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American Morning

Obama Meets With High Profile Advisers; Report Says Americans Still Unsafe; TSA Wants Help from Airlines on Terror Watch List; Car Bombs are Biggest Danger, Not WMDs; Surprising Gesture from Iran: Might Cooperate Over Nuclear Program

Aired July 29, 2008 - 07:00   ET


JOHN ROBERTS, CNN ANCHOR: Just crossing the top of the hour now.
And here are this morning's top stories.

Breaking right now, a major Iraq offensive to clean out an insurgent stronghold. An Iraq commander says troops backed by U.S. forces are launching attacks inside Diyala province which borders Iran. It's a place that they have tried to take before, but Iraq says troops are better prepared to do it this time.

An out of control wildfire destroying more than two dozen homes and threatening 4,000 more. It's only 10 percent contained near the west entrance to Yosemite National Park. About 2,400 firefighters are trying to stop the flames which tower as high as 100 feet.

President Bush has approved the first execution of a U.S. solder since 1961. Private Ronald Gray has been on the military death row for 20 years. Gray was convicted of raping and killing a female army private and a civilian near Fort Bragg, North Carolina. He also raped and tried to kill another fellow soldier in her barracks.

To the "Most Politics in the Morning" now, after a successful world tour and noticeable bump in the poll, Senator Barack Obama is sounding pretty confident. Listen to what he said after a fundraiser in Arlington, Virginia, last night.


SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We are now in a position where the odds of us winning are very good, but it is still going to be difficult.


ROBERTS: Now that Barack Obama is home, he is turning his attention to issue number one for voters. That's the economy. But John McCain says the glad handing is not enough to bring down gas prices and solve the oil prices. Here's CNN's Candy Crowley.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): It's not the wall in Jerusalem, the Elysee Palace in Paris, or 10 Downing Street in London. But this picture is where the voters are. This is Barack Obama flexing his economic muscle, or as an aide put it, a demonstration to voters of who will be advising him on the economy. It's a room full of brain power, from businessman Paul O'Neill, who served as George Bush's first term treasury secretary, to labor leader John Sweeney, to former Fed Chairman Paul Volcker.

OBAMA: -- so that the market is driving so that hard work is rewarded.

CROWLEY: It's a meeting to help Obama pivot from a trip designed to show his agility on the world stage to the home front where he needs to show a steady hand to steward a flailing economy.

OBAMA: And this is an emergency that you feel not only just from reading "The Wall Street Journal" but from traveling across Ohio and Michigan, in New Mexico and Nevada, where you meet people day after day who are one foreclosure notice or one illness, or one pink slip away from economic disaster.

CROWLEY: Every state mentioned is a fall battleground. With polls continuing to show voters trust Obama more than John McCain on the economy, the McCain campaign welcomed Obama home trying to rough him up. Advisers called the Obama meeting just another photo-op while the candidate toured an oil field and slammed Obama for refusing to support the kind of thing that will address one of the major issues troubling voters -- the cost of energy.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: So Senator Obama opposes offshore drilling. He opposes reprocessing of spent nuclear fuel. He opposes storage of spent nuclear fuel. And so, he is the Dr. No of America's energy future.

CROWLEY: Even before Obama left Europe at his final press conference in front of 10 Downing Street, he knew this trip might seem off point back home.

OBAMA: We've been out of the country for a week. People are worried about gas prices. They're worried about home foreclosures.

CROWLEY: It's hard to top pictures with the city of Amman in the background or 200,000 Europeans in the foreground. But Monday, a standard Washington photo-op did just fine.

Candy Crowley, CNN, Chicago.


CHO: President Bush praised new Pakistani prime minister, Yousuf Gilani, after their first meeting at the White House. In an exclusive interview with CNN's Wolf Blitzer, Gilani said he'll work with the U.S. to fight terror.


YOUSUF RAZA GILANI, PAKISTANI PRIME MINISTER: What I want to tell the world, I have come up with a message for prosperity, peace and partnership for the world in the United States. And that should be very, very clear. And my democratic government is taking every step to combat terrorism because we are fighting not a war for United States, it's a war for Pakistan.


CHO: President Bush and the Gilani did not talk about a missile strike on a Pakistani village that killed six people. Gilani said later if the U.S. was involved that would violate Pakistan's sovereignty.

The national security system is still broken. That's according to a report that was mandated by Congress. Despite a major overhaul after the 9/11 attacks, the Pentagon, the State Department, and the Department of Homeland Security apparently still aren't working together to fight terrorism.

Homeland Security correspondent Jeanne Meserve joins me now from Washington with more on this report. So, Jeanne, what exactly is the problem?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Well, Alina, the report from the Project on National Security Reform is harsh in its assessment. One example among many cited, the failure of the coalition and provincial authority in Iraq to successfully reconstruct and stabilize that country.

The root causes of these problems, according to the report: competition among agencies, leadership failures, no long-term planning focus and inflexible budget process, difficulty recruiting and retaining employees, incompatible computer systems, partisan turf battles in Congress.

