, because the Israelis knew that if the Iraqi or the Iranian army came across the Jordan River, I would personally grab a rifle, get in the ditch and fight and die.

(END VIDEO CLIP)

BLITZER: Donna, everybody knows Bill Clinton was very friendly toward Israel, great supporter of Israel.

BRAZILE: Absolutely. BLITZER: What was he talking about? He was going to get in a ditch and pick up a rifle, do something he didn't do in the U.S. Army and go fight for the Israeli army?

BRAZILE: Well, every one knows that also Bill Clinton cared about the Middle East, cares deeply about, you know, finding a workable peace formula. And clearly, he's speaking, I think, on behalf of a lot of Americans who are willing to support Israel's right to exist. And I think that was the best way that he could make his case.

BLITZER: So, Jonah, we don't have to necessarily take him precisely and literally at his word. What he was saying is, the United States would defend Israel if anything like that happened.

GOLDBERG: That's absolutely right, depending on the meaning of "is." But, look...

(LAUGHTER)

... some people suffer from Clinton fatigue. I suffer from Clinton narcolepsy, so I'll keep this short.

Bill Clinton has as endless record of telling audiences what they want to hear. I think he was perfectly fine on the principle of saying that America -- he's right, America is the only big country that really cares about Israel and all of that kind of stuff. But he gets too tempted and seduced by audiences that tell him these things that make him all sort of into a frenzy, and then he gets in trouble for it later. And you can back, you know, you can go back as far as you want to find these examples.

BLITZER: Terry?

NEAL: Well, my thought on it is he's just getting a little carried away with the hyperbole. I don't think Bill Clinton is going to be anybody's ditch anytime soon.

I mean, really what's happening, both of these parties are struggling to show their and demonstrate their support for Israel. And President Bush hasn't gotten as carried away with his hyperbole, but he's doing it every -- you know, virtually every day. He did that the other day with the bombing at the university there.

And I just think he got a little carried away with the hyperbole.

BLITZER: He said he was as angry as anyone in Israel, President Bush said. He's demonstrated over these past, what, almost two years, what a strong supporter of Isreal he is.

GEORGE: Oh, he is.

It's kind of ironic, though, that you know, most draft dodgers go off to Canada, you know, to evade the draft. And there's Bill Clinton saying he's going to volunteer to go to Israel. I mean, you know, as Jonah said, you know, he feels that he needs to empathize so much with his audience that he's going to go a little bit too far rhetorically.

BRAZILE: Well, there's more than one way to serve and fight for your country, and I think Bill Clinton, over the years, has demonstrated that he is willing to serve and fight for his country.

BLITZER: All right...

GOLDBERG: But not get in a ditch with a rifle.

BLITZER: That's another matter.

(LAUGHTER)

Let's take another quick break. Our Lightning Round is just ahead. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Time now for our Lightning Round.

A federal judge is giving the Bush administration two weeks to release the identities of hundreds of people detained after September 11th. That order does not include the detainees at Guantanamo Bay, the U.S. naval base there.

Is this a good decision, Jonah?

GOLDBERG: I think, on the whole, it's probably a bad decision. I mean, keep in mind, one of the things to remember is that these guys were always allowed to talk to their lawyers and tell the world and tell the press who they were.

The only thing the administration didn't want to do is be publishing their names outright. You know, if these guys want to remain in holding in, quote, unquote, "secret," that's their business too.

And generally, I think the administration has handled most of this security stuff pretty well.

BLITZER: The Bush administration argues that if you release the names, it could give information to other terrorists out there who the United States is talking to and what they have.

BRAZILE: Or it could scare the hell out of them and keep them, you know, from hurting us any further.

Look, I thought it was a good decision, because finally someone reminds us that this is America and not a police state. So I thought the judge did the right thing.

BLITZER: The judge, in this case, a Clinton appointee, a more liberal judge than -- maybe it will be reversed if the administration decides to seek that reversal.

GEORGE: Yes, I guess I like, in a sense, I like the idea the judge did make this decision. I'm slightly more libertarian on some of these things, I think, than Jonah.

But what I do like is the fact it, in a sense, does force this discussion. Because we are still in war, and it would be a good idea if we do get a broader framework as to what is going to be permissible in terms of civil liberties right now.

BLITZER: Terry?

