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Bush, Kerry Prepare for Second Presidential Debate; Videotape Shows British Hostage Kenneth Bigley Beheaded; Martha Stewart Begins Prison Sentence

Aired October 08, 2004 - 11:00   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.


DARYN KAGAN, CNN ANCHOR: And here is a look at what is happening right now in the news.
Reports say that some Iraq kidnappers have killed the British hostage, Kenneth Bigley. Reuters says that its representatives saw a tape of Bigley's beheading. Kidnappers grabbed Bigley, along with two Americans, from their home in Baghdad on September 16. Both Americans, Eugene Armstrong and Jack Hensley, were beheaded. Bigley, in a cage, had made a tearful videotaped plea for his life to British Prime Minister Tony Blair.

We are getting reports of a major earthquake in the Philippines. The Associated Press reports the earthquake hit the capital of Manila. There were no immediate reports of injuries or damage. The report says the quake caused high-rise buildings to sway and knock out power in some areas.

An Israeli official says al Qaeda is most likely to blame for the deadly bomb attacks in Egypt. The attacks targeted resorts popular among Israeli vacationers. At least 26 people were killed. Dozens more are missing, and officials fear the death toll will rise. We'll go live to the scene later this hour.

President Bush and Senator John Kerry square off tonight in their second debate. Kerry is hoping to continue the momentum he gained after their first encounter, while the president will try to reverse that trend. We'll have a debate preview from both campaigns just ahead.

A Kenyan environmentalist is the first African woman to win the Nobel Peace Prize. The Nobel Committee today announced that Wangari Maathai has been awarded the prize. Maathai's Green Belt Movement is responsible for a massive reforestation effort that has planted 30 million trees in Africa.

Checking the clock, we are just a minute past 11:00 a.m. on the East Coast, just past 8:00 a.m. on the West Coast. From the CNN Center in Atlanta, good morning once again. I'm Daryn Kagan.

First up on CNN, meet me in St. Louis. And I'm not talking' about the Judy Garland movie. The presidential candidates meet in St. Louis tonight for their second face-to-face showdown. Let's get a debate preview from White House correspondent Suzanne Malveaux and national correspondent Frank Buckley, covering the Kerry campaign.

Suzanne, we'll begin with you. Good morning once again.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good morning, Daryn.

Well, Bush aides wasted no time in responding to those new economic numbers this morning, 96,000 new jobs created in September. Disappointing to a lot of economists who thought it would be much higher than that. But the Bush campaign saying that, look, these numbers do not reflect the true nature of the economy. It does not include those who work at home, own their businesses or are freelance.

They say a lot of times those numbers are revised upwards. At least they have been for the last six months. And they also say, take into account that there were a million jobs that were lost in the three months immediately following September 11.

The campaign putting out an official response, saying that the U.S. economy is continuing to grow, Senator Kerry's proposals of higher taxes and increased regulation for an economy in recovery. And the campaign wasting no time trying to capitalize off of that message.

They released a new ad today. It says almost two million. That is a figure -- they say almost two million jobs created just within the last year under the Bush administration.

They believe that the plan for the economy is working. They say that they are insistent on making tax cuts permanent, that they want a national energy policy. They go down the list here in the ad, saying, look, they are setting up a clear contrast between the president's economic policy and that of his opponent, Kerry.

Now, it was last night that the president arrived in St. Louis. He is staying at the home, we are told, Stephen Brauer. He's the former ambassador to Belgium, also part owner of the St. Louis Cardinals.

The president this morning received his daily briefing. He taped his radio address. And within moments, we expect that he's actually going to go through that technical tour of the debate site, looking, trying to get a sense of the lay of the land, as he did the last time before.

What do we expect to hear this night, Daryn? We expect that the president is going to hit hard on Kerry's record, he's going to use that against him, as well as his voting record and his own words, to make the case that Kerry's policies are bad for the economy and that he is dangerous when it comes to national security.

The other point, of course, is that there was much ado made about those grimaces and scowls that we saw the last time. Well, Bush aides saying that the president has watched those tapes of the debate, that he has stepped up his stump speech, and that he is ready to go -- Daryn.

KAGAN: All right. Suzanne Malveaux, thank you for that. Let's check in with the Kerry camp. And for that we go to Frank Buckley -- Frank.