Many of these criticisms are not new. But despite the expenditure of much time and money to reform the national security apparatus since 9/11, the problems persist. The overarching issue, according to the panel, the continuing failure to take a collaborative government-wide approach to national security matters -- Alina.

CHO: So those are the problems. They're obviously not working together very well. So what are the solutions? Were there any recommendations in this report?

MESERVE: No. But a final report scheduled for October will make such recommendations. The Project on National Security Reform says it is already working with both presidential campaign staffs as it develops its proposals with the hope that the next president will make the reforms that are needed -- Alina.

MESERVE: Probably a good idea. CNN's Jeanne Meserve, always great to see you. Jeanne, thank you.

ROBERTS: Six minutes after the hour. And now, take a look at what happened during a so-called critical mass event in Times Square. Celebrating cyclists rights on the road. A video shows a police officer body-check a cyclist, Christopher Long, on to the sidewalk. You can see it right there beside that woman. The cop then arrests the biker accusing him of disrupting traffic and steering his bicycle right into the officer.

The video, though, does not appear to back that up. Officer kind of walks right over there and decks him. According to Long's attorney, he spent 26 hours in jail after the officer sent him flying. The officer reassigned to desk duty while the case is investigated.

Some Chicago students are being encouraged to cut the first day of school. Illinois State Senator James Meeks is leading the charge to try to make a point about unequal funding. He wants parents living in poorer areas to take their kids to a suburban school district on September 2nd, and try to enroll there instead. Critics say the protest sends the wrong message.

And party in the swamp. The Princeton Review has picked the University of Florida as the number one party school in America. It surveyed 120,000 students.

They've had a lot to celebrate in Gainesville recently. Back to back basketball titles and a national football championship in just the past three years. University of Colorado, not living up to its reputation.

CHO: Or Boston College for that matter, my alma mater.

ROBERTS: You know, that's kind of a good thing, I think.

CHO: Yes. Probably is.

ROBERTS: Give it to Gainesville.

CHO: That's right. University of Florida, the Gators.

Here's what we're working on for you this morning. At 13 past, cleaning up the Homeland Security terror watch list. Find out what the TSA is pressuring the airlines to do and what it could mean for your next trip to the airport.

ROBERTS: At 19 minutes after the hour, a car bomb - the movie. A shocking new documentary by an ex-CIA agent. He says it's not WMDs that we should be worrying about.


ROBERT BAER, FORMER CIA AGENT: It's easy to make and it's unstoppable. You and I can go out and by tomorrow morning we have a very nice car bomb that could close London or Manhattan.


CHO: And 35 after, a crooked NBA ref facing sentencing in New York today. We're going to take a look at whether the betting scandal goes even deeper. You're watching the "Most News in the Morning." (COMMERCIAL BREAK)

ROBERTS: Coming up on 11 minutes after the hour, our Ali Velshi is on vacation. Gerri Willis is filling in for Ali this morning. And not good news when it comes to a couple of big things like the stock market and the federal deficit.

GERRI WILLIS, PERSONAL FINANCE EDITOR: I'm doing what I can, John. But here's the news from yesterday.

Last up, the Dow closed --

ROBERTS: Because nobody is helping, right?

WILLIS: Nobody is helping. I'm getting no help here. The Dow is down 240 points, down two percent here. Led by financials, Citigroup down 7.5 percent, Bank of America down five percent. Big financials down, down hard as credit concerns continue. The Nasdaq also down two percent kind of across the board.

And, you know, we've talked a lot about our stocks deal right now. In fact, many of them are still sort of expensive compared to the earnings they're delivering right now. The economy is weak and except for those companies to make a lot of dough. But we wanted to show you some details, too, on the deficit and the projection of what the deficit is going to be.

Yes, that's the right reaction.

ROBERTS: Can you count that high?

WILLIS: Yes, it's like how much gas we --

ROBERTS: Oh, my Lord.


So let's look at the numbers here. White House Budget Office boosted its estimate of the budget deficit for fiscal 2009 to $482 billion. Yes. And if you add in the full cost of the war, $500 billion.

The good news is the deficit projection for 2008 fell just a bit. But I wanted to show you this chart which I think is pretty interesting about budget deficits over time. You can see just how devastating this is.

The federal government in the red, in the black. Mostly in the red. You know, a single year there during the Clinton administration where we really see it bounce into positive territory there.

CHO: Now look closely on the chart.

WILLIS: And, of course, this all comes out of our pockets, naturally, being consumers and paying taxes.


You know, the White House likes to say, hey, is the percentage of GDP, the debt is not as bad as it was during the 1980s.

WILLIS: You got to make a comparison.

ROBERTS: Hurray for us.

WILLIS: Yes, exactly. Well, and that end of quarter will get you a cup of coffee, right?

ROBERTS: Living up to her reputation as the B pod.

CHO: Or the blonde prophet of doom, as we like to call it.

WILLIS: Oh, watch, we're looking.

ROBERTS: Blonde prophet of doom.

