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Shuttle Launch Delayed Again?; Former U.S. Soldier Charged With Rape and Murder of Iraqi Civilians; Iraq Releases New Most Wanted List; Preparations for Macy's Fireworks Spectacular

Aired July 03, 2006 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BETTY NGUYEN, CNN ANCHOR: The next hour of LIVE FROM starts right now.
About 24 hours and counting to a scheduled Fourth of July spectacular at Kennedy Space Center. But, for the moment, the launch of the shuttle Discovery is still a go, even after inspectors found a crack in the foam on the external fuel tank.

Engineers say the crack is too small to have caused any damaged during a launch.

(BEGIN VIDEO CLIP)

JOHN SHANNON, SHUTTLE PROGRAM DEPUTY MANAGER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION: The obvious question is, well, gee, if this would have happened in flight and this piece of foam would have come off, would that have been an issue.

And the answer is no. Absolutely, it would not have been an issue. It is less than half the size that we think can cause damage to the orbiter. So, although it is an area that we don't like to have foam come off, this was not unexpected, and it would not have caused any damage to the orbiter itself.

(END VIDEO CLIP)

NGUYEN: NASA experts say they will discuss their options again this evening. So, you will want to stay tuned to CNN prime time for the latest updates on this launch.

An Iraq war vet with a purported personality disorder is in a North Carolina lockup today, charged with rape and murder in Iraq.

CNN Pentagon correspondent Barbara Starr is at her post.

And, Barbara, bring us up to speed on these new developments.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Betty, hello to you.

Twenty-one-year-old Steven Green, a former private 1st class in the 101st Airborne Division, now facing federal charges, arraigned earlier today in Charlotte, North Carolina, on charges of murder and rape -- federal prosecutors spelling out a very disturbing case, Betty. Last March, they allege that Green and three other soldiers went to an Iraqi home in Mahmoudiya, Iraq, a home where they knew there were Iraqi civilians, and that they murdered four people. They raped a woman there, shot her, and then also shot and killed three other people in this house, including a young child, a little girl estimated to be about 5 years old.

The affidavit by the federal prosecutors is extraordinarily disturbing, Betty. It spells out that there had been alcohol consumed as they planned to go to this house, as they made their plan, that they changed into dark clothing, that they were carrying weapons, and that they went into this house, put all of the people -- three people in one room, that Green was involved in shooting them, it was alleged, and then was involved in the rape and murder of the fourth member of that family.

If he is convicted, Betty, of course, he faces the death penalty on the murder charges, life in prison on the rape charge. At least one other soldier in Iraq still on active duty is being questioned regarding this incident. And we do not have the details yet, Betty, on the other soldiers that are alleged to have been involved -- Betty.

NGUYEN: Well, we will be watching.

Barbara Starr, thank you for bringing us up to speed on all of that.

Two more U.S. military families are getting the worst possible news. Another U.S. Marine was killed in Iraq today, and a soldier died on patrol last night. It's been a deadly day for Iraqis as well, at least 12 killed in attacks all across the country. Dozens were killed hurt, including two soldiers and two police officers, when a suicide car bomber blew himself up near a Baghdad hospital.

Well, he was the leader of al Qaeda in Iraq, but did al Qaeda sell out Abu Musab al-Zarqawi? That is what a woman said to be his first wife tells an Italian newspaper. She is quoted as saying al- Zarqawi had been -- had become too powerful and too troublesome for al Qaeda. So, she says, the network struck a secret deal with U.S. intelligence, in exchange for a promise to let up on the hunt for Osama bin Laden.

Now, al-Zarqawi's family says it hasn't been in touch with this woman in two years.

Back here in the U.S., want to bring you up to speed as well on a developing story that we told you about last hour. The Supreme Court today has intervened to save a large cross on city property in San Diego. Justice Anthony Kennedy, acting for the high court, issued a stay while supporters of this cross continue their legal fight.

Now, here's the rub. A lower court judge has ordered the city of San Diego to remove this cross or face $5,000-a-day fine. This cross is 29-feet tall, and it sits atop of Mount Soledad. And attorneys for -- those in support of the cross say that it's part of a broader memorial, and they are fighting to keep it. The cross has been in place for decades, until it was contested by a Vietnam veteran and an atheist. So, today, the Supreme Court has intervened, which stalls that $5,000-a-day fine, until those in support of the cross can continue with their legal battle.

We will continue with that and bring you the latest on it when we get it.

In the meantime, we want to talk about that snag for the space shuttle. It's something that has been a huge story today, a crack in the foam of the fuel tank. Will it delay Discovery yet again? That's the question.

Our space correspondent, Miles O'Brien, is right on top of all this.

And, Miles, you are very close with the folks at NASA. what are they telling you?

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Well, Betty, it's one of those situations where, if this had happened before Columbia, we wouldn't have been paying attention to this at all, practically.