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Hi there, Daryn. Expect Senator Kerry tonight, even if no one asks about the jobs report in the town hall-style setting, expect Senator Kerry to at least steer one answer in that direction.

The Kerry campaign coming out strong on this issue this morning, trying to put President Bush on the defensive, leading up to the debate. Senator Kerry expected to say that the president is the first in 72 years to experience a net job loss during his presidency.

Senator Kerry saying in a statement released this morning that even over this last year our economy has failed to create jobs to cover new workers coming into the job market, not to speak of the millions who are unemployed, working in part-time or temporary jobs, or who have given up and dropped out. Now, Senator Kerry arrived here in St. Louis last night. And while the jobs report is expected to be part of the domestic policy discussion during the debate tonight, Iraq will, no doubt, be part of the foreign policy portion of the debate.

Yesterday, Senator Kerry criticized President Bush on the final CIA report on weapons of mass destruction in Iraq which indicates that Iraq had no weapons stockpiles at the time of the invasion last year. Senator Kerry says that is evidence that President Bush was misleading Americans about the rationale for war.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: The facts and the truth are that the primary justification for going to war, the reason the Congress gave the president authority to use force, after he had exhausted all the other remedies, was to disarm Saddam Hussein of the weapons of mass destruction.

We remember the pieces of evidence, like aluminum tubes and Niger yellow-cake uranium that were laid out before us. All overblown then. We said they were, and now completely known to be wrong.

(END VIDEO CLIP)

BUCKLEY: So, the stage is set for what could be a lively, heated discussion tonight during this town hall-style format debate. We're told that during the day, Senator Kerry has no formal debate prep sessions planned.

He may do some going over some policy with policy advisers. He'll also do his technical walk-through of the debate site and then, mostly, we're told, Daryn, that he's just going to be resting and getting ready for tonight.

KAGAN: And then, looking forward post-debate, where does the senator head?

BUCKLEY: Well, as they always do, they have a post-debate rally. He'll have one tonight. Tomorrow will be in Ohio, one of the major battleground states. And also at the end of the day we'll be ending up in a place called Florida.

KAGAN: Frank Buckley in St. Louis. Frank, thank you for that.

We're going to have a lot more on reaction to the September jobs report coming up. In the last hour, I talked to Don Evans, the Commerce secretary from the Bush administration. This hour, I'll talk with Kerry campaign adviser and former Labor secretary, Alexis Herman.

Stay with CNN for in-depth coverage of tonight's presidential debate. Our prime-time lineup begins at 7:00 p.m. Eastern with a special edition of "ANDERSON COOPER 360." That is followed by "PAULA ZAHN NOW" at 8:00.

Wolf Blitzer hosts our debate special at 8:30. And the candidates get down to business at 9:00.

Reports from Iraq say that kidnappers have killed the British hostage Kenneth Bigley. Reuters says that its representatives saw a tape of Bigley's beheading. Kidnappers grabbed Bigley, along with two Americans from their home in Baghdad on September 16. Both of the Americans, Eugene Armstrong and Jack Hensley, were beheaded. Bigley, as you saw in that picture, was kept in a cage, and he had made a tearful videotaped plea for his life to British Prime Minister Tony Blair.

It has been a torturous few weeks for the Bigley family. Our Paula Hancocks joins us from London.

Paula, hello.

PAULA HANCOCKS, CNN CORRESPONDENT: Hello, Daryn.

It certainly has been torturous for the family. Twenty-two days of not knowing exactly what was been happening. Many different developments, and many different pieces of information coming in now. But we do hear from Reuters that a video does exist.

It has been released by militants showing the beheading of Kenneth Bigley, the 62-year-old engineer from Liverpool, who was taken just over three weeks ago in the Mansour diplomatic region of Baghdad, as you say, along with those two Americans. The two Americans both beheaded, and sources from Reuters now saying that Kenneth Bigley has also been beheaded. We don't have an independent confirmation of that at the moment.

Reuters also saying that some of their sources down in Fallujah suggest that Kenneth Bigley was killed on Thursday afternoon -- so yesterday afternoon in a town called Latifiya, which is about 60 kilometers southwest of Baghdad. We also have Abu Dhabi Television suggesting that he has been killed.

Now, a little earlier on, just about an hour ago, we saw the Bigley family up in Liverpool leaving their house with a police escort, presumably to be taken to a police station nearby away from the media and be able to be told exactly what is happening.

