Return to Transcripts main page

Paula Zahn Now

Suspect Charged in North Dakota Kidnapping Case; Disney's Eisner Facing Revolt

Aired December 02, 2003 - 20:00   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: "In Focus" tonight: the search for a young North Dakota woman. A convicted sex criminal is in custody on kidnapping charges. But Dru Sjodin is still missing.
Was a 7-year-old boy punished at school for say the word "gay"? We'll talk to his mom.

And the future of Michael Eisner. The man at the helm of the Disney entertainment empire now faces a revolt from its board of directors.

Good evening and welcome. I'm Daryn Kagan, in for Paula Zahn.

Also ahead tonight, Christiane Amanpour reports on the challenges facing Iraq's new police force, targets of terrorists themselves, yet short on manpower and weapons.

And why do you get so many colds and the guy next door gets so few? New science says it could all be about attitude.

Plus, new numbers show American factories racing up to keep with demand and businesses ready to hire more workers. Is the economy back on track?

And we'll ask our Joe Klein what the Democratic presidential candidates will have to do to counter what bright economic news is coming out and the president's headline-grabbing holiday trip to Iraq.

First, here are some headlines you need to know right now.

Investigators in Ohio say they have linked a dozen shootings along one stretch of highway near Columbus. And they say four of the shootings were done with the same gun. A 62-year-old woman was killed last week in one of the shootings along I-270.

The oldest son of convicted D.C. area sniper John Allen Muhammad called his father a manipulator in court today. Lindbergh Williams testified in the trial of alleged sniper accomplice Lee Boyd Malvo. Malvo's lawyers want to show that he was indoctrinated by Muhammad and couldn't tell right from wrong.

There are new terror warnings today for attacks against U.S. targets in Saudi Arabia and Kenya. The State Department issued the alerts just weeks after a suicide attack in Riyadh. A U.S. official also says there's concern that al Qaeda may strike in London or attack British targets elsewhere. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our community is a safer place this morning. But law enforcement officials continue to be resolute in our commitment to find Dru Sjodin and bring her home.

Dru, we will find you.

(END VIDEO CLIP)

KAGAN: "In Focus" tonight: the search for missing college student Dru Sjodin, last seen on November 22. Police believe she's still alive, even though they have a suspect in custody charged in her kidnapping. He's an ex-convict who served 23 years in prison for rape and was released just last May.

Joining us live from Minneapolis are Dru's aunt and uncle, Dianne McGuire (ph) and Bob Sutson (ph).

Thank you for joining us during this very difficult time for your family.

UNIDENTIFIED FEMALE: Thank you.

UNIDENTIFIED MALE: Thank you.

KAGAN: What can you tell us about the latest in the search for your niece?

UNIDENTIFIED MALE: Well, we're still -- people are out looking. We have a search party going to go out tomorrow of about 1,000 people. They're asking for help, and looking for Dru.

KAGAN: Let me ask you about this latest development and the arrest of the suspect. On one hand, it must be encouraging that there has been this development. And yet, you hear this man's background and it just has to be absolutely terrifying.

UNIDENTIFIED MALE: Yes.

I guess we were -- first, we were real excited to get some information about Dru. And, obviously, now trying to really find where she's at is where the family's at today.

KAGAN: Diane, have police been able to explain to the family why they believe this man, Alfonso Rodriguez, might be attached to your niece's disappearance?

UNIDENTIFIED FEMALE: Yes. They have pretty tangible evidence that makes us comfortable they have the right person.

KAGAN: And any of that you can share with us, or have the police asked us to keep that quiet for now?

UNIDENTIFIED FEMALE: Absolutely not. Private information.

KAGAN: OK. I understand and I respect that.

Can you tell us little bit more about your niece? She's absolutely a beautiful young woman, as we can see from the photos, not just her looks, though. She seems like she has such a vivacious sense of life.

UNIDENTIFIED FEMALE: You are absolutely right.

In those pictures, she is beautiful. But I don't know if you can see the sparkle in those blue eyes. And she's as beautiful on the inside as she is on the outside, and just a gem in our family. And we want her back. And we're sure we're going to get her back.

KAGAN: Tell us about some of her plans. We knew she was working at the mall, at the Victoria's Secret store, going to school. Any plans for travel?

UNIDENTIFIED FEMALE: Yes. In fact, she was planning a trip to Australia. But she is looking to graduate here this year with a major in communications. And she has a love for art. And her plans were to go on to an art school after she finished up at UND.

KAGAN: And, also, I understand a love of children. Didn't you take her along on one of your family trips this year?

UNIDENTIFIED FEMALE: Actually, she -- I had a conference, and she -- I had to take my five-week-old baby and she came along and acted as the nanny. We went to New Orleans. And we were just so glad she's always been there for us. She's the godmother of our son and just -- can't say enough.

KAGAN: A very special member of your family. You can't say enough about her.

Do you believe in your heart that she's still alive?

UNIDENTIFIED FEMALE: I do.

UNIDENTIFIED MALE: Very much so.

KAGAN: Well, we wish you well in those hopes and the search for your niece, we can tell not only a beautiful young woman, but a treasured member of your family. Thank you so much. I know it's a very, very difficult time for you and your family.

UNIDENTIFIED MALE: Thank you.

KAGAN: Our thoughts are with you.

UNIDENTIFIED MALE: Thank you.

KAGAN: Bob Sutson (ph) and Diane McGuire (ph), the aunt and uncle of Dru Sjodin.

We move on now and try to get more information about this case. We want to take a closer look at the man who is charged with Dru's kidnapping. His name, Alfonso Rodriguez Jr., a 50-year-old ex-convict with a very disturbing past. He was released last May, after serving time for raping two women.

Wayne Swanson prosecuted Rodriguez for one of those crimes. It was back in 1980. He's joining us now from Grand Forks, North Dakota.

Mr. Swanson, thank you for being here with us.

WAYNE SWANSON, PROSECUTOR: Thank you.

KAGAN: What can you tell us about that case back in 1980? He approached this woman, as I understand, with a knife. And what happened from there?

SWANSON: That's correct.

He approached her. He tried to force her into a motor vehicle, apparently threatened her. And she fought him off. And he did stab her at that point in the abdomen. But she was successful in getting away and getting into a house and getting some help. And he then left the scene. And later, through investigation, we were able to identify him, particularly since the victim in that case was an artist. And she drew a full-head portrait for us of the person who had attacked her.

KAGAN: As I understand it, incredibly accurate. And you were able to hold that picture up in the courtroom, and that helped lead to this conviction.

SWANSON: Yes. During final argument, I held the picture alongside of the defendant's head and asked the jury to keep that in mind when they went back into the jury room.

KAGAN: I'm going to call on you to help us understand how the law works here a little bit, because, with this conviction and his previous convictions, he was sentenced to over 20 years in prison, because he had the previous conviction. So he does over 20 years.

SWANSON: That's correct.

KAGAN: And then, when he was released after 23 years, there was no parole in this case. Is that because he had served the full sentence?

SWANSON: He served the full sentence.

Normally, what happens is, a person would serve a portion of the sentence, such as two-thirds or three-quarters, two-thirds in Minnesota. And then they would be on what's called supervised release. In his case, for reasons that I don't fully know, he did not have any supervised release. He served the entire sentence in confinement.

KAGAN: And the way that works, when your sentence is up, you walk out the door.

SWANSON: Basically, you still have to register as a sex offender.

But my understanding is that there is no active supervision. But you do have a 10-year requirement that they have to remain registered with the state as a sex offender.

KAGAN: And, as I understand it, he was registered as a -- or was known as a level-three sex offender, one who is most likely to commit a sexual offense again?

SWANSON: That's my understanding. There's level one, two, and three. Level three is the highest level of risk.

KAGAN: Wayne Swanson, thanks for helping us look back and understand a little bit more about this man who is in custody tonight in connection with the kidnapping of the Dru Sjodin. We appreciate it.

SWANSON: Thank you.

KAGAN: Well, you can be sure that police are now trying to get information out of Rodriguez, desperate to find out where Dru Sjodin is. Interrogation is one of the most important tools used by police. You've seen it time and again on television shows.

Let's take a look.

(BEGIN VIDEO CLIP, "HOMICIDE")

ANDRE BRAUGHER, ACTOR: So what you thought was going to be a simple little robbery turned into a bloodbath. And now you're not ever going anywhere ever, ever, ever!

UNIDENTIFIED ACTOR: This interview is over.

BRAUGHER: I don't have a triggerman, counselor. I've got the next best thing, an accessory. I've got an accessory, counselor.

(END VIDEO CLIP)

KAGAN: All right, that's what it's like on television in "Homicide." That's fiction, but what is the real-life situation when life depends on the outcome?

Joining us now, former police Detective Bill Majeski.