No one can recall ever seeing a piece of foam falling off the external fuel tank onto the launch platform, the mobile launch platform, but, in this case, that's exactly what happened. Engineers conducting an inspection, after a couple of scrubbed launch attempts, found a piece of foam on the floor of the mobile launch platform.

But this was after they had discovered this, right up in this area, a little crack in that region, really about five inches long, right next to a liquid oxygen fuel pipe. Now, take a look. This is -- this is what happened after that piece came off. You can see the slightly lightly colored portion there.

I was told -- we're told by the NASA mission managers that it was probably about the size of a little piece of a bread crumb, about half the weight that they would be concerned about for causing possible damage.

Let's listen to the deputy administrator, John Shannon.

(BEGIN VIDEO CLIP)

SHANNON: The obvious question is, well, gee, if this would have happened in flight and this piece of foam would have come off, would that have been an issue. And the answer is no. Absolutely, it would not have been an issue. It is less than half the size that we think can cause damage to the -- to the orbiter. So, although it is an area that we don't like to have foam come off, this was not unexpected, and it would not have caused any damage to the orbiter itself.

(END VIDEO CLIP)

O'BRIEN: Still a lot of questions to consider, though: Could this be a situation where ice could form? Could it be a problem with less foam there? Could that cause some thermal problems, ultimately? And could it -- could it ultimately create further problems for the orbiter?

We are talking about a situation which takes us back to the scenario which led to the loss of Columbia. Of course, a much larger piece of foam, a pound-and-a-half, the size of a briefcase, came off, inflicting a fatal breach on the heat shield of the space shuttle Columbia back in January of 2003.

There you see it there. You see it blasting through at that point.

Joining us now is former shuttle engineer Randy Avera, who has written a book about Columbia, the loss of Columbia.

Randy, it's interesting to me that they haven't made the decision to go up there and take a little closer look at this place where the crack formed and ultimately, a piece fell off. They are going to decide later in the day. It seems to me that would be the first thing you would do, would be to go take a look.

RANDY AVERA, FORMER NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ENGINEER: Well, actually, Miles, they have taken a look with cameras and optical equipment, very powerful optical equipment. And the technicians that were making those observations of the external tank were located 25 feet from the area where the foam came off of the external tank. And managers...

(CROSSTALK)

O'BRIEN: Yes, but they can't see on the top side of that strut, which is what I'm talking about here, going and actually kind of getting a hands-on feel for what's going on there. So, there still is kind of a blind spot here, right?

AVERA: That's correct.

There were three major elements that came out of the briefing within this hour. The first thing is, of course, the amount of foam that has come off. The second thing is a thermal analysis. Is this really a problem in flight if launched in this configuration with the missing foam? And the third thing is additional damage in that area. And that's what NASA is reviewing, currently, as we speak, in their team meetings.

And 6:00 p.m. tonight, Eastern, they will have another mission management team meeting to discuss all three of those points.

O'BRIEN: Well, why not just -- why is it even a question whether to go put a scaffolding out there and just take a look?

AVERA: Well, that's what they are trying to decide, is, what is the plan? You know, when you put scaffolding there, you run the risk of further damage. But, regardless, you have to make the decision whether you need to look closer or at all. And that's what NASA is currently discussing as we speak. O'BRIEN: Let's put this all into some perspective, if we can, because, whenever we mention falling foam, we have been talking about the risk of falling foam in advance of this launch.

A piece of foam fell off Discovery a year ago, when they thought they had fixed it, and, of course, the problems we saw with Columbia. You know, I think, pre-Columbia, this -- people would not have even paid much attention to this. I think they admitted as much at that briefing today.

AVERA: Well, pre-Columbia, when you speak of Columbia's last flight in 2003, the NASA ice team did exist. And they did pay attention to the external tank, the orbiter, and the launchpad.

But, since the loss of Columbia, where foam struck the leading edge of the wing in flight, it's certainly become more obvious, and a lot more attention to this area, plus, the overall of the NASA safety system. Right now, NASA is working with that new safety system. This is a test not only of the shuttle vehicle, but NASA's new safety system as well.

O'BRIEN: What's your best take? What would be your advice if you were weighing in on the MMT? Would you vote to go, erect a scaffold, and take a closer look of that, or would you say it's good enough to fly as it is?

AVERA: Well, you know, you can look at the engineering drawings and see that, perhaps, there is a lot of foam there that might thermally take care of protecting the vehicle from the heat of boost to orbit.

But there's also the aerodynamic effects. You know, this vehicle is traveling at very high Mach numbers through the atmosphere to get to orbit. And you are going to have to have the right people with a lot of experience in aerodynamics and thermodynamics to make this call.

O'BRIEN: So, you're not willing to weigh in? You don't have enough data yourself?

AVERA: Well, I personally like to see a vehicle that matches the exact drawing. That's the goal that NASA has. And the drawing is the configuration that you are supposed to be flying. Any configuration different from the drawing requires an engineering explanation, which includes a lot of science behind that engineering.