WILLIS: We're still trolling for the positive news out there.

ROBERTS: All right. Keep looking.

CHO: Gas prices, I say.

ROBERTS: Turn over every rock.

CHO: Gas prices, I say.


WILLIS: Well, we'll overprice that.

ROBERTS: Thanks, Gerri.

CHO: Thanks, Gerri.

New questions this morning about John McCain's health. We're waiting on biopsy results to come back after the presidential candidate had a growth removed from his right cheek. We're paging Dr. Gupta at the half hour.

ROBERTS: Also, singer Amy Winehouse just released from the hospital. We'll tell you why. You're watching the "Most News in the Morning."


CHO: Just about 15 minutes after the hour. Welcome back to the "Most News in the Morning."

Thanks to a series of reports by Drew Griffin of CNN's special investigations unit, Congress is cracking down on the TSA's terror watch list. You see, Congress wants Griffin and thousands of others who don't belong on that list to be taken off. And now, the TSA is asking the airlines to step in. Here's Drew with the story. (BEGIN VIDEOTAPE)

DREW GRIFFIN, SPECIAL INVESTIGATIONS UNIT CORRESPONDENT (voice- over): With Congress now bearing down on watch list mistakes, the Transportation Security Administration will look for help from the airlines. Along with asking airlines to store dates of birth on travelers, the TSA wants air carriers to count how many passengers are stuck on the watch list forced to go to ticket counters to verify who they are rather than quickly getting tickets online or checking in at a kiosk.

That has been happening to Jim Robinson, who has been stopped every time he flies for the last three years, even though he's a former assistant attorney general. And to me, since CNN began airing reports critical of the TSA.

UNIDENTIFIED MALE: You're on the watch list.

GRIFFIN: The TSA insists I'm not on a watch list, even though just last week I was stopped again and told I was as I checked in for a flight to Detroit. TSA also says it is actively exploring enforcement action against air carriers who inaccurately tell passengers they are watch-listed.

UNIDENTIFIED FEMALE: You're on the watch list.

GRIFFIN: A watch list?

What does the financially strapped airline industry say about the TSA's proposals? The Air Transport Association told us, "The airlines have been given assurances for more than four years that TSA would soon be taking over responsibility for vetting passenger names against government watch lists." It hasn't happened yet.

The TSA says, next year. So the airlines are waiting but Congress may not. Congresswoman Sheila Jackson Lee has written a letter to Homeland Security Secretary Michael Chertoff demanding solutions. She says 32,000 people have written to Homeland Security demanding to get off the list they are apparently mistakenly on.

REP. SHEILA JACKSON LEE (D), TEXAS: I want the burden of clearing this up to be on the agencies that are the holders of the responsibility. The Department of Homeland Security, the secretary of the department, and the attorney general of the United States of America.

GRIFFIN: Along with clearing up the list, Congresswoman Jackson Lee wants to know how some people got on it in the first place.

JACKSON LEE: Frankly, I also want to know why you curiously wound up on a list after you did an investigation that asked questions about the United States Air Marshals.

GRIFFIN: If this is just a case of mistaken identity, we have asked the FBI if CNN's audience can help catch the real terrorists. Specifically, CNN has asked for the name, photos and location of any suspected terrorist using the either the names James Robinson or Drew Griffin. The FBI refused saying their policy is not to discuss individuals on or not on the watch list.

Drew Griffin, CNN, Atlanta.


CHO: Homeland Security Director Michael Chertoff said during congressional hearings that Drew should talk to the inspector general of Homeland Security about getting off the terror watch list. He did, but apparently that didn't work -- John.

ROBERTS: Nelson Mandela was on the terror watch list and it took President Bush to get him off of it. So maybe that's Drew's next stop.

CHO: We're going to have to call the White House for that.

ROBERTS: 19 minutes after the hour. The top videos right now on

Most popular, Tarek bin Laden, Osama's brother and the head of a Saudi construction company. He's planning a massive 18-mile long bridge that link Yemen and Djibouti. The bridge would cost $20 billion to build.

Also, former presidential spokesman Scott McClellan kicking up a fuss by saying his press office routinely sent talking points to FOX commentators, who might help carry the administration's message. FOX's Bill O'Reilly flatly denies McClellan's account.

And kangaroo attack at Zoo Atlanta. IReporter Aftab Allam (ph) catching this kangaroo kicking a handler. You can see the entire video on our Web site. Look at that. Apparently, the handler was pretty nonplused about the whole thing.

CHO: It's so much -- it's so much more in path (ph) with the music, isn't it?


Those are the most popular videos on You're watching the most news in the morning and we are back in 90 seconds.


CHO: Welcome back. George Clooney played him in the movie "Syriana." Now meet the real life former spy who says forget WMDs. The most dangerous weapon in the world today is the car bomb.

CNN's Paula Newton is with the secret agent who says car bombs can change the world.


PAULA NEWTON, CNN CORRESPONDENT (voice-over): "Car Bomb' is the candid testimonial of former American spy Bob Baer. A man who admits the CIA taught him to construct car bombs so he'd know firsthand of their power.


