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America Votes 2004 On The Road; Bush on Edwards' Turf; Iraq: The Next Chapter; Troop Strength; Karachi: City in Chaos; Hendrix V. Hendrix

Aired July 07, 2004 - 13:00 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.

MILES O'BRIEN, CNN ANCHOR: From the CNN Center in Atlanta, I'm Miles O'Brien. Kyra Phillips is off today. LIVE FROM... starts right now.
The nation's top Democratic duo is on the road at this hour. Right now John Kerry and John Edwards are campaigning in the critical battleground state of Ohio.

(BEGIN VIDEO CLIP)

JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: We, America, we need a president that will lead the world, not bully it.

(APPLAUSE)

We need a commander-in-chief that will protect and keep the American people safe, who will keep our military strong and stand up for the men and women who serve this country.

(END VIDEO CLIP)

O'BRIEN: Now, earlier we got a first look at them together since the announcement, and CNN's Kelly Wallace was there.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: What we saw this morning was the beginning of a very carefully-orchestrated rollout designed to get maximum coverage and the maximum bounce for the Democratic ticket. It was the first joint photo op featuring John Kerry and John Edwards. Senator Edwards there with his wife, Elizabeth, and his three children. John Kerry with his wife, Teresa, his two daughters and two of his three stepsons.

We also got the first word from John Edwards since he was tapped to be John Kerry's running mate. And he put forward that populous message that made him very popular during the primaries and is one of the reasons Kerry's advisers say Senator Kerry decided to select him to be his vice presidential candidate.

EDWARDS: There is so much at stake. He shares the values and the visions that I believe in. You know I grew up in a small town in North Carolina. This is the kind of man we grew up looking up to, respecting, somebody who believed in faith and family and responsibility and having everybody get a chance to do what they're capable of doing, not just a few.

JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: John Edwards and his family represent a life of fighting to provide hope and opportunity for people, opening doors, making things better for people who have been hurt.

TERESA HEINZ-KERRY, WIFE OF JOHN KERRY: And that's what we're going to do is to bring back hope and inspire all of our country people to be what they can be, which is optimistic, working and healthy.

WALLACE: The senators refused to take questions, saying they would take some later. Perhaps one of the toughest questions will be going to John Kerry. Questions about how he could choose someone to be his running mate, someone whose own readiness and experience for the presidency he questioned during the primaries.

Right now, though, it's all campaigning all the time. The senators and their wives will be hitting six states over the next four days, starting first in the ever-important battleground state of Ohio and wrapping up this tour on Saturday in John Edwards' home state of North Carolina.

Kelly Wallace, CNN, reporting from Fox Chapel, Pennsylvania.

(END VIDEOTAPE)

O'BRIEN: CNN has the top of the ticket Thursday night on "LARRY KING LIVE." Larry will talk with Democratic presidential candidate John Kerry and his wife, Teresa Heinz-Kerry. That's 9:00 p.m. Eastern, "LARRY KING LIVE."

President Bush headed right into the heart of Edwards' country today, North Carolina.

CNN's Suzanne Malveaux is with the president.

Hello -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Miles, yesterday President Bush congratulated Edwards on the nomination. Today, the gloves came off. The president met with his judicial nominees. He raised more than $2 million.

But what's getting all the attention here is the president took a couple of reporters' questions. He was asked about his reaction to Edwards, whether or not he thought that Edwards was a challenge in any way for Dick Cheney.

Let's hear just a little bit of that exchange.

(BEGIN VIDEO CLIP)

QUESTION: He's being described today as charming, engaging, a nimble campaigner, a populace and even sexy. How does he stack up against Dick Cheney? GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Dick Cheney can be president.

Next.

(END VIDEO CLIP)

MALVEAUX: Well the clear implication here is what many Republicans have been saying, they believe that Edwards does not have the experience or the gravitas to take on Cheney, and particularly if the occasion came up that he would have to assume the presidency.

Now, President Bush also taking on this notion here that Edwards performs very well in the South, that he would be able to influence the campaign by taking on sweeping many of those southern states. President Bush taking issue with that saying that he believes he can lay claim to that region.

(BEGIN VIDEO CLIP)

BUSH: I'm going to carry the south because the people understand that they share -- we share values. That they understand, they know me well, and I am -- I believe that I did well in the South last time and will do well in the South this time because the senator from Massachusetts doesn't share their values.

(END VIDEO CLIP)

MALVEAUX: Now the Edwards and Kerry campaigns shot back in response to President Bush's comments. One of them from the Edwards camp saying that obviously the Bush administration has hit the panic button, that they have seen their policies failed in this particular state and the region.

The Bush administration points out the fact that the president carried the state of North Carolina back in 2000 by 13 points. The Democrats believe that they can close that gap. They believe that President Bush is most vulnerable when it comes to those textile jobs that were lost some 158,000 under President Bush's watch -- Miles.