O'BRIEN: All right. Randy Avera, former NASA engineer who knows an awful lot about the space shuttle program, thanks for your time -- Betty.

AVERA: You're welcome, Miles.

NGUYEN: Thank you, Miles.

A little suggestion before hitting those roller coasters. Take a look at this. (BEGIN VIDEO CLIP)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: The feeling of your stomach dropping out is a great feeling, but one piece of advice. Do not eat lunch or dinner just before you get on this.

(END VIDEO CLIP)

NGUYEN: What's he saying? Yes, that's why we needed those subtitles. Gary Tuchman on scream machines, that's coming up.

(COMMERCIAL BREAK)

NGUYEN: Wanted to take you to some pictures that are coming into CNN of a fire that's taking place in Canton, Ohio. This -- these are some pictures that you just want -- look at this. I mean, this fire is just raging at the moment.

This is a scrap yard. We don't know, at this time, exactly what has caused this fire. Maybe we will get a wide shot in a minute. But it's huge. There you go. You can see the smoke just billowing into the air. Now, it doesn't appear, from this vantage point, that it's threatening any homes or anything like that. But they are quite remarkable pictures. And we wanted to bring those to you of a scrap yard fire in Canton, Ohio.

Speaking of pictures, you got to check these out. Take a look at this picture right now. No, that is not an action shot. Those folks are stuck upside-down on a roller coaster 50 feet in the air. This is in northern Indiana at an amusement park there called the Fun Spot Amusement Park. There's not having too much fun being stuck like that.

In fact, it took 45 minutes to rescue these riders. Firefighters had to use ladder trucks to actually nudge the coaster cars through the loops, so that would be in an upright position. Seven people were treated at the scene. Five went to the hospital with minor injuries.

Now, get this. The park manager says the cable that launches the cars, well, that came off the pulley. But, the manager says, the riders were in safety harnesses, and they were in no danger of falling -- definitely a scary situation for those stuck in it, though.

Do you like to spend your leisure time screaming your lungs out hanging on for dear life? Those people didn't. Or do you just pray that you can keep your lunch down when you are on a roller coaster?

I'm sure you do, because roller coasters get bigger and badder and longer and scarier every single year. And, Americans, they can't get enough of it.

Case in point, CNN's mild-mannered national correspondent, Gary Tuchman.

(LAUGHTER)

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN CORRESPONDENT (voice-over): When you see the skull and crossbones, it's too late to turn back.

(SCREAMING)

TUCHMAN: There are more than 1,300 roller coasters in the United States, bigger, better, faster, steeper. Coasters are more popular than ever. Three hundred and thirty-five million people went to U.S. amusement parks last year. Most went on roller coasters.

BETH ROBERTSON, VICE PRESIDENT OF COMMUNICATIONS, INTERNATIONAL ASSOCIATION AMUSEMENT PARKS ATTRACTIONS: Our technology continues to improve and the demand for -- for more fun, for new things.

TUCHMAN (on camera): The drops and the loops are what you wait for, but it's the anticipation that sets it all up.

(voice-over): Grand openings of super-coasters are the big thing in the industry now. Two-hundred-foot-tall, 70-mile-per-hour Goliath just opened this year at Six Flags over Georgia.

(SCREAMING)

TUCHMAN: It follows in the tradition of the Great Cyclone at New York's Coney Island, 79 years old and going strong.

Other traditional coasters are The Racer at Pittsburgh's Kennywood Park, a wooden coaster where you race another car. But it's the ultimate thrill coasters with huge drops and loops that are dominating the industry now.

(on camera): I play a game with my kids when I take them on a roller coaster. I couldn't take them on this time, but they're at summer camp right now. The game is, keep a serious face as long as you can. When you go through the loop, you see if you can stay serious. But it's very hard to do for a long time.

(voice-over): These are not your parents' or grandparents' roller coasters. But the industry says greater thrills do not mean greater risks.

ROBERTSON: Roller coasters are absolutely safe. In our industry, in today's regulatory system, there is virtually no safer form of recreation.

TUCHMAN: American amusement parks took in more than $11 billion last year.

(on camera): The feeling of your stomach dropping out is a great feeling, but one piece of advice. Do not eat lunch or dinner just before you get on this.

(CHEERING)

(voice-over): The summer season is just hitting its stride. Roller coaster ridership is expected to be record-setting.

(on camera): So, what did you think of that?

UNIDENTIFIED MALE: I'm surprised you held on to the camera.

(LAUGHTER)

TUCHMAN (voice-over): Gary Tuchman, CNN, Atlanta.

(END VIDEOTAPE)

NGUYEN: Hey, Gary, the feeling of your stomach dropping, hey, it's not a good feeling. I don't ride those things. But, if you do, you can ride along with "ANDERSON COOPER" weeknights on 360, beginning at 10:00 Eastern, 7:00 Pacific.