UNIDENTIFIED MALE: This is a film of how the century of the car turned into the century of the car bomb.


NEWTON: In his documentary, Baer says we've been told weapons of mass destruction would shape this century.


UNIDENTIFIED MALE: But that's a lie. The real terrorist threat has always been the car bomb.


NEWTON: With Lebanon as its center piece, Baer, a CIA veteran of the civil war there, catalogues the carnage of such a powerful and callous weapon, including the 1983 truck bombing of the U.S. embassy in Beirut that killed 63 people, including six of Baer's CIA colleagues.

ROBERT BAER, FORMER CIA AGENT: It works, the car bomb. And it's easy to make. And it's unstoppable. You and I can go out and by tomorrow morning we have a very nice car bomb that could close London or Manhattan.

NEWTON: A point so vividly made in Britain last year when a vehicle laden with explosives slammed into Glasgow Airport last summer, just hours after two car bombs failed to detonate in the heart of London.

NEWTON (on camera): As authorities towed the car bomb away, many here in London didn't need reminding what a powerful weapon of terror a car bomb can be.

NEWTON (voice-over): 1992, the IRA bombing of the Baltic Exchange building in London's financial district killed three and caused colossal damage executed by a white truck packed with more than a thousand pounds of explosives.

JEFFREY BLUM, IRA BOMBING SURVIVOR: It exploded behind me and I was thrown in the air for, I have no idea how long or how high, but long enough and high enough for the seven-story building next door to collapse and I came down on its rubble. So the first thing that hit the ground was my head and my skull was cracked open.

NEWTON: Blum's survival was unlikely. He lost most of his blood. There were several surgeries. But after months of recovery, he was back here and still is -- reflecting. His opinion, car bombs are not an equal threat to weapons of mass destruction.

BLUM: But, yes, the nature of the word terrorism means that you are striking terror as in fear into an awful lot of people.

NEWTON: "Car Bomb," the documentary, argues the weapon's influence can go much further than that. We could just be one car bomb away from changing the direction of war, politics from changing history.

Paula Newton, CNN, London.


ROBERTS: Hard foul. Gambling on the game.


UNIDENTIFIED MALE: He was part of a pattern of behavior that is illegal.


ROBERTS: And accusations of other crooked refs.


UNIDENTIFIED MALE: So I'd like to tell you that they don't engage in the criminal conduct which Mr. Donaghy has accused them.


ROBERTS: Today could be the day disgraced NBA official Tim Donaghy gets sentenced to prison. You're watching the "Most News in the Morning."


ROBERTS: 27 minutes after the hour. Welcome back to the "Most News in the Morning" now.

A surprising move by Iranian President Mahmoud Ahmadinejad. He is now saying he might be willing to reach common ground with the United States over his country's nuclear program. Is it just a political tactic or is it a sincere gesture?

Richard Haass served in the State Department under President Bush. He is now the president of the Council on Foreign Relations, and he joins us this morning.

Good morning to you.


ROBERTS: So there's been an ever so slight shift in U.S. policy toward Iran. William Burns went to these talks in Geneva. And yesterday in an interview with my colleague Brian Williams on NBC, Ahmadinejad said he might look favorably upon a change in approach. Let's listen to what he said. (BEGIN VIDEO CLIP, FROM NBC'S "TODAY SHOW")

PRES. MAHMOUD AHMADINEJAD, IRAN (through translator): The approach changes, we will be facing a new situation and the response by the Iranian people will be a positive one.


ROBERTS: So, Richard, he's sending these signals that may be a positive response. But at those nuclear talks two weeks ago, nothing happened. They went nowhere.

So what's going on?

HAASS: Less than meets the eye, I'm afraid. At the talks nothing much happened. The written response the Iranians gave really looked like a stall tactic. The bottom line is even though we're hearing things that sound slightly more reasonable, we're not seeing any change in Iranian behavior.

As every day goes on, they are building up their capacity to enrich uranium, which as you know is the raw material potentially of a nuclear weapon. So again, this looks like a charm offensive. It might be designed to stop more western sanctions. It might be designed to make an Israeli or American military strike less likely. But so far, at least, I don't see any change in what the Iranians are doing.

ROBERTS: The White House very skeptical of it as well. They say that his pronouncement to Brian Williams came two days after Ahmadinejad boasted that they had doubled the number of centrifuges that they had tried to enrich uranium to 6,000.

HAASS: Right.

ROBERTS: Here's what Dana Perino said about that yesterday.


DANA PERINO, WHITE HOUSE PRESS SECRETARY: I think we have to approach this with a big grain of salt. President Ahmadinejad said one thing to the Iranian people on Saturday and another thing to an American journalist on Monday.


ROBERTS: On the one hand, Richard, there's the suggestion of cooperation and on the other, there's continued defiance.

HAASS: Look, what always matters is not intentions, it's capabilities. We don't know what the Iranians are up to. But they are preparing and they are getting along in the process of building up capacity. So while, again, the words sound somewhat better. I myself am not impressed.