We have spoken to the foreign office here in the U.K. They say they're not confirming anything at the moment. They do not know, and they are urgently trying to find out whether or not these reports are accurate. The same for the U.K embassy in Baghdad -- Daryn.

KAGAN: Well, Bigley's brother, Paula -- brothers -- have been vocal in not only pleading for their brother's life, but also in trying to speak to world leaders.

HANCOCKS: There's been a tremendous amount of support across the world for Bigley. There's been some very high-profile calls for his release.

Also, on Tuesday, he was actually issued an Irish passport. The Irish obviously suggesting that the neutrality of having an Irish passport -- they're not involved and he is not involved in England itself. And in Britain, his mother was born in Dublin, hence he was able to get an Irish passport.

We also had Yasser Arafat, the Palestinian president, asking for his release. Gerry Adams, who is the Sinn Fein president in Ireland -- in northern Ireland, he was on Al Jazeera television.

There's been a tremendous amount of public support for Bigley. But it does appear as though the captors have been using him for political purposes. They have released two videos in the past three weeks from Bigley, blaming Tony Blair, the U.K. prime minister, for him being held captive, demanding that female prisoners be released from Baghdad and Iraqi prisons -- Daryn.

KAGAN: Paula Hancocks in London. Thank you for the latest on that.

It has been a day of death in Egypt. The day after a coordinated terrorist strike across popular resorts. The question there, who was behind these attacks? We'll have the latest coming up next.

And more from St. Louis, as the men want to get the White House get ready to go head to head yet again. CNN LIVE TODAY is back after this.

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

(COMMERCIAL BREAK)

KAGAN: Martha Stewart trades a lifestyle of impeccable domestic pleasures for that of prison living. Today, our financial correspondent, Allan Chernoff, is outside the federal facility in Alderson, West Virginia, this morning.

Good morning.

ALLAN CHERNOFF, CNN FINANCIAL CORRESPONDENT: Good morning, Daryn.

And Martha Stewart usually welcomes publicity. But certainly not today.

She arrived here at about 6:00 in the morning to check in for her five-month prison term. Now, this was well coordinated.

According to local police, a meeting was held earlier this week between the police, the U.S. Marshals staff, the prison staff, the FBI, even representatives of CSX Railroad, whose tracks run right next to the prison. Now, this is the one form of special treatment that Martha Stewart is receiving. Typically, inmates check in after 8:00 in the morning.

Now, inside, it's certainly not going to be special at all for Martha Stewart. In fact, she'll be enduring a day of indignities.

First of all, a strip search. She'll be getting her prison khakis. She'll also be getting an assignment for her bunk bed.

She'll be sharing a cubicle, a very small cubicle, in which to sleep. And she'll also be receiving a job assignment.

She'll have to work 7.5 hours every day for 12 cents an hour, doing either janitorial work, helping out in the kitchen, some grounds keeping perhaps. These are all the sorts of jobs at the local prison here.

Now, in terms of the prisoners inside, we've spoken with some former inmates who were recently released, and they say that many people are quite excited to have Martha Stewart joining their ranks. But they certainly don't want to see her getting any special treatment.

The people in the surrounding community, they seem to be having some fun with this. Tonight, at the Clover Club, at 11:30, there will be a Martha Stewart look alike contest. And the winner is to receive a $250 gift certificate to Kmart -- Daryn.

KAGAN: OK. Well, good luck to all of them. Let's just leave it at that. Allan Chernoff in Alderson, West Virginia. Thank you.

An attack in Fallujah and the reported beheading of a British hostage. Let's get the latest in details from our Brent Sadler from Baghdad -- Brent.

BRENT SADLER, CNN CORRESPONDENT: Thanks, Daryn.

Reuters News Agency reporting that they have seen a video showing the beheading of a man identified as the 62-year-old British hostage, Kenneth Bigley. This report not being confirmed by the U.S. or British authorities, or indeed the Irish authorities. Bigley also held Irish nationality. But it is being confirmed, according to Reuters, by insurgent sources within the city of Fallujah.

Now, Fallujah is the stronghold of Iraq's most wanted terror suspect, Abu Musab al-Zarqawi. And it was Fallujah overnight last night that U.S. war planes again struck against the al-Zarqawi's terrorist operations. U.S. war planes targeting what the U.S. military said was say safe house.