Crucial to the nation's security, a network of eyes in the sky -- part two of our exclusive look at spy satellites coming up.

(COMMERCIAL BREAK)

NGUYEN: Iraq has put out a most-wanted fugitives list. And some of the names aren't surprises. But why did Saddam Hussein's wife and daughter make the cut? I will talk with an expert coming up on LIVE FROM.

(COMMERCIAL BREAK)

NGUYEN: Iraq, Iran, North Korea, Afghanistan, if they are in the news, they are probably in the sights of a U.S. spy satellite, maybe several spy satellites. But is it mutual?

In this exclusive report, CNN's David Ensor found that America's eyes in the sky may not be out of reach of potential enemies.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): U.S. satellites, including the ones used for spying, have sometimes been deployed by the space shuttle. But most of them go up the old- fashioned way, by rocket. This surveillance relay satellite under construction in California will go up that way soon.

(on camera): You have got to take 8,000 pounds and get it 22,000 miles up...

REAR ADMIRAL VICTOR SEE, COMMUNICATIONS SYSTEMS ACQUISITION AND OPERATIONS DIRECTORATE DIRECTOR, NATIONAL RECONNAISSANCE OFFICE: Yes.

ENSOR: ... and get it to a precise place where you would need it to be, and hold it there for 10 years?

SEE: Yes.

ENSOR (voice-over): Spy satellites are essential to the national security of the United States. And other countries know it. (on camera): Are America's spy satellites vulnerable to attack?

DONALD KERR, DIRECTOR, NATIONAL RECONNAISSANCE OFFICE: It's certainly possible to do a direct-ascent kinetic attack on a space system, but it's a very hard thing to do. And it would likely be observable, for a variety of reasons, particularly if it involved a missile launch.

ENSOR (voice-over): National Reconnaissance Office Director Donald Kerr says adversaries know there would be retaliation. One day, the U.S. will know it's at war, say analysts, when its eye and ears in the sky get hit.

JOHN PIKE, GLOBALSECURITY.ORG: These spy satellites are basically our glass jaw. They're easy to track, and, for a country with rocket capabilities, like China, not that difficult to shoot down.

ENSOR: To make that less likely, the NRO, sources say, is working on a new generation of stealthy satellites.

PIKE: I could make it blend into the space debris, the space junk in low Earth orbit. That way, an enemy wouldn't know when it was overhead. They wouldn't be able to track it, and they wouldn't be able to shoot it down.

ENSOR: America's spy satellites were crucial in the Cold War, but their role in tracking al Qaeda is less clear.

(on camera): Some senior officials have said that, in the post- 9/11 world, what's really needed now is a lot more and better human intelligence, and that satellites are less useful. What do you think about that?

KERR: One of the important things that people need to remember is that, in some cases, the best HUMINT is, in fact, that which is supported by technical collection, because human sources are notoriously unreliable.

ENSOR (voice-over): Satellites not only take pictures and eavesdrop from hundreds of miles above the Earth; they can also detect heat in an underground hidden nuclear plant, using infrared sensors. U.S. scientists are also working on hyper-spectral sensors that can track a hidden weapons plant by finding trace amounts of chemicals in the air.

(on camera): How far along are they on that? Don't ask the NRO. It's top-secret.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

NGUYEN: The numbers are numbing: more than 2,500 U.S. troops killed in Iraq. And behind every number is a human being and, sometimes, a story of extraordinary valor. CNN's Kareen Wynter has more.

(BEGIN VIDEOTAPE)

MARIA ESTRELLA, LOST SON IN IRAQ: A part of us is gone.

KAREEN WYNTER, CNN CORRESPONDENT (voice-over): Flipping through the pages of an old photo album ignites painful memories for this grief-stricken mom. You may catch a smile when Maria Estrella describes how her son, Marine Corporal Michael Estrella, so full of life...

ESTRELLA: You can see, he's always laughing.

WYNTER: ... and courage, paid the ultimate price for his country.

ESTRELLA: And he told me. He said, "If -- don't worry." He goes: "If God wants to take me, he'll take me. I'm coming to Iraq to be with my brothers, and I have to be there."

WYNTER: Estrella was on his second deployment. His first took him to Afghanistan -- this time, Iraq. The 20-year-old field radio operator was out on foot patrol in Haditha June 14, when he was killed by a sniper's bullet.

ESTRELLA: When we heard that he was shot, my imagination just imagined him just being on the floor by himself, and me not being there to pick him up. But then I was told that they did. They came to -- to him. They did not leave him by himself. They came to him and picked him up. This person did not -- he didn't care there was bullets flying. He went and got him and pulled him out.

WYNTER: That person, Lieutenant Rick Posselt, who, in a daring move, risked his own to save another -- we spoke with him from Iraq.

1ST LIEUTENANT RICK POSSELT, U.S. MARINE CORPS: Well, the first thing I thought of was, I got to get him to safety. That's all that was going through my head.