O'BRIEN: Suzanne, when we talk about the South, do we include Florida in this picture here? Is Florida somewhat of an aberration? And to what extent is the Bush campaign at all concerned about how Edwards might impact things there?

MALVEAUX: Well, they certainly are concerned about that. And as you had noted, yes, it is an aberration, but they believe that they are going to -- they are going to hold Florida, that they're going to take Florida as they did last time.

But if you talk to a lot of these aides, they say look, they realize this is going to be a tough fight, that it is not going to be easy. Many people look at some of the criticism and the rhetoric, the harsh rhetoric that you've heard over the last 24 hours, as a clear indication that they believe that this Kerry-Edwards ticket is certainly it's going to be a challenge. O'BRIEN: Suzanne Malveaux, thank you very much.

If you need more campaign news and more on John Edwards, we know just what to do, check out " JUDY WOODRUFF'S INSIDE POLITICS," 3:30 p.m. Eastern, right here on CNN. You don't want to miss it.

Suicide bombings, hostage takings and ambushes, all reasons to bolster security in Iraq. Today Iraq's interim prime minister unveiled sweeping measures aimed at ending the violence. The announcement came as insurgents opened fire on the Iraqi national guardsmen in Baghdad.

With more on that, we go live now to our Baghdad bureau chief Jane Arraf -- Jane.

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Miles, U.S. officials say that firefight lasted for four hours in central Baghdad in a main residential neighborhood. Now this broke out when insurgents opened fire on the Iraqi national guard and this is a new national guard force. They've just started patrolling.

And as they were patrolling, they came under fire from small arms and rocket-propelled grenades. Some of that fire apparently in the direction of an Iraqi police station. They called for reinforcements, and American troops came in armored vehicles and helicopters. But a senior U.S. military official says they didn't fire a shot. They made sure everything was relatively under control and withdrew, leaving it to Iraqi security forces.

Now, just before that fighting broke out, the government announced a series of security measures aimed at cracking down and trying to stop this violence. They would allow the prime minister to be able to impose (INAUDIBLE) to mobilize the armed forces and to launch house-to-house searches. But, according to the justice minister and the human rights minister who announced the plan, it does have a series of checks and balances. It needs approval from a majority of cabinet and it includes a committee to monitor any potential human rights abuses -- Miles.

O'BRIEN: CNN's Jane Arraf in Baghdad, thank you very much.

Prior to the handover in Iraq, the U.S. secretly moved out almost two tons of dangerous materials that could have been used to make a so-called dirty bomb. The Energy Department says experts removed radioactive materials from a former nuclear facility a couple of weeks ago. The nuclear materials were taken to an undisclosed lab for further study. No word on what exactly those items consisted of, however.

On Capitol Hill, the House Armed Services Committee is considering U.S. troop strength in Iraq and Afghanistan days after the Pentagon announced the call-up of more reservists.

Our Pentagon correspondent Barbara Starr joining us with details on all this -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hello to you, Miles.

At this hour, that hearing remains ongoing. The House Armed Services Committee questioning, very sharply questioning top Pentagon and military officials about troop rotation, troop strength in Iraq and Afghanistan, just how ready the military is to deal with these ongoing combat zones.

Now, there is a lot of concern on the part of Congress that the force is just tired and exhausted, that it's literally at the so- called breaking point.

Now, military officials interestingly said earlier today in this hearing that they are making their recruiting goals, that people are continuing to sign up for military services -- service. But that's not to say that the Pentagon is not very concerned about wear and tear on the equipment and stress on the force.

Top -- a top Army official talked about all of that.

(BEGIN VIDEO CLIP)

GEN. RICHARD CODY, U.S. ARMY: Are we stretched thin with active and reserve component forces right now? Absolutely. We just did the largest move of the Army since World War II. You can't move eight- and-a-half divisions and 240,000 soldiers without stressing the force. And we still have equipment that is en route back to those units that have already been home for a month or so. And so when we talk about search capability, we're rapidly trying to rebuild the search capability.

(END VIDEO CLIP)

STARR: So General Dick Cody, the vice chief, the No. 2 man in the U.S. Army, saying they know the force is tired, but they're trying to bring people home and get them ready in case they were to have to deploy again.

Now also in the hearing, Pentagon officials strongly denied that there are any plans because of all of this to reinstate a draft. That continues to be quite a rumor that floats around the Internet and other e-mail-type circles. But a top official saying absolutely no plans to reinstate a draft. They are getting enough people signing up on a volunteer basis. Compulsory service doesn't work, according to the Pentagon. So even though there's a lot of stress on the force, a lot of concern, absolutely no plans to reinstate a draft in this country -- Miles.

O'BRIEN: But, Barbara, taking the issue of the daft aside for just a moment, is there much talk about increasing the numbers of men and women in uniform who are not reservists so these reservists aren't leaned on so heavily?