ROBERTS: Now, Ahmadinejad also insisted during that interview that they're not trying to build a bomb.

HAASS: Well, the fact is that 90 percent of what you would do right now is the same. You would build your capacity to produce enriched uranium. At the 11th hour if the Iranians so chose, they could then decide to weaponize it. They've got the missiles, and they're building up the capacity to produce the raw material.

The actual bomb-making part is maybe 10 percent of it, and it's the least difficult part. So, again, we should not be persuaded or put off by that.

ROBERTS: We had an editorial board meeting with Secretary of state Condoleezza Rice about a month ago in which she said look it would be OK for Iran to have nuclear power to generate electricity. It's the fuel cycle that we can't let them get a hold of. If they do progress to having a complete fuel cycle what should happen, what do you think would happen?

HASS: She's right. We don't want them to have physical control of nuclear material. Having access to it without control of it would be fine to produce nuclear power. Look we want to avoid a situation where we've got to make a choice. Either living with this kind of an Iranian near nuclear weapon or nuclear weapon or having to use military force. Either option is terribly unattractive and costly. Which is why we want the diplomatic option to work. But it's not clear quite honestly the diplomatic option will work.

The United States is beginning to inch towards a more active diplomatic option. We could go farther. But I can't sit here and tell you it would succeed. But we probably want to explore it more fully. Again, only because the two alternatives, living with an Iranian nuclear capability or attacking them to prevent them from getting one are so potentially dangerous and costly. Not just to the United States but quite honestly to the region and the world economy.

ROBERTS: Richard Hass, it's always great to see you. Thanks for coming in today and we look forward to seeing you at the political conventions at the end of the month.

HAASS: Thanks for having me.


CHO: Thanks, John.

31 minutes after the hour. Here are this morning's top stories.

Get rid of the war on terror label. That's one suggestion from a Washington think tank that counseled the Pentagon. The Rand Research Center said the term counter terrorism is better, saying it would help the perception that they are criminals, not holy warriors. It also says the Bush administration should rely more on intelligence and policing and less on brute force.

Junk food ads targeting children. A new study from the Federal Trade Commission says it's a $1.6 billion with a 'B' Business. The report looked at how the nation's largest food and beverage companies marketed products to children and teens. It says companies spent $0.5 billion on soda ads alone.

Senator John McCain could get his biopsy result as early as today. The campaign says it was ordered as a precaution after doctors removed a spot of skin from his face and he has a Band-Aid to prove it. McCain is a melanoma survivor. He talked about it exclusively last night on "Larry King Live."


MCCAIN: If you look at it and be careful, it's fine. I had one - I had one serious bout with it. And that was, frankly, due to my own neglect. Because I let it go and go and go. In fact, I was running for president at the time. I'm not making that mistake again.


CHO: Chief medical correspondent Dr. Sanjay Gupta joining us now from Atlanta with more on this. So, Sanjay, as you know, McCain has a history of melanoma, which is the most serious form of skin cancer. How concerned should people be about this latest development?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, I think he's probably more concerned than the average person would be if they had a mole removed. Given that he's had melanoma four times in the past, his risk of having another skin cancer is higher. I think that's probably his best way of putting it. At this point it's just a mole. No results back on exactly what that is.

But the concern certainly is about that most serious form of melanoma back in 2000, eight years ago. That accounts for the scars on the left side of his face. Still some of the swelling that you see on the left side of his face all a result of that melanoma and the subsequent operation. So his risk is going to be slightly higher than the average person. But, again, you know, at this point it's just a mole.

CHO: And it's also why you often see him wearing a baseball cap on the campaign trail, Sanjay. As you know, you were one of the few journalists who had an opportunity to take a close look at McCain's health records, about 1,000 pages that was back in May, not too long ago. I know, you traveled to Arizona for that. Now, this latest growth I understand is on the other side of his face, it's on his right cheek.

GUPTA: Right.

CHO: What do we make of that?

GUPTA: Well you know, first of all, as far as his records go, you know, the melanoma is far and away the biggest part of his medical history. Otherwise for a 71-year-old guy he's pretty healthy for his age. The fact that it's on the other side of his face I think makes me less concerned. When you say someone has - something has recurred, they're all different ways of categorizing that. One is to say it's a local recurrence meaning it came back at the exact same place, on his left side that he had before. If this were melanoma, and again no one is saying that it is, this would be occurring at a different place in the body. So I'd be slightly less concerned about that.

I just like to point out as well. I was with him Thursday night at the Live Strong Summit where he was talking about cancer and talking about his concerns about cancer and concerns about recurrence. At that point I really didn't notice anything abnormal on the right side of his face, although you know, I wasn't necessarily looking for it.

CHO: Right. And he basically used this as a PSA opportunity to encourage people to go see a doctor if they see any discoloration on their face which I know you advise as well. Sanjay Gupta, always a pleasure. Thank you.

GUPTA: Thanks, Alina.