Now, inside Fallujah, a hospital was -- we're reporting that there have been more civilian casualties, 14 people killed and about a dozen or so wounded as a result of that latest airstrike. One in about a dozen over the past several weeks aimed specifically at Zarqawi's network. And it is Abu Musab al-Zarqawi's followers suspected of beheading, if it's proved to be Kenneth Bigley, the hostage.

He was, of course, taking three weeks ago, along with two co- workers, engineers. Two Americans beheaded, Jack Hensley and Eugene Armstrong. Kidnapped and then beheaded within several days after their disappearance.

Bigley's been kept alive for two weeks. But now reports that he, too, has followed the same fate of his two co-workers and has been executed and has been beheaded -- Daryn.

KAGAN: Absolutely gruesome and disappointing news from Baghdad. Thank you, Brent Sadler.

There is more to come on the U.S. jobs report. And the latest numbers, the last report before the election, may not be all the president had hoped for. Reaction from the Kerry camp is coming up next.

And preparing for tonight's big face-off between the candidates. It is round two. We'll talk about what you might expect to see.

(COMMERCIAL BREAK)

KAGAN: Live pictures. Senator John Edwards, the Democratic vice presidential candidate, he is in Scranton, Pennsylvania, today, just a few days after the vice presidential debate and, of course, the day of the second presidential debate taking place in St. Louis, Missouri.

At tonight's debate, questions will come from what they're calling real people in a town hall format. The two you're about to meet aren't divided. They are actually not invited to the debate, but they, too, have questions for the candidates.

Here's CNN's Jonathan Freed. He, too, is in St. Louis.

(BEGIN VIDEOTAPE)

JONATHAN FREED, CNN CORRESPONDENT (voice-over): Larry Borkowski owns DB's Sports Bar in St. Louis.

LARRY BORKOWSKI, OWNER, DB'S SPORTS BAR: Politics or religion, man, just don't talk about them.

FREED: And he's not afraid to break his own rules.

BORKOWSKI: Who are you guys voting for?

FREED: A few blocks away...

JOANIE THOMAS, OWNER, JOANIE'S PIZZERIA: Hello? Joanie's.

FREED: ... is Joanie Thomas' pizzeria, where she's never shy to serve up politics.

THOMAS: We all want Kerry to win the debate.

FREED: A Democrat and a Republican, different parties, same type of job. And plenty of questions they'd like to ask the candidates.

BORKOWSKI: I'd like to know taxes. I'd like to know foreign policy. I'd like to know the economy. And I'd like to know healthcare.

FREED: Larry and Joanie agree on those general topics, but if they could question only one candidate, they'd go separate ways. Joanie would confront President Bush.

THOMAS: I don't understand why we can't find Osama bin Laden. And are we really trying? That just drives me crazy.

FREED: Larry would ask John Kerry to define himself.

BORKOWSKI: What has he done as a senator? What decisions has he made? What -- what crises has he led people out of?

FREED: We didn't want to let them get away with just going after the other guy. So, we asked what they'd ask their preferred candidate. Joanie admits she thinks Kerry hasn't been clear about healthcare.

THOMAS: It's too expensive. We need it, and not everybody can afford it. And isn't there a way that we can, you know, make it work?

FREED: And while Larry supports the invasion of Iraq...

BORKOWSKI If President Bush would go back and just get them all again and do it differently, would he do it differently?

FREED: Despite their differences, these two business owners agree on taxes. They'd both ask the candidates to lower them, and say they would use part of the money to provide better employee benefits.

Jonathan Freed, CNN, St. Louis.

(END VIDEOTAPE)

KAGAN: A day of death across Egyptian resort towns. As the human cost is tallied, one question remains: Was this the work of al Qaeda? The very latest coming up next.

(COMMERCIAL BREAK)

KAGAN: I'm Daryn Kagan in Atlanta. Let's check what's happening "Now in the News" for Friday, October 8.

President Bush and Senator Kerry are out of public view today. They are practicing for tonight's debate in St. Louis. The town hall format will feature questions from undecided voters.

Martha Stewart is inside the federal prison in Alderson, West Virginia, this morning. She'll serve five months for lying about a stock sale. Attorneys are appealing her conviction.

Reuters is reporting a videotape showing the beheading of British hostage Ken Bigley in Iraq. Bigley was captured, along with two Americans, last month. Both Americans were also killed.

