Return to Transcripts main page

Live From...

Bush Prepares Big Iraq Speech; Beware Rip Currents at Atlantic Beaches; Where Will Gas Prices Go?

Aired May 24, 2004 - 13:34   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.


DREW GRIFFIN, CNN ANCHOR: President Bush goes to war in defense of his Iraq policy tonight. He is expected to address mounting skepticism over his strategy and outline plans for next month's handover. His aides say he will also tell Americans to brace for more U.S. casualties, even after the Iraqis take power.
Instead of reporting traffic problems a California radio station's airplane created some this morning, KCBS Sky 3 making an emergency landing on Interstate 580 just south of Oakland. It touched down in an area called Castro Valley. The crew says they just ran out of gas. Nobody hurt there.

And in tennis, a first round exit for Andre Agassi at the French Open. The eight-time Grand Slam champ lost in straight sets to a French qualifier ranked 271st in the world. There is some consolation for Agassi, his picture will soon appear on the Wheaties cereal box.

KYRA PHILLIPS, CNN ANCHOR: After weekend tornadoes flattened at least two small towns in Nebraska, forecasters are warning of additional severe storms across the Midwest this afternoon. In the town of Bradgate, Iowa, a massive cleanup is under way, virtually every building was destroyed or badly damaged. In (UNINTELLIGIBLE), Nebraska, homes, farms and businesses were just wiped out. Thousands of people across the Midwest are still without power.

Tens of thousands of Michigan residents are also without power this morning. Flood warnings posted in at least 20 counties there. Several rivers stand above flood stage at this hour, two tornadoes touched down, but thankfully, very little damage is reported.

Well, hundreds of miles away, along the Eastern Seaboard, the problem is not flooding rivers but ocean rip currents. That story now from CNN's Julie Vallese (ph), she's in North Carolina.

(BEGIN VIDEOTAPE)

JULIE VALLESE, CNN CORRESPONDENT (voice-over): Each year approximately 90 million people visit America's beaches and every one of them face the potential danger of being caught in a rip current. Sandee LaMotte's husband, a CNN reporter and bureau chief was killed when he tried to rescue his son from a rip current last year.

SANDEE LAMOTTE, HUSBAND DIED IN RIP CURRENTS: Larry started to swim the maybe two arm lengths or three that it would have taken him to get to Ryan, right at the time that he entered the water a wave went over Ryan's head, so he lost -- and the next thing he knows there was no daddy.

VALLESE: The LaMotte's son Ryan did survive, but six people died on that same Florida beach that day. A hundred people die in rip currents every year. They occur in ocean seas and the Great Lakes.

CONRAD LAUTENBACHER, NOAA ADMINISTRATOR: This will be an opportunity for people to use the latest technology, not only with weather, but look at surf forecasts and look then at the surf forecasts and what the rip current vulnerabilities are at that particular time.

VALLESE: The reason so many people get caught in them is swimmers panic, become tired and lose the struggle, staying calm and not fighting the current is the beginning of surviving it.

UNIDENTIFIED MALE: Swim to the side, along the shoreline and then angle away from the rip current toward shore..

LAMOTTE: Water is dangerous. We think about drownings, but we don't think about it happening to us.

VALLESE: Rip currents begin at the shore line, so keep in mind, you don't have to be in deep water to get caught in the current.

(on camera): The chances of drowning in a beach where a lifeguard is present, one in 18 million, 80 percent of beach rescues are because of rip currents. So if a beach isn't guarding, swimming may be at a risk much too great.

Julie Vallese, CNN, Wrightsville Beach, North Carolina.

(END VIDEOTAPE)

GRIFFIN: The rising prices at the pumps have us all scratching our heads. Why are we paying so much for gas? Who is setting the prices and who is making the profit? Up next some perspective on those questions.

And an ornery ogre seeing green after his first weekend at the box office. We're going to show you just how much that guy ranked in a little later.

(COMMERCIAL BREAK)

PHILLIPS: Could the rising price of a fill-up eventually kill the largest SUVs? It's an interesting question, and not without merit, CNN's Miguel Marquez reports on the latest car shopping trends.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN CORRESPONDENT (voice-over): This Toyota dealership sells more alternative fuel vehicles than any other in the country. The reason? Pretty obvious.

UNIDENTIFIED FEMALE: I drive a Jeep, a Cherokee Jeep right now and I spend about $80 a week in gas. MARQUEZ: Californians, used to higher gas prices than the rest of the U.S., are beginning to balk at prices making a run at $3 a gallon. No where has the effect been more immediate than the car lot.

UNIDENTIFIED MALE: Our large SUVs have -- the percentage of vehicles sold is declining.

MARQUEZ: And that trend may be playing out nationwide. Autodata (ph), a company that tracks vehicle sales, says in April consumers bought fewer large SUVs like the Ford Explorer, Chevy Suburban and Hummer H2. While it's still not clear if high gas prices are driving SUV sales down, the price of petroleum is driving interest in hybrids up.

(on camera): How many of these could you sell if you could?

UNIDENTIFIED MALE: We could use another 200 or 300 right now, today.

MARQUEZ (voice-over): Marketing firm J.D. Power estimates the next few years up to 20 models of hybrids will be on U.S. roads and yearly sales will hit about a half million vehicles, that's 10 times what they are now. Some consumers considering buying a hybrid say it's not just that gas prices are high, it's that they expect them to stay high.

UNIDENTIFIED MALE: They're not going to go down below $2, probably only go up and -- yes, $3, $4, seems likely.

MARQUEZ (on camera): For now consumers are seeking out the lowest-priced gas they can find, places like Costco where the cheap stuff is $2.26 a gallon. Believe it or not, that's a deal. And with the high-driving summer months ahead, lower gas prices may not be on the horizon for some time.

Miguel Marquez, CNN, Burbank, California.

(END VIDEOTAPE)

GRIFFIN: Who would have thought 2.26 was the cheap stuff. What's driving the near runaway gas prices? More importantly, who, if anybody, could put the brakes on it? We're going to turn to Rayola Dougher with the American Petroleum Institute and former Deputy Energy Secretary Joe Romm under the Clinton administration there in Washington.

Rayola, let's begin with you. The petroleum industry certainly an obvious target, seeing that we have record prices, record profits and stock prices are up. And seven attorneys general wondering if there is some kind of collusion in the industry which is forcing profits up at least in several areas of the country, is it -- the problem with the petroleum producers?

RAYOLA DOUGHER, AMERICAN PETROLEUM INSTITUTE: Well, the problem really is out in the worldwide marketplace and the supply and the demand of crude oil is the major factor pushing prices upward. We have tight supplies and rising demand, especially in Asia, but also here in the United States where our economy is taking off and growth is higher than some analysts had originally anticipated.

GRIFFIN: But if I was hearing you right, earlier in the day we talked about supply and demand, and quite frankly, the refineries are at near capacity now, even if Saudi produces more oil from the ground, can the U.S. refineries deliver to the gas tanks?

DOUGHER: That's the other side of the equation, too, not only high crude oil prices, but our refineries are operating flat out right now. We're producing more gasoline than we ever produced. We're at 95 percent capacity utilization. But our import levels, we can't produce all of the gasoline we consume. We produce about 90 percent of it. The other 10 percent comes from abroad, and that level is down somewhat this year, about 10, 12 percent over where it was a year ago.

And we think that might have something to do with the fuel new specifications in the U.S. market this year and that foreign refiners exporting to this market might not have made the investment necessary to meet these new fuel specifications. That's playing out in our inventories now, too. Part of the reasons we have low inventories.

GRIFFIN: Well, there doesn't seem to be any magic bullet here. Joe Rome, let's bring you in, what is the solution or are we just dealing now with gas prices over $2?

JOE ROMM, FMR. DEPUTY ENERGY SECY.: Well, I think there's no question that your viewers are going to be facing high gasoline prices for many months and perhaps years to come. The solution is to do something on the demand side. If we don't reduce the demand, if we don't use more fuel efficient cars, we're just going to see higher and higher demand and that is going to give complete pricing control to the suppliers and the oil companies.

So I think we currently don't have an energy policy in this country aimed at demand. In the '70s and '80s we pushed fuel efficiency into the marketplace and as a result the price of gasoline and oil went down. We have abandoned that for the last 10 years and not surprisingly the price of oil and gasoline are up. So I would urge your viewers, if they want to do something about their own gasoline bill, they should go out and buy a hybrid, as was reported in your story. And if you want to help nationwide, we need to push fuel efficiency standards nationwide.