Bill, thanks for being here with us.

BILL MAJESKI, FORMER NYPD DETECTIVE: Thanks for having me.

KAGAN: You're kind of chuckling, not because it is funny. But when you look at that, is that what it looks like in the interrogation rooms?

MAJESKI: You know, actually, each investigator has his own technique in conducting an interrogation. But an interrogation, by its very nature, is trying to extract information from a person that doesn't want to give you that information. And, in addition to that, that information, when it is given, is to the detriment of that person that's giving it to you.

(CROSSTALK)

KAGAN: And so are kind of in this weird battle and negotiation with this person.

MAJESKI: Yes, you're in a weird battle.

It's a psychological game. You're going to have to finesse the person. In this particular instance, we can hope and it appears that there is some belief that she is still alive. And, hopefully, she still is. So that makes it even a more delicate situation, because what they're trying to do is find her, if she is still alive, find her as quickly as they possibly can, because this fellow, if she is still alive, put her someplace where she's not able to escape on her own.

She's there. She's there now for a couple days, because he's in custody.

KAGAN: Right.

MAJESKI: So it's a life-threatening situation. So what they have to do is, they have to finesse him into giving them some information that will be useful to them, not necessarily

(CROSSTALK)

KAGAN: I would think you have to, then, give him something that is going to be of value to him. How do you do that?

MAJESKI: It is going to be a negotiation of sorts. Clearly, he has very little to gain by giving the information. So it's going to take a shrewd investigator to go in there and try to extract from him little bits of information that then can be used as clues in conjunction with the investigative process that's ongoing as we are speaking now.

KAGAN: Well, and I imagine this is a very difficult dance, because if you take it too far and you tick the guy off, then you lose them and you lose your one possible trace to the woman.

(CROSSTALK)

MAJESKI: No question about it. So it's a very delicate situation and has to be finessed eloquently.

KAGAN: I just want to ask you one final question.

MAJESKI: Yes.

KAGAN: In all your years of the job, how does time factor into this? She's been missing since November 20. The police talk -- the family believes she's still alive. How does history work in this case?

MAJESKI: Usually against her.

But there seems to be some hope in this particular case that she is still alive. So you have to go with that and move as quickly as they possibly can. It's apparent that they're doing a very good job in the investigative process. They're piecing together the investigation. And it's like a giant jigsaw puzzle. And they're getting the pieces. And a good interrogation with him can perhaps extract one or two bits of information that will make that picture very clear and hopefully find her.

(CROSSTALK)

KAGAN: I think a lot of people, with the Elizabeth Smart case, saw that, sometimes, you keep hope alive long enough and there can be a happy ending.

MAJESKI: Absolutely.

KAGAN: Thank you for your insight. Appreciate it so much.

Well, tomorrow on PAULA ZAHN NOW, you're going to hear from the mother of Dru Sjodin. So join Paula, please, for that interview.

What are the challenges facing the new Iraqi police force? We'll get a report from CNN's Christiane Amanpour.

There's trouble in the world of Disney, CEO Michael Eisner facing a revolt in the magic kingdom.

And can you beat a cold with a smile? We'll find out.

(COMMERCIAL BREAK)

KAGAN: Suddenly, the holiday season is not looking so rosy for the Democratic presidential candidates. There are new signs that the economy is improving. And President Bush grabbed headlines with his surprise Thanksgiving trip to Iraq.

Joining us from Manchester, New Hampshire, regular contributor and "TIME" magazine columnist Joe Klein.

Joe, good evening.

JOE KLEIN, CNN CONTRIBUTOR: Hi, Daryn. How are you? It's cold up here.

KAGAN: It's cold here in New York City as well. And it's getting little chilly for Democrats out there. We're two days past the weekend. Have the Democrats recovered from what took place over the weekend, that one-two punch?

KLEIN: Well, I think that there have been a number of punches in the last few months on the domestic side that the Democrats have had to deal with. Clearly, the economy is getting better. The Congress just passed a major new entitlement, the prescription drug benefit for the elderly, will is going to redound to the president's benefit. And this is kind of weird for the Democrats, because they expected that they were going to run on domestic issues. But the war is still out there. And even though the president did a rather remarkable thing of flying into Baghdad and delivering the Thanksgiving turkey on Thursday, the question is whether the policy toward Iraq is a turkey.

And I think that this election over the next year is going to be a question of how the people react to the president's decision to go to war with Iraq in the first place.

KAGAN: All right, Joe, I want to bring you back to a couple points first. First of all, let's look at these economic numbers. You can't dismiss that they are good. And it's hard to be a Democratic candidate to go up there and go, oh, shucks, that the economy is recovering. So what goes back to the old Clinton saying that it's the economy, stupid? If the economy is on track, where do the Democrats go from there?

KLEIN: It was the economy, stupid, in 1992.

But we are living in a completely different world now, since September 11. And the question of national security is what this election was always going to be about, whether the Democrats liked it or not. And they didn't like it. But now you have the president bogged down in a very questionable situation in Iraq. And you have the larger question of whether he should have gone there in the first place.

And that is clearly what this election is going to be about and what it's been about. The reason why Howard Dean is the Democratic front-runner is because he took the strongest position again the war from the very beginning.

KAGAN: But can Howard Dean sustain what he has working right now and can he win a national election? And if not Howard Dean, then who is there for the Democrats?

KLEIN: Well, if I knew the answer to that, I would be a lot richer than I am, Daryn. That's why we have elections.

We're going to go through this year. And I'll tell you something. This election is less in the hands of the politicians than any I have ever covered. It's more in the hands of fate. What happens, God forbid, if we have another terrorist act in American? What happens if the situation in Iraq continues to go south? What happens if we have problems in other countries?

We're at the beginning of a major struggle against Islamic radicalism. What the Democrats have to do is come up with an alternative to the way that the president has been handling this.

KAGAN: All right, you'll be tracking it.

KLEIN: Absolutely.

KAGAN: From the land of New Hampshire. You're rolling up those sleeves early and enjoying it. Joe Klein...

KLEIN: Actually, I put on my overcoat.

KAGAN: Put on your overcoat, yes. Don't roll up your sleeves. Roll them down, but get to work. Thank you so much for that.

KLEIN: OK.

KAGAN: Well, there's more ahead tonight on President Bush and the economy and whether it really is back on track.

Is keeping healthy this cold season all a matter of your attitude? We'll have the results of a new study that says a spring in your step and a smile on your face may keep the doctor away.

And Christiane Amanpour's report on Iraq's new police force and the challenges facing it.

(BEGIN VIDEO CLIP)

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: "I don't think, at present, we have sufficient capability," he says. "From our borders, all the way to Baghdad, we need enough force to foil the saboteurs. And right now, we don't have it, because there aren't enough police and no Iraqi army."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KAGAN: Becoming part of Baghdad's thin blue line is a dangerous proposition. More than 100 police officers have been killed since the end of the war.

Christiane Amanpour looks at the efforts of the Iraqi police to protect the public while protecting themselves.

(BEGIN VIDEOTAPE)

AMANPOUR (voice-over): The police are working out of the hulk of their devastated station in Baghdad one month after it was blown up in a suicide bomb. Police chief Salam Al-Assad (ph) says the engine of the suicide truck flew through the building and hit the wall of his office, where he was working.

(on camera): You were lucky?

UNIDENTIFIED MALE: Yes.

AMANPOUR (voice-over): Six of his men were killed, raising the number of Iraqi police deaths to more than 100 and further complicating the hunt for insurgents.

Despite all of this, Colonel Al-Assad remains at his desk, but:

(on camera): You have no telephone?

UNIDENTIFIED MALE: Yes. We have no telephone.

AMANPOUR: No computer?

UNIDENTIFIED MALE: No computer. Many things, we need.

AMANPOUR (voice-over): But the U.S. plan to reduce its troop numbers by May depends on successfully building up Iraqi forces.

(on camera): This police station is meant to take over security for this whole neighborhood. But the police commander here says they're not ready and they won't be, unless they get many more officers, much more training, and much more equipment.

(voice-over): "I don't think, at present, we have sufficient capability," he says. "From our borders, all the way to Baghdad, we need enough force to foil the saboteurs. And right now, we don't have it, because there aren't enough police and no Iraqi army."

Indeed, some U.S. military officials tell us, disbanding the Iraqi army last summer was among America's biggest postwar blunders. The head of the U.S. occupation here, Paul Bremer, fired them. And only one new Iraqi battalion has been formed so far. Bush administration officials claim that more than 100,000 Iraqi soldiers, police and other security forces are operational. But top U.S. military officials say the number is closer to 60,000.