And government officials say U.S. troops in Iraq found two computer disks containing photographs and layouts of schools in six U.S. states. The schools weren't identified. They were notified, but a Homeland Security official says there was no terror threat.

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


Aired October 8, 2004 - 11:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: And here is a look at what is happening right now in the news.
Reports say that some Iraq kidnappers have killed the British hostage, Kenneth Bigley. Reuters says that its representatives saw a tape of Bigley's beheading. Kidnappers grabbed Bigley, along with two Americans, from their home in Baghdad on September 16. Both Americans, Eugene Armstrong and Jack Hensley, were beheaded. Bigley, in a cage, had made a tearful videotaped plea for his life to British Prime Minister Tony Blair.

We are getting reports of a major earthquake in the Philippines. The Associated Press reports the earthquake hit the capital of Manila. There were no immediate reports of injuries or damage. The report says the quake caused high-rise buildings to sway and knock out power in some areas.

An Israeli official says al Qaeda is most likely to blame for the deadly bomb attacks in Egypt. The attacks targeted resorts popular among Israeli vacationers. At least 26 people were killed. Dozens more are missing, and officials fear the death toll will rise. We'll go live to the scene later this hour.

President Bush and Senator John Kerry square off tonight in their second debate. Kerry is hoping to continue the momentum he gained after their first encounter, while the president will try to reverse that trend. We'll have a debate preview from both campaigns just ahead.

A Kenyan environmentalist is the first African woman to win the Nobel Peace Prize. The Nobel Committee today announced that Wangari Maathai has been awarded the prize. Maathai's Green Belt Movement is responsible for a massive reforestation effort that has planted 30 million trees in Africa.

Checking the clock, we are just a minute past 11:00 a.m. on the East Coast, just past 8:00 a.m. on the West Coast. From the CNN Center in Atlanta, good morning once again. I'm Daryn Kagan.

First up on CNN, meet me in St. Louis. And I'm not talking' about the Judy Garland movie. The presidential candidates meet in St. Louis tonight for their second face-to-face showdown. Let's get a debate preview from White House correspondent Suzanne Malveaux and national correspondent Frank Buckley, covering the Kerry campaign.

Suzanne, we'll begin with you. Good morning once again.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good morning, Daryn.

Well, Bush aides wasted no time in responding to those new economic numbers this morning, 96,000 new jobs created in September. Disappointing to a lot of economists who thought it would be much higher than that. But the Bush campaign saying that, look, these numbers do not reflect the true nature of the economy. It does not include those who work at home, own their businesses or are freelance.

They say a lot of times those numbers are revised upwards. At least they have been for the last six months. And they also say, take into account that there were a million jobs that were lost in the three months immediately following September 11.

The campaign putting out an official response, saying that the U.S. economy is continuing to grow, Senator Kerry's proposals of higher taxes and increased regulation for an economy in recovery. And the campaign wasting no time trying to capitalize off of that message.

They released a new ad today. It says almost two million. That is a figure -- they say almost two million jobs created just within the last year under the Bush administration.

They believe that the plan for the economy is working. They say that they are insistent on making tax cuts permanent, that they want a national energy policy. They go down the list here in the ad, saying, look, they are setting up a clear contrast between the president's economic policy and that of his opponent, Kerry.

Now, it was last night that the president arrived in St. Louis. He is staying at the home, we are told, Stephen Brauer. He's the former ambassador to Belgium, also part owner of the St. Louis Cardinals.

The president this morning received his daily briefing. He taped his radio address. And within moments, we expect that he's actually going to go through that technical tour of the debate site, looking, trying to get a sense of the lay of the land, as he did the last time before.

What do we expect to hear this night, Daryn? We expect that the president is going to hit hard on Kerry's record, he's going to use that against him, as well as his voting record and his own words, to make the case that Kerry's policies are bad for the economy and that he is dangerous when it comes to national security.

The other point, of course, is that there was much ado made about those grimaces and scowls that we saw the last time. Well, Bush aides saying that the president has watched those tapes of the debate, that he has stepped up his stump speech, and that he is ready to go -- Daryn.

KAGAN: All right. Suzanne Malveaux, thank you for that. Let's check in with the Kerry camp. And for that we go to Frank Buckley -- Frank.

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Hi there, Daryn. Expect Senator Kerry tonight, even if no one asks about the jobs report in the town hall-style setting, expect Senator Kerry to at least steer one answer in that direction.