GRIFFIN: Will not the market take care of that, Mr. Romm? As you saw, we saw the people lining up for the Toyota Prius. They're getting rebates on the Hummer. If the prices just stay high, aren't we eventually going to see a marketplace that's going to bring back conservative cars and cars that will get much more fuel efficiency?

ROMM: Well, I think there are two fears here. One is that if we don't push fuel efficiency in the United States, we're going to end up importing these cars from Japan, Toyota and Honda, so I think if we want to save jobs in this country, we should adopt incentives and regulations to get every car company to be building these hybrid, fuel-efficient vehicles. Secondly, we have to care about the environment. There is this movie coming out this weekend, "The Day After Tomorrow," which will raise aware awareness on the dangers of global warming. In order to address global warming, we have to burn less gasoline. And that means every car on the road has to be fuel efficient, not just a few people's.

GRIFFIN: Rayola, the Saudi Arabian announcement that they're going to pump more gas from the spigot, I think they're the only ones who can simply turn on and off the flow, will that eventually reduce prices or are we just going to see a stabilization at these rates?

DOUGHER: Well, we're going to have to wait and see how much they actually do produce and how much the other member countries agree to when they meet on June 3, and see what impact that will have on the marketplace. Prices originally went down over the weekend after OPEC met in Amsterdam, but I understand they're back up again today. So I think the traders really want to see the oil, show me the oil. That's what they're waiting for.

GRIFFIN: Well, we'd like to see it, too. We thank both of you for joining us on this topic. Certainly affecting just about everybody whether you drive or not.

Coming up, an overstuffed green monster is bringing in the greenbacks.

(BEGIN VIDEO CLIP FROM "SHREK 2")

UNIDENTIFIED ACTOR: Are we there yet?

UNIDENTIFIED ACTOR: Yes.

UNIDENTIFIED ACTOR: Oh finally!

(END VIDEO CLIP)

GRIFFIN: "Shrek" and the entourage taking over the box office.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP "SHREK 2")

UNIDENTIFIED ACTOR: Told you coming here was a bad idea.

UNIDENTIFIED ACTOR: They're my parents.

UNIDENTIFIED ACTOR: Hello, they locked you in a tower.

UNIDENTIFIED ACTOR: Wasn't she supposed to kiss Prince Charming and break the spell? I'd like to know how it could get any worse.

UNIDENTIFIED ACTOR: Hello, Harold.

UNIDENTIFIED ACTOR: Ahhh!

(END VIDEO CLIP)

PHILLIPS: Oh wait, I have read a script now. I want to keep listening. An overwhelming open for the latest Dreamworks release. "Shrek" turned into the comeback kind this weekend, the sequel pulled in more than $104 million, that's the second biggest three-day tally in movie history. Sales far exceeded expectation despite all the publicity leading up to its return.

(MARKET REPORT)

GRIFFIN: The stakes are high, the handover looming and many Americans are growing impatient. President Bush set to address the nation tonight on his plan to hand over authority in Iraq.

Coming up next in our second hour of LIVE FROM..., we're going to hear from both sides. What do Democrats, what do Republicans need to hear from the president regarding the future of Iraq?

(COMMERCIAL BREAK)

PHILLIPS: Primetime plan. Will President Bush deliver a convincing plan to skeptics on giving control back to Iraq?

GRIFFIN: Violent twisters. A state of emergency after more than a dozen funnel clouds rip through the heartland.

PHILLIPS: Cruel and unusual punishment. The Supreme Court allows a death row inmate to make his case against lethal injection.

GRIFFIN: And we've got a fixer-upper for sale, stately British mansion, 3000 acres and your own pheasant shooting range. It's a steal at $85 million. We're going to tour the ultimate handy-man special.

From the CNN Center in Atlanta, I'm Drew Griffin.

PHILLIPS: All right. And I'm Kyra Phillips. Miles is off today. This hour of CNN's LIVE FROM starts right now.

A new day in Iraq starts 37 days from today. And tonight we'll hear details. President Bush plans the first in a series of speeches on a topic that he once considered unworthy of U.S. foreign policy, namely, nation building. CNN's Dana Bash has a preview now from the Army War College in Carlisle Barracks, Pennsylvania -- Dana?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi Kyra, well the president is still back at the White House. We're told he's been practicing his speech this afternoon in the White House theater, going over it. It is a speech the White House says will be about 30 to 35 minutes. And it's an address that they admit candidly is intended to calm American jitters about Iraq.

And when you talk about Republicans outside the White House, they say that this is long overdue, that this is something they hope will calm Americans jitters about the president himself as his poll numbers really have been slumping over the past few weeks even the past month. And they attribute that to how people about what they see as chaos in Iraq.

Now that is exactly what the president is going to try to do tonight, try to lay out essentially what he will say is a plan that will try to essentially contradict the idea that it's chaos in Iraq. And the White House is billing this as something that is a five-step plan. They're essentially more like five themes the president will address, will try to bring out some of the things that we've been reporting on for some time.

For example, the transfer of power to Iraqis. Bush aides say that the American people hear the date June 30, they don't really know what that means. The president is going to talk about what that will mean, the interim government, what that will be made up of. And also he will talk about improving Iraqi security, how the U.S. military will work, the fact that they will stay certainly after June 30, how they will work with a multinational force.

He will talk about expanding the international role, address the U.N. resolution that the U.S., along with Great Britain, just introduced at the U.N. today, a five-page resolution that lays out the timetable towards democracy, if you will, between now and January of next year.

He'll talk also about rebuilding the Iraqi infrastructure and the economy and planning for the election. That, of course, again is at the end of 2005. Unclear, Kyra, if all of this will answer a lot of the criticism that the president is getting that this is more than just a communications problem, that it's a problem with his policies.

You heard from retired General Anthony Zinni, who said that this is a question of bad policy from the get-go and that the president needs to change that policy. What the president is going to do tonight is offer some new details and almost sort of lay out in what they hope is an organized way the things that they are already planning on doing, working with the United Nations, working with the Iraqi people to transfer sovereignty. This is sort of a communications issue, unclear, again, how much this will answer critics about whether or not there is a big problem with the policy here -- Kyra.

PHILLIPS: Dana Bash, thank you. Well, the president's speech begins at 8:00 p.m. Eastern, just about six hours from now. And CNN will air it start to finish as part of a special edition of "PAULA ZAHN NOW.".

GRIFFIN: Diplomats at the United Nations already looking beyond the handover to the next mission in Iraq, one in which the U.N. would play a major role. Our senior U.N. correspondent, Richard Roth, is here with that live -- Richard.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Yes, Drew, in anticipation of President Bush's remarks to the nation, the United States and Britain distribute a new proposed resolution to the other members of the United Nations Security Council for this transition and beyond period in Iraq after June 30. Many are focusing on one key aspect, the so-called multinational force, which would then replace the occupying force of the U.S. and Britain, will have a 12-month period where they will be in there and there's no expiration date for their service, which annoys some members of the council. At the moment, according to U.S. Deputy Ambassador Cunningham, it's a review after 12 months on the status of those forces.

(BEGIN VIDEO CLIP)

JAMES CUNNINGHAM, DEPUTY U.S. AMBASSADOR TO U.N.: The resolution makes clear that the multinational force will be reviewed after 12 months or at the request at the transitional government. And it also makes clear the importance of the consent of the sovereign government of Iraq for the presence of multinational forces. So we think those two concepts together describe what the relationship should be, the multinational force will be there at the -- with the agreement of the sovereign government of Iraq.

(END VIDEO CLIP)

ROTH: Also vague, still to be defined, the relationship between the caretaker Iraqi government and the multinational force, the hundreds of thousands of troops that are needed on the ground for security. Countries such as Algeria, Germany and France would probably like to see more definition, more clarity, so that that force does not stay in there more than 12 months. A review here in the Security Council could be blocked by United States veto. Otherwise, European countries that haven't always been in lockstep with the U.S. are interested in getting economic and financial help to the Iraqi people.

(BEGIN VIDEO CLIP)

GUNTER PLEUGER, GERMAN AMBASSADOR TO U.N.: I think it is important that the resolution will make clear that we have a new start in Iraq, a political process, the restoration of sovereignty to Iraq. And we will have to make sure that this process provides Iraqi ownership for the political process as well as for the process of economic reconstruction.