Many of them have only three weeks training. And some have to share weapons, vehicles and radios. Colonel Al-Assad says the attacks won't deter him from working for the new Iraq. But the shortages, he says, means American forces won't be able to leave yet, "not until we get enough weapons, enough policemen, and enough training to meet the security situation we face now."

The U.S. wants to scale back within six months. But, on the ground, U.S. officers tell us it will be several years before a capable Iraqi force can be deployed.

Christiane Amanpour, CNN, Baghdad.

(END VIDEOTAPE)

KAGAN: Let's stay with Iraq now.

There is now an official voice for the country. Rend al-Rahim was recently appointed Iraq's informal ambassador to the U.S. The Iraqi-born American citizen will represent the country's governing council, as the nation moves closer to becoming a sovereign state again.

Joining us from our Washington bureau in D.C. is Rend al-Rahim.

Madam Ambassador, good evening and thanks for being with us. REND AL-RAHIM, IRAQ'S INFORMAL AMBASSADOR TO U.S.: Good evening. Thank you.

KAGAN: This is truly historic. It's been, I think, 13 years since Iraq has had any kind of ambassador representing that country in the nation's capital.

AL-RAHIM: Yes, indeed.

The chancery has been empty. There has not been any Iraqi representation, not only in Washington, but there hasn't been in very many capitals of the world. So we are breaking new ground. And this is sort of an opening first move. And we're hoping that more ambassadors will be posted around capitals.

(CROSSTALK)

KAGAN: I'm sorry. It's just that our time is so short and I have so many questions for you.

I think some people would be surprised to see a woman filling that role.

AL-RAHIM: I think I'm the first Iraqi woman ambassador ever.

And that's significant, because it sort of signals the face of the new Iraq, if you see what I mean. We want to send a clear message that this is a new country with a new agenda, a new outlook on the world.

KAGAN: What message, though, does it send to the Iraqi people that the person representing their country is actually a U.S. citizen who hasn't lived in their country, has been living here in America for the last 12 years? Do you think you'll get the proper respect?

AL-RAHIM: Well, I certainly hope I will get the proper respect.

I have to tell you that I am one of about four million Iraqis who were forced to flee Iraq and leave their country not by choice, really, but because they were persecuted politically. And all of these four million Iraqis are good, patriotic Iraqis who love their country and want to serve it. So there are many of them. And many of them, by the way, have returned to Iraq and are helping politically, helping in reconstruction. And Iraqis who have never left Iraq accept us as genuine Iraqis who want to do some good.

KAGAN: You have been back since the war. We hear so many conflicting reports, some people saying it's all terrible, some people saying, you need to stress the positive. What is really going on in your home country? What are the conditions like in Iraq?

AL-RAHIM: I think, to be realistic, one has to say it's a mixed picture.

And I know that, for the news media, it's perhaps more interesting to stress the negative aspects and the terrorist acts. But, actually, that's not the whole story. Part of the story is that people have more money to spend. There are more jobs. Salaries are far, far higher than they have been in the last 15 years. There is purchasing power in the country. And goods are sold. Satellite dishes are all over the place. People are buying new houses. They're buying fridges, TV sets, a lot of commodities.

(CROSSTALK)

KAGAN: I'm sorry, because I need to get all these questions in.

The danger is still there. And there's also this incredible challenge of reaching the point where Iraqis can rule themselves. And I know you're appointed by the governing council, so you might be biased in this. But can this group of people that comes from so many different groups and religions and ethnicities, can they get it together, and can they come up with a constitution, and can they rule Iraq?

AL-RAHIM: Well, two things.

First of all, this is the most representative group of people that has ever governed Iraq. They represent multiple ethnicities, religious backgrounds, and so on. And they really are a diverse, pluralistic group. However, keep in mind that they are not alone in moving Iraq towards the sovereignty. There's also a cabinet. There's a group of ministers. There is going to be a transitional assembly by June 30. And it is through the participation of the people throughout Iraq that we are going to have this transitional assembly.

So we are working on a pluralistic, representative process, the likes of which we have never had in Iraq. So it is truly a new experiment and a new experience for us.

KAGAN: And not just for Iraq, but for the world. And the world will be watching.

AL-RAHIM: Yes, indeed.

KAGAN: Madam Ambassador, thank you for your time.

AL-RAHIM: Thank you.

KAGAN: And good luck in the hard work you have ahead for you and your country.

AL-RAHIM: Thanks very much.

KAGAN: Ambassador Rend al-Rahim.

New indicators show unexpected growth in the American economy. Our debate tonight, is it really back on track? And does President Bush deserve the credit?

Also, we'll talk to a mother who says her 7-year-old son was punished at school because he used the word gay.

And tomorrow, an exclusive: Roy Disney speaks out on what he says is the downfall of his uncle's magic kingdom.

(COMMERCIAL BREAK)

KAGAN: And here are some headlines you need to know right now.

Yaser Hamdi, the Taliban American who has been held for two years since Being captured in Afghanistan, will now by allowed to have his own lawyer. That is according to the Pentagon. Hamdi was born in Louisiana, but grew up in Saudi Arabia. He has appealed to the U.S. Supreme Court to protest his detention.

Federal officials are now investigating the death of a man beaten by Cincinnati police over the weekend. Nathaniel Jones attacked two police officers and was then subdued. He died in a local hospital a short time later. There are two local investigations into the incident as well.

And the cancer doctor who cared for the rock star George Harrison has been reprimanded for talking to the press. Dr. Gilbert Lederman accepted censure and a $5,000 fine. He had told a newspaper that Harrison had been -- quote -- "quiet and dignified and that he was not afraid of death."

And now to our debate tonight.

There is rising optimism among many economists that the U.S. economy is back on track. And President Bush has been quick to claim the credit. But is he entitled or is he just benefiting from some good timing?

Joining us now from Watertown, Massachusetts, Robert Reich, the former secretary of labor in the Clinton administration; and, in Washington, Kevin Hassett of the American Enterprise Institute.

Gentlemen, good evening. Thanks for being here with us.

ROBERT REICH, FORMER LABOR SECRETARY: Hi, Daryn.

KAGAN: Mr. Reich, we are going to start with you. We have prepared some numbers for you, for you to peruse and to comment on. Let's put them up on the screen, manufacturing first, at its highest in 20 years. The Dow Jones, the Nasdaq, the S&P have all, in recent days, hit their highest in 18 months. Gold is selling higher than it has in eight years. And even construction spending in this country is at its highest ever.

So, Robert Reich, has the president turned around the economy? The numbers are there to do the speaking.

REICH: Well, Daryn, let's hope that the economy is now back on track.

We're certainly improving. A lot of the numbers are showing that. We'll know more Friday, when the last month's unemployment figures come out. But, remember, we lost, over the last three years, three million jobs in the United States economy. We still have a very, very long way to go. There are too many Americans who are not working or are working part-time who would rather be working full-time or are too discouraged to look for work.

So we may be out of the woods, but we're still in the swamp.

KAGAN: All right.

From the swamp, we want to bring Kevin in.

No personal comment on that, but I do want to throw other number in there before you can pat President Bush on the back there. And that is the deficit, record federal deficit numbers. How does that play into it? And is this just a quick fix and just good times now?

KEVIN HASSETT, AMERICAN ENTERPRISE INSTITUTE: Well, right now, we would have to say that, looking ahead, the economy looks about as good as it's ever looked.

We're coming off of an amazing quarter. And all the signs are that economic growth almost that high is likely to continue for the foreseeable future. And so the fact is, right now, things are good. And the only really bad news is that the labor market, as Secretary Reich mentioned, hasn't really taken off yet and the deficit is higher than we would like.

But the fact is that deficit is high because President Bush passed some policies that were designed to get us out of the recession. They appear to have worked. And the labor market seems to be taking off. And so I think that the Democrats are going to have a hard time finding anything to talk about next year, at least about the economy.

KAGAN: Well, one thing that they can talk about is when the bills come due. As you said, there is this tax cut. There are the record deficits. These bills are going to have to be paid at some time, someplace.

So, Mr. Secretary, when do you think that will happen and how will it happen?

REICH: Well, Daryn, right now, a deficit is not necessarily a bad thing, because we have so much underutilized capacity in the economy, so many factories that are idle, so much office space, so much equipment, so many people that are not being used.

Having the government run a huge $500 billion deficit is certainly a way to get the economy moving. But, over the longer term, when the economy gets back on track, let's say maybe two years from now, those big deficits will come back to haunt us. Those big deficits will crowd out private investment. It will make it harder to get the capital for private businesses that they need and will drive up interest rates.

That's the big problem. That's the big fear. That's why big deficits are bad. That's why Bill Clinton in 1993 and 1994, you remember, inherited huge deficits and did everything he could to get the deficits down. And that led to an economic expansion.

KAGAN: All right, Kevin, I see you actually nodding at Secretary Reich.

