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American Morning

Are We Less Safe?; Carry-On Rules Eased; Allen on the Defense; Japan's New P.M.

Aired September 26, 2006 - 06:00   ET


SOLEDAD O'BRIEN, CNN ANCHOR: Good morning. Welcome, everybody. It is Tuesday, September 26. I'm Soledad O'Brien.

Here's a look at what is happening this morning.

Some good news if you're packing for a flight this morning, the government is easing the ban on liquids in carry-ons. Starting this morning, you can carry on items like toothpaste and hand lotion as long as they're in small bottles and kept in a clear zip-lock bag.

A scene just a few hours ago in Baghdad, Saddam Hussein tossed out of court for the second straight day, the third time in a week. Once again, Hussein was arguing with the chief judge, as you see. Right now court is in recess.

S. O'BRIEN: In Houston today, former Enron executive Andrew Fastow is going to learn his fate. Fastow pleaded guilty to charges related to Enron's collapse. He's expected to be sentenced to 10 years in prison.

Meanwhile, the former WorldCom Chief, Bernie Ebbers, reports to prison today. Ebbers was convicted of fraud last year in an $11 billion accounting scheme. He was sentenced to 25 years. That sentence was put on hold while he was appealing the case.

M. O'BRIEN: In a few hours, Afghan President Hamid Karzai meets with the president at the White House. Mr. Bush is trying to ease tensions between Afghanistan and neighboring Pakistan, each side accusing the other of not doing enough to combat Islamic extremists.

And a swan song for British Prime Minister Tony Blair addressing the Labour Party's annual conference for the last time as its leader. Mr. Blair has said he'll leave office within a year.

S. O'BRIEN: It's time for the first look at the forecast this morning. Chad Myers is at the CNN Center with that.

Good morning.



And because there is no weather, I'm going to yield back the rest of my time to the anchor from New York. Back to you guys.

S. O'BRIEN: That's what I like to hear. Thank you, -- Chad.

MYERS: You're welcome.

S. O'BRIEN: War of words heating up as the director of National Intelligence takes issue with that classified report that says the war in Iraq is increasing the risk of terrorism. John Negroponte, during a speech last night in Washington, D.C., said that a leaked portion of the report distorts the entire report.

Listen to what he said.


JOHN NEGROPONTE, DIRECTOR OF NATIONAL INTELLIGENCE: It talks about the jihadist movement having spread. I -- my personal assessment, with respect to the United States, is that we are certainly more vigilant, we are better prepared. And in that sense, I think we could safely say that we are safer.


S. O'BRIEN: The chairman of the Senate Intelligence Committee, a Republican, and the panel's top Democrat both want the president to declassify the report.

CNN's Suzanne Malveaux has our report this morning.


SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): White House officials are on the offensive and crying foul.

FRAN TOWNSEND, WHITE HOUSE HOMELAND SECURITY ADVISER: It does not say that. It does not say that the war in Iraq has worsened the terror situation for the United States.

DAN BARTLETT, WHITE HOUSE COUNSELOR: And I think there were some characterizations made in the papers that I think leave a wrong impression.

MALVEAUX: Since the leaked parts of the National Intelligence Estimate are classified, top Bush administration officials said they could not talk about its contents. Instead, they took on their critics.

TOWNSEND: We ought to question the motives of the individual or individuals who leaked this. It was written in April. It is more than sort of a coincidence to me that we're now in almost October before a midterm election, and now once again we're seeing a leak of classified documents, and taken out of context, to make a political point.

MALVEAUX: Democrats are taking advantage of the opportunity to score political points that Mr. Bush's Iraq war plan is a failure. SEN. HILLARY RODHAM CLINTON (D), NEW YORK: We know this is not working, and we know that it is creating, you know, very difficult problems for us down the road.

SEN. HARRY REID (D-NV), MINORITY LEADER: The present course is doing more harm than good.

MALVEAUX: But the counselor to the president, Dan Bartlett, did not hesitate to make a political point of his own.

BARTLETT: The reason why Democrats can't win any control of the Congress or the presidency is because one of the most central issues facing our country is national security. And they don't have a clue how to do it.

MALVEAUX (on camera): But convincing the American people that the Republicans know how to do it could be in jeopardy, if voters believe that the administration's own intelligence does not back the president's rhetoric.

(voice-over): That's why some members of Congress, including the Republican head of the Senate Intelligence Committee, Pat Roberts, is calling for the White House to declassify the National Intelligence Estimate, and do it quickly.

Suzanne Malveaux, CNN, the White House.


S. O'BRIEN: Well some Democrats on Capitol Hill are calling for hearings on those findings by the nation's 16 intelligence agencies -- Miles.

M. O'BRIEN: If you're heading to the airport this morning, you can pack a little differently and avoid checking bags for the first time since that foiled airliner bombing plot last month in England. The federal government is relaxing its rules on liquid carry-ons.

Here's homeland security correspondent Jeanne Meserve.


JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Liquids, gels and aerosols now allowed in carry-on bags if you don't carry on very much. Three ounces or less of toiletries, like toothpaste, lotion and lip gloss, now permitted if they are placed in one clear zip-loc plastic bag. Also allowed on flights, beverages and other items bought on the other side of security in the boarding area.

The TSA says although liquid explosives remain a significant threat, intelligence experimental testing and overall increases in aviation security allowed the modifications.

KIP HAWLEY, TSA DIRECTOR: We've looked at all of the various MacGyver scenarios that are -- that you can imagine, and we are comfortable with these measures that we are adequately covered. MESERVE: But some security experts believe complaints from travelers and businesses triggered the changes, which they say leave too many loopholes terrorists could exploit.

GEORGE BAURIES, FORMER FBI OFFICIAL: We know that al Qaeda has frequently worked in small groups. So if you take three ounces and multiply it times a factor of four or five or six individuals, that will be ample material to bring basically a liquid bomb aboard a plane.

MESERVE: The TSA disagrees.

HAWLEY: We are not flying near the treetops on this. We are giving ourselves plenty of room and the only thing we're thinking of here is the safety of the traveling public.

MESERVE (on camera): Hawley says the changes in the liquid ban will allow screeners to look for more significant threats. But the ultimate solution, a technology to screen for liquid explosives, is not yet deployed at the nation's airports.

Jeanne Meserve, CNN, Washington.


M. O'BRIEN: And the TSA Chief Hawley says it could be months before new machines to detect liquid explosives can be tested at U.S. airports -- Soledad.

S. O'BRIEN: Happening in America this morning, charges formally filed in that gruesome dragging death, took place outside of Denver. Remember we told you about this. Thirty-six-year-old Jose Luis Rubi- Nava appeared in court on Monday. He faces first-degree murder and second-degree kidnapping charges in the death of his 49-year-old girlfriend. He's being held without bail. And if he's convicted, he could face the death penalty.

In Texas, students at Houston's Rice University mourning the sudden death of a freshman football player. Nineteen-year-old Dale Lloyd died on Monday. He collapsed on the field while the team was doing some light running on Sunday. Now his family is hoping that an autopsy will reveal the cause of his death.

Five of the Duquesne basketball players shot on campus a week and a half ago, 6' 7" Sam Ashaolu is the only one left in the hospital. He's in serious condition this morning. He's making progress, though. On Monday, he was able to move from his bed to a chair and then doctors removed one of the bullet fragments that are still in his head.

Another prominent school dropping its early admissions program, the University of Virginia now the third major university to do that. The change applies to students who will be starting classes in the fall of 2008. In recent weeks, Harvard and Princeton got rid of their early admission programs.


UNIDENTIFIED MALE: And after 13 months...


S. O'BRIEN: It was a triumphant return for the New Orleans Saints and the Louisiana Superdome, too. It was a sell-out crowd, 72,000 people brought a Super Bowl-like atmosphere, really, to the re- opening. The roof has been repaired. About 10,000 of the seats were replaced. They got brand new turf, new scoreboards. And the Saints beat the Atlanta Falcons last night 23 to 3.

In Columbus, Ohio, an update on that car dealership. Remember Andy was talking about this, the dealership that wanted to run radio commercials for the jihad on the automotive market. Well the president of that dealership is apologizing now and he's pulled the spot from radio. The Council on American Islamic Relations has accepted his apology.

M. O'BRIEN: Senator George Allen once again fending off accusations he is a racist. The Virginia Republican, already under fire for uttering a racially derogatory term at a political rally, is now accused by two former acquaintances of uttering slurs in the '70s and '80s.

AMERICAN MORNING's Bob Franken joining us from Washington with more.

Good morning, -- Bob.


You will remember in the not too distant past when people were talking about a George Allen presidential campaign after what amounted to an easily disposed of senate campaign. Well since then, he has a number of bullet wounds in his foot that many people say have been self-administered.

We now know the famous macaca incident and all the brouhaha over whether or not he had Jewish lineage. Now come -- the people coming out, one quoted in, Dr. Allen Shelton, who was a former football player at the University of Virginia with George Allen, saying "Allen said he came to Virginia because he wanted to play football in places where blacks knew their place. He used the N- word," -- quoting Dr. Shelton, -- "He used the N-word on a regular basis back then."

So, again, George Allen is playing defense.


SEN. GEORGE ALLEN (R), VIRGINIA: I have never. I don't understand why I would ever use such a word and I don't remember ever using it. And again, for them to assert that that was part of my vocabulary is absolutely false.


FRANKEN: Well we should point out that Allen's opponent in this race is James Webb, although there are many who are beginning to believe, Miles, that Allen's opponent in this race is George Allen.

M. O'BRIEN: All right, Bob Franken, thank you very much.

If you want to make sure you get your daily dose of the latest political news, click on to CNN's new Political Ticker. Go to -- Soledad.

S. O'BRIEN: Ahead this morning, Secretary of State Condoleezza Rice challenges the former President Bill Clinton's versions of events that led up to 9/11. We'll take a look at that.