WYNTER: Estrella died from his injury. Posselt described the eager marine they nicknamed "Scratchy" as a close friend.

POSSELT: I used to go to him for everything. Every time I screwed up a radio, he would be there to fix. It's a shame that we have to lose the good ones. But he is a -- he was a true hero out there.

WYNTER: Estrella became the 2,500th serviceman killed since the start of the war. Maria Estrella says that is a somber statistic. But she is grateful for one gift, knowing her son didn't die alone.

ESTRELLA: That's one thing he told me. He goes, "Mom, don't worry. They are always going to be there to help me and stand by me."

And sure enough, they were -- someone was there with him. WYNTER: Kareen Wynter, CNN, Hemet, California.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

NGUYEN: Back now to Mahmoudiya, an Iraqi town at the center of a U.S. probe into allegations of a brutal attack in March -- federal prosecutors today charged a former soldier with raping an Iraqi woman and killing her, along with three of her relatives.

Now, the alleged rape happened -- or was about 25 -- the -- let me say that again -- the alleged rape victim was about 25 years old. The "Washington Post" reports, her mother was just so worried about her daughter's safety that she asked a neighbor if she could sleep at his house. But the family was allegedly attacked the next day. We'll keep on top of that story and the investigation that continues.

Hey, remember that deck of cards, each one a most-wanted fugitive from the Saddam Hussein era in Iraq? Well, now there is a new list from the new Iraqi government, but it includes some old names.

And one name that always comes to mind in stories like this is Jim Walsh.

International security analyst at MIT and old friend of LIVE FROM, he joins us today from Watertown, Massachusetts.

Thanks for being with us, Jim.

JIM WALSH, INTERNATIONAL SECURITY ANALYST, MIT: Always good to be with you.

NGUYEN: Well, you know, we appreciate it. And let's talk about this list now, this most wanted list. Do you agree that Izzat Ibrahim al-Douri, which is the former deputy commander of Saddam's army, number one on that list, that Iraqi list? Do you agree with that.

WALSH: I think that makes sense if you're talking about the Baathists. Remember, when you talk about the insurgency, you need to keep in mind that are different parts of the insurgency. There is the al Qaeda in Iraq. Remember, that was the group that used to be lead by Zarqawi.

There are the old Saddam officials, the Baathists, of which al- Douri is probably the most important. He was on the old deck of cards and they had never caught him. And then there are other parts of the insurgency -- criminals, nationalists -- that are also contributing. But for the Baathists, al-Douri is most important.

NGUYEN: All right, also on the list, though, is Saddam's daughter. She ranks 16, ahead of her mother. What makes her so dangerous?

WALSH: Well, you know, to be honest with you, I don't think either the wife of Saddam Hussein or the mother -- if we -- if they were extradited and imprisoned tomorrow, I don't think it would have a very big impact on the insurgency.

But the allegation of the Iraqi government is that the daughter, in addition to organizing Saddam's defense team, which is legitimate, is also funding the insurgency, also providing financial support to al-Douri or to other former Saddam officials who are carrying out part of the insurgency. That's the allegation for her and for the mother. There may be additional allegations.

You know, when dictators flee a country, they often take with them a large amount of cash left over from the regime. And it's not unusual for countries to want to get some of the family members back, if only to reclaim some of that cash.

NGUYEN: I see what you're saying. All right, I want you to listen to what she had to say to CNN back in 2003 about the situation in Iraq. Take a listen.

(BEGIN VIDEO CLIP)

RAGHAD SADDAM HUSSEIN, DAUGHTER OF SADDAM HUSSEIN (through translator): I wish the Iraqis peace, security and a bright future, better than what they have today. But I think from what I hear and see on television, the situation is bad and getting worse day by day.

(END VIDEO CLIP)

NGUYEN: Now, the Iraqi government would say that she's helping it get worse, but she has asylum in Jordan. Any chance that now that she's on this list, Jordan is going to give her up?

WALSH: I don't think so. She's under the protection of the royal family in Jordan. They say they're holding her for humanitarian reasons. It is sort of customary practice in the region that if somebody is deposed and their family leaves, they are able to find asylum elsewhere.

And according to the Jordanians, at least as of morning, they claim that did not receive an extradition request. So, in the absence of a request, they certainly aren't going to turn her over. But even with such a request, my guess is that she'll remain under the protection of the Jordanian royal family.

NGUYEN: Well, let's quickly get to Saddam's first wife. She's 17 on this list. How much of a danger does she pose and where is she?

WALSH: Well, again, I don't think she poses that much of a danger. She may be providing financial support to the insurgents, but at the end of the day, it's the insurgents themselves on the ground that are the most dangerous, actually, in Iraq.

NGUYEN: But if you're funding terrorism, you're just as much a part of the problem.

WALSH: Oh, I agree, that certainly if she is doing that, then she is culpable morally, if not legally. But, you know, terrorism is one of those low-cost things. We call it in my field -- we call asymmetric warfare. You can cause a lot of damage for a little money. So money is not the main driver.