HASSETT: Well, Secretary Reich has a much more healthy attitude about deficits than Secretary Rubin used to.

He's right. The fact is that, when there's a recession, you should run deficits. But if you run deficits forever, then you're going to run out of money. Now, the interesting question is, how are we going to fix the problem in the years ahead?

KAGAN: Exactly my question. So what's the answer?

(CROSSTALK)

HASSETT: Well, as a Republican, what I would like to see is that we stop the growth of government. And the thing that I'm most concerned about, about the Bush record of the last couple years is that he's increased spending at really an alarming rate.

Three of the five biggest increases in government spending in U.S. history have occurred in the first three years of the Bush administration. And the other two were in World War II. So Bush is spending a lot of money.

(CROSSTALK)

REICH: Excuse me for interrupting, but we are fighting a war on terrorism. A lot of these expenditures are necessary. We have a huge tax cut, $1.7 trillion.

When you have that kind of tax cut and you are trying to fight a war, and you are also providing a $400 billion drug benefit in Medicare and doing a lot of other things, well, you can't do everything. And that's why that deficit is going to be there.

(CROSSTALK)

KAGAN: Final seconds, one-word answer. And I want to take this from Joe Klein. Come around the election time in November, will the election be on the economy or on terrorism?

HASSETT: Well, the economy will really help President Bush. It's going to be wonderful next year.

KAGAN: That's like six words. Quickly.

REICH: I think jobs are still going to be a big issue. It's jobs, stupid.

KAGAN: Jobs, stupid. OK, we'll leave on that final word.

Former Secretary Robert Reich, thank you. And, Kevin Hassett, appreciate your time.

(CROSSTALK)

REICH: Bye-bye, Daryn.

KAGAN: I like the discussion.

Can a smile on your face save you from a stuffy nose? A new study says, don't get sick; get happy.

And there is more trouble in Disney World. Can Disney Michael Eisner keep the keys to the kingdom?

(COMMERCIAL BREAK)

KAGAN: Let's talk a little bit of health news now.

Flu season arrived early this year. And thousands of Americans have already gotten it. One factor is an especially powerful strain of the virus that wasn't included in this year's flu vaccine. But there is more upbeat news today in the battle against the common cold. It comes from a researcher who may have found reasons that some people don't get sick as often as the rest of us.

It's about personality, stress, and your social life. To put it in "Plain English," psychologist Sheldon Cohen joins us from Pittsburgh to talk about his work on colds. Also joining us from Los Angeles, frequent contributor, Dr. Drew Pinsky.

Gentlemen, good evening.

SHELDON COHEN, CARNEGIE MELLON UNIVERSITY: Good evening.

KAGAN: And, Dr. Sheldon, we'll start with you. It sounds like you're saying just be happy and you'll be healthy.

COHEN: Well, basically, that's true.

We found that people who have -- report positive emotions, being happy, being enthusiastic, being calm, are less susceptible to infection when they're exposed to cold viruses.

KAGAN: This sounds kind of like common sense. So can you put a few numbers with it, to tell us how much healthier happy people are?

COHEN: Well, the less happy people, the people who report less enthusiasm, less happiness, are almost three times more likely -- I think it's 2.9 times more likely to catch a cold than the people who are the happiest.

KAGAN: Well, Dr. Drew seems pretty happy. He's happy just that he's here with us tonight.

So you're looking pretty healthy. What do you make out of this study?

DR. DREW PINSKY, ADDICTION SPECIALIST: I think it's a wonderful experiment. I think it opens us up to a discussion about a new holism, I think.

We're so concerned about putting things in our mouth to make ourselves healthier. I just saw on the strip running under your picture that a new study at the University of Washington shows echinacea does nothing for colds with young people. Surprise, surprise. We are a holistic being. And what goes on in our brain affects the rest of our physiology.

And we should paying much more attention to our mental health. And, indeed, we've known for a long time people with suboptimal mental health get more illness. And here's a great study that shows not only cancer and heart disease and other things that may be related to behaviors, but here's an explicit example of an infectious disease being more easily fought off by people who have better flexibility, better resilience emotionally, better interpersonal connectedness, and better satisfaction in their work, play and relationships.

KAGAN: Well, and Dr. Sheldon -- Dr. Sheldon Cohen -- let's take this one step further and say, well, why just stop with the common cold? If you're happy, are you less likely not just to get the cold, but the flu, cancer, heart disease as well?

COHEN: Well, we don't have direct evidence on this, but we do have some findings in this study that are very suggestive.

People with this positive emotional style, the happier people, have better lifestyle practices. They exercise more. They drink less. They -- and they smoke less. And they sleep better.

KAGAN: And those are some really big things. That's a lot more than just putting a smile on your face.

COHEN: Right.

They also have lower levels of stress hormones. So, all of these things are potential issues in other diseases. So, it certainly leads us to think that there is this possibility that positive emotions may be related to the development of other diseases as well.

KAGAN: And what about the part about social life? How did that come into the study?

COHEN: Well, we've actually looked at the notion of extroversion for several years several different times, and very consistently find that extroverts and people who have diverse social networks, have friends, family, social groups, belong to churches are more resistant to cold viruses.

And this is kind of a mixed finding in a sense, because, in our studies, we expose people to cold viruses. We're really interested in their body's ability to fight off the infection to prevent you from getting a cold.

KAGAN: So part of your job, you give people colds,or try to?

COHEN: We actually give people colds. So, in an extroversion study, for example, we would measure extroversion in people. We would bring them in. We give them nasal drops in each nostril that contain particles of cold viruses. And then we follow them for six or seven days, depending on the study, and we see if they develop a cold. And not everybody gets a cold when they're exposed to a virus. And whether they get a cold or not depends on their immune system's ability to fight off the infectious disease.

KAGAN: And, Dr. Drew, I'll just wrap it up with you. We're not telling people, well, it's important to be happy, but don't bother watching your hands or, you know, your mother tells you, put a sweater on before you go outside.

(CROSSTALK)

PINSKY: Absolutely.

If you get a virus on your hands, your risk of getting this disease is there. There's no risk if the virus doesn't get on your hands. But I think one of the nice things we can extrapolate from the study is that intersubjective interpersonal experiences, which we've known for a long time build self-function, build regulation, build resiliency, these sorts of things that we've not been paying attention to for a long time may and -- well, clearly do affect health.

KAGAN: Well, be happy, be social and be healthy.

Appreciate the information. Dr. Sheldon Cohen and Dr. Drew Pinsky, thanks for being with us.

A revolt in the magic kingdom. Has CEO Michael Eisner worn out his welcome in Disney World?

And was a 7-year-old boy punished at school for saying the word gay? We will talk to his mother.

(COMMERCIAL BREAK)

KAGAN: The wonderful world of Disney is anything but these days, and the atmosphere is positively goofy in the boardroom.

Two board members, including Roy Disney, resigned this week. And both called for the exit of longtime CEO Michael Eisner. Is a changing of the guard coming to the magic kingdom?

Joining us now, media analyst Ken Auletta.

Good evening. Thanks for being here with us.

KEN AULETTA, MEDIA ANALYST: Hi. Pleasure.

KAGAN: Corporate boardrooms can be nasty places. We know this. But the public airing of some of this dirty laundry is just absolutely jaw-breaking this week from the magic kingdom. AULETTA: Well, it's not good news for Michael Eisner. It's good news in that he gets rid of two adversaries from his board. It's bad news in that no one wants to pick up the newspaper and see yourself on the front page humiliated and accused of being incompetent, as he's been.

And, secondly, it's not good news for him, because these two people, one of whose name is on the door, Roy Disney, and the other who is a very experienced financial manager, are as committed to getting rid of Michael Eisner as they were to hiring him 20 years ago.

KAGAN: Well, and they went away, but they are not going away quietly. And they're not completely going away. Some of the charges that we've heard not only from Roy Disney, but Stanley Gold, charges that he's running ABC terribly, the ABC Family channel, talking about micromanagement, running a soulless company, scaring away their most talented employees. These are scathing remarks.

AULETTA: They're scathing remarks uttered by people who have been pushed aside within Disney, as Michael Eisner has managed to push aside anyone who was his adversary over a period of years.

He's a very successful infighter, which is why I would not sell him short in terms, of in the long run, winning this battle. But, in the long run, it's not good news for Michael Eisner to be attacked that way and to have people out there who are your enemy and who are trying to agitate among shareholders, and people who are obviously concerned that ABC has not performed as well as promised, that the theme parks are not in great shape, that the company doesn't have a succession plan in place.

So there are lots of problems hanging over Michael Eisner's head. But I would not say -- if you put a gun to my head and you ask me, do I think Michael Eisner is out tomorrow?

KAGAN: Yes, is he going?