ATIKA SHUBERT, CNN CORRESPONDENT: I'm Atika Shubert in Tokyo. Japan has a new prime minister. What do we know about his politics? I'll tell you coming up.

ARWA DAMON, CNN CORRESPONDENT: I'm Arwa Damon in Baghdad. President Talabani has harsh words for countries interfering with Iraq. I'll tell you what he said coming up.

S. O'BRIEN: And Carrie Lee has got our business headlines this morning.

Good morning, -- Carrie.

CARRIE LEE, CNN CORRESPONDENT: Good morning. Thank you.

A House panel subpoenas three people to testify this week in Hewlett-Packard's spying scandal. We'll have that story and more coming up on AMERICAN MORNING.


M. O'BRIEN: Happening this morning.

Afghan President Hamid Karzai meets in a few hours with President Bush at the White House. Mr. Bush trying to ease tensions between Afghanistan and neighboring Pakistan, each side accusing the other of not doing enough to combat Islamic extremists.

Secretary of State Condoleezza Rice firing back at former President Bill Clinton. In that fiery interview on FOX, Clinton claimed he left the Bush administration a comprehensive plan to fight al Qaeda. Rice telling "The New York Post" that's not true.

And in Houston, some are calling it "Yell at Fastow" Day. Former Enron workers will speak today at former executive Andrew Fastow's sentencing. Fastow expected to get 10 years in prison for his role in Enron's collapse.

S. O'BRIEN: Japan has a new prime minister. Shinzo Abe was elected today by the Parliament. At 52 years old, he is the youngest Japanese leader since World War II. CNN's Atika Shubert is live for us in Tokyo.

Hey, Atika, good morning.

SHUBERT: Good morning, Soledad.

It all went very smoothly and according to plan. Junichiro Koizumi resigned as Prime Minister first thing in the morning and Parliament immediately went into session and they elected a new head of government. That, of course, is Shinzo Abe. He is the president of the ruling party, the Liberal Democrats, and they have a majority in Parliament, so it really wasn't a surprise that he was elected.

Hours after he took office, he was able to appoint a new Cabinet. And in just a few hours from now, they will be sworn in by Japan's emperor, so all according to schedule -- Soledad.

S. O'BRIEN: All right, sounds like it's going very smoothly. What do we know about Abe's politics?

SHUBERT: Well we know that Abe has more of a nationalist outlook. He has said that he wants to change Japan's pacifist Constitution. He wants to bolster Japan's military. At the same time, he wants to maintain good ties with the U.S., but he wants Japan to stand up to region rivals like China. That could be something difficult to do. Those relationships have been severely strained. He has also said, however, that he wants to press ahead with economic reform such as privatization. These are all tough challenges.

But the biggest challenge for Abe may simply be following in the footsteps of his predecessor, Junichiro Koizumi. He is one of the most popular politicians the country has ever had. So Abe now has to create a unique style and way of connecting with the public. We'll have to see how he does in the next few months.

S. O'BRIEN: Yes, those are going to be some very big shoes to fill there.

Atika Shubert for us this morning in Tokyo.

Thanks, Atika -- Miles.

M. O'BRIEN: In Baghdad, Saddam Hussein has been kicked out of court again. It is the second day in a row, the third time in a week he has gotten the boot after arguing with the judge.

CNN's Arwa Damon live from Baghdad with more, -- Arwa.

DAMON: Good morning, Miles, that's right. And today's trial proceedings, today's events that happened in court started when Saddam Hussein objected to terminology used by the prosecution. This resulted in a heated exchange between Saddam Hussein and the judge, and this time tempers really did flare.

(BEGIN VIDEO CLIP) MOHAMMAD MAJEED AL-KHALEFA, CHIEF JUDGE (through translator): You are a defendant and I'm a judge. You have to respect the court. We should not allow you to speak. The court decided to remove defendant Saddam. Shut up. No one is allowed to speak.


DAMON: And after Saddam Hussein was ejected, the remaining defendants continued to stand up, continued to argue heatedly with the judge. Eventually the judge did also decide to remove Saddam Hussein's former minister of defense, at that point abruptly adjourning the proceedings, saying that they were closing for a lunch break. When court did resume afterwards, there were no defendants present -- Miles.

M. O'BRIEN: Arwa, it seems to be chaos. Is there any semblance of justice at this point in this trial?

DAMON: Well that's what a lot of Iraqis are really asking and talking about. And many will argue that on one hand it is a kangaroo court. They are frustrated, though, that it does have the appearance of being such a joke.

I was speaking with a friend of mine. He was very angry because he did want to see Saddam Hussein and the former leaders of this country brought to justice. But he was very critical of the way that the court was proceeding, saying that the judge was having an appearance of being unfair, appearance of being biased towards the prosecution, not just the judge who is overseeing the proceedings right now, but also judges in the past. And he says that just having this perception makes the court lose a certain amount of legitimacy.

And it is fair to say that a large number of Iraqis do want to see justice, but they also want it brought about in a way that is legitimate and that can be perceived as being fair by all -- Miles.