(END VIDEO CLIP)

ROTH: Also the Iraqi caretaker government will have a bigger say regarding oil proceeds sales, but still left unclear, though, is just how much freedom they will have as to what to do with that money. There's an international monetary mechanism, will still remain in place to make sure there's no corruption.

Of course, hanging over the U.N. in the last few months, controversial Oil-for-Food Program where some U.N. members and staff members and former diplomats are accused of profiting from that lengthy oil-for-food humanitarian program.

Drew, back to you.

GRIFFIN: Complicated day at the U.N. Richard Roth, live, thank you.

Kyra, back to you.

PHILLIPS: More developments on the ground in Iraq today. After weeks in a bitter standoff with coalition forces in Karbala, Muqtada al-Sadr's have pulled out of the holy city, a positive sign tempered by new blasts in Baghdad today, killing two British. Guy Raz has the details.

(BEGIN VIDEOTAPE)

GUY RAZ, CNN CORRESPONDENT: Another violent day in this beleaguered Iraqi capital. Two British nationals were killed when their vehicle was hit by an explosive device. It's unclear whether that was a roadside bomb or a rocket-propelled grenade, but we understand that four British nationals were traveling in armored sport utility vehicle, right in the heart of central Baghdad, very close to the Coalition Provisional Authority's Green Zone, a secure area, when that vehicle was struck by some kind of explosive device, immediately killing two inside that vehicle.

Meanwhile, there has been more violence in southern Iraq, in the town of Kufa, that's a stronghold of the radical Shiite cleric Muqtada al-Sadr. U.S. forces clashed with members of al-Sadr's Mehdi Army brigade, killing at least 32 suspected Iraqi fighters in that attack.

Now according to U.S. officials, they found large stockpiles of weapons, artillery, mortars and rocket-propelled grenades inside a mosque in Kufa. Also in Kufa, 400 to 500 Shiites gathered to protest the U.S. action in the city, saying that they'd prefer to see violence far away from holy sites.

Now, in other news here in Iraq, more controversy surrounding the so-called wedding massacre that took place last week. The United States launched a raid on a village early Wednesday morning, killing up to 45 people in that town. Now according to residents there, they say there was a wedding happening, that they were simply firing celebratory gunfire. U.S. officials have denied it, saying that this was a waystation for foreign fighters.

But in a tape obtained by the Associated Press Television, it appeared as if some type of wedding may have taken place at the site. Now the tape hasn't been confirmed by CNN or APTN, but an APTN reporter managed to cross-identify some of the bodies that he witnessed at the scene and some of the people captured on that video.

U.S. officials are sticking to their story, saying they will continue to investigate, but at the moment, insisting in their minds, there's no question this was a terror training ground.

Guy Raz, CNN, Baghdad.

(END VIDEOTAPE)

GRIFFIN: Picking up the pieces in the aftermath of powerful tornadoes, details on the damage straight ahead. (WEATHER REPORT)

GRIFFIN: And later on LIVE FROM..., a word of warning for American men about their chances of getting breast cancer.

(COMMERCIAL BREAK)

PHILLIPS: In the eye of the storm. The Midwest is expecting more wicked weather after a weekend of deadly thunderstorms and tornadoes. More than a dozen twisters left behind damage like this in Nebraska. An elderly woman in Nebraska was killed by a tornado. The weather was also fatal in Iowa and Michigan where several counties are under flood warnings today. CNN meteorologist Jacqui Jeras is watching the Midwest weather for us.

Hi, Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Hi, Kyra. No tornado warnings right now but we are expecting some to be issued we think later on this afternoon and into the evening hours. The Storm Prediction Center issuing a tornado watch over the same areas that got hit hard this weekend, including Hallam. And this is a particularly dangerous situation. We have a very high risk of supercell-type thunderstorms, the ones that spawn tornadoes, to be developing here later on for today.

Right now severe thunderstorms have been moving across much of the area. North of the Omaha area, north of I-80 there, and that's the watch area we were talking about. And you head on up the Missouri River, up along the I-29 corridor and we do also have some warnings just approaching Sioux City, in the south Sioux, and into north Sioux right now. Also Vermillion under a severe thunderstorm warning.

And so we do expect to see nickel-sized hail, strong wind gusts, possibly between 60 and 70 miles per hour. So you do want to use a lot of caution and not travel across this part of country at this time.

Our main storm threat is going to be severe weather with large tornadoes potentially later on for today. And a very large area of the country is going to be at risk. But the high risk that we're talking about covers a smaller area of southern Iowa, northern Missouri, from Peoria to Des Moines to Omaha over towards Kansas City. And basically what that means to you at home, you have a one in four chance of a tornado coming within 25 miles of your home. So this is very dangerous for today.

Why have we been seeing such an ongoing outbreak? Well, all of the elements are there. It's a classic severe weather set-up, where we have warm, moist air coming in from the Gulf of Mexico, rising air here and very strong upper level winds, our jetstream. We need that to support these storms and also that causes the opposing winds. It helps with that rotation. That's what helps to develop these supercell thunderstorms, the ones that do produce the tornadoes.

Also flooding, Kyra, a big concern. An additional one to two inches of rain in some of these locations, particularly in Iowa have seen four or five even six inches of rain over the last couple of days.

Wow, Jacqui, you've been a busy woman. We'll continue to check in with you. Thanks so much -- Drew.

GRIFFIN: News across America now begins with mixed findings about safety if the U.S. The FBI says violent crime dropped by more than 3 percent last year, the number of aggravated assaults, rapes and robberies all down, but murder rates were up.

In Texas, a chartered bus slammed into a parked tractor trailer, killing one passenger, injuring more than two dozen others. The coach bus was heading back from a gambling trip to Houston from Harrah's casino in Louisiana.

In New York more than 1700 firefighters and police officers have filed lawsuits now over health issues in the wake of 9/11. The suit claims toxins at ground zero gave them a number of illnesses, including cancer and asthma. More than 300 firefighters have retired due to sickness or injuries connected to those attacks.

PHILLIPS: An embattled president, a doubting public and looming questions. What did the president know and when did he know it? That famous question to Richard Nixon 30 years ago is once again echoing through the halls of Congress. Political analysts wonder is history repeating itself? President Bush will try his hand at damage control in a speech tonight. What can the president do to survive? And should he, like Richard Nixon, be held accountable for scandals and doubt concerning a war-torn country. Our Washington guests are going to give us both sides. Peter Fenn is Democratic strategist, and Cheri Jacobus is one for the Republicans.

Good to see you both.

CHERI JACOBUS, REPUBLICAN STRATEGIST: Thank you.

PETER FENN, DEMOCRATIC STRATEGIST: Good to see you.

PHILLIPS: Peter, what do you think, is history repeating itself?

FENN: Well, I think there's no question that this president is embattled, not so much by the Democrats as by the Republicans, the independents, the conservative columnists. This war is not going well. A year ago this president and the Defense Department were talking about going into Iran and Syria. They find themselves now in a situation where they have to go on the PR offensive. And I think what we're going to see here tonight is a lot of politics and a lot of PR but probably not much policy.

PHILLIPS: Cheri?

JACOBUS: Well, I think the president never promised us a rose garden, so to speak, in this regard. He has always said that this was going to be difficult. He's been consistent. We've known that it was going to be more difficult up until and just after the handover of power and sovereignty to the Iraqi people. So this isn't anything new.

And I think what we're seeing is sort of a desperate attempt on the part of the left and the Democrats and Kerry to try and stain this president in what really is a victory. The fact that we have freed Iraq and the Iraqi people from a dictator such as Saddam Hussein is huge. It is great news. And I think that with the Democrats persistent message that if it isn't easy, then there's something wrong with it, this will end up being a feather in the cap for George W. Bush.

PHILLIPS: All right. Let's talk about following the rules, sidestepping the Constitution, something that has been brought up. It was on NPR, Cokie Roberts talking about it, Carl Bernstein coming out with this editorial. I want to read something to both of you on that issue. "Like Nixon, the president decided that the Constitution could be bent on his watch. Terrorism justified it. Rumsfeld's Pentagon promoted policies making inevitable what happened at Abu Ghraib and Guantanamo Bay, Cuba. The legal justification for ignoring the Geneva Conventions regarding humane treatment of prisoners was annunciated in a memo to Bush dated back January 25, 2002." What do you think, has there been a number of bending the rules and is that going to affect the president, Peter?