CHO: John.

ROBERTS: 35 minutes after the hour. And today is sentencing day for former NBA referee Tim Donaghy. Donaghy pleaded guilty last summer to betting on games and selling info to other gamblers. And Donaghy says the refs you're yelling at through your television may not be blind, just crooked like he is. Richard Roth joins me now from the courthouse in Brooklyn, New York, where this is all going to go down today. Richard, this is going to be a big day for sports.

RICHARD ROTH, CNN CORRESPONDENT: That's right, John. It has been called the biggest sports gambling scandal in decades. In the final minutes of the Tim Donaghy scandal is going to tick down here this morning.


ROTH (voice-over): Like any referee in any sport, former NBA official Tim Donaghy has his share of disagreements on the court. But little did players, coaches or fans of the NBA know that a man paid to be an impartial judge was gambling on dozens of games that he officiated.

MICHAEL MCCANN, LEGAL ANALYST, SI.COM: He was part of a pattern of behavior that is illegal, is very wrong, and sets a very poor example for others, particularly for all the people who watch the NBA.

DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": I had a lot of fun. Went out to dinner and watched the crooked NBA finals. That was fun.

ROTH: The scandal is no laughing matter for the NBA's powerful Commissioner David Stern. The league's integrity was further shaken when Donaghy told federal investigators there are other cheating refs. Stern was forced to play defense.

DAVID STERN, NBA COMMISSIONER: On behalf of my officials I'd like to tell you that they don't engage of the criminal conduct of which Mr. Donaghy has accused them.

ROTH: Since Donaghy spoke to the Feds, several NBA referees have reportedly been interviewed by the U.S. government. None have been charged with crimes. And while most league observes believe Donaghy was simply a rogue ref, many agree that the league had to make some changes.

MCCANN: The big issue here is one of gamesmanship, is one of sportsmanship. The idea that our games are supposedly real based on actual events, and not scripted, unlike entertainment events such as wrestling.

ROTH: Commissioner Stern says the NBA had reviewed tape of all of their officials' work, just to be sure there were no other rogue refs. And he also hired a retired U.S. Army general to oversee the officials' work. Fans think the NBA still has some rebounding to do.

So what's your opinion right of that whole affair and your trust of the game?

UNIDENTIFIED MALE: They got to get their credibility back.

TOMMY DEE, THEKNICKBLOG.COM: It's the biggest scandal they've had to deal with certainly in the David Stern era. But again a s long as they throw the ball up every night, fans will always be paying attention.


ROTH: Under federal sentencing guidelines, Donaghy could receive a sentence between 27 and 33 months. In a bid for leniency his lawyers submitted papers, in effect saying Donaghy did it because he's a compulsive gambling addict. John.

ROBERTS: Richard Roth for us this morning outside the courthouse in Brooklyn. We'll be looking forward to and watching very closely. That sentencing coming down today. Richard, thanks so much. Alina.

CHO: Oil is up, gas is down. Gerri Willis, "Minding your Business." Gerri, what's going on?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, oil prices higher overnight. But there is a silver lining. We'll tell you all about it next on AMERICAN MORNING, the most news in the morning.


CHO: 40 minutes after the hour. Gerri Willis here, "Minding your business."

WILLIS: I'm back. And yes, I want to tell you a little bit about these oil prices that were higher overnight. Last night, $124.73. It got as high as $126. And then back in at 124.70 is where they were trading before I came over. And this is because of the sabotage of two oil pipelines by militants in Nigeria. We mentioned this earlier. Earlier, these were Royal Dutch Shell pipelines and of course, we heard a lot about this. This is the latest in a two year campaign of attacks on the oil industry. We'll keep an eye on this.

Let you know what's going on with the oil prices. But there is a flip side to this good news. Gas prices are lower. $3.94 a gallon is the average according to AAA. And yes, this is after yesterday, $3.95. So, I'm bringing you what I can here. I'm doing what I can to have some positive news to make your day better.

ROBERTS: That's good news because I've been thinking about going out and buying the new Hummer.

WILLIS: Is that on your list?

CHO: Yes.

ROBERTS: And I was waiting for it go back below four bucks.

WILLIS: You're a motorcycle man. Come on.

ROBERTS: Can you imagine any in a hummer?

CHO: No.

ROBERTS: Maybe a smart car.

WILLIS: That's not bad.

CHO: Hey, listen.

ROBERTS: You know, in the area where I live in northern Virginia, the Hummer dealership went out of business. The smart cars are the latest thing to be put on display.

WILLIS: There's one close to me now. Yes.

CHO: There you go.

WILLIS: It's a waiting list.

It's a great idea. I'm taking my car advice now from John Roberts.

ROBERTS: All right. Thanks, Gerri.

CHO: As you should.

ROBERTS: John McCain has promised to take on the special interests. Is the campaign practicing what it preaches? We're following the money trail for you this morning.

CHO: And the First Lady of France is a model. She's a musician and she may very well be more popular than her husband. We're going to have a deeper look at France's power couple. You're watching the most news in the morning.