AULETTA: I don't think he's going tomorrow.

KAGAN: You don't think so?

AULETTA: Now, he may be going a year from now. I don't know.

But he won this battle. He kicked Roy Disney off the board and he basically got rid of Mr. Gold. So, in that sense, he's won in the short term. In the long term, I don't know.

KAGAN: But are the charges legitimate? Is Michael Eisner the problem with a company that used to have, in mid-2000, a stock that was selling for $44 and then dropped down into the mid-teens?

AULETTA: And he'll come back and say, well, my stock is twice what it was a year ago.

But it's not good enough. And it's not what it was. That's true. I think, if you like at Michael Eisner, a way to look at him is to say, his first act, the first 10 years he ran that company, was a brilliant first act. He put Disney back on the map. He rejuvenated that company.

The second act, the next decade, was not a brilliant performance. So the question is, will he have a third act?

KAGAN: Well, and let me ask you about that performance, because one of the criticisms coming about Michael Eisner are these huge bonuses, $5 million bonus not tied to performance. Is that legitimate, given the current corporate environment?

AULETTA: This was a very insular company, a company where he put a former schoolteacher of his on the board. He put his architect on the board. It was not a great board.

And, by the way, this is very common in corporate America. So he deserves to be attacked for that board and deserves to be attacked for some of the extravagant bonuses given to himself and other executives. Now, the question is, has he learned something from that? Will he have a new third act? And I don't know the answer to that, nor does anyone else.

KAGAN: And just a final question. This is interesting to business insiders like you, people who follow it for a living. But for the millions of parents who are at home watching the "Finding Nemo" DVD with their kids, do they care what happens in the corporate boardroom of Disney?

AULETTA: Well, they care whether ABC, which is a Disney division, has good shows on the air. They care whether the theme parks are rejuvenated and exciting places to go on family vacations. They care about ESPN, which is owned by Disney.

KAGAN: And they scare about that stock price, which is in a lot of portfolios.

AULETTA: And more important.

And, by the way, more than 50 percent of Americans own stock. So, yes, they care about that stock price.

KAGAN: They care. And so do we. Thanks for coming in, Ken Auletta. Appreciate it.

Tomorrow on PAULA ZAHN NOW, an exclusive interview with Roy Disney.

We'll go to Louisiana and talk to a mom who says her 7-year-old boy was punished at school for using the word gay.

(COMMERCIAL BREAK)

KAGAN: To Louisiana now.

And the mother of a 7-year-old second grader says her son was punished the other day for using the word gay in school. Sharon Huff's son Marcus was asked at recess about his mom and his dad. Marcus explained that he -- quote -- "had two moms." And then he was sent to the principal's office.

As you might imagine, Marcus' mom is not happy about this. Sharon Huff joins us live from New Orleans in Louisiana. And with me here in New York, ACLU attorney Ken Choe.

Sharon, I'm going to start with you.

Take us to that line after recess, and your son Marcus not just saying he had two moms, but explaining, as I understand, to the other second grader what gay means.

SHARON HUFF, MOTHER: OK.

The other boy asked him how he had two moms. And he said, because my mother is gay and our family has two mothers. They live together and we're a family. And the little boy said that he didn't understand that. And he said that gay meant that it was when two girls like each other, as a 7-year-old would say.

KAGAN: And, as I understand it, the teacher overheard your son talking to this other boy and sent a note home, saying she didn't want that discussed in her school and her classroom.

HUFF: Right. She said that that type of discussion was inappropriate in her classroom.

KAGAN: And do you understand how that might represent some other families out there, that they don't want their 7-year-old learning what gay means at school, that this is something they want to be able to talk to their kids about in the privacy of their home?

HUFF: Actually, I totally understand, if it meant that he was talking about something explicit, like sexual conduct or something.

And this had nothing to do with that. This just had to do with the fact that he had two moms and not a mom and a dad.

(CROSSTALK)

HUFF: And so I compare this to being like -- like being adopted or any other nontraditional family.

KAGAN: We have a statement from the school, from the school district. And it's from the Lafayette Parish school superintendent, James Easton. He says: "It would surprise me if this accusation is accurate. A child can't be disciplined for using the term gay. If one were, it would be a violation of their rights."

And yet you say your son has been disciplined. So what's the discipline for?

HUFF: He was disciplined for using the word gay. And if this does not represent the school board, somebody has disciplined him at school. And he had to be sent for further action. So I would say, yes, he has been. And, no, he shouldn't have been. And it's not legal, no. And it's not right. And it shouldn't be done. But it has.

KAGAN: All right, Ken, let's bring you in here. Let's bring in the ACLU. What would you like to see happen?

KEN CHOE, ACLU: Well, we have two goals here.

The first is to ensure that the censorship and discrimination against Marcus stops, to be sure that he can talk about his family in school, just like any other student can. We also are seeking an apology. We think it's important that the school correct the damaging message that it sent to Marcus, which is that his family is so unworthy that, if he talks about his family, he's subject to punishment.

The second thing we want is to send a message to schools and school districts across the country that they have children in their schools that are children of lesbian and gay parents, and they should not be sending them this damaging message.

KAGAN: Any response from the school yet?

CHOE: We have not received a formal response from the school.

KAGAN: And to the families that say, I don't want my kid learning about that at school, what would you say to them?

CHOE: Well, families are certainly entitled to talk about this issue with their children as they wish. But it's not the place of the school or the government to police those conversations.

KAGAN: And, Sharon, just real quickly -- we have about 10 seconds left -- where is Marcus? Is he in school? And how is he dealing with this controversy?

HUFF: He's in school, but he told me he's really confused and he feels sad, because he can't talk about his parents, like other kids can. And it's not fair.

KAGAN: We will be tracking it. And it's difficult for a 7-year- old.

Thank you, Sharon Huff. Ken Choe, thank you so much.

HUFF: Thank you.

KAGAN: That's going to do it for us. Paula Zahn will be back tomorrow.

"LARRY KING LIVE" up next with "The Bachelorette," Trista Rehn. And the wedding is right around the corner.

Good night.

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





Eisner Facing Revolt>


Aired December 2, 2003 - 20:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: "In Focus" tonight: the search for a young North Dakota woman. A convicted sex criminal is in custody on kidnapping charges. But Dru Sjodin is still missing.
Was a 7-year-old boy punished at school for say the word "gay"? We'll talk to his mom.

And the future of Michael Eisner. The man at the helm of the Disney entertainment empire now faces a revolt from its board of directors.

Good evening and welcome. I'm Daryn Kagan, in for Paula Zahn.

Also ahead tonight, Christiane Amanpour reports on the challenges facing Iraq's new police force, targets of terrorists themselves, yet short on manpower and weapons.

And why do you get so many colds and the guy next door gets so few? New science says it could all be about attitude.

Plus, new numbers show American factories racing up to keep with demand and businesses ready to hire more workers. Is the economy back on track?

And we'll ask our Joe Klein what the Democratic presidential candidates will have to do to counter what bright economic news is coming out and the president's headline-grabbing holiday trip to Iraq.

First, here are some headlines you need to know right now.

Investigators in Ohio say they have linked a dozen shootings along one stretch of highway near Columbus. And they say four of the shootings were done with the same gun. A 62-year-old woman was killed last week in one of the shootings along I-270.

The oldest son of convicted D.C. area sniper John Allen Muhammad called his father a manipulator in court today. Lindbergh Williams testified in the trial of alleged sniper accomplice Lee Boyd Malvo. Malvo's lawyers want to show that he was indoctrinated by Muhammad and couldn't tell right from wrong.

There are new terror warnings today for attacks against U.S. targets in Saudi Arabia and Kenya. The State Department issued the alerts just weeks after a suicide attack in Riyadh. A U.S. official also says there's concern that al Qaeda may strike in London or attack British targets elsewhere. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our community is a safer place this morning. But law enforcement officials continue to be resolute in our commitment to find Dru Sjodin and bring her home.

Dru, we will find you.

(END VIDEO CLIP)

KAGAN: "In Focus" tonight: the search for missing college student Dru Sjodin, last seen on November 22. Police believe she's still alive, even though they have a suspect in custody charged in her kidnapping. He's an ex-convict who served 23 years in prison for rape and was released just last May.

Joining us live from Minneapolis are Dru's aunt and uncle, Dianne McGuire (ph) and Bob Sutson (ph).

Thank you for joining us during this very difficult time for your family.

UNIDENTIFIED FEMALE: Thank you.

UNIDENTIFIED MALE: Thank you.

KAGAN: What can you tell us about the latest in the search for your niece?

UNIDENTIFIED MALE: Well, we're still -- people are out looking. We have a search party going to go out tomorrow of about 1,000 people. They're asking for help, and looking for Dru.