FENN: Absolutely. I mean, they've thrown the Geneva accords out the window. This policy -- I disagree with Cheri, I'm afraid, this policy is a disaster. They're making it up as they go along. They had no post-election plan. You had a General Zinni on "60 Minutes" last night talking about it. You have now a cacophony of Republican columnists and Republican members of Congress who are very concerned about it.

You know, this is a president now who has got to get his act together in the next five months or he's going to find himself out of office because voters are going to say the only way to change Iraqi policy is to change presidents. The only way we can get on the ground, straightened out is if we have a new president because he's ignored the will of the United Nations and he's ignored the will of the united community. And the problem with it right now is that if we're going to solve the problem of terrorism, we're going about it the totally the wrong way.

(CROSSTALK)

JACOBUS: Can I make a point?

PHILLIPS: Go ahead, go ahead.

JACOBUS; The point that Peter is missing is the fact that John Kerry has no plan and people are concerned about what any wartime president's policies are going to be. They should be concerned. But that doesn't mean they're blaming the president. They're seriously concerned about the situation that we're in. That's a far cry from blame and that's a far cry from wanting to jump over to a President Kerry who has not articulated a position on anything.

And with regard to Mr. Bernstein's piece in "The USA Today" this morning, I think that he is -- it's so irrelevant, it's really a stretch to compare Bush to Nixon, and I think that he's just a little bit nostalgic for the glory days and the relevancy that he enjoyed during the Watergate era.

PHILLIPS: So Peter, does the president need to convince Americans that this war can be won, or does the president need to convince Americans that the troops will be coming home?

FENN: I think he's got to convince the Americans of both those things. He said "mission accomplished" a year ago. The mission has not been accomplished. John Kerry has called for greater support from the United Nations, greater international support, changing the basic context of this conflict. He's written in "The Washington Post" very specifically about it.

The problem that the Bush administration has is that they've got a lot of people pointing fingers and no plan, no program. And this is -- you know, this is when you try to make it up as you go along, which is what's going on here, you have no exit strategy, you have no ability to put in place a really solid government that you don't control, and you have people dying every day.

PHILLIPS: Peter brings up a good point, Cheri, the president has got to lay out an exit strategy, is he going to do it?

JACOBUS: Well, actually, I don't think it's an exit strategy so much as a strategy for victory. And that's what tonight is, it's the first of a series of speeches that the president is giving to the American people and to the world, laying out how the transfer of power will take place and what happens after that. That's exactly what he should be doing. But I personally, as with a lot of Republicans, think that the president should not lay out on exit strategy until we have a victory strategy, and I think part and parcel of that obviously is handing over as smooth as possible this transition of power.

PHILLIPS: So Cheri...

JACOBUS: ... let John Kerry talk about exit strategy at this point without victory. The president we have is going for victory.

PHILLIPS: Can the president guarantee freedom? Can the president guarantee a victory or can the president just say, we have done our best, this will be a free country with free elections, now it's up to you and stop the guarantees?

FENN: I think that's exactly what he's going to try to do. But the problem is it's chaos there now. There is very likely going to be a civil war in Iraq. I mean, anybody who knows Iraq and who would have planned for this would have said to you, how do you bring the Sunnis and Shiites together? It's very difficult to do.

This president did not have a plan. He went before the American people in 2000 and said he had a three-legged stool for his foreign policy, clear and defined objectives, a clear exit strategy and no nation building. He has violated all three in the case of Iraq and terrorism -- the war on terrorism has suffered because of it. The policy is a disaster and it's time for him to pull back.

PHILLIPS: Cheri, does he have to justify his policy? Does the president have to still come forward tonight and justify this war?

JACOBUS: I think the president has already done that. The fact of the matter is that the weapons of mass destruction issue, he had the same intelligence that Bill Clinton did. And as of Bill Clinton's last day in office, he said he believed there were weapons of mass destruction. We have found some small amounts of Sarin, and I think a lot of people believe there are weapons of mass destruction.

However, I'm not so sure that we all really care. This is the president. This is the administration that had the integrity and strength to go after Saddam Hussein who should not have been left there in the first place when his father was president, clearly. And Bill Clinton pretty much ignored the problem. So I think most Americans really believe that this is the president who has the strengths of convictions. And we've seen this in some polling, that he's the one they do trust for matters such as these, even though it's difficult and even though they aren't big cheerleaders for him right now.

FENN: The great irony of this is that President Bush's father wrote in his book that he would not have gone in and taken out Saddam Hussein, that he knew what was going to happen, they would take too many troops, that it would lead to chaos. It would be impossible to govern this country. When President Bush's father laid out the problems he was absolutely correct. He foresaw what the President Bush has got himself in for right now and it's sort of sad, really.

PHILLIPS: Cheri brought up one point, just real quickly before we go. CNN/"TIME" poll, U.S. military policy in Iraq, the latest numbers, you mentioned numbers, Cheri: approve, 41 percent, disapprove, 49 percent. The speech is tonight, 8 p.m. What do you say, will you two come back tomorrow and maybe talk to me about how you thought the president did?

JACOBUS: Absolutely.

FENN: Absolutely.

PHILLIPS: That's great. We're on. Thanks, you guys.

FENN: Thanks.

JACOBUS: Thanks.

PHILLIPS: Peter Fenn, Cheri Jacobus.

You can watch all the president's speech tonight right here on CNN. We're going to bring it to you live like we mentioned during a special edition of "PAULA ZAHN LIVE" beginning at 8 p.m. Eastern.

GRIFFIN: And while the debate continues on that, another controversy brewing in Iraq, did American forces attack suspected terrorists or was it a wedding party in the Iraqi desert? We have new information on that, a live report from the Pentagon just ahead.

And new research being hailed as a medical breakthrough for treating spinal cord injuries. We've got your health headlines. That's all ahead on LIVE FROM...

(COMMERCIAL BREAK)

GRIFFIN: All eyes on Wall Street. New York Attorney General Eliot Spitzer today filed suit against former New York Stock Exchange Chairman Richard Grasso. Here with details on that, CNN Financial News correspondent Allan Chernoff -- Allan.

ALLAN CHERNOFF, CNN SR. FINANCIAL NEWS CORRESPONDENT: Drew, the New York attorney general, Eliot Spitzer is seeking more than $100 million from Richard Grasso, the return of at least that amount to the New York Stock Exchange, part of the compensation that Mr. Grasso had received.

The attorney general is charging that the board of directors at the New York Exchange was misled with regard to details of the compensation package it had approved for Grasso; also, that the formula used to calculate the compensation was fundamentally flawed; and also that Mr. Grasso was engaged in a conflict of interest because as the former head of the exchange he was also the regulator for Wall Street firms. And there were several chief executives of Wall Street firms on the very board that approved Grasso's compensation.

The attorney general alleges that Grasso and also Ken Langone, the former head of the compensation committee, as well as the exchange itself, all violated New York State's not-for-profit corporation law with an excessive compensation package.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: And we are initiating an action filed today on behalf of the state of New York, naming as defendants Dick Grasso, Ken Langone and the New York Stock Exchange. Several key principals are vindicated by this lawsuit. First, you can't pay the head of a not-for-profit that much money, close to $200 million. It's simply too much. It's not reasonable. It's not right. It violates the law.

(END VIDEO CLIP)

CHERNOFF: Richard Grasso hasn't put out a statement yet, but we are expecting one this afternoon. Back in February his attorney did write to the exchange and said that the compensation package was legitimate. It was approved by the compensation committee, by the board of directors, and that Mr. Grasso would simply not back down even if a lawsuit were to be filed.

Ken Langone's spokesman put out a statement a few moments ago, and he said that it was an honest, diligent and sound compensation decision, also adding that it is misguided to single out one person because the entire board of directors had approved the compensation package. Kyra -- Drew, back to you. GRIFFIN: Allan, that does seem like a tough sell for Eliot Spitzer. The board approved the contract, certainly must have read the contract with Mr. Grass. And he had a signed contract when he left with a clear exit clause in it. How do you get around that without saying that the board of directors itself was either not in cahoots with Grasso or didn't read the fine print?

CHERNOFF: Right, very good question. Well, the allegation here is that the board was really misled, that many details of the compensation simply were not revealed to the entire board of directors. So that these people voting for the package didn't really know exactly what they were voting on.