(COMMERCIAL BREAK) ROBERTS: Can't live with them. Can't live without them. That's often the relationship between politicians and lobbyists. And with the money it takes to win a presidential election in 2008, it's awfully hard to say no to the checks. This morning we're taking a look at each candidate's finances. First, CNN's Joe Johns follows John McCain's cash.


JOE JOHNS, CNN CORRESPONDENT (voice-over): To hear John McCain tell it, he's your guy in Washington fighting against the unchecked influence of big businesses and their lobbyists.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The workers and entrepreneurs of America are taken for granted by their government. While the lobbyists and special pleaders are seldom turned away.

JOHNS: But how does that McCain rhetoric square with this? A fancy 2006 soiree of the little known but well respected International Republican Institute in Washington. The video from the group's own web site shows the chairman of AT&T which has just donated $200,000 to the institute, introducing none other than John McCain, still chairman of the Institute's board.

JOHNS (on-camera): Remember, at the time McCain was fresh off of a term as the chairman of the senate committee that regulates telephone companies like AT&T. AT&T says there were no strings attached to the donation. But that's not always the point.

PROF. LARRY SABATO, UNIVERSITY OF VIRGINIA: Access is the name of the game. It's getting in the door to see the candidate so you can make your case. Sometimes you don't even need to see the candidate, you just talk to staff members, the people who influence the candidate's decision.

JOHNS: OK. So which is it? Is he the scourge of the system in Washington that rewards lobbyists and their wealthy bosses, or is he the guy who hob-knobs with and therefore might be influenced by the very interest he's trying to root out? Answer, both.

Smart politicians know that tough talk on lobbyists sounds good to the public. But the reality is players at this level can't live without them.

SABATAO: They work with lobbyists. They have staffers who've been lobbyists. They are going to depend on lobbyists for a lot of the information for the decisions they make if they get elected.

JOHNS: The group IRI that held the event McCain attended gets just about all its money from the federal government to do things like promote democracy around the world and help governments run more efficiently. It's a cause McCain believes in. A former IRI staffer who also worked for the last McCain presidential campaign says that while the IRI event may have brought McCain and the lobbyists together, there was never any kind of a quid pro quo. TODD HARRIS, REPUBLICAN STRATEGIST: There has never been a single time when someone gave money and said, this is what I want in exchange.

JOHNS: Still, part of McCain's campaign message is very much about going up against the special interests. And simply by raising questions about McCain's relationships with lobbyists, the democrats are hoping they're also raising seeds of doubt. Joe Johns, CNN, Washington.


ROBERTS: And coming up in an hour's time, we're going to take a look at the Obama campaign and why some of the big money coming in could cause problems down the line.

CHO: An Olympic terror threat. Flags on the web. The group being compared to militants in Afghanistan and Iraq. Whether China's paying attention.

And happening right now, Amy Winehouse heading home after being rushed to the E.R. for a "reaction to medicine." We're going to go live to London for details.


CHO: About ten minutes before the top of the hour. New this morning, Amy Winehouse out of the hospital, again. The Grammy-award winner was rushed to the emergency room last night and Phil Black is outside the hospital in London right now. So Phil, good morning to you. What happened this time?

PHIL BLACK, CNN CORRESPONDENT: Hello, Alina. Not unusual to hear about Amy Winehouse and drugs. This situation, however, was a little different. We are told she had an adverse reaction to medication. As a result, an ambulance was called to her home around 8:30 last night and she brought here for observation.

We don't know the medication was or what the reaction to it was but it follows not long after another recent hospital stay for Winehouse after which her family revealed the 24-year-old singer is suffering from the lung disease emphysema and already lost some lung capacity because of that disease.

Getting her to the hospital here was a little bit of drama as news of her illness spread. Photographers surrounded her home. And the police had to be called so that the paramedics could have clear access but the news now is essentially good. She rested comfortably through the night. Her father stayed here with her and she is now been allowed to go home. Alina.

CHO: She's so young and so talented, and may be time for her to get help. Phil Black, thank you.


ROBERTS (voice-over): Watching them.

Drew Griffin tries to clear his name after it ends up on the terror watch list.

DREW GRIFFIN, CNN CORRESPONDENT: CNN has asked for the photos and location of any suspected terrorist using either the names James Robinson or Drew Griffin.

ROBERTS: Plus, the supermodel, musician and cover girl who married the French president. The U.S. gets an intimate look Carla Bruni.



ROBERTS: 54 minutes after the hour. France's First Lady Carla Bruni Sarkozy may be more popular in France than her husband. She is an international supermodel and a talented musician with a number of hit singles and at the age of 40, far from the usual wife of a head of state. Since marrying French President Sarkozy in February, she has become a media darling. Maureen Orth is special correspondent for "Vanity Fair." She is profiling Carla Bruni Sarkozy in the upcoming September issue.

And Maureen, it's great to see you this morning.


ROBERTS: Thank you for being with us.