The Kerry campaign coming out strong on this issue this morning, trying to put President Bush on the defensive, leading up to the debate. Senator Kerry expected to say that the president is the first in 72 years to experience a net job loss during his presidency.

Senator Kerry saying in a statement released this morning that even over this last year our economy has failed to create jobs to cover new workers coming into the job market, not to speak of the millions who are unemployed, working in part-time or temporary jobs, or who have given up and dropped out. Now, Senator Kerry arrived here in St. Louis last night. And while the jobs report is expected to be part of the domestic policy discussion during the debate tonight, Iraq will, no doubt, be part of the foreign policy portion of the debate.

Yesterday, Senator Kerry criticized President Bush on the final CIA report on weapons of mass destruction in Iraq which indicates that Iraq had no weapons stockpiles at the time of the invasion last year. Senator Kerry says that is evidence that President Bush was misleading Americans about the rationale for war.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: The facts and the truth are that the primary justification for going to war, the reason the Congress gave the president authority to use force, after he had exhausted all the other remedies, was to disarm Saddam Hussein of the weapons of mass destruction.

We remember the pieces of evidence, like aluminum tubes and Niger yellow-cake uranium that were laid out before us. All overblown then. We said they were, and now completely known to be wrong.

(END VIDEO CLIP)

BUCKLEY: So, the stage is set for what could be a lively, heated discussion tonight during this town hall-style format debate. We're told that during the day, Senator Kerry has no formal debate prep sessions planned.

He may do some going over some policy with policy advisers. He'll also do his technical walk-through of the debate site and then, mostly, we're told, Daryn, that he's just going to be resting and getting ready for tonight.

KAGAN: And then, looking forward post-debate, where does the senator head?

BUCKLEY: Well, as they always do, they have a post-debate rally. He'll have one tonight. Tomorrow will be in Ohio, one of the major battleground states. And also at the end of the day we'll be ending up in a place called Florida.

KAGAN: Frank Buckley in St. Louis. Frank, thank you for that.

We're going to have a lot more on reaction to the September jobs report coming up. In the last hour, I talked to Don Evans, the Commerce secretary from the Bush administration. This hour, I'll talk with Kerry campaign adviser and former Labor secretary, Alexis Herman.

Stay with CNN for in-depth coverage of tonight's presidential debate. Our prime-time lineup begins at 7:00 p.m. Eastern with a special edition of "ANDERSON COOPER 360." That is followed by "PAULA ZAHN NOW" at 8:00.

Wolf Blitzer hosts our debate special at 8:30. And the candidates get down to business at 9:00.

Reports from Iraq say that kidnappers have killed the British hostage Kenneth Bigley. Reuters says that its representatives saw a tape of Bigley's beheading. Kidnappers grabbed Bigley, along with two Americans from their home in Baghdad on September 16. Both of the Americans, Eugene Armstrong and Jack Hensley, were beheaded. Bigley, as you saw in that picture, was kept in a cage, and he had made a tearful videotaped plea for his life to British Prime Minister Tony Blair.

It has been a torturous few weeks for the Bigley family. Our Paula Hancocks joins us from London.

Paula, hello.

PAULA HANCOCKS, CNN CORRESPONDENT: Hello, Daryn.

It certainly has been torturous for the family. Twenty-two days of not knowing exactly what was been happening. Many different developments, and many different pieces of information coming in now. But we do hear from Reuters that a video does exist.

It has been released by militants showing the beheading of Kenneth Bigley, the 62-year-old engineer from Liverpool, who was taken just over three weeks ago in the Mansour diplomatic region of Baghdad, as you say, along with those two Americans. The two Americans both beheaded, and sources from Reuters now saying that Kenneth Bigley has also been beheaded. We don't have an independent confirmation of that at the moment.

Reuters also saying that some of their sources down in Fallujah suggest that Kenneth Bigley was killed on Thursday afternoon -- so yesterday afternoon in a town called Latifiya, which is about 60 kilometers southwest of Baghdad. We also have Abu Dhabi Television suggesting that he has been killed.

Now, a little earlier on, just about an hour ago, we saw the Bigley family up in Liverpool leaving their house with a police escort, presumably to be taken to a police station nearby away from the media and be able to be told exactly what is happening.

We have spoken to the foreign office here in the U.K. They say they're not confirming anything at the moment. They do not know, and they are urgently trying to find out whether or not these reports are accurate. The same for the U.K embassy in Baghdad -- Daryn.