GRIFFIN: Very interesting. Allan Chernoff, thank you, from Wall Street.

(MARKET REPORT)

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


Aired May 24, 2004 - 13:34   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DREW GRIFFIN, CNN ANCHOR: President Bush goes to war in defense of his Iraq policy tonight. He is expected to address mounting skepticism over his strategy and outline plans for next month's handover. His aides say he will also tell Americans to brace for more U.S. casualties, even after the Iraqis take power.
Instead of reporting traffic problems a California radio station's airplane created some this morning, KCBS Sky 3 making an emergency landing on Interstate 580 just south of Oakland. It touched down in an area called Castro Valley. The crew says they just ran out of gas. Nobody hurt there.

And in tennis, a first round exit for Andre Agassi at the French Open. The eight-time Grand Slam champ lost in straight sets to a French qualifier ranked 271st in the world. There is some consolation for Agassi, his picture will soon appear on the Wheaties cereal box.

KYRA PHILLIPS, CNN ANCHOR: After weekend tornadoes flattened at least two small towns in Nebraska, forecasters are warning of additional severe storms across the Midwest this afternoon. In the town of Bradgate, Iowa, a massive cleanup is under way, virtually every building was destroyed or badly damaged. In (UNINTELLIGIBLE), Nebraska, homes, farms and businesses were just wiped out. Thousands of people across the Midwest are still without power.

Tens of thousands of Michigan residents are also without power this morning. Flood warnings posted in at least 20 counties there. Several rivers stand above flood stage at this hour, two tornadoes touched down, but thankfully, very little damage is reported.

Well, hundreds of miles away, along the Eastern Seaboard, the problem is not flooding rivers but ocean rip currents. That story now from CNN's Julie Vallese (ph), she's in North Carolina.

(BEGIN VIDEOTAPE)

JULIE VALLESE, CNN CORRESPONDENT (voice-over): Each year approximately 90 million people visit America's beaches and every one of them face the potential danger of being caught in a rip current. Sandee LaMotte's husband, a CNN reporter and bureau chief was killed when he tried to rescue his son from a rip current last year.

SANDEE LAMOTTE, HUSBAND DIED IN RIP CURRENTS: Larry started to swim the maybe two arm lengths or three that it would have taken him to get to Ryan, right at the time that he entered the water a wave went over Ryan's head, so he lost -- and the next thing he knows there was no daddy.

VALLESE: The LaMotte's son Ryan did survive, but six people died on that same Florida beach that day. A hundred people die in rip currents every year. They occur in ocean seas and the Great Lakes.

CONRAD LAUTENBACHER, NOAA ADMINISTRATOR: This will be an opportunity for people to use the latest technology, not only with weather, but look at surf forecasts and look then at the surf forecasts and what the rip current vulnerabilities are at that particular time.

VALLESE: The reason so many people get caught in them is swimmers panic, become tired and lose the struggle, staying calm and not fighting the current is the beginning of surviving it.

UNIDENTIFIED MALE: Swim to the side, along the shoreline and then angle away from the rip current toward shore..

LAMOTTE: Water is dangerous. We think about drownings, but we don't think about it happening to us.

VALLESE: Rip currents begin at the shore line, so keep in mind, you don't have to be in deep water to get caught in the current.

(on camera): The chances of drowning in a beach where a lifeguard is present, one in 18 million, 80 percent of beach rescues are because of rip currents. So if a beach isn't guarding, swimming may be at a risk much too great.

Julie Vallese, CNN, Wrightsville Beach, North Carolina.

(END VIDEOTAPE)

GRIFFIN: The rising prices at the pumps have us all scratching our heads. Why are we paying so much for gas? Who is setting the prices and who is making the profit? Up next some perspective on those questions.

And an ornery ogre seeing green after his first weekend at the box office. We're going to show you just how much that guy ranked in a little later.

(COMMERCIAL BREAK)

PHILLIPS: Could the rising price of a fill-up eventually kill the largest SUVs? It's an interesting question, and not without merit, CNN's Miguel Marquez reports on the latest car shopping trends.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN CORRESPONDENT (voice-over): This Toyota dealership sells more alternative fuel vehicles than any other in the country. The reason? Pretty obvious.

UNIDENTIFIED FEMALE: I drive a Jeep, a Cherokee Jeep right now and I spend about $80 a week in gas. MARQUEZ: Californians, used to higher gas prices than the rest of the U.S., are beginning to balk at prices making a run at $3 a gallon. No where has the effect been more immediate than the car lot.

UNIDENTIFIED MALE: Our large SUVs have -- the percentage of vehicles sold is declining.

MARQUEZ: And that trend may be playing out nationwide. Autodata (ph), a company that tracks vehicle sales, says in April consumers bought fewer large SUVs like the Ford Explorer, Chevy Suburban and Hummer H2. While it's still not clear if high gas prices are driving SUV sales down, the price of petroleum is driving interest in hybrids up.

(on camera): How many of these could you sell if you could?

UNIDENTIFIED MALE: We could use another 200 or 300 right now, today.

MARQUEZ (voice-over): Marketing firm J.D. Power estimates the next few years up to 20 models of hybrids will be on U.S. roads and yearly sales will hit about a half million vehicles, that's 10 times what they are now. Some consumers considering buying a hybrid say it's not just that gas prices are high, it's that they expect them to stay high.

UNIDENTIFIED MALE: They're not going to go down below $2, probably only go up and -- yes, $3, $4, seems likely.

MARQUEZ (on camera): For now consumers are seeking out the lowest-priced gas they can find, places like Costco where the cheap stuff is $2.26 a gallon. Believe it or not, that's a deal. And with the high-driving summer months ahead, lower gas prices may not be on the horizon for some time.

Miguel Marquez, CNN, Burbank, California.

(END VIDEOTAPE)

GRIFFIN: Who would have thought 2.26 was the cheap stuff. What's driving the near runaway gas prices? More importantly, who, if anybody, could put the brakes on it? We're going to turn to Rayola Dougher with the American Petroleum Institute and former Deputy Energy Secretary Joe Romm under the Clinton administration there in Washington.

Rayola, let's begin with you. The petroleum industry certainly an obvious target, seeing that we have record prices, record profits and stock prices are up. And seven attorneys general wondering if there is some kind of collusion in the industry which is forcing profits up at least in several areas of the country, is it -- the problem with the petroleum producers?

RAYOLA DOUGHER, AMERICAN PETROLEUM INSTITUTE: Well, the problem really is out in the worldwide marketplace and the supply and the demand of crude oil is the major factor pushing prices upward. We have tight supplies and rising demand, especially in Asia, but also here in the United States where our economy is taking off and growth is higher than some analysts had originally anticipated.

GRIFFIN: But if I was hearing you right, earlier in the day we talked about supply and demand, and quite frankly, the refineries are at near capacity now, even if Saudi produces more oil from the ground, can the U.S. refineries deliver to the gas tanks?

DOUGHER: That's the other side of the equation, too, not only high crude oil prices, but our refineries are operating flat out right now. We're producing more gasoline than we ever produced. We're at 95 percent capacity utilization. But our import levels, we can't produce all of the gasoline we consume. We produce about 90 percent of it. The other 10 percent comes from abroad, and that level is down somewhat this year, about 10, 12 percent over where it was a year ago.

And we think that might have something to do with the fuel new specifications in the U.S. market this year and that foreign refiners exporting to this market might not have made the investment necessary to meet these new fuel specifications. That's playing out in our inventories now, too. Part of the reasons we have low inventories.

GRIFFIN: Well, there doesn't seem to be any magic bullet here. Joe Rome, let's bring you in, what is the solution or are we just dealing now with gas prices over $2?

JOE ROMM, FMR. DEPUTY ENERGY SECY.: Well, I think there's no question that your viewers are going to be facing high gasoline prices for many months and perhaps years to come. The solution is to do something on the demand side. If we don't reduce the demand, if we don't use more fuel efficient cars, we're just going to see higher and higher demand and that is going to give complete pricing control to the suppliers and the oil companies.

So I think we currently don't have an energy policy in this country aimed at demand. In the '70s and '80s we pushed fuel efficiency into the marketplace and as a result the price of gasoline and oil went down. We have abandoned that for the last 10 years and not surprisingly the price of oil and gasoline are up. So I would urge your viewers, if they want to do something about their own gasoline bill, they should go out and buy a hybrid, as was reported in your story. And if you want to help nationwide, we need to push fuel efficiency standards nationwide.