KAGAN: Let me ask you about this latest development and the arrest of the suspect. On one hand, it must be encouraging that there has been this development. And yet, you hear this man's background and it just has to be absolutely terrifying.

UNIDENTIFIED MALE: Yes.

I guess we were -- first, we were real excited to get some information about Dru. And, obviously, now trying to really find where she's at is where the family's at today.

KAGAN: Diane, have police been able to explain to the family why they believe this man, Alfonso Rodriguez, might be attached to your niece's disappearance?

UNIDENTIFIED FEMALE: Yes. They have pretty tangible evidence that makes us comfortable they have the right person.

KAGAN: And any of that you can share with us, or have the police asked us to keep that quiet for now?

UNIDENTIFIED FEMALE: Absolutely not. Private information.

KAGAN: OK. I understand and I respect that.

Can you tell us little bit more about your niece? She's absolutely a beautiful young woman, as we can see from the photos, not just her looks, though. She seems like she has such a vivacious sense of life.

UNIDENTIFIED FEMALE: You are absolutely right.

In those pictures, she is beautiful. But I don't know if you can see the sparkle in those blue eyes. And she's as beautiful on the inside as she is on the outside, and just a gem in our family. And we want her back. And we're sure we're going to get her back.

KAGAN: Tell us about some of her plans. We knew she was working at the mall, at the Victoria's Secret store, going to school. Any plans for travel?

UNIDENTIFIED FEMALE: Yes. In fact, she was planning a trip to Australia. But she is looking to graduate here this year with a major in communications. And she has a love for art. And her plans were to go on to an art school after she finished up at UND.

KAGAN: And, also, I understand a love of children. Didn't you take her along on one of your family trips this year?

UNIDENTIFIED FEMALE: Actually, she -- I had a conference, and she -- I had to take my five-week-old baby and she came along and acted as the nanny. We went to New Orleans. And we were just so glad she's always been there for us. She's the godmother of our son and just -- can't say enough.

KAGAN: A very special member of your family. You can't say enough about her.

Do you believe in your heart that she's still alive?

UNIDENTIFIED FEMALE: I do.

UNIDENTIFIED MALE: Very much so.

KAGAN: Well, we wish you well in those hopes and the search for your niece, we can tell not only a beautiful young woman, but a treasured member of your family. Thank you so much. I know it's a very, very difficult time for you and your family.

UNIDENTIFIED MALE: Thank you.

KAGAN: Our thoughts are with you.

UNIDENTIFIED MALE: Thank you.

KAGAN: Bob Sutson (ph) and Diane McGuire (ph), the aunt and uncle of Dru Sjodin.

We move on now and try to get more information about this case. We want to take a closer look at the man who is charged with Dru's kidnapping. His name, Alfonso Rodriguez Jr., a 50-year-old ex-convict with a very disturbing past. He was released last May, after serving time for raping two women.

Wayne Swanson prosecuted Rodriguez for one of those crimes. It was back in 1980. He's joining us now from Grand Forks, North Dakota.

Mr. Swanson, thank you for being here with us.

WAYNE SWANSON, PROSECUTOR: Thank you.

KAGAN: What can you tell us about that case back in 1980? He approached this woman, as I understand, with a knife. And what happened from there?

SWANSON: That's correct.

He approached her. He tried to force her into a motor vehicle, apparently threatened her. And she fought him off. And he did stab her at that point in the abdomen. But she was successful in getting away and getting into a house and getting some help. And he then left the scene. And later, through investigation, we were able to identify him, particularly since the victim in that case was an artist. And she drew a full-head portrait for us of the person who had attacked her.

KAGAN: As I understand it, incredibly accurate. And you were able to hold that picture up in the courtroom, and that helped lead to this conviction.

SWANSON: Yes. During final argument, I held the picture alongside of the defendant's head and asked the jury to keep that in mind when they went back into the jury room.

KAGAN: I'm going to call on you to help us understand how the law works here a little bit, because, with this conviction and his previous convictions, he was sentenced to over 20 years in prison, because he had the previous conviction. So he does over 20 years.

SWANSON: That's correct.

KAGAN: And then, when he was released after 23 years, there was no parole in this case. Is that because he had served the full sentence?

SWANSON: He served the full sentence.

Normally, what happens is, a person would serve a portion of the sentence, such as two-thirds or three-quarters, two-thirds in Minnesota. And then they would be on what's called supervised release. In his case, for reasons that I don't fully know, he did not have any supervised release. He served the entire sentence in confinement.

KAGAN: And the way that works, when your sentence is up, you walk out the door.

SWANSON: Basically, you still have to register as a sex offender.

But my understanding is that there is no active supervision. But you do have a 10-year requirement that they have to remain registered with the state as a sex offender.

KAGAN: And, as I understand it, he was registered as a -- or was known as a level-three sex offender, one who is most likely to commit a sexual offense again?

SWANSON: That's my understanding. There's level one, two, and three. Level three is the highest level of risk.

KAGAN: Wayne Swanson, thanks for helping us look back and understand a little bit more about this man who is in custody tonight in connection with the kidnapping of the Dru Sjodin. We appreciate it.

SWANSON: Thank you.

KAGAN: Well, you can be sure that police are now trying to get information out of Rodriguez, desperate to find out where Dru Sjodin is. Interrogation is one of the most important tools used by police. You've seen it time and again on television shows.

Let's take a look.

(BEGIN VIDEO CLIP, "HOMICIDE")

ANDRE BRAUGHER, ACTOR: So what you thought was going to be a simple little robbery turned into a bloodbath. And now you're not ever going anywhere ever, ever, ever!

UNIDENTIFIED ACTOR: This interview is over.

BRAUGHER: I don't have a triggerman, counselor. I've got the next best thing, an accessory. I've got an accessory, counselor.

(END VIDEO CLIP)

KAGAN: All right, that's what it's like on television in "Homicide." That's fiction, but what is the real-life situation when life depends on the outcome?

Joining us now, former police Detective Bill Majeski.

Bill, thanks for being here with us.

BILL MAJESKI, FORMER NYPD DETECTIVE: Thanks for having me.

KAGAN: You're kind of chuckling, not because it is funny. But when you look at that, is that what it looks like in the interrogation rooms?

MAJESKI: You know, actually, each investigator has his own technique in conducting an interrogation. But an interrogation, by its very nature, is trying to extract information from a person that doesn't want to give you that information. And, in addition to that, that information, when it is given, is to the detriment of that person that's giving it to you.

(CROSSTALK)

KAGAN: And so are kind of in this weird battle and negotiation with this person.

MAJESKI: Yes, you're in a weird battle.

It's a psychological game. You're going to have to finesse the person. In this particular instance, we can hope and it appears that there is some belief that she is still alive. And, hopefully, she still is. So that makes it even a more delicate situation, because what they're trying to do is find her, if she is still alive, find her as quickly as they possibly can, because this fellow, if she is still alive, put her someplace where she's not able to escape on her own.

She's there. She's there now for a couple days, because he's in custody.

KAGAN: Right.

MAJESKI: So it's a life-threatening situation. So what they have to do is, they have to finesse him into giving them some information that will be useful to them, not necessarily

(CROSSTALK)

KAGAN: I would think you have to, then, give him something that is going to be of value to him. How do you do that?

MAJESKI: It is going to be a negotiation of sorts. Clearly, he has very little to gain by giving the information. So it's going to take a shrewd investigator to go in there and try to extract from him little bits of information that then can be used as clues in conjunction with the investigative process that's ongoing as we are speaking now.

KAGAN: Well, and I imagine this is a very difficult dance, because if you take it too far and you tick the guy off, then you lose them and you lose your one possible trace to the woman.

(CROSSTALK)

MAJESKI: No question about it. So it's a very delicate situation and has to be finessed eloquently.

KAGAN: I just want to ask you one final question.

MAJESKI: Yes.

KAGAN: In all your years of the job, how does time factor into this? She's been missing since November 20. The police talk -- the family believes she's still alive. How does history work in this case?

MAJESKI: Usually against her.

But there seems to be some hope in this particular case that she is still alive. So you have to go with that and move as quickly as they possibly can. It's apparent that they're doing a very good job in the investigative process. They're piecing together the investigation. And it's like a giant jigsaw puzzle. And they're getting the pieces. And a good interrogation with him can perhaps extract one or two bits of information that will make that picture very clear and hopefully find her.

(CROSSTALK)

KAGAN: I think a lot of people, with the Elizabeth Smart case, saw that, sometimes, you keep hope alive long enough and there can be a happy ending.

MAJESKI: Absolutely.

KAGAN: Thank you for your insight. Appreciate it so much.

Well, tomorrow on PAULA ZAHN NOW, you're going to hear from the mother of Dru Sjodin. So join Paula, please, for that interview.