STARR: Well, you know that really is the key question. Is the active duty military force in this country the right size? Are there simply not enough people on active duty and is that making the Pentagon have to rely too much on the reserves and the National Guard in a way that they never expected to?

Now officially the Pentagon position is that everything is about the right size, that they don't have to go to Congress and ask for legislation to increase the size of the military. But on the other hand, the military currently is operating under some so-called emergency situations in which there are more active duty people than there normally would be. Secretary Rumsfeld says all of this is being looked at, but at the moment, he doesn't feel he needs a permanent increase in the size of the military -- Miles.

O'BRIEN: Barbara Starr at the Pentagon, thank you very much.

Big development today to tell you about in Yemen. Six Yemeni men charged in the bombing of the USS Cole. That attack killed 17 American sailors, you'll recall, back in October of 2000. Among those charged was the suspected ringleader who is already in U.S. custody. All six are suspected members of al Qaeda.

It's a crucial hot spot in the war on terror and it's in the grip of violence. Will things get under control? We'll take you to the mean streets of Pakistan in just a bit.

When you buy low-carb, are you really drinking to your health? We'll toast that one a little later on LIVE FROM...

And trying to clear up the purple haze over a rock legend's legacy. It's all coming down in court.

(COMMERCIAL BREAK)

O'BRIEN: In the global war on terror, Karachi, Pakistan is one of the most dangerous places in the world. It is an easy place for an outlaw to hide and an extremely hazardous place for the police.

CNN's Ash-Har Quraishi reports.

(BEGIN VIDEOTAPE)

ASH-HAR QURAISHI, CNN CORRESPONDENT (voice-over): The sweltering heat in Karachi was matched only by the mood on the streets. It was a month that has come to be known as Bloody May, over 60 people killed and hundreds more injured in bombings, shootings and suicide attacks, many of which were thought to be linked to al Qaeda.

For Karachi's overburdened police force, it was a month-long nightmare.

CHIEF TARIQ JAMIL, KARACHI POLICE: But obviously under the present situation, our top most priority is fighting terrorism.

QURAISHI: It's easy to get lost in this city of over 14 million people. Investigators believe that after 9/11, hundreds of al Qaeda operatives took refuge in the provincial capital, inciting a wave of violence not seen here in over a decade.

(on camera): This one kilometer stretch of road is one of the most heavily guarded in Karachi. Just down the street is the U.S. consulate, around the corner are several major hotels. It is an area that has been targeted several times by terrorists. Attacks here have killed dozens.

(voice-over): Maintaining law and order in a city this large is a daunting challenge for a police force of under 30,000 officers. That's 10,000 less than New York, a city half the size. For Karachi's understaffed police force, checking each and every car is practically impossible, so instincts can mean the difference between life and death.

UNIDENTIFIED MALE: This particular vehicle, the license plate did not match with the make of the vehicle. Then I just had a gut feeling that this thing is going to explode. Immediately we removed all the people.

QURAISHI: This was one of many car bomb attacks that rocked the city. On this day, the quick thinking of one police officer saved dozens of lives.

JAMIL: In the face of sudden decisions, like there's a car bomb or there's an assault on a police station, I mean everyone has to face the bricks.

QURAISHI: And they have. In the past five months alone, Jamil has lost 15 of his men to terrorist attacks. But even with the lack of resources, manpower and technological assistance, police have so far not been deterred.

Ash-Har Quraishi, CNN, Karachi, Pakistan.

(END VIDEOTAPE)

O'BRIEN: News around the world now.

In Hong Kong, the health minister has resigned amid criticism of how his team handled last year's SARS crisis. The resignation comes within a week of a huge anti-government rally calling for more democracy in Hong Kong. The health chief was the third minister to quit under public pressure in less than a year.

In North Korea, the leader, Kim Jong Il is loving American-style hamburgers. And, according to media reports, promoting them as a quality food for university students. His pro-burger stance is seen as a curious development for a country that traditionally despises U.S. consumerism. For instance, the accepted official North Korean translation for Coca-Cola is, get this, cesspool water of American capitalism. I'm not sure if there is a diet version.

And Tibetans and exiles, followers of the Dalai Lama around the world marked his 69th birthday today. The Dalai Lama himself did not take part, however, in any of the public festivities.

In Seattle, a family feud winds up in front of a judge. The players, relatives of the late great rock guitarist Jimi Hendrix. At stake is millions of dollars in royalties and merchandising rights. CNN's Kimberly Osias navigates the legal haze.

(BEGIN VIDEOTAPE)

KIMBERLY OSIAS, CNN CORRESPONDENT (voice-over): Like Woodstock itself, Jimi Hendrix and his music marked a generation. But now the rights over who controls the Hendrix empire, including advertising licensing, merchandising and a vast rock catalog is being played out in a Washington state probate court. Hendrix versus Hendrix.