GRIFFIN: Will not the market take care of that, Mr. Romm? As you saw, we saw the people lining up for the Toyota Prius. They're getting rebates on the Hummer. If the prices just stay high, aren't we eventually going to see a marketplace that's going to bring back conservative cars and cars that will get much more fuel efficiency?

ROMM: Well, I think there are two fears here. One is that if we don't push fuel efficiency in the United States, we're going to end up importing these cars from Japan, Toyota and Honda, so I think if we want to save jobs in this country, we should adopt incentives and regulations to get every car company to be building these hybrid, fuel-efficient vehicles. Secondly, we have to care about the environment. There is this movie coming out this weekend, "The Day After Tomorrow," which will raise aware awareness on the dangers of global warming. In order to address global warming, we have to burn less gasoline. And that means every car on the road has to be fuel efficient, not just a few people's.

GRIFFIN: Rayola, the Saudi Arabian announcement that they're going to pump more gas from the spigot, I think they're the only ones who can simply turn on and off the flow, will that eventually reduce prices or are we just going to see a stabilization at these rates?

DOUGHER: Well, we're going to have to wait and see how much they actually do produce and how much the other member countries agree to when they meet on June 3, and see what impact that will have on the marketplace. Prices originally went down over the weekend after OPEC met in Amsterdam, but I understand they're back up again today. So I think the traders really want to see the oil, show me the oil. That's what they're waiting for.

GRIFFIN: Well, we'd like to see it, too. We thank both of you for joining us on this topic. Certainly affecting just about everybody whether you drive or not.

Coming up, an overstuffed green monster is bringing in the greenbacks.

(BEGIN VIDEO CLIP FROM "SHREK 2")

UNIDENTIFIED ACTOR: Are we there yet?

UNIDENTIFIED ACTOR: Yes.

UNIDENTIFIED ACTOR: Oh finally!

(END VIDEO CLIP)

GRIFFIN: "Shrek" and the entourage taking over the box office.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP "SHREK 2")

UNIDENTIFIED ACTOR: Told you coming here was a bad idea.

UNIDENTIFIED ACTOR: They're my parents.

UNIDENTIFIED ACTOR: Hello, they locked you in a tower.

UNIDENTIFIED ACTOR: Wasn't she supposed to kiss Prince Charming and break the spell? I'd like to know how it could get any worse.

UNIDENTIFIED ACTOR: Hello, Harold.

UNIDENTIFIED ACTOR: Ahhh!

(END VIDEO CLIP)

PHILLIPS: Oh wait, I have read a script now. I want to keep listening. An overwhelming open for the latest Dreamworks release. "Shrek" turned into the comeback kind this weekend, the sequel pulled in more than $104 million, that's the second biggest three-day tally in movie history. Sales far exceeded expectation despite all the publicity leading up to its return.

(MARKET REPORT)

GRIFFIN: The stakes are high, the handover looming and many Americans are growing impatient. President Bush set to address the nation tonight on his plan to hand over authority in Iraq.

Coming up next in our second hour of LIVE FROM..., we're going to hear from both sides. What do Democrats, what do Republicans need to hear from the president regarding the future of Iraq?

(COMMERCIAL BREAK)

PHILLIPS: Primetime plan. Will President Bush deliver a convincing plan to skeptics on giving control back to Iraq?

GRIFFIN: Violent twisters. A state of emergency after more than a dozen funnel clouds rip through the heartland.

PHILLIPS: Cruel and unusual punishment. The Supreme Court allows a death row inmate to make his case against lethal injection.

GRIFFIN: And we've got a fixer-upper for sale, stately British mansion, 3000 acres and your own pheasant shooting range. It's a steal at $85 million. We're going to tour the ultimate handy-man special.

From the CNN Center in Atlanta, I'm Drew Griffin.

PHILLIPS: All right. And I'm Kyra Phillips. Miles is off today. This hour of CNN's LIVE FROM starts right now.

A new day in Iraq starts 37 days from today. And tonight we'll hear details. President Bush plans the first in a series of speeches on a topic that he once considered unworthy of U.S. foreign policy, namely, nation building. CNN's Dana Bash has a preview now from the Army War College in Carlisle Barracks, Pennsylvania -- Dana?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi Kyra, well the president is still back at the White House. We're told he's been practicing his speech this afternoon in the White House theater, going over it. It is a speech the White House says will be about 30 to 35 minutes. And it's an address that they admit candidly is intended to calm American jitters about Iraq.

And when you talk about Republicans outside the White House, they say that this is long overdue, that this is something they hope will calm Americans jitters about the president himself as his poll numbers really have been slumping over the past few weeks even the past month. And they attribute that to how people about what they see as chaos in Iraq.

Now that is exactly what the president is going to try to do tonight, try to lay out essentially what he will say is a plan that will try to essentially contradict the idea that it's chaos in Iraq. And the White House is billing this as something that is a five-step plan. They're essentially more like five themes the president will address, will try to bring out some of the things that we've been reporting on for some time.

For example, the transfer of power to Iraqis. Bush aides say that the American people hear the date June 30, they don't really know what that means. The president is going to talk about what that will mean, the interim government, what that will be made up of. And also he will talk about improving Iraqi security, how the U.S. military will work, the fact that they will stay certainly after June 30, how they will work with a multinational force.

He will talk about expanding the international role, address the U.N. resolution that the U.S., along with Great Britain, just introduced at the U.N. today, a five-page resolution that lays out the timetable towards democracy, if you will, between now and January of next year.

He'll talk also about rebuilding the Iraqi infrastructure and the economy and planning for the election. That, of course, again is at the end of 2005. Unclear, Kyra, if all of this will answer a lot of the criticism that the president is getting that this is more than just a communications problem, that it's a problem with his policies.

You heard from retired General Anthony Zinni, who said that this is a question of bad policy from the get-go and that the president needs to change that policy. What the president is going to do tonight is offer some new details and almost sort of lay out in what they hope is an organized way the things that they are already planning on doing, working with the United Nations, working with the Iraqi people to transfer sovereignty. This is sort of a communications issue, unclear, again, how much this will answer critics about whether or not there is a big problem with the policy here -- Kyra.

PHILLIPS: Dana Bash, thank you. Well, the president's speech begins at 8:00 p.m. Eastern, just about six hours from now. And CNN will air it start to finish as part of a special edition of "PAULA ZAHN NOW.".

GRIFFIN: Diplomats at the United Nations already looking beyond the handover to the next mission in Iraq, one in which the U.N. would play a major role. Our senior U.N. correspondent, Richard Roth, is here with that live -- Richard.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Yes, Drew, in anticipation of President Bush's remarks to the nation, the United States and Britain distribute a new proposed resolution to the other members of the United Nations Security Council for this transition and beyond period in Iraq after June 30. Many are focusing on one key aspect, the so-called multinational force, which would then replace the occupying force of the U.S. and Britain, will have a 12-month period where they will be in there and there's no expiration date for their service, which annoys some members of the council. At the moment, according to U.S. Deputy Ambassador Cunningham, it's a review after 12 months on the status of those forces.

(BEGIN VIDEO CLIP)

JAMES CUNNINGHAM, DEPUTY U.S. AMBASSADOR TO U.N.: The resolution makes clear that the multinational force will be reviewed after 12 months or at the request at the transitional government. And it also makes clear the importance of the consent of the sovereign government of Iraq for the presence of multinational forces. So we think those two concepts together describe what the relationship should be, the multinational force will be there at the -- with the agreement of the sovereign government of Iraq.

(END VIDEO CLIP)

ROTH: Also vague, still to be defined, the relationship between the caretaker Iraqi government and the multinational force, the hundreds of thousands of troops that are needed on the ground for security. Countries such as Algeria, Germany and France would probably like to see more definition, more clarity, so that that force does not stay in there more than 12 months. A review here in the Security Council could be blocked by United States veto. Otherwise, European countries that haven't always been in lockstep with the U.S. are interested in getting economic and financial help to the Iraqi people.

(BEGIN VIDEO CLIP)

GUNTER PLEUGER, GERMAN AMBASSADOR TO U.N.: I think it is important that the resolution will make clear that we have a new start in Iraq, a political process, the restoration of sovereignty to Iraq. And we will have to make sure that this process provides Iraqi ownership for the political process as well as for the process of economic reconstruction.

