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More Than 100 Killed in Seven Train Explosions in India; Deaths of Two U.S. Soldiers Shown on Internet; Pentagon, Congress Work on New Gitmo Rules; Deficit to Be Lower Than Expected

Aired July 11, 2006 - 13:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Hello, I'm Kyra Phillips at CNN world headquarters in Atlanta.
Was it a terror attack? Seven explosions, seven different trains and platforms, all during rush hour in India. More than 100 people are dead. We're live from the scene.

Graphic images, messages of terror. Two U.S. soldiers murdered, and it's all on the Internet. U.S. reaction straight ahead.

It's Boston's Big Dig. Now it's a big disaster. Part of a highly-traveled tunnel collapses. One person is killed.

LIVE FROM starts right now.

Bodies on the tracks, train cars spattered with blood. Hundreds of people dead or hurt in a string of explosions on passenger trains in Mumbai, previously known as Bombay. CNN's Seth Doane is there. He filed this report just a short time ago.

(BEGIN VIDEOTAPE)

SETH DOANE, CNN CORRESPONDENT (voice-over): Well, we have been on the line with a number of people in Mumbai. I'm in New Delhi, en route to Mumbai currently. Getting a phone call through to that city has been nearly impossible at times. Speaking with a CNN News representative on the ground, they said they had to go blocks and blocks to be able to get a cell signal, to be able to call us.

They say it is complete chaos. And from all the pictures I've seeing being fed into our sister station, CNN-IBN (ph) and other Indian media here, the pictures are indeed quite gruesome.

UNIDENTIFIED FEMALE: What about the response of hospitals? Are they able to cope with what's happening and the number of people? I think the latest figures we have, 135 people dead, about 260 or so people injured. Those numbers have fluctuated, as we've been covering this in the last few hours. But what about the response at the hospital level?

DOANE: Yes, we're hearing the same numbers, police confirming around 135 people dead already. Up to 250, we've heard close to 300, from Mumbai police, possibly injured.

We have spoken with some CNN News representatives on the ground who have been in touch with the hospitals, who have been relaying figures to us as, unfortunately, the death toll continues to rise. But as to the exact operations inside the hospitals, I can't answer that for you.

UNIDENTIFIED FEMALE: And so we're also hearing the country has been -- or parts of the country, at least, have been put on high alert in every state capital. You're there in New Delhi at the airport. What's the security like there?

DOANE: Well, the security is relatively chaotic here. At the airport at the moment, security is in place. Although it's hard to tell how different this would be from a normal evening. But there is a sense of anticipation that of chaos, even here in the capital.

As you know, Manmohan Singh, the prime minister here, has appealed for calm in India, but also all cities are at a high state, or heightened state of alert, including New Delhi.

UNIDENTIFIED FEMALE: And David (ph), interesting, in the wake of this, not long after the seven near simultaneous blasts went off along the western railway line, we heard from Pakistan, as well. What all has been said from there?

DOANE: Well, President Musharraf has said that he condemns the attack. That was the word I had -- that's the word I had received crossing the wires. Incidentally, there was another separate, unrelated attack in Kashmir earlier in the day, a number of people killed. It has been a day that has really rocked -- rocked Indians.

UNIDENTIFIED FEMALE: And also there was a report of a possible arrest in connection with these blasts. What information do you have on that?

DOANE: I can confirm I've seen those wires, as well, that information coming across. I have no independent confirmation of that. Our sister station, CNN-IBN (ph) here, the media here, is working out their (UNINTELLIGIBLE) also in the suburb of Mumbai has been defused, that according to our sister station CNN-IBN (ph) here.

(END VIDEOTAPE)

PHILLIPS: "TIME" magazine's South Asia correspondent, Alex Perry, is in New Delhi. He joins me on the phone with the latest.

Now, Alex, word you're getting is this is definitely an act of terrorism. What more do you know? What group is being linked to this?

ALEX PERRY, "TIME" MAGAZINE CORRESPONDENT: Well, I don't think we're going to see anybody admit that they carried out this attack. That generally doesn't happen.

But all the people I'm speaking to in intelligence, in the security service, are pointing to a loose alliance between a Pakistan group, the Lashkar-e-Toiba. It's a group based in Punjab in Pakistan, in Kashmir, but also carries out a bombing campaign across most of India. And an alliance between them and a group called SIMI, which is formerly -- it's sort of -- it's a radical student Islamic group of Muslims.