On one side is Jimi's brother, fellow musician Leon Hendrix.

LEON HENDRIX, MUSICIAN: This is a heritage and legacy for my family, and Jimi's family.

OSIAS: He's suing their sister, Janie Hendrix, the adopted daughter of Jimi's father, who's had control of the company since 1995.

JANIE HENDRIX, RELATIVE OF JIMI HENDRIX: Where were they when we were planting the seed? Now that it's all growing and blooming, everybody has their hands out.

OSIAS (on camera): Jimi Hendrix died in 1970 without a will, so his estate automatically went to the next of kin, Jimi's father, Al. Now, Al is dead and the estate, originally valued at about a half a million dollars, is now estimated to be valued between $80 and $100 million.

(voice-over): Leon and seven others want to be recognized as legitimate heirs.

J. HENDRIX: Even though there were monies made, the monies were used to pay back debt.

OSIAS: Debt, the suit alleges, because of Janie Hendrix' gross mismanagement, saying she lavished millions of company money on herself and her family. Leon Hendrix says Jimi's own blood relatives never saw a dime.

The defense denies that, pointing to the fact that the estate has earned more than $47 million in the time they've run it.

L. HENDRIX: They're living like the well will never run dry.

OSIAS: A decision is expected sometime in August. Regardless of what happens in the courtroom, the music that Jimi Hendrix created will carry on.

Kimberly Osias, CNN, Seattle.

(END VIDEOTAPE)

O'BRIEN: Some intense moments today in another courtroom involving a murder case. TED ROWLANDS, CNN CORRESPONDENT: Ted Rowlands live in Redwood City, California. Jurors in the Scott Peterson double murder trial heard graphic testimony and saw more graphic photos today. We'll have the latest coming up.

O'BRIEN: All right pedal pushers, we know you're interested in this. We'll check out Lance's chances and show you how he did in today's leg of the Tour de France just ahead.

And the next time you have a craving for a candy bar, the vending machine may be the last place to go. We'll explain.

(COMMERCIAL BREAK)

O'BRIEN: Wicked piece of news. Tomorrow, Matt Damon will bring his car over here, he'll park it, he'll come on in. We'll get a Dunkin' Donuts, regular and we'll talk about his next movie. Was is -- is he from Dorchester or South Beach? I don't know. We're going to get it all. His next movie is "The Bourne Supremacy," 3:00 p.m. right here.

Thirty-six seconds may not seem like much, but in the Tour de France, it is a lot of a lead and it belongs to Lance Armstrong. Cue the Sheryl Crow here. You get that, right. He just wants to have fun with her after he's done with all this.

The Texan and his U.S. team dominated the 40-mile rain-soaked course to Arras today, averaging 32 miles an hour. You can convert to kilometers, as I know you want to. That is the third fastest time in trial in the history of the race. There's the team. Armstrong is chasing an unprecedented sixth Tour de France victory. Put him heads and tails above the rest, Eddy Merckx and the Mall (ph).

Could computer chips get any smaller, we ask? Well, excuse me, a new technology might mean they can shrink to almost nothing.

Rhonda Schaffler joining us from the New York Stock Exchange to explain how that can happen, because she, of course, has a degree in physics, right?

RHONDA SCHAFFLER, CNN FINANCIAL NEWS CORRESPONDENT: No, Miles.

O'BRIEN: No.

SCHAFFLER: This is actually right up your alley. We'll try to explain it as best as we can, though.

GE has unveiled one of the smallest functioning devices in the world. It's a nano tube. It is a carbon tube only ten hydrogen atoms wide. That's a tiny fraction of a human hair. Scientists are hoping the new device could someday replace silicon chips and act as a semiconductor in computers and other electronics. Researchers believe that silicon chips will reach their minimum size within the next decade and will not be able to get any smaller without losing the ability to function. So in theory these nano tubes might replace that -- Miles. O'BRIEN: OK, nano tubes. Now you've heard it here first.

SCHAFFLER: That's right.

O'BRIEN: Right. All right. Let's talk about -- we're talking about computers, let's talk about Microsoft. Steve Ballmer out with -- you know he is such a shy retiring guy, that Steve Ballmer, out with a very subtle memo telling the folks up there in Seattle -- or where is it, Redmond, they better tighten their belts?

SCHAFFLER: Yes, and it wasn't that subtle, by the way. It was a very lengthy memo from company CEO Steve Ballmer, basically telling the employees there that the company is going to cut costs by $1 billion. Ballmer says the move is needed because Microsoft's expenses have grown faster than revenues for three years straight.

The cuts will come from changes in the employee benefit package and also the unification of the company's marketing and advertising across all of its separate business units. Shares of Microsoft a couple of pennies lower today.

As for the overall markets, stocks are little changed. The Dow industrial average up just 30 points, Nasdaq is up slightly, as well. That is the very latest from Wall Street.