(END VIDEO CLIP)

ROTH: Also the Iraqi caretaker government will have a bigger say regarding oil proceeds sales, but still left unclear, though, is just how much freedom they will have as to what to do with that money. There's an international monetary mechanism, will still remain in place to make sure there's no corruption.

Of course, hanging over the U.N. in the last few months, controversial Oil-for-Food Program where some U.N. members and staff members and former diplomats are accused of profiting from that lengthy oil-for-food humanitarian program.

Drew, back to you.

GRIFFIN: Complicated day at the U.N. Richard Roth, live, thank you.

Kyra, back to you.

PHILLIPS: More developments on the ground in Iraq today. After weeks in a bitter standoff with coalition forces in Karbala, Muqtada al-Sadr's have pulled out of the holy city, a positive sign tempered by new blasts in Baghdad today, killing two British. Guy Raz has the details.

(BEGIN VIDEOTAPE)

GUY RAZ, CNN CORRESPONDENT: Another violent day in this beleaguered Iraqi capital. Two British nationals were killed when their vehicle was hit by an explosive device. It's unclear whether that was a roadside bomb or a rocket-propelled grenade, but we understand that four British nationals were traveling in armored sport utility vehicle, right in the heart of central Baghdad, very close to the Coalition Provisional Authority's Green Zone, a secure area, when that vehicle was struck by some kind of explosive device, immediately killing two inside that vehicle.

Meanwhile, there has been more violence in southern Iraq, in the town of Kufa, that's a stronghold of the radical Shiite cleric Muqtada al-Sadr. U.S. forces clashed with members of al-Sadr's Mehdi Army brigade, killing at least 32 suspected Iraqi fighters in that attack.

Now according to U.S. officials, they found large stockpiles of weapons, artillery, mortars and rocket-propelled grenades inside a mosque in Kufa. Also in Kufa, 400 to 500 Shiites gathered to protest the U.S. action in the city, saying that they'd prefer to see violence far away from holy sites.

Now, in other news here in Iraq, more controversy surrounding the so-called wedding massacre that took place last week. The United States launched a raid on a village early Wednesday morning, killing up to 45 people in that town. Now according to residents there, they say there was a wedding happening, that they were simply firing celebratory gunfire. U.S. officials have denied it, saying that this was a waystation for foreign fighters.

But in a tape obtained by the Associated Press Television, it appeared as if some type of wedding may have taken place at the site. Now the tape hasn't been confirmed by CNN or APTN, but an APTN reporter managed to cross-identify some of the bodies that he witnessed at the scene and some of the people captured on that video.

U.S. officials are sticking to their story, saying they will continue to investigate, but at the moment, insisting in their minds, there's no question this was a terror training ground.

Guy Raz, CNN, Baghdad.

(END VIDEOTAPE)

GRIFFIN: Picking up the pieces in the aftermath of powerful tornadoes, details on the damage straight ahead. (WEATHER REPORT)

GRIFFIN: And later on LIVE FROM..., a word of warning for American men about their chances of getting breast cancer.

(COMMERCIAL BREAK)

PHILLIPS: In the eye of the storm. The Midwest is expecting more wicked weather after a weekend of deadly thunderstorms and tornadoes. More than a dozen twisters left behind damage like this in Nebraska. An elderly woman in Nebraska was killed by a tornado. The weather was also fatal in Iowa and Michigan where several counties are under flood warnings today. CNN meteorologist Jacqui Jeras is watching the Midwest weather for us.

Hi, Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Hi, Kyra. No tornado warnings right now but we are expecting some to be issued we think later on this afternoon and into the evening hours. The Storm Prediction Center issuing a tornado watch over the same areas that got hit hard this weekend, including Hallam. And this is a particularly dangerous situation. We have a very high risk of supercell-type thunderstorms, the ones that spawn tornadoes, to be developing here later on for today.

Right now severe thunderstorms have been moving across much of the area. North of the Omaha area, north of I-80 there, and that's the watch area we were talking about. And you head on up the Missouri River, up along the I-29 corridor and we do also have some warnings just approaching Sioux City, in the south Sioux, and into north Sioux right now. Also Vermillion under a severe thunderstorm warning.

And so we do expect to see nickel-sized hail, strong wind gusts, possibly between 60 and 70 miles per hour. So you do want to use a lot of caution and not travel across this part of country at this time.

Our main storm threat is going to be severe weather with large tornadoes potentially later on for today. And a very large area of the country is going to be at risk. But the high risk that we're talking about covers a smaller area of southern Iowa, northern Missouri, from Peoria to Des Moines to Omaha over towards Kansas City. And basically what that means to you at home, you have a one in four chance of a tornado coming within 25 miles of your home. So this is very dangerous for today.

Why have we been seeing such an ongoing outbreak? Well, all of the elements are there. It's a classic severe weather set-up, where we have warm, moist air coming in from the Gulf of Mexico, rising air here and very strong upper level winds, our jetstream. We need that to support these storms and also that causes the opposing winds. It helps with that rotation. That's what helps to develop these supercell thunderstorms, the ones that do produce the tornadoes.

Also flooding, Kyra, a big concern. An additional one to two inches of rain in some of these locations, particularly in Iowa have seen four or five even six inches of rain over the last couple of days.

Wow, Jacqui, you've been a busy woman. We'll continue to check in with you. Thanks so much -- Drew.

GRIFFIN: News across America now begins with mixed findings about safety if the U.S. The FBI says violent crime dropped by more than 3 percent last year, the number of aggravated assaults, rapes and robberies all down, but murder rates were up.

In Texas, a chartered bus slammed into a parked tractor trailer, killing one passenger, injuring more than two dozen others. The coach bus was heading back from a gambling trip to Houston from Harrah's casino in Louisiana.

In New York more than 1700 firefighters and police officers have filed lawsuits now over health issues in the wake of 9/11. The suit claims toxins at ground zero gave them a number of illnesses, including cancer and asthma. More than 300 firefighters have retired due to sickness or injuries connected to those attacks.

PHILLIPS: An embattled president, a doubting public and looming questions. What did the president know and when did he know it? That famous question to Richard Nixon 30 years ago is once again echoing through the halls of Congress. Political analysts wonder is history repeating itself? President Bush will try his hand at damage control in a speech tonight. What can the president do to survive? And should he, like Richard Nixon, be held accountable for scandals and doubt concerning a war-torn country. Our Washington guests are going to give us both sides. Peter Fenn is Democratic strategist, and Cheri Jacobus is one for the Republicans.

Good to see you both.

CHERI JACOBUS, REPUBLICAN STRATEGIST: Thank you.

PETER FENN, DEMOCRATIC STRATEGIST: Good to see you.

PHILLIPS: Peter, what do you think, is history repeating itself?

FENN: Well, I think there's no question that this president is embattled, not so much by the Democrats as by the Republicans, the independents, the conservative columnists. This war is not going well. A year ago this president and the Defense Department were talking about going into Iran and Syria. They find themselves now in a situation where they have to go on the PR offensive. And I think what we're going to see here tonight is a lot of politics and a lot of PR but probably not much policy.

PHILLIPS: Cheri?

JACOBUS: Well, I think the president never promised us a rose garden, so to speak, in this regard. He has always said that this was going to be difficult. He's been consistent. We've known that it was going to be more difficult up until and just after the handover of power and sovereignty to the Iraqi people. So this isn't anything new.

And I think what we're seeing is sort of a desperate attempt on the part of the left and the Democrats and Kerry to try and stain this president in what really is a victory. The fact that we have freed Iraq and the Iraqi people from a dictator such as Saddam Hussein is huge. It is great news. And I think that with the Democrats persistent message that if it isn't easy, then there's something wrong with it, this will end up being a feather in the cap for George W. Bush.

PHILLIPS: All right. Let's talk about following the rules, sidestepping the Constitution, something that has been brought up. It was on NPR, Cokie Roberts talking about it, Carl Bernstein coming out with this editorial. I want to read something to both of you on that issue. "Like Nixon, the president decided that the Constitution could be bent on his watch. Terrorism justified it. Rumsfeld's Pentagon promoted policies making inevitable what happened at Abu Ghraib and Guantanamo Bay, Cuba. The legal justification for ignoring the Geneva Conventions regarding humane treatment of prisoners was annunciated in a memo to Bush dated back January 25, 2002." What do you think, has there been a number of bending the rules and is that going to affect the president, Peter?