You would not necessarily think if you are picking a First Lady that a supermodel would be the person you go to immediately but how has she done so far in this role?

ORTH: So far, they had a rocky beginning because they had a very, very fast courtship, you know. He divorced his second wife on October 18th. They met on November 13th and they got married on February 9th. And the French people were kind of scandalized by all of the trappings of his dating her but now they're thrilled. His ratings went way down but hers have gone up and they like her a lot.

ROBERTS: You say she is an unexpected asset here. Because his ratings were going down and she's kind of lifting him up.

ORTH: Right.

ROBERTS: He's so popular.

ORTH: Well, he had been criticized for liking America too much liking wealth too much, being too flashy. They called him President bling-bling. And she's made him take away the jeans. She made him take away his gold Rolex watch and put on a sleek leather strap. You know, because good taste is very important to the French and plus she looks so good and so she wears clothes well and gets a lot of attention internationally and they like that. Plus she is a very bright woman. I mean, she is not a silly person at all.

ROBERTS: No. Speaks several languages and she is an heiress to an Italian wire firm, I think.

ORTH: Well, that's another part of the story.

Well, she came from this rich, industrialist family in the north of Italy. However, when she was 28 years old, her father said, you know, he was about to die. He said, I'm not really your biological father and she said, when she heard that news, it made a lot of sense to her. However, she had grown up with lies. Her mother was a concert pianist who had an affair with a 19-year-old guitar player who came from another wealthy family in Turin.

ROBERTS: Wow. So not surprising that she has the background that she has. I mean, she brings a whole set Louis Vuitton luggage with her to this relationship because she dated Mick Jagger, Eric Clapton. If you want to see all of Carla Bruni looks like, just goggle her on the internet.

ORTH: That's right. And at one point, she told Sarkozy, look, I think you have to understand there's a lot of nude pictures of me. So she took him by the hand and took him to the internet and showed him. And I said, what did he think? He said, oh, I like that one. Can I have a print of that?

ROBERTS: How is it - you know, you can imagine particularly when you quote her as saying things like "I bore myself silly with monogamy. I prefer polygamy and polyandry which is where one woman marries several men." Can you imagine what the reaction would be if it were Cindy McCain that you're talking about, or Michelle Obama in this country. How is it that the French laissez-faire about all this?

ORTH: Well, what the French believe that, for example, their president is more like a king and he can do whatever he wants but they don't want to hear about it. However, Carla is taking pains to say that she made those kinds of remarks when she was building her singing career and now she says to me, "monogamy is not an idea. It's a fact."

ROBERTS: These two fell in love very quickly.

ORTH: Wow.

ROBERTS: Over dinner, right? A four hour dinner.

ORTH: Yes. One four-hour dinner and she had her guitar to sing songs at the end of the dinner and then he -

ROBERTS: Almost like out of a comedy. Pass me my guitar, I want to sing a song for the president.

ORTH: And he gave a ride home. And then she called the host immediately and said, what did you do introducing me to this charming man? Blah, blah, blah. He hasn't even called me. The host said, Carla, he just left you five minutes ago and then he came for lunch two days later or something and I think that's when it happened. ROBERTS: The clock tend to move very slowly with new love.

ORTH: Well, I think he proposed within a couple of weeks.

ROBERTS: Do you think it's going to last? I mean, it's such a whirlwind romance.

ORTH: Well, they're very much in love now and she is very much in the cat bird seat and he can't afford to have another wife leave as the previous one did and so I really do think that she is thrilled to be First Lady. And I do think it will last.

ROBERTS: Well, it's a fascinating article. Very entertaining, as well. Maureen, thank you for being with us.

ORTH: Thank you.

ROBERTS: And from all of us here at CNN, by the way, our extreme condolences on the loss of Tim. He's such a fantastic guy.

ORTH: Thank you so much.

ROBERTS: I appreciate you coming in -- Alina.

CHO: Crossing the top of the hour right now. We're following breaking news. Police in Pakistan say militants there have abducted 30 officers and military troops. It happened in the northwestern part of the country. One official says insurgents ambushed the forces at a security check point.

A CNN exclusive with Pakistan's new Prime Minister Yousuf Raza Gilani visited the White House yesterday and spoke to Wolf Blitzer last night in "THE SITUATION ROOM." They talked about the war on terror and the hunt for the most wanted terrorist in the world.


WOLF BLITZER, CNN HOST: Is Pakistan, the new government, the democratically elected government of Pakistan which you lead, is it doing everything it possibly can to find, to capture or to kill Osama Bin Laden?

GILANI: Actually, my government is certainly is doing its best. There are two things. One is the will. The other is ability. We have the will but at the same times, the militants are equipped with most sophisticated weapons in the world and, therefore, we can't matched that equipment and the training.


CHO: Also breaking right now in Iraq, the U.S. military is confirming that a new offensive is under way right now in the violent Diyala province. That's northeast of Baghdad. The Iraqi military calls the area, the last major stronghold for al-Qaeda near the capital city.

The national security system is still broken. That's according to a report that was mandated by Congress.