The main driver right now is the Sunni/Shiite conflict. And, at least for the nationalists, the fear that the U.S. is going to be an occupying force. Those are the things that drive it. If you take those away, then it doesn't matter how much money you have, the insurgency would shrink. So if she's doing it, she should be prosecuted.

And frankly, Betty, this is a woman with a very colorful --- and I use that phrase charitably -- colorful background. She is alleged to have organized an assassination plot against her own son and was placed by Saddam under house arrest. So she's got all sorts of stories and allegations as part of her past.

NGUYEN: Very interesting. Jim Walsh, that's why we like you. International security analyst with all the information today. Thank you for that insight.

WALSH: Thank you.

NGUYEN: No deal, no way. Israel tells Palestinian militants it will not -- or it won't free any prisoners to secure the release of an Israeli soldier kidnapped eight days ago. And, by the way, if anything happens to that soldier, Israel says there will be consequences for the Palestinian Authority and Syria.

CNN's Paula Hancocks is in Gaza City, where no one is blinking yet.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): A sixth night of airstrikes on Gaza, and another political target. This time, the offices of Al Aqsa Martyrs Brigade.

Just hours later, the hostage-takers issued an ultimatum. Israel rejected it. Three militant groups holding the kidnapped Israeli soldier say it will be case closed if their demands are not met by 6:00 a.m. Gaza time on Tuesday.

The political wing of Hamas has also been asking for concessions.

UNIDENTIFIED MALE (through translator): The situation must be clear and precise, and at the very least, they need to release in the first stage the children and women prisoners in Israeli jals.

HANCOCKS: There have been further demands for 1,000 prisoners to be released. In public, at least Israel is sticking to its no- negotiation line.

UNIDENTIFIED MALE: Israel will not reward acts of terrorism. And terrorism will not be paid, and terrorists will pay for their terrible things. And therefore, we will not negotiate with terrorists.

HANCOCKS: Clashes between Israelis forces and Palestinian gunmen have stepped up. Three militants were killed near the airport in southern Gaza, two were found to be wearing suicide belts. A further two militants died in clashes in northern Gaza.

Some Israeli tanks rolled into northern Gaza early Monday, but this is not yet the extensive operation Olmert had threatened. But as the shelling continues, ordinary Gazans are just trying to live.

Business continues as normally as it can and as normally as it has in previous Israeli incursions. This taxi driver says, "For four or five years it's been the same. There's no difference. What Israel is trying to accomplish, it won't."

One of his passengers tells me, "The continuing airstrikes and sonic booms make children, women and the elderly terrified. It causes stress night and day, and no one can sleep."

(on camera): That's what Prime Minister Ehud Olmert had promised: that no one would get any sleep in Gaza until the Israeli soldier is released. But he's also insisted that the ongoing operation here is not directed at the Palestinian people.

Paula Hancocks, CNN, Gaza City.

(END VIDEOTAPE)

NGUYEN: It is a tense waiting game for NASA, faced once again with falling foam from the external fuel tank. Will Discovery launch? We're live from Kennedy Space Center when LIVE FROM continues.

(COMMERCIAL BREAK)

NGUYEN: You saw it there on the launchpad and on hold. NASA has hit just another stag trying to get this Shuttle Discovery back into space.

Our technology correspondent Daniel Sieberg is at Kennedy Space Center. What's the latest word now, Daniel? Of course, they're discussing all the angles on this one.

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT: They are, Betty. They've got everything from plan A to plan Z. NASA can't seem to catch a break with the lift-off of Shuttle Discovery. In this case, they are dealing with not just weather concerns, which they've dealt with in the last couple of days, but also this technical concern. They are looking at the external fuel tank.

They, in fact, discovered last night some pieces of this foam, this insulating foam, on the external fuel tank. They then discovered this small crack. It's about three or four inches long, about an eighth to a quarter of an inch deep, so not very big in terms of the amount of foam that can come off but, of course, NASA has to take this very seriously, get a better look at it.

They have been meeting throughout the day. They will be meeting again tonight at 6:30. At the briefing that just wrapped up not too long ago, it was mission management director John Shannon who said that since the Columbia disaster of 2003, they have had to take the foam issue very seriously and that's probably a good thing.

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JOHN SHANNON, MISSION MANAGEMENT TEAM: I think it would not have gotten as much attention prior to Columbia as it is getting now. And I think it is a very -- I think it's a very good thing that we have the sensitivity and we are looking this close at the vehicle, that if it does something that's unexpected, that we really put forth the effort to understand it before we commit to go flying.

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SIEBERG: Now, this is the type of foam that we are talking about on the external fuel tank. This is a much bigger piece than the one that would have come off last night at some point. And what we are talking about here -- we've got a model of what Discovery looks like, and the external fuel tank.