M. O'BRIEN: Arwa Damon in Baghdad, thank you very much -- Soledad.

S. O'BRIEN: Time for a check of the forecast, Chad has got that at the CNN Center.

Good morning again.

MYERS: Good morning, Soledad.


S. O'BRIEN: All right, Chad, thank you very much.

MYERS: You're welcome.

S. O'BRIEN: Popular talk show host Oprah Winfrey swapped some seats last night. She was talking with CNN's Larry King about all things Oprah, -- excuse me -- including a Kansas City man's Web site promoting her for president. Remember we told you about that. Here's what she said on that.


LARRY KING, HOST: Any comment on this movement to make you president?

OPRAH WINFREY, TALK SHOW HOST: Is there a movement?

L. KING: This guy has got a movement.

WINFREY: I don't know if that's a movement or not. What...

L. KING: He's got a Web site. He's got...

WINFREY: You know what I would say to him, I would say take your energy and put it in Barack Obama. That's what I would say to him.

L. KING: Is that your favorite guy?

WINFREY: That would be my favorite guy. So I would -- I'm going to call -- I tried to call this guy, Mr. Mann, the other day. Mr. Mann. What's his...


WINFREY: Mr. Crowe, the other day...

G. KING: ... of Kansas City.

WINFREY: ... in Kansas City, because my attorneys had sent him a letter, and they should not have sent that letter. You know how...

L. KING: He can have -- he can do whatever he wants.

WINFREY: But you know how attorneys are, they just love cease and desist.

G. KING: They're very legalese.

L. KING: And sues.

WINFREY: Yes, and I didn't appreciate...

G. KING: Yes.

WINFREY: ... that my attorneys did that.

L. KING: Are you still an Illinoisan?


L. KING: So even though you have a home in California?

WINFREY: Yes, I'm very much an Illinoisan.

L. KING: So Senator Obama is your senator?

WINFREY: He is my senator.


S. O'BRIEN: The Elect Oprah Web site, which they were talking about, includes campaign stuff like T-shirts and the like, and that's why the lawyers got involved. Oprah Winfrey launched "Oprah & Friends" yesterday on XL Satellite Radio.

M. O'BRIEN: I heard a few things about that, yes.

S. O'BRIEN: Yes, including all of the dough, yes (ph).

M. O'BRIEN: It's kind of out there, yes.

S. O'BRIEN: It's getting $55 million a deal (ph).

M. O'BRIEN: And she sure needs the money. And you know the other thing is...

S. O'BRIEN: Hey, you know what, she's going to write probably a big old check to some kids in Africa.

M. O'BRIEN: God bless her. No, no, no, I -- don't get me wrong, where does she find the time, though? I just don't get it. Yes.

S. O'BRIEN: You know I was thinking about that yesterday, like...

M. O'BRIEN: Well you can identify with this, you have no time in your life, too.

S. O'BRIEN: Yes, me, Oprah, both busy gals.

M. O'BRIEN: So, well, you know, she doesn't have four kids, you know.

S. O'BRIEN: Well.

M. O'BRIEN: All right, still to come on the program, a political misstep in Canada. The campaign team for a Liberal Party official signs up some new members, only trouble is some of them aren't breathing.

Also, the Hewlett-Packard scandal comes to Washington. A couple of execs set to testify on the Hill. What will be the new wrinkle on that one?

Stay with us for more AMERICAN MORNING.


S. O'BRIEN: Welcome back, everybody.

Here's a look at some of the most popular stories on this morning.

Security forces in Guatemala stormed a prison to gain control. For the last 10 years, inmates have been running the place, living in spacious homes, renting space for stores and restaurants. These were the prisoners. One leader, they estimated, was making $25,000 a month running drugs, and his son was living inside the prison illegally so he could help run the crime empire. He hadn't been sent there by a court. It is the craziest story. Check it out on the Web site.

Political ghosts are haunting a candidate who is accused of using dead people to pad his list of supporters. Opponents wearing sheets represent those dead people. I'm sorry, it's in bad...

M. O'BRIEN: To be like a ghost. It's like a ghost, not like those kind of sheets, you know.

S. O'BRIEN: Right.

M. O'BRIEN: Right.

S. O'BRIEN: Are heckling Joe Volpe as he runs for the leader of Canada's Liberal Party. This is the same guy who earlier they found had some children were making major donations to his campaign. He's in a little bit of trouble.

And the New Orleans Saints did not disappoint their fans at the first post-Katrina home game. The team ran right into the refurbished Superdome like rock stars, then they played like super stars. They beat the Falcons 23 to 3.

M. O'BRIEN: They're undefeated. The Saints are undefeated, isn't that amazing?

S. O'BRIEN: It is amazing.

M. O'BRIEN: Go Saints. Wouldn't it be great if this would be this year -- their year?

Carrie Lee, good to have you with us this morning.

LEE: Thank you.

M. O'BRIEN: We're talking about tobacco this morning or...

LEE: We're talking about tobacco and Hewlett-Packard, the spying scandal.