KAGAN: Well, Bigley's brother, Paula -- brothers -- have been vocal in not only pleading for their brother's life, but also in trying to speak to world leaders.

HANCOCKS: There's been a tremendous amount of support across the world for Bigley. There's been some very high-profile calls for his release.

Also, on Tuesday, he was actually issued an Irish passport. The Irish obviously suggesting that the neutrality of having an Irish passport -- they're not involved and he is not involved in England itself. And in Britain, his mother was born in Dublin, hence he was able to get an Irish passport.

We also had Yasser Arafat, the Palestinian president, asking for his release. Gerry Adams, who is the Sinn Fein president in Ireland -- in northern Ireland, he was on Al Jazeera television.

There's been a tremendous amount of public support for Bigley. But it does appear as though the captors have been using him for political purposes. They have released two videos in the past three weeks from Bigley, blaming Tony Blair, the U.K. prime minister, for him being held captive, demanding that female prisoners be released from Baghdad and Iraqi prisons -- Daryn.

KAGAN: Paula Hancocks in London. Thank you for the latest on that.

It has been a day of death in Egypt. The day after a coordinated terrorist strike across popular resorts. The question there, who was behind these attacks? We'll have the latest coming up next.

And more from St. Louis, as the men want to get the White House get ready to go head to head yet again. CNN LIVE TODAY is back after this.

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

(COMMERCIAL BREAK)

KAGAN: Martha Stewart trades a lifestyle of impeccable domestic pleasures for that of prison living. Today, our financial correspondent, Allan Chernoff, is outside the federal facility in Alderson, West Virginia, this morning.

Good morning.

ALLAN CHERNOFF, CNN FINANCIAL CORRESPONDENT: Good morning, Daryn.

And Martha Stewart usually welcomes publicity. But certainly not today.

She arrived here at about 6:00 in the morning to check in for her five-month prison term. Now, this was well coordinated.

According to local police, a meeting was held earlier this week between the police, the U.S. Marshals staff, the prison staff, the FBI, even representatives of CSX Railroad, whose tracks run right next to the prison. Now, this is the one form of special treatment that Martha Stewart is receiving. Typically, inmates check in after 8:00 in the morning.

Now, inside, it's certainly not going to be special at all for Martha Stewart. In fact, she'll be enduring a day of indignities.

First of all, a strip search. She'll be getting her prison khakis. She'll also be getting an assignment for her bunk bed.

She'll be sharing a cubicle, a very small cubicle, in which to sleep. And she'll also be receiving a job assignment.

She'll have to work 7.5 hours every day for 12 cents an hour, doing either janitorial work, helping out in the kitchen, some grounds keeping perhaps. These are all the sorts of jobs at the local prison here.

Now, in terms of the prisoners inside, we've spoken with some former inmates who were recently released, and they say that many people are quite excited to have Martha Stewart joining their ranks. But they certainly don't want to see her getting any special treatment.

The people in the surrounding community, they seem to be having some fun with this. Tonight, at the Clover Club, at 11:30, there will be a Martha Stewart look alike contest. And the winner is to receive a $250 gift certificate to Kmart -- Daryn.

KAGAN: OK. Well, good luck to all of them. Let's just leave it at that. Allan Chernoff in Alderson, West Virginia. Thank you.

An attack in Fallujah and the reported beheading of a British hostage. Let's get the latest in details from our Brent Sadler from Baghdad -- Brent.

BRENT SADLER, CNN CORRESPONDENT: Thanks, Daryn.

Reuters News Agency reporting that they have seen a video showing the beheading of a man identified as the 62-year-old British hostage, Kenneth Bigley. This report not being confirmed by the U.S. or British authorities, or indeed the Irish authorities. Bigley also held Irish nationality. But it is being confirmed, according to Reuters, by insurgent sources within the city of Fallujah.

Now, Fallujah is the stronghold of Iraq's most wanted terror suspect, Abu Musab al-Zarqawi. And it was Fallujah overnight last night that U.S. war planes again struck against the al-Zarqawi's terrorist operations. U.S. war planes targeting what the U.S. military said was say safe house.

Now, inside Fallujah, a hospital was -- we're reporting that there have been more civilian casualties, 14 people killed and about a dozen or so wounded as a result of that latest airstrike. One in about a dozen over the past several weeks aimed specifically at Zarqawi's network. And it is Abu Musab al-Zarqawi's followers suspected of beheading, if it's proved to be Kenneth Bigley, the hostage.