FENN: Absolutely. I mean, they've thrown the Geneva accords out the window. This policy -- I disagree with Cheri, I'm afraid, this policy is a disaster. They're making it up as they go along. They had no post-election plan. You had a General Zinni on "60 Minutes" last night talking about it. You have now a cacophony of Republican columnists and Republican members of Congress who are very concerned about it.

You know, this is a president now who has got to get his act together in the next five months or he's going to find himself out of office because voters are going to say the only way to change Iraqi policy is to change presidents. The only way we can get on the ground, straightened out is if we have a new president because he's ignored the will of the United Nations and he's ignored the will of the united community. And the problem with it right now is that if we're going to solve the problem of terrorism, we're going about it the totally the wrong way.

(CROSSTALK)

JACOBUS: Can I make a point?

PHILLIPS: Go ahead, go ahead.

JACOBUS; The point that Peter is missing is the fact that John Kerry has no plan and people are concerned about what any wartime president's policies are going to be. They should be concerned. But that doesn't mean they're blaming the president. They're seriously concerned about the situation that we're in. That's a far cry from blame and that's a far cry from wanting to jump over to a President Kerry who has not articulated a position on anything.

And with regard to Mr. Bernstein's piece in "The USA Today" this morning, I think that he is -- it's so irrelevant, it's really a stretch to compare Bush to Nixon, and I think that he's just a little bit nostalgic for the glory days and the relevancy that he enjoyed during the Watergate era.

PHILLIPS: So Peter, does the president need to convince Americans that this war can be won, or does the president need to convince Americans that the troops will be coming home?

FENN: I think he's got to convince the Americans of both those things. He said "mission accomplished" a year ago. The mission has not been accomplished. John Kerry has called for greater support from the United Nations, greater international support, changing the basic context of this conflict. He's written in "The Washington Post" very specifically about it.

The problem that the Bush administration has is that they've got a lot of people pointing fingers and no plan, no program. And this is -- you know, this is when you try to make it up as you go along, which is what's going on here, you have no exit strategy, you have no ability to put in place a really solid government that you don't control, and you have people dying every day.

PHILLIPS: Peter brings up a good point, Cheri, the president has got to lay out an exit strategy, is he going to do it?

JACOBUS: Well, actually, I don't think it's an exit strategy so much as a strategy for victory. And that's what tonight is, it's the first of a series of speeches that the president is giving to the American people and to the world, laying out how the transfer of power will take place and what happens after that. That's exactly what he should be doing. But I personally, as with a lot of Republicans, think that the president should not lay out on exit strategy until we have a victory strategy, and I think part and parcel of that obviously is handing over as smooth as possible this transition of power.

PHILLIPS: So Cheri...

JACOBUS: ... let John Kerry talk about exit strategy at this point without victory. The president we have is going for victory.

PHILLIPS: Can the president guarantee freedom? Can the president guarantee a victory or can the president just say, we have done our best, this will be a free country with free elections, now it's up to you and stop the guarantees?

FENN: I think that's exactly what he's going to try to do. But the problem is it's chaos there now. There is very likely going to be a civil war in Iraq. I mean, anybody who knows Iraq and who would have planned for this would have said to you, how do you bring the Sunnis and Shiites together? It's very difficult to do.

This president did not have a plan. He went before the American people in 2000 and said he had a three-legged stool for his foreign policy, clear and defined objectives, a clear exit strategy and no nation building. He has violated all three in the case of Iraq and terrorism -- the war on terrorism has suffered because of it. The policy is a disaster and it's time for him to pull back.

PHILLIPS: Cheri, does he have to justify his policy? Does the president have to still come forward tonight and justify this war?

JACOBUS: I think the president has already done that. The fact of the matter is that the weapons of mass destruction issue, he had the same intelligence that Bill Clinton did. And as of Bill Clinton's last day in office, he said he believed there were weapons of mass destruction. We have found some small amounts of Sarin, and I think a lot of people believe there are weapons of mass destruction.

However, I'm not so sure that we all really care. This is the president. This is the administration that had the integrity and strength to go after Saddam Hussein who should not have been left there in the first place when his father was president, clearly. And Bill Clinton pretty much ignored the problem. So I think most Americans really believe that this is the president who has the strengths of convictions. And we've seen this in some polling, that he's the one they do trust for matters such as these, even though it's difficult and even though they aren't big cheerleaders for him right now.

FENN: The great irony of this is that President Bush's father wrote in his book that he would not have gone in and taken out Saddam Hussein, that he knew what was going to happen, they would take too many troops, that it would lead to chaos. It would be impossible to govern this country. When President Bush's father laid out the problems he was absolutely correct. He foresaw what the President Bush has got himself in for right now and it's sort of sad, really.

PHILLIPS: Cheri brought up one point, just real quickly before we go. CNN/"TIME" poll, U.S. military policy in Iraq, the latest numbers, you mentioned numbers, Cheri: approve, 41 percent, disapprove, 49 percent. The speech is tonight, 8 p.m. What do you say, will you two come back tomorrow and maybe talk to me about how you thought the president did?

JACOBUS: Absolutely.

FENN: Absolutely.

PHILLIPS: That's great. We're on. Thanks, you guys.

FENN: Thanks.

JACOBUS: Thanks.

PHILLIPS: Peter Fenn, Cheri Jacobus.

You can watch all the president's speech tonight right here on CNN. We're going to bring it to you live like we mentioned during a special edition of "PAULA ZAHN LIVE" beginning at 8 p.m. Eastern.

GRIFFIN: And while the debate continues on that, another controversy brewing in Iraq, did American forces attack suspected terrorists or was it a wedding party in the Iraqi desert? We have new information on that, a live report from the Pentagon just ahead.

And new research being hailed as a medical breakthrough for treating spinal cord injuries. We've got your health headlines. That's all ahead on LIVE FROM...

(COMMERCIAL BREAK)

GRIFFIN: All eyes on Wall Street. New York Attorney General Eliot Spitzer today filed suit against former New York Stock Exchange Chairman Richard Grasso. Here with details on that, CNN Financial News correspondent Allan Chernoff -- Allan.

ALLAN CHERNOFF, CNN SR. FINANCIAL NEWS CORRESPONDENT: Drew, the New York attorney general, Eliot Spitzer is seeking more than $100 million from Richard Grasso, the return of at least that amount to the New York Stock Exchange, part of the compensation that Mr. Grasso had received.

The attorney general is charging that the board of directors at the New York Exchange was misled with regard to details of the compensation package it had approved for Grasso; also, that the formula used to calculate the compensation was fundamentally flawed; and also that Mr. Grasso was engaged in a conflict of interest because as the former head of the exchange he was also the regulator for Wall Street firms. And there were several chief executives of Wall Street firms on the very board that approved Grasso's compensation.

The attorney general alleges that Grasso and also Ken Langone, the former head of the compensation committee, as well as the exchange itself, all violated New York State's not-for-profit corporation law with an excessive compensation package.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: And we are initiating an action filed today on behalf of the state of New York, naming as defendants Dick Grasso, Ken Langone and the New York Stock Exchange. Several key principals are vindicated by this lawsuit. First, you can't pay the head of a not-for-profit that much money, close to $200 million. It's simply too much. It's not reasonable. It's not right. It violates the law.

(END VIDEO CLIP)

CHERNOFF: Richard Grasso hasn't put out a statement yet, but we are expecting one this afternoon. Back in February his attorney did write to the exchange and said that the compensation package was legitimate. It was approved by the compensation committee, by the board of directors, and that Mr. Grasso would simply not back down even if a lawsuit were to be filed.

Ken Langone's spokesman put out a statement a few moments ago, and he said that it was an honest, diligent and sound compensation decision, also adding that it is misguided to single out one person because the entire board of directors had approved the compensation package. Kyra -- Drew, back to you. GRIFFIN: Allan, that does seem like a tough sell for Eliot Spitzer. The board approved the contract, certainly must have read the contract with Mr. Grass. And he had a signed contract when he left with a clear exit clause in it. How do you get around that without saying that the board of directors itself was either not in cahoots with Grasso or didn't read the fine print?

CHERNOFF: Right, very good question. Well, the allegation here is that the board was really misled, that many details of the compensation simply were not revealed to the entire board of directors. So that these people voting for the package didn't really know exactly what they were voting on.

GRIFFIN: Very interesting. Allan Chernoff, thank you, from Wall Street.

(MARKET REPORT)

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