M. O'BRIEN: Of course you've got to talk about Hewlett-Packard.

LEE: Yes.

M. O'BRIEN: Yes.

LEE: So let's start with that.

M. O'BRIEN: All right. LEE: House subcommittee meeting hearing taking place this Thursday and the first subpoenas have been issued in this scandal over the weekend. Now Anthony Gentilucci, he heads HP's global investigations unit. He resigned from the company yesterday. But he was the first to be issued a subpoena.

Also, Kevin Hunsaker, he's the Chief Ethics Officer, he's also expected to be released. And Ron DeLia, he's the one who operates the detective firm that was hired by HP. Patricia Dunn, of course, Mark Hurd, the company's CEO and former chairwoman, also have agreed to testify. Not exactly sure how forthcoming they will be, though, or whether they will simply take the fifth. So this is happening Thursday.

M. O'BRIEN: So they could plead the Fifth Amendment?

LEE: They could.

M. O'BRIEN: The other question would be is if the California attorney general is involved whatever is said there could be used against them in that case down the line?

LEE: I believe so, yes.

M. O'BRIEN: Yes, OK.

LEE: So that's the latest on HP this Thursday.

Turning to the markets, futures pointing to a bit of a lower open for this Tuesday morning, following decent gains yesterday. Dow up about 68 points. One thing helping yesterday, the Federal Reserve president in Dallas said inflation would be slowed by the weakening economy. He cites the weak housing and auto sectors, but says the rest of the economy is doing rather well. So Wall Street seems to have liked those words.

Big tobacco, though, big loses yesterday. Altria, parent company of Philip Morris, down 6 percent. Basically a big ruling here, the judge granting class action status to light cigarette smokers. This could be a $200 billion damages -- worth $200 billion in damages for this case.

M. O'BRIEN: It just keeps going for big tobacco.

LEE: It does. Philip Morris, by the way, said they will appeal, so not quite the end of the story.

M. O'BRIEN: All right.

S. O'BRIEN: Yes, no surprise there.

M. O'BRIEN: Thank you very much.


M. O'BRIEN: All right, thank you. In Toledo, a stock car race that looked a little bit like a hockey game yesterday. This is the Glass City 200. That's driver Michael Simko none too pleased with the other driver Don St. Denis.

S. O'BRIEN: My gosh. My gosh.

M. O'BRIEN: Simko thinks that St. Denis caused his wreck, started drop kicking his car. St. Denis finally gets out and then the fight continues, as you can see. Eventually cooler heads prevailed. I guess they called in a hockey ref to break it up. The race finished minus both drivers.

S. O'BRIEN: I think they're out.

M. O'BRIEN: He might...

S. O'BRIEN: You know no fighting in -- well this is in NASCAR, but no fighting in -- the people who run this race say there is no fighting. They've been yanked.

M. O'BRIEN: No, you can't fight. You can't fight. You can bash them with your car, but you can't fight.

S. O'BRIEN: You can't do that.

M. O'BRIEN: Yes.

S. O'BRIEN: Right.

M. O'BRIEN: Yes...

S. O'BRIEN: That's not right.

M. O'BRIEN: All right.

S. O'BRIEN: A look at the morning's top stories straight ahead, including a closer look at what Carrie was just talking about, one of the largest class action lawsuits potentially in American history. Big tobacco may be on the hook for $200 billion. Much more on that story is ahead this morning.

Plus, you can take liquids on your plane again, some very specific rules, though, about sizes and timing that you're going to need to know.

That's all ahead. Stay with us.


S. O'BRIEN: Happening this morning, the government is easing the ban on liquids in airline carry-ons. Starting today, you can carry on things like toothpaste, hand lotion, as long as they're travel-size and as long as they're kept in a clear Ziploc bag.

CNN's Brianna Keilar is going to have more for us in a moment on that. U.S. support for the war in Afghanistan seems to be dwindling. A new CNN poll finds that only half of all Americans favor the war. Forty-eight percent say they're opposed.

And former WorldCom chief Bernie Ebbers reports to prison today. Ebbers was convicted of fraud last year in that $11 billion accounting scheme. He was sentenced to 25 years in prison. The sentence was put on hold while he was appealing the case.

Good morning. Welcome back, everybody.

I'm Soledad O'Brien.

M. O'BRIEN: And I'm Miles O'Brien.

Thanks for being with us.

The top Republican and Democrat on the Senate Intelligence Committee are urging President Bush to declassify a report that says the terror threat has increased since 2001. That leaked intelligence estimate says the war in Iraq has inspired a new generation of terrorists. The president's intelligence chief Monday rejected the suggestion that Americans are less safe now than before 9/11.


JOHN NEGROPONTE, DIRECTOR OF NATIONAL INTELLIGENCE: It talks about the jihadist movement having spread. I -- my personal assessment with respect to the United States is that we are certainly more vigilant, we're better prepared. And in that sense, I think we could safely say that we are safer.