India has 150 million Muslims. It's the second largest Muslim population in the world. And all the security services are pointing to a sort of nexus between those two.

That's simply because this alliance has been carrying out attacks for years in India. They set off another series of bombs in 2003 in Bombay, and they're also responsible for attacks in Varanasi, the Indian holy city, in March this year and other attacks in Bangalore and even possibly Delhi last year, which killed 60.

PHILLIPS: And can you -- you're giving us a little background on these organization. You're tying these organizations to others -- or to other attacks. What more can you tell us about the mission statement of these organizations? Of course, we talked so much about al Qaeda and the insurgency in Iraq. What is the mission of these individuals?

PERRY: It's simply to wage war on Hindu India. I'm talking to a friend just now in the security services who was totally -- you know, the attack is the point. You don't see a manifesto coming out after one of these attacks. You don't see a list of demands. It's simply to say, "Here we are, and this is what we're doing, you know. And we're angry."

Muslims in India, to be honest, come off second best. You know, it's slightly incredible to think of 150 million people a minority, but they are.

PHILLIPS: So it's about status, Alex? It's about religion and status?

PERRY: Yes, basically. And it's the Hindu-Muslim divide that goes back to partition and beyond. You know, including three wars in -- you know, against Pakistan (UNINTELLIGIBLE), including those Gujarat riots in 2002, where 2,000 Muslims were killed.

It's a long history of antagonism that often spills over into violence.

PHILLIPS: Alex Perry with "TIME" magazine. Appreciate your time, Alex. Thanks so much.

Let's get straight to Betty Nguyen now in the news room, working a developing story for us.

Betty, what do you have?

BETTY NGUYEN, CNN ANCHOR: Here's what we know so far. It's just coming in, getting it from the Associated Press, that New York City is increasing security on its transit system in response to these bomb blasts in India. That's really about the -- all that we know about this situation. No details exactly how they're going to increase that security. But of course big cities around the world are watching this and wondering exactly who caused this blast and if it could be coming to a city near them. So New York City taking some proactive measures, increasing security on its transit system.

We're keeping a close eye on this, Kyra, and should we get any information, of course we're going to bring that to you.

PHILLIPS: Betty, thanks.

Two brutal deaths in Iraq relived on the Internet. An al Qaeda- linked group has posted a gruesome video claiming to show the mutilated bodies of two American soldiers. The U.S. military calls it barbaric. The insurgents call it revenge.

Let's get more from our Nic Robertson. He's in Baghdad -- Nic.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Well, the insurgents say that this is revenge for the alleged rape of Abir al- Janabi back in March. They say the reason that these two soldiers were targeted for killing and for abduction was because they were from the same unit as the soldiers who were allegedly involved in the murder and rape of Abir al-Janabi and three of her family members.

There is no evidence presented in this tape that is -- provides enough information to believe necessarily what the insurgents are saying. There's nothing there that stands up their claim that this was an act of revenge.

However, this is al Qaeda in Iraq. The message on this tape also replaying something from Osama bin Laden, "Keep up the attacks on the Americans."

Also playing a previous message from Abu Musab al-Zarqawi, the former al Qaeda leader here, again, saying, "Keep up the attacks on American soldiers in Iraq."

The tape itself is about five minutes long. Very, very barbaric in its nature -- Kyra.

PHILLIPS: Nic, you think it's being released now due to all these investigations surrounding U.S. troops?

ROBERTSON: Well, you know, when you look at the time line, these two soldiers were abducted and killed about a week before the information was made public about the alleged rape and murder of Abir al-Janabi. Did the insurgents have prior knowledge before it became public knowledge?

The U.S. military says no, they don't believe that's the case. There has been speculation that they do. But it would appear, perhaps, to have the hallmarks of some opportunism here. In the postscript, going back and saying, yes, we did kill these two guys because they were members of the same unit but, it's impossible to know just from this video alone, Kyra.

PHILLIPS: All right, Nic Robertson, live from Baghdad, thanks, Nic.

Gagging President Bush? Well, attorneys for a former soldier accused of rape and murder in Iraq want the president and the Pentagon and everybody else to keep their opinions to themselves.

Steven Green's defense team tells a federal judge in Kentucky that a gag order is needed because of strong and inflammatory opinion all over the media. Green and four of his former comrades are charged in a sensational attack near Mahmoudiya in March.

Conventional wisdom? After almost five years of insisting so- called enemy combatants don't deserve the protections of the Geneva Conventions and after one huge Supreme Court rebuff, well, the Bush administration has reconsidered.