Coming up later this hour, you might be in for a surprise the next time you get a snack attack and head to the vending machines. Details on that coming up, and LIVE FROM... continues after this break.

(COMMERCIAL BREAK)

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Aired July 7, 2004 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: From the CNN Center in Atlanta, I'm Miles O'Brien. Kyra Phillips is off today. LIVE FROM... starts right now.
The nation's top Democratic duo is on the road at this hour. Right now John Kerry and John Edwards are campaigning in the critical battleground state of Ohio.

(BEGIN VIDEO CLIP)

JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: We, America, we need a president that will lead the world, not bully it.

(APPLAUSE)

We need a commander-in-chief that will protect and keep the American people safe, who will keep our military strong and stand up for the men and women who serve this country.

(END VIDEO CLIP)

O'BRIEN: Now, earlier we got a first look at them together since the announcement, and CNN's Kelly Wallace was there.

(BEGIN VIDEOTAPE)

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: What we saw this morning was the beginning of a very carefully-orchestrated rollout designed to get maximum coverage and the maximum bounce for the Democratic ticket. It was the first joint photo op featuring John Kerry and John Edwards. Senator Edwards there with his wife, Elizabeth, and his three children. John Kerry with his wife, Teresa, his two daughters and two of his three stepsons.

We also got the first word from John Edwards since he was tapped to be John Kerry's running mate. And he put forward that populous message that made him very popular during the primaries and is one of the reasons Kerry's advisers say Senator Kerry decided to select him to be his vice presidential candidate.

EDWARDS: There is so much at stake. He shares the values and the visions that I believe in. You know I grew up in a small town in North Carolina. This is the kind of man we grew up looking up to, respecting, somebody who believed in faith and family and responsibility and having everybody get a chance to do what they're capable of doing, not just a few.

JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: John Edwards and his family represent a life of fighting to provide hope and opportunity for people, opening doors, making things better for people who have been hurt.

TERESA HEINZ-KERRY, WIFE OF JOHN KERRY: And that's what we're going to do is to bring back hope and inspire all of our country people to be what they can be, which is optimistic, working and healthy.

WALLACE: The senators refused to take questions, saying they would take some later. Perhaps one of the toughest questions will be going to John Kerry. Questions about how he could choose someone to be his running mate, someone whose own readiness and experience for the presidency he questioned during the primaries.

Right now, though, it's all campaigning all the time. The senators and their wives will be hitting six states over the next four days, starting first in the ever-important battleground state of Ohio and wrapping up this tour on Saturday in John Edwards' home state of North Carolina.

Kelly Wallace, CNN, reporting from Fox Chapel, Pennsylvania.

(END VIDEOTAPE)

O'BRIEN: CNN has the top of the ticket Thursday night on "LARRY KING LIVE." Larry will talk with Democratic presidential candidate John Kerry and his wife, Teresa Heinz-Kerry. That's 9:00 p.m. Eastern, "LARRY KING LIVE."

President Bush headed right into the heart of Edwards' country today, North Carolina.

CNN's Suzanne Malveaux is with the president.

Hello -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Miles, yesterday President Bush congratulated Edwards on the nomination. Today, the gloves came off. The president met with his judicial nominees. He raised more than $2 million.

But what's getting all the attention here is the president took a couple of reporters' questions. He was asked about his reaction to Edwards, whether or not he thought that Edwards was a challenge in any way for Dick Cheney.

Let's hear just a little bit of that exchange.

(BEGIN VIDEO CLIP)

QUESTION: He's being described today as charming, engaging, a nimble campaigner, a populace and even sexy. How does he stack up against Dick Cheney? GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Dick Cheney can be president.

Next.

(END VIDEO CLIP)

MALVEAUX: Well the clear implication here is what many Republicans have been saying, they believe that Edwards does not have the experience or the gravitas to take on Cheney, and particularly if the occasion came up that he would have to assume the presidency.

Now, President Bush also taking on this notion here that Edwards performs very well in the South, that he would be able to influence the campaign by taking on sweeping many of those southern states. President Bush taking issue with that saying that he believes he can lay claim to that region.

(BEGIN VIDEO CLIP)

BUSH: I'm going to carry the south because the people understand that they share -- we share values. That they understand, they know me well, and I am -- I believe that I did well in the South last time and will do well in the South this time because the senator from Massachusetts doesn't share their values.

(END VIDEO CLIP)

MALVEAUX: Now the Edwards and Kerry campaigns shot back in response to President Bush's comments. One of them from the Edwards camp saying that obviously the Bush administration has hit the panic button, that they have seen their policies failed in this particular state and the region.

The Bush administration points out the fact that the president carried the state of North Carolina back in 2000 by 13 points. The Democrats believe that they can close that gap. They believe that President Bush is most vulnerable when it comes to those textile jobs that were lost some 158,000 under President Bush's watch -- Miles.