M. O'BRIEN: Senator Jay Rockefeller, the top Democrat on the Intelligence Committee, says releasing the report would enhance the public debate on counterterrorism policies -- Soledad.

S. O'BRIEN: Happening "In America" this morning, two bags of tainted Dole baby spinach are leading California health officials to the source of the E. coli outbreak. The bags were packaged at the same plant during the same ship, on the same day, and inspectors are focusing on Natural Selection Foods, which supplies Dole.

So far, 175 people have gotten sick and one person died from E. coli.

In Virginia, more allegations that Republican Senator George Allen used racial slurs when he was in college. A noted political scientists and former college classmate of Allen said in a TV interview that he used -- rather he heard Allen use the "N" word back in college. It comes after a former teammate of Allen's made the same accusation.

Senator Allen dismisses the claims as "ludicrously false." That's a quote. In Phoenix, some victims of the so-called serial shooters saw the two men who are accused in the case in person for the first time. Dale Hausner and Samuel Dieteman asked for handwriting samples at a pretrial hearing on Monday. In all, 17 people were killed -- 17 people were wounded by the serial shooters, and both suspects have pleaded not guilty.

In Columbus, Ohio, an update on that car dealership that was planning to run radio commercials for a jihad on the automotive market. Remember Andy was talking about that yesterday? Well, the president of that dealership has now apologized and he's pulled the spot. The Council on American-Islamic Relations has accepted that apology.

In southern California, the Day Fire, we've been monitoring that for a while now. It's prompting voluntary evacuations for about 500 people in the Lockwood Valley area, northern Ventura County. Evacuations were called after flames jumped a fire line then moved quickly toward that community. The fire's burned about 140,000 acres. Still only 40 percent contained.

Time for a check of the forecast. Chad's at the CNN Center for us.

Chad, how's it looking for them today?


M. O'BRIEN: If you are flying this morning, you can bring some liquids in your carry-ons. After six weeks of dry flying, or shampoo smuggling, the government is relaxing the rules a bit. The rules changed after authorities foiled that airliner bombing plot in London.

CNN's Brianna Keilar live at Reagan National Airport with more -- Brianna.


TSA officials say these changes will free up screeners to focus on more significant threats, but some security experts warn it could jeopardize the safety of travelers.


KEILAR (voice over): Small amounts of toiletries, like toothpaste, lotion, and lip gloss, now allowed back on planes.

KIP HAWLEY, TSA DIRECTOR: While this novel type of liquid explosives is now an ongoing part of the terrorist playbook and must be dealt with, we now know enough to say that a total ban is no longer needed from a security point of view.

KEILAR: The Transportation Security Administration is letting liquids, gels and aerosols through security as long as each is three ounces or less and all items are in a clear, quart-sized zip-top bag. You can also bring beverages on planes, but only those bought after you passed through the security checkpoint.

TSA calls it common sense screening, but some terrorism experts question the changes.

CLARK KENT ERVIN, CNN SECURITY ANALYST: We were told when this ban was instituted that at least potentially bottled water of any kind could be used as an explosive. Now, if that's the case, it seems to me that the bottled water that can be bought in sterile areas, likewise, can be used by terrorists on board to constitute an explosive.

KEILAR: Some passengers also worry terrorists will find a way to work within the new rules.

GEORGIA ORTIZ, AIR TRAVELER: I don't see the difference between a three ounce or a gallon of liquid. If you're going to do something, you know, these people are incredibly creative.


KEILAR: And that's the concern of some security experts as well, that four or five terrorists working together could combine their small amounts of liquids and gels into a larger explosive -- Miles.

M. O'BRIEN: All right. Thank you very much, Brianna Keilar, at Reagan National Airport this morning.

Still to come on the program, another important natural resource the target of global warming. What would the world be like without coral reefs? They're in jeopardy. And we'll tell you why.

And then an historic meeting in China. The NASA chief goes to visit the Chinese space program. Maybe we'll all go to the moon together. Who knows?

And the tale of the dolphin without a tail. We'll tell you how to get your flipper back.

Stay with us.


S. O'BRIEN: Here's a look now at stories that CNN correspondents around the world are covering today.


ROBIN OAKLEY, CNN EUROPEAN POLITICAL EDITOR: I'm Robin Oakley, reporting from Manchester, England, where today Tony Blair will make his last speech to the Labour Party conference as prime minister. Mr. Blair, who led his party to a record three election victories, wants them to focus on policies, but everyone else is talking personalities. The jostling for the succession has already begun, with longtime Finance Minister Gordon Brown the favorite.

Mr. Blair will be given a warm sendoff. But with Labour behind in the polls, he remains under pressure to name a precise date when he will go.




Today at the United Nations we'll be following the story of North Korea. It's not every day that a member of that country speaks to the world. But Vice Foreign Minister Choi Soo-han (ph) will do just that to the U.N. General Assembly. North Korea remains under limited sanctions by the Security Council and refuses to return to six-party talks.

Also at the General Assembly, a representative of Syria and Myanmar, two countries also under some heat from the Security Council.



SHUBERT: I'm Atika Shubert in Tokyo.