CNN Pentagon correspondent Barbara Starr is at her post with the details -- Barbara.

BARBARA STAR, CNN PENTAGON CORRESPONDENT: Kyra, hello to you.

Some days around here, you need a law degree. Today is, indeed, one of them.

The Senate Judiciary Committee at this hour continuing to hear from government witness, government attorneys about this entire matter. The Supreme Court ruling a couple of weeks ago, of course, that the Pentagon's process for trying detainees under a commission process did not comply with federal law. So now they are looking at what to do about all of that.

But one of the steps was taken today. A Pentagon memo being made public that says for the first time detainees will get that formal protection of one section of the Geneva Convention, to Article 3, which basically guarantees them humane treatment and some legal rights.

Now, the Pentagon, of course, says that they had literally been in compliance with this section all the way along, that that was the practice of the U.S. government. But in order to be in compliance, full compliance, with that Supreme Court ruling, they put it all on paper. They said they must be in compliance.

But from a political perspective, Kyra, the reality is still a lot of frustration in Congress about the detainees' situation. Earlier today, Senator Patrick Leahy of Vermont, one of the most vocal critics of the Pentagon policy, spoke at this hearing.

(BEGIN VIDEO CLIP)

SEN. PATRICK LEAHY (D), VERMONT: The last five years, there have been no trials and no convictions of any of the detainees, and no one has been brought to justice through these commissions. Instead, precious time, effort and resources have been wasted. Remember what I said, five years, no trials no convictions.

(END VIDEO CLIP) STARR: But, of course, the Pentagon, Kyra, says now that the Supreme Court has basically thrown out the process they had for dealing with these detainees, they're going through the very difficult legal morass of trying to sort it all out and put a process in place that will be accepted by the courts and the Congress and get the whole thing moving again -- Kyra.

PHILLIPS: So as you read over these new Gitmo rules, Barbara, what exactly do you think would change?

STARR: Well, it's hard to see what changes except for this one point: the question of humane treatment. Of course, the thing is we all remember the headlines about allegations of not humane treatment, of those practices that the Pentagon said violated their policy. Now the policy is crystal clear. Humane treatment, nothing else is allowed but that.

But, of course, at the end of the day, a lot of this is really up to human nature, and it will remain to be seen how it all works out -- Kyra.

PHILLIPS: All right, Barbara Starr, thanks so much.

Back to our top story now. Train cars packed with rush hour commuters blown apart on the tracks. It's a developing story out of India today. A string of explosions hit crowded commuter trains, killing more than 130 people, wounding as many as 300. The blast left mangled wreckage and body parts. They put major cities across India on high alert.

No claim of responsibility yet. India has blamed some previous attacks on an Islamic militant group based in Pakistan. That nation has condemned today's bombings.

Let's get straight to Betty Nguyen with details now on U.S. reaction -- Betty.

NGUYEN: Yes, we have a little bit more. Again, according to the Associated Press, New York City has increased security on its transit system in response to the bomb blasts there in India, which so far has killed about 135 people and wounded so many others.

Here's what we know about that increased security. So far, New York City has increased it with more officers patrolling the subways, and they're also going to increase the number of bag searches. They say that these measures are just precautionary and there have been no specific threats to New York City.

But, again in light of what has happened in India today, that country's commuter rail system, of course, New York City is being very cautious. And these are just some precautionary measures, which include, again, more officers patrolling the subway system and more random bag searches.

This is a huge subway system for the city of New York. A lot of people who take that each and every day. In fact, to be exact, about 4 1/2 million people ride the city's 468 subway stations each day, Kyra.

So obviously, New York City stepping up its searches, its security, on the subway systems, just in a reaction -- as precautionary reaction to what's happened in India.

PHILLIPS: Betty, thanks.

Straight ahead, crunching numbers, crushing debt. The president says there's good news in the government's overspending, but not everyone's celebrating. We'll explain on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

PHILLIPS: Is America $127 billion better off than we thought? Well, as the federal government's fiscal year winds down, President Bush says this year's deficit will come in quite a bit lower than the White House had predicted. And he's taking the credit.

CNN's Kathleen Koch has all the facts and figures. Hey, Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Hi, Kyra.

The president says that this is good news for the American taxpayer, that this means that the economy is growing, that jobs are being created, that more taxes are being collected from corporations and from the wealthy.