What are the challenges facing the new Iraqi police force? We'll get a report from CNN's Christiane Amanpour.

There's trouble in the world of Disney, CEO Michael Eisner facing a revolt in the magic kingdom.

And can you beat a cold with a smile? We'll find out.

(COMMERCIAL BREAK)

KAGAN: Suddenly, the holiday season is not looking so rosy for the Democratic presidential candidates. There are new signs that the economy is improving. And President Bush grabbed headlines with his surprise Thanksgiving trip to Iraq.

Joining us from Manchester, New Hampshire, regular contributor and "TIME" magazine columnist Joe Klein.

Joe, good evening.

JOE KLEIN, CNN CONTRIBUTOR: Hi, Daryn. How are you? It's cold up here.

KAGAN: It's cold here in New York City as well. And it's getting little chilly for Democrats out there. We're two days past the weekend. Have the Democrats recovered from what took place over the weekend, that one-two punch?

KLEIN: Well, I think that there have been a number of punches in the last few months on the domestic side that the Democrats have had to deal with. Clearly, the economy is getting better. The Congress just passed a major new entitlement, the prescription drug benefit for the elderly, will is going to redound to the president's benefit. And this is kind of weird for the Democrats, because they expected that they were going to run on domestic issues. But the war is still out there. And even though the president did a rather remarkable thing of flying into Baghdad and delivering the Thanksgiving turkey on Thursday, the question is whether the policy toward Iraq is a turkey.

And I think that this election over the next year is going to be a question of how the people react to the president's decision to go to war with Iraq in the first place.

KAGAN: All right, Joe, I want to bring you back to a couple points first. First of all, let's look at these economic numbers. You can't dismiss that they are good. And it's hard to be a Democratic candidate to go up there and go, oh, shucks, that the economy is recovering. So what goes back to the old Clinton saying that it's the economy, stupid? If the economy is on track, where do the Democrats go from there?

KLEIN: It was the economy, stupid, in 1992.

But we are living in a completely different world now, since September 11. And the question of national security is what this election was always going to be about, whether the Democrats liked it or not. And they didn't like it. But now you have the president bogged down in a very questionable situation in Iraq. And you have the larger question of whether he should have gone there in the first place.

And that is clearly what this election is going to be about and what it's been about. The reason why Howard Dean is the Democratic front-runner is because he took the strongest position again the war from the very beginning.

KAGAN: But can Howard Dean sustain what he has working right now and can he win a national election? And if not Howard Dean, then who is there for the Democrats?

KLEIN: Well, if I knew the answer to that, I would be a lot richer than I am, Daryn. That's why we have elections.

We're going to go through this year. And I'll tell you something. This election is less in the hands of the politicians than any I have ever covered. It's more in the hands of fate. What happens, God forbid, if we have another terrorist act in American? What happens if the situation in Iraq continues to go south? What happens if we have problems in other countries?

We're at the beginning of a major struggle against Islamic radicalism. What the Democrats have to do is come up with an alternative to the way that the president has been handling this.

KAGAN: All right, you'll be tracking it.

KLEIN: Absolutely.

KAGAN: From the land of New Hampshire. You're rolling up those sleeves early and enjoying it. Joe Klein...

KLEIN: Actually, I put on my overcoat.

KAGAN: Put on your overcoat, yes. Don't roll up your sleeves. Roll them down, but get to work. Thank you so much for that.

KLEIN: OK.

KAGAN: Well, there's more ahead tonight on President Bush and the economy and whether it really is back on track.

Is keeping healthy this cold season all a matter of your attitude? We'll have the results of a new study that says a spring in your step and a smile on your face may keep the doctor away.

And Christiane Amanpour's report on Iraq's new police force and the challenges facing it.

(BEGIN VIDEO CLIP)

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: "I don't think, at present, we have sufficient capability," he says. "From our borders, all the way to Baghdad, we need enough force to foil the saboteurs. And right now, we don't have it, because there aren't enough police and no Iraqi army."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KAGAN: Becoming part of Baghdad's thin blue line is a dangerous proposition. More than 100 police officers have been killed since the end of the war.

Christiane Amanpour looks at the efforts of the Iraqi police to protect the public while protecting themselves.

(BEGIN VIDEOTAPE)

AMANPOUR (voice-over): The police are working out of the hulk of their devastated station in Baghdad one month after it was blown up in a suicide bomb. Police chief Salam Al-Assad (ph) says the engine of the suicide truck flew through the building and hit the wall of his office, where he was working.

(on camera): You were lucky?

UNIDENTIFIED MALE: Yes.

AMANPOUR (voice-over): Six of his men were killed, raising the number of Iraqi police deaths to more than 100 and further complicating the hunt for insurgents.

Despite all of this, Colonel Al-Assad remains at his desk, but:

(on camera): You have no telephone?

UNIDENTIFIED MALE: Yes. We have no telephone.

AMANPOUR: No computer?

UNIDENTIFIED MALE: No computer. Many things, we need.

AMANPOUR (voice-over): But the U.S. plan to reduce its troop numbers by May depends on successfully building up Iraqi forces.

(on camera): This police station is meant to take over security for this whole neighborhood. But the police commander here says they're not ready and they won't be, unless they get many more officers, much more training, and much more equipment.

(voice-over): "I don't think, at present, we have sufficient capability," he says. "From our borders, all the way to Baghdad, we need enough force to foil the saboteurs. And right now, we don't have it, because there aren't enough police and no Iraqi army."

Indeed, some U.S. military officials tell us, disbanding the Iraqi army last summer was among America's biggest postwar blunders. The head of the U.S. occupation here, Paul Bremer, fired them. And only one new Iraqi battalion has been formed so far. Bush administration officials claim that more than 100,000 Iraqi soldiers, police and other security forces are operational. But top U.S. military officials say the number is closer to 60,000.

Many of them have only three weeks training. And some have to share weapons, vehicles and radios. Colonel Al-Assad says the attacks won't deter him from working for the new Iraq. But the shortages, he says, means American forces won't be able to leave yet, "not until we get enough weapons, enough policemen, and enough training to meet the security situation we face now."

The U.S. wants to scale back within six months. But, on the ground, U.S. officers tell us it will be several years before a capable Iraqi force can be deployed.

Christiane Amanpour, CNN, Baghdad.

(END VIDEOTAPE)

KAGAN: Let's stay with Iraq now.

There is now an official voice for the country. Rend al-Rahim was recently appointed Iraq's informal ambassador to the U.S. The Iraqi-born American citizen will represent the country's governing council, as the nation moves closer to becoming a sovereign state again.

Joining us from our Washington bureau in D.C. is Rend al-Rahim.

Madam Ambassador, good evening and thanks for being with us. REND AL-RAHIM, IRAQ'S INFORMAL AMBASSADOR TO U.S.: Good evening. Thank you.

KAGAN: This is truly historic. It's been, I think, 13 years since Iraq has had any kind of ambassador representing that country in the nation's capital.

AL-RAHIM: Yes, indeed.

The chancery has been empty. There has not been any Iraqi representation, not only in Washington, but there hasn't been in very many capitals of the world. So we are breaking new ground. And this is sort of an opening first move. And we're hoping that more ambassadors will be posted around capitals.

(CROSSTALK)

KAGAN: I'm sorry. It's just that our time is so short and I have so many questions for you.

I think some people would be surprised to see a woman filling that role.

AL-RAHIM: I think I'm the first Iraqi woman ambassador ever.

And that's significant, because it sort of signals the face of the new Iraq, if you see what I mean. We want to send a clear message that this is a new country with a new agenda, a new outlook on the world.

KAGAN: What message, though, does it send to the Iraqi people that the person representing their country is actually a U.S. citizen who hasn't lived in their country, has been living here in America for the last 12 years? Do you think you'll get the proper respect?

AL-RAHIM: Well, I certainly hope I will get the proper respect.

I have to tell you that I am one of about four million Iraqis who were forced to flee Iraq and leave their country not by choice, really, but because they were persecuted politically. And all of these four million Iraqis are good, patriotic Iraqis who love their country and want to serve it. So there are many of them. And many of them, by the way, have returned to Iraq and are helping politically, helping in reconstruction. And Iraqis who have never left Iraq accept us as genuine Iraqis who want to do some good.

KAGAN: You have been back since the war. We hear so many conflicting reports, some people saying it's all terrible, some people saying, you need to stress the positive. What is really going on in your home country? What are the conditions like in Iraq?

AL-RAHIM: I think, to be realistic, one has to say it's a mixed picture.

And I know that, for the news media, it's perhaps more interesting to stress the negative aspects and the terrorist acts. But, actually, that's not the whole story. Part of the story is that people have more money to spend. There are more jobs. Salaries are far, far higher than they have been in the last 15 years. There is purchasing power in the country. And goods are sold. Satellite dishes are all over the place. People are buying new houses. They're buying fridges, TV sets, a lot of commodities.