Lawmakers here have voted Shinzo Abe as the new prime minister of Japan. At 52, he is one of the country's youngest leaders and the first to be born after World War II in a significant generational shift.

Abe has said that he wants to change Japan's (INAUDIBLE) constitution. He has also promised to press ahead with economic reforms that were started by his predecessor and mentor, Junichiro Koizumi. Koizumi resigned earlier this morning as prime minister, but he remains one of the country's most popular politicians.

Abe's biggest challenge may simply be distinguishing himself from his predecessor.



PAULA NEWTON, CNN CORRESPONDENT: I'm Paula Newton in London, where there is controversy over Hitler's artworks. Later today, a tiny auction house in southwest England will put 21 watercolors and two of Hitler's sketches on the auction bloc, and they are already reporting unprecedented interest from around the world. Each piece could go for as much as $8,000 U.S.

Meantime, Holocaust survivors are wondering why anyone should make any money off of the works of such an evil man. And they say it is an insult to the memory of Holocaust victims.


S. O'BRIEN: For more on these stories or any of our top stories, go right to our Web site at -- Miles. M. O'BRIEN: Government scientists issuing their strongest warning yet about fragile coral reefs in the Caribbean. Water temperature around the U.S. Virgin Islands is up -- 85.5 degrees is the temperature. That apparently attributable to climate change.

The high water temperature causes the coral to die off. And that deprives numerous fish and other animals of an important habitat.

And take a look at Winter. She's a bottlenosed dolphin who may be the first ever to get a full artificial tail. Winter lost her tail to a fishing net.

There you see the end there without the tail. She has amazed her handlers at the Clearwater Marine Aquarium in Florida by learning to swim without one, though. But, of course, she can't keep up with all the other dolphins, and now they're designing her a prosthetic tail, to which she will say -- what will she say?

S. O'BRIEN: Click, click, click, click.

M. O'BRIEN: There you go. Excellent. Very well done.

S. O'BRIEN: My dolphin noise, I think. I think.

M. O'BRIEN: That's what she'll say. That means "thank you" in dolphin. Good job.

S. O'BRIEN: Who knows what it means in dolphin, really. I could be saying anything.

M. O'BRIEN: Yes, you could.

S. O'BRIEN: Still to come on AMERICAN MORNING, Secretary of State Condoleezza Rice challenging the former president Bill Clinton's versions of events leading up to 9/11. We'll tell you what she had to say.

That's ahead on AMERICAN MORNING.


S. O'BRIEN: Happening this morning, Afghan president Hamid Karzai meets with President Bush at the White House. It's going to happen in just a few hours. Mr. Bush is trying to ease tensions between Afghanistan and Pakistan. Each side is accusing the other of not doing enough to combat Islamic extremists.

Secretary of State Condoleezza Rice is firing back at former president Clinton. In that fiery interview on FOX we showed you yesterday, Mr. Clinton claimed he left the Bush administration a comprehensive plan to fight al Qaeda. In today's "New York Post," Secretary Rice says not true.

And in Houston, some people are calling it "Yell at Fastow Day." Former Enron workers are going to speak today at the former executive Andrew Fastow's sentencing. Fastow is expected to get 10 years in prison for his role in Enron's collapse -- Miles.

M. O'BRIEN: NASA not interested in a space race with the Chinese. In fact, it is reaching out to the Chinese to see if the U.S. and Chinese space agencies can work together.

The NASA chief is in China for a historic series of meetings with Chinese space officials. Could it one day lead to joint U.S.-Chinese missions?

CNN's Jaime FlorCruz with more.


JAIME FLORCRUZ, CNN CORRESPONDENT (voice over): This was the picture-perfect space launch that catapulted China into the exclusive club of nations capable of launching people into orbit. In 2003, astronauts Yang Liwei orbited the earth 14 times before landing safely to a hero's welcome. Nearly three years later, he's still basking in glory.

YANG LIWEI, CHINESE ASTRONAUT (through translator): This mission has achieved the millennium dream of the Chinese people to fly in space, and I am very proud of this accomplishment.

FLORCRUZ: But China's rise could provide competition to U.S. dominance in space. NASA chief Michael Griffin is making his first ever visit to China to meet with leaders of Beijing's space program.

MICHAEL GRIFFIN, NASA ADMINISTRATOR: We do desire to have a closer relationship with China, and this is one step forward in that arena.

FLORCRUZ: China's space program is moving full speed ahead. Last year, putting two astronauts into orbit for five days. China's space launches, experts say, have civilian and military payoffs. But Griffin says the U.S. is not threatened.

GRIFFIN: Of course, between countries and cultures there are always things which divide us and set us apart, and things which bring us together. And the exploration of space is one of those things that above almost anything else, all people of the world share an interest in, and are excited by.

FLORCRUZ: The heart of China's space program is in Jo Tran (ph), China's equivalent of Cape Canaveral. The Jo Tran satellite launch center sits in an oasis surrounded by the Gobi Desert, two-hours plane ride away from Beijing. Because of its close links with the military, the launch facility is shrouded in secrecy.