He was, of course, taking three weeks ago, along with two co- workers, engineers. Two Americans beheaded, Jack Hensley and Eugene Armstrong. Kidnapped and then beheaded within several days after their disappearance.

Bigley's been kept alive for two weeks. But now reports that he, too, has followed the same fate of his two co-workers and has been executed and has been beheaded -- Daryn.

KAGAN: Absolutely gruesome and disappointing news from Baghdad. Thank you, Brent Sadler.

There is more to come on the U.S. jobs report. And the latest numbers, the last report before the election, may not be all the president had hoped for. Reaction from the Kerry camp is coming up next.

And preparing for tonight's big face-off between the candidates. It is round two. We'll talk about what you might expect to see.

(COMMERCIAL BREAK)

KAGAN: Live pictures. Senator John Edwards, the Democratic vice presidential candidate, he is in Scranton, Pennsylvania, today, just a few days after the vice presidential debate and, of course, the day of the second presidential debate taking place in St. Louis, Missouri.

At tonight's debate, questions will come from what they're calling real people in a town hall format. The two you're about to meet aren't divided. They are actually not invited to the debate, but they, too, have questions for the candidates.

Here's CNN's Jonathan Freed. He, too, is in St. Louis.

(BEGIN VIDEOTAPE)

JONATHAN FREED, CNN CORRESPONDENT (voice-over): Larry Borkowski owns DB's Sports Bar in St. Louis.

LARRY BORKOWSKI, OWNER, DB'S SPORTS BAR: Politics or religion, man, just don't talk about them.

FREED: And he's not afraid to break his own rules.

BORKOWSKI: Who are you guys voting for?

FREED: A few blocks away...

JOANIE THOMAS, OWNER, JOANIE'S PIZZERIA: Hello? Joanie's.

FREED: ... is Joanie Thomas' pizzeria, where she's never shy to serve up politics.

THOMAS: We all want Kerry to win the debate.

FREED: A Democrat and a Republican, different parties, same type of job. And plenty of questions they'd like to ask the candidates.

BORKOWSKI: I'd like to know taxes. I'd like to know foreign policy. I'd like to know the economy. And I'd like to know healthcare.

FREED: Larry and Joanie agree on those general topics, but if they could question only one candidate, they'd go separate ways. Joanie would confront President Bush.

THOMAS: I don't understand why we can't find Osama bin Laden. And are we really trying? That just drives me crazy.

FREED: Larry would ask John Kerry to define himself.

BORKOWSKI: What has he done as a senator? What decisions has he made? What -- what crises has he led people out of?

FREED: We didn't want to let them get away with just going after the other guy. So, we asked what they'd ask their preferred candidate. Joanie admits she thinks Kerry hasn't been clear about healthcare.

THOMAS: It's too expensive. We need it, and not everybody can afford it. And isn't there a way that we can, you know, make it work?

FREED: And while Larry supports the invasion of Iraq...

BORKOWSKI If President Bush would go back and just get them all again and do it differently, would he do it differently?

FREED: Despite their differences, these two business owners agree on taxes. They'd both ask the candidates to lower them, and say they would use part of the money to provide better employee benefits.

Jonathan Freed, CNN, St. Louis.

(END VIDEOTAPE)

KAGAN: A day of death across Egyptian resort towns. As the human cost is tallied, one question remains: Was this the work of al Qaeda? The very latest coming up next.

(COMMERCIAL BREAK)

KAGAN: I'm Daryn Kagan in Atlanta. Let's check what's happening "Now in the News" for Friday, October 8.

President Bush and Senator Kerry are out of public view today. They are practicing for tonight's debate in St. Louis. The town hall format will feature questions from undecided voters.

Martha Stewart is inside the federal prison in Alderson, West Virginia, this morning. She'll serve five months for lying about a stock sale. Attorneys are appealing her conviction.

Reuters is reporting a videotape showing the beheading of British hostage Ken Bigley in Iraq. Bigley was captured, along with two Americans, last month. Both Americans were also killed.

And government officials say U.S. troops in Iraq found two computer disks containing photographs and layouts of schools in six U.S. states. The schools weren't identified. They were notified, but a Homeland Security official says there was no terror threat.

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