This is the external fuel tank right here, and they believe that this crack happened up in here. You know, this is what houses all of the super-cold fuels, the liquid hydrogen and liquid oxygen, oxygen being up here, and hydrogen here. So if Discovery was right here, this is where the actual point was.

Now John Shannon also talked about whether this had happened during takeoff, if that would have been a problem, if this piece had come off, and he said, no, because it was such a small piece and because of where it would have come off.

So they have to look at not only the size of the pieces that come off, but when they come off and where they may hit on the orbiter itself. And, of course, all of this in light of the disaster that happened in 2003 with Columbia, and even a year ago with Discovery when it launched, another piece of foam came off. In that case it didn't do any sort of damage.

But now, of course, they have to look at the possible fixes. Are they going ahead with this scheduled launch tomorrow at 2:38 in the afternoon? We simply don't know. That announcement will happen sometime tonight after this meeting at 6:30. They could possibly do a fix on the launchpad, if they can get up to that point and do it.

They may also decide to go as is and they could do something more drastic like swapping out the external fuel tank. That would cause quite a considerable delay, so everybody here speculating, wondering what might happen, Betty.

NGUYEN: Yes, and, you know, also if it is a go tomorrow, then you have got to count on the weather being there, and good weather so that they can get this shuttle off the ground. So when we talk about delays, this can't go on forever, obviously. How short is that window of opportunity?

SIEBERG: Right, well, they will certainly try tomorrow, and if they can't, they will try again on Wednesday. The window extends until July 19th, then it opens up again at the end of August, but we're talking about a window, just to give people an idea of what that means. It's basically so that everything lines up properly.

If you are a quarterback throwing to receiver or pitcher to the catcher, the shuttle is the ball in those cases, and they have to line up so that everything goes perfectly. The International Space Station would be the catcher or the receiver. That's the ultimate goal of this mission is to get up there, do some repairs, and bring this other astronaut up to the International Space Station, Thomas Reiter from Germany.

So they want all of these things to work out. Of course, you know, there is some pressure with the timetable to get these missions off the ground. NASA is saying they're not listening to that, that they're gong to everything they can to make sure it's safe. But they have got quite a number of shuttle missions that they want to try and do before 2010 when they retire the shuttle fleet completely.

NGUYEN: A lot of decisions to be made and, yes, as you mentioned, a lot of pressure too. Daniel Sieberg, thank you for that.

SIEBERG: You bet.

NGUYEN: Well, it's an unplanned holiday for 45,000 state workers in New Jersey where lawmakers missed the deadline to come up with a budget. Atlantic City casinos could join courts, state offices, beaches, and other services already shut down. Gaming halls and racetracks are under constant state supervision and will close Wednesday morning if there is still no budget. The governor is pushing a one percent hike in the sales tax to cover a deficit.

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GOV. JON CORZINE (D), NEW JERSEY: We have already cut $2.5 billion. We cut higher education. We have cut spending on education. We have cut all kinds of things already, and it is just an issue of whether we're going to go deeper into not being able to provide basic services that the public really wants to see, including, by the way, protecting them, homeland security, making sure we have state police.

So I don't think it's an issue of whether we are prepared to cut spending because we have already done that to a very large degree, the highest degree that has occurred any time in recent history in Trenton.

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NGUYEN: Corzine is urging lawmakers to work around the clock until they agree on spending.

Well, a fascinating turn of events in politics today. Three-term Senator Joseph Lieberman announced a contingency plan against a possible loss in Connecticut's democratic primary. The incumbent is locked in a tight race against upstart challenger Ned Lamont. Speaking in Hartford today, Lieberman said if he loses to Lamont August 8th, he will rally his supporters to sign petitions to get him on the November ballot anyway.

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SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: Enough signatures to be collected that will enable me to appear on the November ballot as an individual Democratic candidate for reelection to the United States Senate if I do not win, the Democratic Party's nomination in the primary on August 8th.

I want to be very clear about why I have made this decision and what it means. First, I have been a proud, loyal and progressive Democrat since John F. Kennedy inspired my generation of Americans into public service. And I will stay a Democrat, whether I am the Democratic Party's nominee, or a petitioning Democratic candidate on the November ballot.

If I am privileged to be reelected in November, I will remain a member of the Senate Democratic Caucus, hopefully the Senate Democratic Majority Caucus, as I informed Senator Harry Reid this morning.

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NGUYEN: But his support of President Bush, especially on Iraq, has turned Lieberman into a target of the Democratic left.

Sunny, muggy or stormy? What will your Fourth be like? Well, our Jacqui Jeras has a holiday forecast for all of us, and some folks are going to see a lot of rain. It's going to actually rain on those barbecues out there. Say it isn't so, Jacqui.

(WEATHER REPORT)

NGUYEN: They do. I have one, by the way. All right.

Well, the fireworks displays that light up America's major cities are definitely not the work of amateurs. A sneak peak behind the scenes at one of the most elaborate displays, when LIVE FROM continues.