Recently, foreign journalists for the first time were given a guided tour. Here the catchwords are safety and thriftiness. There is an Olympic sized swimming poll, but the hotel rooms and the gym reserved for astronauts are Spartan looking. Meantime, astronauts continue rigorous training, part of China's plans to launch its own space station and send a manned mission to the moon.

Jaime FlorCruz, CNN, Beijing.


S. O'BRIEN: Up next, Andy Serwer is "Minding Your Business."

Good morning, Andy.


The sound you hear is the housing bubble, well, deflating. Not necessarily popping, but deflating a bit. Yes, that's the sound.

Also, just exactly how soft is the Louisiana job market? We'll tell you about that coming up next on AMERICAN MORNING.


S. O'BRIEN: A look now at some of the stories we're working on for you this morning.

Some retired generals coming out again to blame Defense Secretary Donald Rumsfeld for U.S. mistakes in Iraq.

The Pentagon extending duty for thousands of soldiers also in Iraq.

Virginia's Senator George Allen on the defensive again. This time he's denying he used a racial slur back in the 1970s.

An Ohio car dealer drops an ad that was calling for a jihad on the car market.

And does god want you to be rich? We're going to take a closer look at the so-called gospel of prosperity.

All that straight ahead.

Plus, there's more evidence that the bubble is deflating for home prices. Andy Serwer is "Minding Your Business" this morning.

Good morning.

SERWER: Good morning to you, Soledad.

It's unassailably true that the housing market is getting softer. Besides the thousands of pieces of anecdotal evidence across the country, we have some harder stuff for you here, two components.

Number one, existing home sales fell 0.5 percent in August. That's the fifth straight monthly decline. In other words, the number of homes declining.

Now, the second piece, the median home price fell to $225,000 in August. That's the first year-over-year drop in prices since April of 1995. So at 2.2 percent drop would be about $4,000. So, in other words, the median home in America has fallen from $230,000 to $225,000.

Not a huge drop, but, of course, every little bit counts.

And the other thing to point out here is, of course, this is a very regional type of business. Some markets still OK, some in much worse shape than that, of course.

M. O'BRIEN: Who's doing better than others?

SERWER: Well, actually, it's always -- you know, the ones that went up the highest are the ones that are starting to fall. So, in other words, the Las Vegas, the Florida, the California are down a bit, whereas sort of your older Midwestern areas holding up a little bit better.

Now, moving to Louisiana.

Exactly how bad is the job market there a year after Hurricane Katrina? Well, the state is done 175,000 jobs since before Katrina. Almost all of those job losses coming from New Orleans.

The good news is, is that they were down 234,000 jobs. So coming back a little bit. This, despite all the reconstruction in New Orleans.

Other cities in Louisiana actually had job gains. Not surprising, because people moved there. Say, Baton Rouge, Shreveport and Lafayette experienced job gains. But New Orleans still feeling a lot of economic pain and woe from Katrina.

S. O'BRIEN: Yes, they're going to have to fix the infrastructure in a major way before they're going to be able to fix that part of it, too.

SERWER: To get people to come back to work there.

M. O'BRIEN: Thank you very much, Andy Serwer.

What's next?

SERWER: Next we're going to be talking about, guess what, Miles?



SERWER: Hewlett-Packard. You guys are so good. You can read my mind.

Hewlett-Packard and the latest on that.

M. O'BRIEN: All right. Thank you, Andy.

SERWER: Thanks.

M. O'BRIEN: See you in a bit. The fall season is with us. The heat is not giving up by any stretch. Researchers say Earth's temperature has risen to levels not seen in 12,000 years. The higher temperatures have begun to affect plants and animals, according to a report in the proceedings of the National Academy of Sciences.

Researchers say the Earth has been warming at a rate of .36 degrees per decade for the past 30 years. All this the result of global climate change, hastened by the burning of fossil fuels.

Let's go to Chad now in the weather center for more on the short- term forecast.

CHAD MYERS, CNN METEOROLOGIST: They always bring those out when we're going to get record lows coming up in the next couple of days.


MYERS: The next hour of AMERICAN MORNING starts right now.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux at the White House, where a firestorm has erupted over a classified intelligence document and questions over whether or not the Iraq war is contributing to the spread of terrorism.

I'll have more on that coming up.


UNIDENTIFIED MALE: Secretary Rumsfeld's dismal strategic decisions resulted in the unnecessary deaths of American servicemen and women, our allies, and the good people of Iraq.


M. O'BRIEN: General discontent with Donald Rumsfeld. Scathing words about his handling of the Iraq war from some retired military brass.

S. O'BRIEN: New rules for carrying liquids on planes. Travel might be getting easier, but not all security experts say it's getting safer.


Senator George Allen's campaign certainly gets more interesting thanks to a daily -- daily litany of charges against him, and much to his chagrin.

M. O'BRIEN: And Enron's Andy Fastow sentenced today. But first he must face some of the families who lost everything in Enron's collapse.