NEAL: I think it was a -- it's a good decision by the judge. I mean what makes America great is rule of law. And I think that that sort of transparency is an integral part of it.

BLITZER: All right, let's move on. The nation's airlines are planing to cut back some of their flights this September 11th because of low bookings.

Are you afraid to fly this September 11th for some reason?

GEORGE: I've always been a little bit afraid to fly. I think -- it makes a lot of sense that I think people are going to be little bit nervous, given everything. But frankly, September 11th is probably the safest day possible to fly because I think there's going to be so much security.

BLITZER: You fly a lot, Donna.

BRAZILE: Yes, I do, unfortunately, but...

BLITZER: Are you going to fly on September 11th?

BRAZILE: I have no plans at this time, but I'm open.

Let me just say this. I would lower the fares -- I want to give some advice to the airlines -- lower the fares and...

BLITZER: On September 11th, a one-day sale.

BRAZILE: ... $99 anywhere in the country, go, just go.

GEORGE: Nine dollars and 11 cents.

BRAZILE: Absolutely, $9.11. That's even better.

And you know what else I would do? I would let fat people fly free.

(LAUGHTER)

I would serve them a gourmet meal and have an open bar.

(LAUGHTER)

BLITZER: You know, a lot of people are afraid to fly because they think there could be a repetition. Is that fear legitimate?

GOLDBERG: No, and I think that fear is probably not that widespread. I think what it is is people saying, "Well, I could fly on the 11th, I could fly on the 10th, I could fly on the 12th. Better safe than sorry, I'll fly on the 10th." I mean, I don't think it's -- I don't think there's any one person out there who is terrified of flying on 9/11 all that much. I think it's probably a silly issue.

BLITZER: But, Terry, you've got to think that on September 11th, security is going to be tight.

NEAL: I agree with Robert, I think that's going to be the safest day to fly. And if I were going to pick a day, that would probably be it.

GOLDBERG: That would be -- the hassle factor is the reason people aren't flying on that day.

BLITZER: All right, let's move on and talk about this. The president, the president of the United States, he's spending the weekend at the family in Kennebunkport, Maine.

Later this week he begins a month-long vacation at his ranch in Crawford, Texas. Some say that's too long for the president to be away from Washington. His aides say it's a working vacation.

What do you say, Terry?

TERRY: Well, Scott McClellan at the White House told me it's not a vacation. He's just leaving Washington for a little while. He's actually going to be working. He's going to -- I say that kind of tongue in cheek. I think he did too.

But he is going to be doing some work. He's going to California. He's going to campaign for Bill Simon.

I wrote a column on this subject a couple of days ago on washingtonpost.com. It got more reaction than anything that I've ever written. Hundreds of e-mails actually poured in. People don't like -- I think a lot of people tend to think that, you know, with all of the technology and everything else, he can go anywhere he wants.

BLITZER: He works hard. What's wrong with letting him take a few days off?

GEORGE: I don't think there's any kind of a problem with it. I mean, in a sense, the seat of government is wherever the president is. If there's an emergency or something, obviously, he can get back to Washington very, very quickly. So I don't think...

BLITZER: Bill Clinton used to like to go to -- where did he go? Martha's Vineyard.

BRAZILE: Martha's Vineyard. And he went to Colorado and other places, wherever anyone loaned him a house.

BLITZER: Wherever his...

GOLDBERG: Wherever the polls told him to go.

(LAUGHTER)

BRAZILE: Well, I don't have -- last year I criticized the president for taking four weeks off after, you know, being on the job for just a couple of months. I think he deserve a rest, a nap or whatever he likes.

BLITZER: Jonah?

GOLDBERG: Leaving Washington in August is a sign of sanity.

BLITZER: I'm planning on leaving myself.

Thanks to all of you.

Congratulations, Jim Kelly, of the Buffalo Bills, the Hall of Fame. He brought us to four Super Bowls. Very impressive. I wish we would have just won one of those Super Bowls.

That's your LATE EDITION for Sunday, August 4. Tune in again next Sunday, every Sunday, noon Eastern, for the last word in Sunday talk.

Please join me Monday through Friday, 5:00 p.m. Eastern, 2:00 p.m. on the West Coast, "WOLF BLITZER REPORTS."

For now, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington.

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