O'BRIEN: Suzanne, when we talk about the South, do we include Florida in this picture here? Is Florida somewhat of an aberration? And to what extent is the Bush campaign at all concerned about how Edwards might impact things there?

MALVEAUX: Well, they certainly are concerned about that. And as you had noted, yes, it is an aberration, but they believe that they are going to -- they are going to hold Florida, that they're going to take Florida as they did last time.

But if you talk to a lot of these aides, they say look, they realize this is going to be a tough fight, that it is not going to be easy. Many people look at some of the criticism and the rhetoric, the harsh rhetoric that you've heard over the last 24 hours, as a clear indication that they believe that this Kerry-Edwards ticket is certainly it's going to be a challenge. O'BRIEN: Suzanne Malveaux, thank you very much.

If you need more campaign news and more on John Edwards, we know just what to do, check out " JUDY WOODRUFF'S INSIDE POLITICS," 3:30 p.m. Eastern, right here on CNN. You don't want to miss it.

Suicide bombings, hostage takings and ambushes, all reasons to bolster security in Iraq. Today Iraq's interim prime minister unveiled sweeping measures aimed at ending the violence. The announcement came as insurgents opened fire on the Iraqi national guardsmen in Baghdad.

With more on that, we go live now to our Baghdad bureau chief Jane Arraf -- Jane.

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Miles, U.S. officials say that firefight lasted for four hours in central Baghdad in a main residential neighborhood. Now this broke out when insurgents opened fire on the Iraqi national guard and this is a new national guard force. They've just started patrolling.

And as they were patrolling, they came under fire from small arms and rocket-propelled grenades. Some of that fire apparently in the direction of an Iraqi police station. They called for reinforcements, and American troops came in armored vehicles and helicopters. But a senior U.S. military official says they didn't fire a shot. They made sure everything was relatively under control and withdrew, leaving it to Iraqi security forces.

Now, just before that fighting broke out, the government announced a series of security measures aimed at cracking down and trying to stop this violence. They would allow the prime minister to be able to impose (INAUDIBLE) to mobilize the armed forces and to launch house-to-house searches. But, according to the justice minister and the human rights minister who announced the plan, it does have a series of checks and balances. It needs approval from a majority of cabinet and it includes a committee to monitor any potential human rights abuses -- Miles.

O'BRIEN: CNN's Jane Arraf in Baghdad, thank you very much.

Prior to the handover in Iraq, the U.S. secretly moved out almost two tons of dangerous materials that could have been used to make a so-called dirty bomb. The Energy Department says experts removed radioactive materials from a former nuclear facility a couple of weeks ago. The nuclear materials were taken to an undisclosed lab for further study. No word on what exactly those items consisted of, however.

On Capitol Hill, the House Armed Services Committee is considering U.S. troop strength in Iraq and Afghanistan days after the Pentagon announced the call-up of more reservists.

Our Pentagon correspondent Barbara Starr joining us with details on all this -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hello to you, Miles.

At this hour, that hearing remains ongoing. The House Armed Services Committee questioning, very sharply questioning top Pentagon and military officials about troop rotation, troop strength in Iraq and Afghanistan, just how ready the military is to deal with these ongoing combat zones.

Now, there is a lot of concern on the part of Congress that the force is just tired and exhausted, that it's literally at the so- called breaking point.

Now, military officials interestingly said earlier today in this hearing that they are making their recruiting goals, that people are continuing to sign up for military services -- service. But that's not to say that the Pentagon is not very concerned about wear and tear on the equipment and stress on the force.

Top -- a top Army official talked about all of that.

(BEGIN VIDEO CLIP)

GEN. RICHARD CODY, U.S. ARMY: Are we stretched thin with active and reserve component forces right now? Absolutely. We just did the largest move of the Army since World War II. You can't move eight- and-a-half divisions and 240,000 soldiers without stressing the force. And we still have equipment that is en route back to those units that have already been home for a month or so. And so when we talk about search capability, we're rapidly trying to rebuild the search capability.

(END VIDEO CLIP)

STARR: So General Dick Cody, the vice chief, the No. 2 man in the U.S. Army, saying they know the force is tired, but they're trying to bring people home and get them ready in case they were to have to deploy again.

Now also in the hearing, Pentagon officials strongly denied that there are any plans because of all of this to reinstate a draft. That continues to be quite a rumor that floats around the Internet and other e-mail-type circles. But a top official saying absolutely no plans to reinstate a draft. They are getting enough people signing up on a volunteer basis. Compulsory service doesn't work, according to the Pentagon. So even though there's a lot of stress on the force, a lot of concern, absolutely no plans to reinstate a draft in this country -- Miles.

O'BRIEN: But, Barbara, taking the issue of the daft aside for just a moment, is there much talk about increasing the numbers of men and women in uniform who are not reservists so these reservists aren't leaned on so heavily?