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NGUYEN: Falling foam. It's been a major problem for NASA since a piece of foam fell off and hit the shuttle Columbia during lift-off. Now it's caused a snag for Discovery. Engineers spotted a piece of cracked foam on the external fuel tank. The foam has since fallen off. Last hour, I spoke with Michael Cabbage, aerospace editor of the "Orlando Sentinel," about what engineers believed caused it to fall.

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MICHAEL CABBAGE, AEROSPACE EDITOR, "THE ORLANDO SENTINEL": Well, when the tank is filled with its liquid hydrogen and liquid oxygen propellants, it slightly contracts because of the coldness. And when the fuel is drained out after a launch attempt, as was the case yesterday, it expands.

And there's a bracket on a big pipe, a big feedline that pipes liquid oxygen into the bottom of the tank near where the main engines are, and this bracket moves back and forth. And when it moves, pieces of foam can get pinched.

And what happened, what mission managers think, is that when the tank was emptied yesterday, that this bracket moved and the piece of foam fell off.

NGUYEN: So, we're still waiting for a launch. And as we wait, they're going to have to continue to fuel up and then drain that until this thing really does, you know, go into the skies and head into outer space. So, that being the case, can we see more pieces of foam fall off because of that -- that fuel tank going in and out with fuel?

CABBAGE: It's possible. This is a phenomenon that NASA is just starting to understand right now, this whole idea that, as you fill the tank and empty the tank repeatedly, as you put cycles on it, as NASA says, that pieces of foam become more easily broken off, that cracks develop, and that it weakens the foam insulation that covers the entire exterior of the tank.

(END VIDEOTAPE)

NGUYEN: So as of now, NASA has not delayed tomorrow's launch of Discovery. Engineers are still studying the data and will meet again this evening.

He won't be going to jail, but his name won't by on the door anymore either. The Manhattan detention complex has been named for Bernard Kerik, former New York City police commissioner. But Kerik pleaded guilty last Friday to accepting gifts while in office, apartment renovations from a supposedly mob-connected company that wanted city business. The jail is not named for Kerik anymore.

The rivers are down, but many people in the northeast aren't exactly celebrating. They are too busy mopping up all that mud and grime left behind by historic floods. Hundreds of New Yorkers still are not allowed to go back home. It's just not safe enough. Floods are blamed in the death of at least 20 people. Roads, bridges all across the region need to be repaired and there is no telling how many millions of dollars it will take to fix everything. There's more LIVE FROM next.

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NGUYEN: Well as much as the notion of fame is appealing, I bet you never want to go down in posterity because of your posterior. A Tampa teen and some of his alleged pals were throwing firecrackers around on Sunday when someone thought it would be amusing to put a lit firecracker down Derrick Underwood's pocket.

Underwood ran a block with a blazing saddle before thought to stop, drop and roll. He is now recovering from second and third degree burns on his backside and his thigh, ouch. The fire marshal is investigating and the perpetrator may wind up in the hot seat.

Well millions will see the Macy's fireworks spectacular in New York tomorrow. But long before the oohs and aahs, a team of experts are hard at work. This year, even more so. It's Macy's 30th anniversary show, with thousands of fireworks set to go off from three different sites. Here's a preview.

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BILL SCHERMERHORN, ART DIRECTOR, MACY'S FIREWORKS: What I love about Macy's fireworks, it is the largest 4th of July fireworks show in the country. But more than that, we like to tell a story and to have heart.

You have the Statue of Liberty as your centerpiece. And what could be more patriotic than being with the Statue of Liberty with fireworks on a beautiful night. People think the fireworks come first and you just put the music to it. And we do work the other way around.

In January, we recorded the New York Pops, and then I passed that score along to Gary and Jim Souza of Souza Fireworks, and they put a wonderful fireworks show together.

GARY SOUZA, PYRO SPECTACULARS BY SOUZA: I've been in the fireworks business all of my life. My father started with me, but his father got the family going, and my great grandfather got the fireworks going back in the early 1900s.

Fireworks have changed significantly over the years. I think the computer is one of the most significant inventions that we have seen in our industry, or best applications for firing fireworks more rapidly, a little bit safer and the ability to create more images in the sky.

Happy faces, and huge -- we have over 36,000 fireworks that are going off in the Macy's show, but really there is going to be somewhere near about a million different bursts. We have over 50 people that will work 11 days, working on all of the barges that connect the 36,000 shells for the Macy's show.

If you have butterflies and get nervous, then as soon as that first shell goes off, the fire technicians is just the most relieved person in the area.

SCHERMERHORN: We are all little kids at heart on the Fourth of July. Somehow fireworks are magic in the sky and what I really hope is when people leave the show, they can go, "That was amazing. How did they do that?"

(END VIDEOTAPE)

NGUYEN: Oh, the sight of it. Well John King is in for Wolf Blitzer today in "THE SITUATION ROOM." Hi there, John.

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