The exact figure of the deficit now for the fiscal year that ends in September is $296 billion. It is, indeed, about $127 billion less than they expected. And President Bush, this morning, was very quick to claim the credit.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: That's what happens when you implement pro-growth economic policies. We faced difficult economic times. We cut the taxes on the American people, because we strongly believe that the American people should lead us out of recession.

KOCH: But Democrats point out that the huge $300 billion budget deficit is nothing to celebrate and is certainly a far cry from the later years of the Clinton administration when the country was running a budget surplus.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MINORITY LEADER: During the last three years of the Clinton administration, we didn't have a $300 billion deficit that people are bragging about here today on the Senate floor. We paid down the debt. We spent more -- we spent less money than we were taking in. We brought down the national debt by about $500 million. So, please, let's not boast about a $300 billion deficit.

(END VIDEO CLIP)

KOCH: Some have accused the White House of deliberately downplaying expectations, playing the expectations game, deliberately putting out gloomy forecasts for the deficit just so that several months later they could come out and claim these dramatic improvements.

When I asked press secretary Tony Snow about that this morning, he said not so, that is certainly not the case. He said, "Why would we get beaten up month after month for bad deficit projections only to enjoy one day of P.R.?" He said that would be insane -- Kyra.

PHILLIPS: Kathleen Koch, live from the White House, thanks so much.

Well, for more on this story, let's get to Susan Lisovicz, live from the New York Stock Exchange.

Hey, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Good afternoon, Kyra.

Well, the hallmark of the Bush administration's economic policy is its tax cuts. You know, Wall Street applauded the president in 2001, the first round of tax cuts came. But we were living in much different times. The economy was on the ropes.

Second round came in 2003. Now the president wants to make them permanent, and spending has not been reduced; it's been increased. And that's why there's so much debate as to whether they should be, in fact, made permanent.

President Bush, he says the success of those cuts can be measured in the reduction of this year's federal deficit. The new estimate, as Kathleen just told you, unveiled by the president himself this morning, shows that the red ink, while still sizable, is just under $300 billion, is substantially below that of the administration's initial estimate of $423 billion.

It also projects that the deficit of a percentage of GDP, the broadest possible read of the economy, will shrink, also, to 2.3 percent.

One of the big reasons why the reduction came about is because of higher than expected tax receipts, the second highest in the past quarter century. There was a big surge of income tax revenue from the corporate sector, a reflection of the stellar profits we've been reporting for the past several years.

And that's one of the elements that we'll be watching closely. Because we've seen clear signs of an economic slowdown in the last year in the housing sector and job creation. This week marks the unofficial beginning of the corporate earnings season. And many analysts are concerned about what corporate America has to say about the second half of the year -- Kyra.

PHILLIPS: Well, anther important factor is the size of the deficit going forward is progress in the war in Iraq, correct?

LISOVICZ: Huge factor in a lot of unknowns, Kyra. According to the Pentagon, new weapons are expected to cost at least $1.4 trillion from now until 2009, with more than half of those expenditures yet to be made.

Weapons purchases are one of the federal government's biggest expenses. The Pentagon's weapons buying program has doubled from $700 billion before 9/11.

And that's why deficits matter. When the government is spending that amount of money on defense while it's operating in red ink, there is pressure on the government's other spending programs, everything from road repairs to school lunch programs to health care. That means these figures have the potential to affect everyone and could be subject to further revision -- Kyra.

PHILLIPS: Well, is Wall Street having any reaction to the announcement?

(STOCK REPORT)

(COMMERCIAL BREAK)

PHILLIPS: Eat fish, see better? Well, it may not be that simple, but a pair of eye-opening studies show fish-heavy diets can prevent the leading cause of blindness in old age. Omega-3 fatty acids found in salmon and many other fish appear to lower the risk of age-related macular degeneration. Those compounds were known already to promote healthy hearts and brains.

When Louise Brown was born in 1978, she was one of a kind, the very first of what would be millions of babies born through in vitro fertilization. Now the world's first test tube baby is going to have a baby of her own. British newspapers report Brown, now 27, and her husband, are expecting, and not through IVF.

A messy divorce, a massive explosion. Is there a connection? New developments on New York's Upper East Side blast. We're going to tell you about it, coming up on LIVE FROM.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Public safety is our first job. We're going to make sure the tunnels are safe. What we have found right now is that we're looking at about 200 feet of tunnel.

(END VIDEO CLIP)

PHILLIPS: Part of a Boston tunnel gives way, crushing a car, killing a woman. The latest straight ahead on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

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