STARR: Well, you know that really is the key question. Is the active duty military force in this country the right size? Are there simply not enough people on active duty and is that making the Pentagon have to rely too much on the reserves and the National Guard in a way that they never expected to?

Now officially the Pentagon position is that everything is about the right size, that they don't have to go to Congress and ask for legislation to increase the size of the military. But on the other hand, the military currently is operating under some so-called emergency situations in which there are more active duty people than there normally would be. Secretary Rumsfeld says all of this is being looked at, but at the moment, he doesn't feel he needs a permanent increase in the size of the military -- Miles.

O'BRIEN: Barbara Starr at the Pentagon, thank you very much.

Big development today to tell you about in Yemen. Six Yemeni men charged in the bombing of the USS Cole. That attack killed 17 American sailors, you'll recall, back in October of 2000. Among those charged was the suspected ringleader who is already in U.S. custody. All six are suspected members of al Qaeda.

It's a crucial hot spot in the war on terror and it's in the grip of violence. Will things get under control? We'll take you to the mean streets of Pakistan in just a bit.

When you buy low-carb, are you really drinking to your health? We'll toast that one a little later on LIVE FROM...

And trying to clear up the purple haze over a rock legend's legacy. It's all coming down in court.

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O'BRIEN: In the global war on terror, Karachi, Pakistan is one of the most dangerous places in the world. It is an easy place for an outlaw to hide and an extremely hazardous place for the police.

CNN's Ash-Har Quraishi reports.

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ASH-HAR QURAISHI, CNN CORRESPONDENT (voice-over): The sweltering heat in Karachi was matched only by the mood on the streets. It was a month that has come to be known as Bloody May, over 60 people killed and hundreds more injured in bombings, shootings and suicide attacks, many of which were thought to be linked to al Qaeda.

For Karachi's overburdened police force, it was a month-long nightmare.

CHIEF TARIQ JAMIL, KARACHI POLICE: But obviously under the present situation, our top most priority is fighting terrorism.

QURAISHI: It's easy to get lost in this city of over 14 million people. Investigators believe that after 9/11, hundreds of al Qaeda operatives took refuge in the provincial capital, inciting a wave of violence not seen here in over a decade.

(on camera): This one kilometer stretch of road is one of the most heavily guarded in Karachi. Just down the street is the U.S. consulate, around the corner are several major hotels. It is an area that has been targeted several times by terrorists. Attacks here have killed dozens.

(voice-over): Maintaining law and order in a city this large is a daunting challenge for a police force of under 30,000 officers. That's 10,000 less than New York, a city half the size. For Karachi's understaffed police force, checking each and every car is practically impossible, so instincts can mean the difference between life and death.

UNIDENTIFIED MALE: This particular vehicle, the license plate did not match with the make of the vehicle. Then I just had a gut feeling that this thing is going to explode. Immediately we removed all the people.

QURAISHI: This was one of many car bomb attacks that rocked the city. On this day, the quick thinking of one police officer saved dozens of lives.

JAMIL: In the face of sudden decisions, like there's a car bomb or there's an assault on a police station, I mean everyone has to face the bricks.

QURAISHI: And they have. In the past five months alone, Jamil has lost 15 of his men to terrorist attacks. But even with the lack of resources, manpower and technological assistance, police have so far not been deterred.

Ash-Har Quraishi, CNN, Karachi, Pakistan.

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O'BRIEN: News around the world now.

In Hong Kong, the health minister has resigned amid criticism of how his team handled last year's SARS crisis. The resignation comes within a week of a huge anti-government rally calling for more democracy in Hong Kong. The health chief was the third minister to quit under public pressure in less than a year.

In North Korea, the leader, Kim Jong Il is loving American-style hamburgers. And, according to media reports, promoting them as a quality food for university students. His pro-burger stance is seen as a curious development for a country that traditionally despises U.S. consumerism. For instance, the accepted official North Korean translation for Coca-Cola is, get this, cesspool water of American capitalism. I'm not sure if there is a diet version.

And Tibetans and exiles, followers of the Dalai Lama around the world marked his 69th birthday today. The Dalai Lama himself did not take part, however, in any of the public festivities.

In Seattle, a family feud winds up in front of a judge. The players, relatives of the late great rock guitarist Jimi Hendrix. At stake is millions of dollars in royalties and merchandising rights. CNN's Kimberly Osias navigates the legal haze.

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KIMBERLY OSIAS, CNN CORRESPONDENT (voice-over): Like Woodstock itself, Jimi Hendrix and his music marked a generation. But now the rights over who controls the Hendrix empire, including advertising licensing, merchandising and a vast rock catalog is being played out in a Washington state probate court. Hendrix versus Hendrix.

On one side is Jimi's brother, fellow musician Leon Hendrix.

LEON HENDRIX, MUSICIAN: This is a heritage and legacy for my family, and Jimi's family.

OSIAS: He's suing their sister, Janie Hendrix, the adopted daughter of Jimi's father, who's had control of the company since 1995.

JANIE HENDRIX, RELATIVE OF JIMI HENDRIX: Where were they when we were planting the seed? Now that it's all growing and blooming, everybody has their hands out.

OSIAS (on camera): Jimi Hendrix died in 1970 without a will, so his estate automatically went to the next of kin, Jimi's father, Al. Now, Al is dead and the estate, originally valued at about a half a million dollars, is now estimated to be valued between $80 and $100 million.

(voice-over): Leon and seven others want to be recognized as legitimate heirs.

J. HENDRIX: Even though there were monies made, the monies were used to pay back debt.

OSIAS: Debt, the suit alleges, because of Janie Hendrix' gross mismanagement, saying she lavished millions of company money on herself and her family. Leon Hendrix says Jimi's own blood relatives never saw a dime.

The defense denies that, pointing to the fact that the estate has earned more than $47 million in the time they've run it.

L. HENDRIX: They're living like the well will never run dry.

OSIAS: A decision is expected sometime in August. Regardless of what happens in the courtroom, the music that Jimi Hendrix created will carry on.

Kimberly Osias, CNN, Seattle.

(END VIDEOTAPE)

O'BRIEN: Some intense moments today in another courtroom involving a murder case. TED ROWLANDS, CNN CORRESPONDENT: Ted Rowlands live in Redwood City, California. Jurors in the Scott Peterson double murder trial heard graphic testimony and saw more graphic photos today. We'll have the latest coming up.

O'BRIEN: All right pedal pushers, we know you're interested in this. We'll check out Lance's chances and show you how he did in today's leg of the Tour de France just ahead.

And the next time you have a craving for a candy bar, the vending machine may be the last place to go. We'll explain.

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O'BRIEN: Wicked piece of news. Tomorrow, Matt Damon will bring his car over here, he'll park it, he'll come on in. We'll get a Dunkin' Donuts, regular and we'll talk about his next movie. Was is -- is he from Dorchester or South Beach? I don't know. We're going to get it all. His next movie is "The Bourne Supremacy," 3:00 p.m. right here.

Thirty-six seconds may not seem like much, but in the Tour de France, it is a lot of a lead and it belongs to Lance Armstrong. Cue the Sheryl Crow here. You get that, right. He just wants to have fun with her after he's done with all this.

The Texan and his U.S. team dominated the 40-mile rain-soaked course to Arras today, averaging 32 miles an hour. You can convert to kilometers, as I know you want to. That is the third fastest time in trial in the history of the race. There's the team. Armstrong is chasing an unprecedented sixth Tour de France victory. Put him heads and tails above the rest, Eddy Merckx and the Mall (ph).

Could computer chips get any smaller, we ask? Well, excuse me, a new technology might mean they can shrink to almost nothing.

Rhonda Schaffler joining us from the New York Stock Exchange to explain how that can happen, because she, of course, has a degree in physics, right?

RHONDA SCHAFFLER, CNN FINANCIAL NEWS CORRESPONDENT: No, Miles.

O'BRIEN: No.

SCHAFFLER: This is actually right up your alley. We'll try to explain it as best as we can, though.

GE has unveiled one of the smallest functioning devices in the world. It's a nano tube. It is a carbon tube only ten hydrogen atoms wide. That's a tiny fraction of a human hair. Scientists are hoping the new device could someday replace silicon chips and act as a semiconductor in computers and other electronics. Researchers believe that silicon chips will reach their minimum size within the next decade and will not be able to get any smaller without losing the ability to function. So in theory these nano tubes might replace that -- Miles. O'BRIEN: OK, nano tubes. Now you've heard it here first.

SCHAFFLER: That's right.

O'BRIEN: Right. All right. Let's talk about -- we're talking about computers, let's talk about Microsoft. Steve Ballmer out with -- you know he is such a shy retiring guy, that Steve Ballmer, out with a very subtle memo telling the folks up there in Seattle -- or where is it, Redmond, they better tighten their belts?

SCHAFFLER: Yes, and it wasn't that subtle, by the way. It was a very lengthy memo from company CEO Steve Ballmer, basically telling the employees there that the company is going to cut costs by $1 billion. Ballmer says the move is needed because Microsoft's expenses have grown faster than revenues for three years straight.

The cuts will come from changes in the employee benefit package and also the unification of the company's marketing and advertising across all of its separate business units. Shares of Microsoft a couple of pennies lower today.

As for the overall markets, stocks are little changed. The Dow industrial average up just 30 points, Nasdaq is up slightly, as well. That is the very latest from Wall Street.

Coming up later this hour, you might be in for a surprise the next time you get a snack attack and head to the vending machines. Details on that coming up, and LIVE FROM... continues after this break.

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