(CROSSTALK)

KAGAN: I'm sorry, because I need to get all these questions in.

The danger is still there. And there's also this incredible challenge of reaching the point where Iraqis can rule themselves. And I know you're appointed by the governing council, so you might be biased in this. But can this group of people that comes from so many different groups and religions and ethnicities, can they get it together, and can they come up with a constitution, and can they rule Iraq?

AL-RAHIM: Well, two things.

First of all, this is the most representative group of people that has ever governed Iraq. They represent multiple ethnicities, religious backgrounds, and so on. And they really are a diverse, pluralistic group. However, keep in mind that they are not alone in moving Iraq towards the sovereignty. There's also a cabinet. There's a group of ministers. There is going to be a transitional assembly by June 30. And it is through the participation of the people throughout Iraq that we are going to have this transitional assembly.

So we are working on a pluralistic, representative process, the likes of which we have never had in Iraq. So it is truly a new experiment and a new experience for us.

KAGAN: And not just for Iraq, but for the world. And the world will be watching.

AL-RAHIM: Yes, indeed.

KAGAN: Madam Ambassador, thank you for your time.

AL-RAHIM: Thank you.

KAGAN: And good luck in the hard work you have ahead for you and your country.

AL-RAHIM: Thanks very much.

KAGAN: Ambassador Rend al-Rahim.

New indicators show unexpected growth in the American economy. Our debate tonight, is it really back on track? And does President Bush deserve the credit?

Also, we'll talk to a mother who says her 7-year-old son was punished at school because he used the word gay.

And tomorrow, an exclusive: Roy Disney speaks out on what he says is the downfall of his uncle's magic kingdom.

(COMMERCIAL BREAK)

KAGAN: And here are some headlines you need to know right now.

Yaser Hamdi, the Taliban American who has been held for two years since Being captured in Afghanistan, will now by allowed to have his own lawyer. That is according to the Pentagon. Hamdi was born in Louisiana, but grew up in Saudi Arabia. He has appealed to the U.S. Supreme Court to protest his detention.

Federal officials are now investigating the death of a man beaten by Cincinnati police over the weekend. Nathaniel Jones attacked two police officers and was then subdued. He died in a local hospital a short time later. There are two local investigations into the incident as well.

And the cancer doctor who cared for the rock star George Harrison has been reprimanded for talking to the press. Dr. Gilbert Lederman accepted censure and a $5,000 fine. He had told a newspaper that Harrison had been -- quote -- "quiet and dignified and that he was not afraid of death."

And now to our debate tonight.

There is rising optimism among many economists that the U.S. economy is back on track. And President Bush has been quick to claim the credit. But is he entitled or is he just benefiting from some good timing?

Joining us now from Watertown, Massachusetts, Robert Reich, the former secretary of labor in the Clinton administration; and, in Washington, Kevin Hassett of the American Enterprise Institute.

Gentlemen, good evening. Thanks for being here with us.

ROBERT REICH, FORMER LABOR SECRETARY: Hi, Daryn.

KAGAN: Mr. Reich, we are going to start with you. We have prepared some numbers for you, for you to peruse and to comment on. Let's put them up on the screen, manufacturing first, at its highest in 20 years. The Dow Jones, the Nasdaq, the S&P have all, in recent days, hit their highest in 18 months. Gold is selling higher than it has in eight years. And even construction spending in this country is at its highest ever.

So, Robert Reich, has the president turned around the economy? The numbers are there to do the speaking.

REICH: Well, Daryn, let's hope that the economy is now back on track.

We're certainly improving. A lot of the numbers are showing that. We'll know more Friday, when the last month's unemployment figures come out. But, remember, we lost, over the last three years, three million jobs in the United States economy. We still have a very, very long way to go. There are too many Americans who are not working or are working part-time who would rather be working full-time or are too discouraged to look for work.

So we may be out of the woods, but we're still in the swamp.

KAGAN: All right.

From the swamp, we want to bring Kevin in.

No personal comment on that, but I do want to throw other number in there before you can pat President Bush on the back there. And that is the deficit, record federal deficit numbers. How does that play into it? And is this just a quick fix and just good times now?

KEVIN HASSETT, AMERICAN ENTERPRISE INSTITUTE: Well, right now, we would have to say that, looking ahead, the economy looks about as good as it's ever looked.

We're coming off of an amazing quarter. And all the signs are that economic growth almost that high is likely to continue for the foreseeable future. And so the fact is, right now, things are good. And the only really bad news is that the labor market, as Secretary Reich mentioned, hasn't really taken off yet and the deficit is higher than we would like.

But the fact is that deficit is high because President Bush passed some policies that were designed to get us out of the recession. They appear to have worked. And the labor market seems to be taking off. And so I think that the Democrats are going to have a hard time finding anything to talk about next year, at least about the economy.

KAGAN: Well, one thing that they can talk about is when the bills come due. As you said, there is this tax cut. There are the record deficits. These bills are going to have to be paid at some time, someplace.

So, Mr. Secretary, when do you think that will happen and how will it happen?

REICH: Well, Daryn, right now, a deficit is not necessarily a bad thing, because we have so much underutilized capacity in the economy, so many factories that are idle, so much office space, so much equipment, so many people that are not being used.

Having the government run a huge $500 billion deficit is certainly a way to get the economy moving. But, over the longer term, when the economy gets back on track, let's say maybe two years from now, those big deficits will come back to haunt us. Those big deficits will crowd out private investment. It will make it harder to get the capital for private businesses that they need and will drive up interest rates.

That's the big problem. That's the big fear. That's why big deficits are bad. That's why Bill Clinton in 1993 and 1994, you remember, inherited huge deficits and did everything he could to get the deficits down. And that led to an economic expansion.

KAGAN: All right, Kevin, I see you actually nodding at Secretary Reich.

HASSETT: Well, Secretary Reich has a much more healthy attitude about deficits than Secretary Rubin used to.

He's right. The fact is that, when there's a recession, you should run deficits. But if you run deficits forever, then you're going to run out of money. Now, the interesting question is, how are we going to fix the problem in the years ahead?

KAGAN: Exactly my question. So what's the answer?

(CROSSTALK)

HASSETT: Well, as a Republican, what I would like to see is that we stop the growth of government. And the thing that I'm most concerned about, about the Bush record of the last couple years is that he's increased spending at really an alarming rate.

Three of the five biggest increases in government spending in U.S. history have occurred in the first three years of the Bush administration. And the other two were in World War II. So Bush is spending a lot of money.

(CROSSTALK)

REICH: Excuse me for interrupting, but we are fighting a war on terrorism. A lot of these expenditures are necessary. We have a huge tax cut, $1.7 trillion.

When you have that kind of tax cut and you are trying to fight a war, and you are also providing a $400 billion drug benefit in Medicare and doing a lot of other things, well, you can't do everything. And that's why that deficit is going to be there.

(CROSSTALK)

KAGAN: Final seconds, one-word answer. And I want to take this from Joe Klein. Come around the election time in November, will the election be on the economy or on terrorism?

HASSETT: Well, the economy will really help President Bush. It's going to be wonderful next year.

KAGAN: That's like six words. Quickly.

REICH: I think jobs are still going to be a big issue. It's jobs, stupid.

KAGAN: Jobs, stupid. OK, we'll leave on that final word.

Former Secretary Robert Reich, thank you. And, Kevin Hassett, appreciate your time.

(CROSSTALK)

REICH: Bye-bye, Daryn.

KAGAN: I like the discussion.

Can a smile on your face save you from a stuffy nose? A new study says, don't get sick; get happy.

And there is more trouble in Disney World. Can Disney Michael Eisner keep the keys to the kingdom?

(COMMERCIAL BREAK)

KAGAN: Let's talk a little bit of health news now.

Flu season arrived early this year. And thousands of Americans have already gotten it. One factor is an especially powerful strain of the virus that wasn't included in this year's flu vaccine. But there is more upbeat news today in the battle against the common cold. It comes from a researcher who may have found reasons that some people don't get sick as often as the rest of us.

It's about personality, stress, and your social life. To put it in "Plain English," psychologist Sheldon Cohen joins us from Pittsburgh to talk about his work on colds. Also joining us from Los Angeles, frequent contributor, Dr. Drew Pinsky.

Gentlemen, good evening.

SHELDON COHEN, CARNEGIE MELLON UNIVERSITY: Good evening.

KAGAN: And, Dr. Sheldon, we'll start with you. It sounds like you're saying just be happy and you'll be healthy.

COHEN: Well, basically, that's true.

We found that people who have -- report positive emotions, being happy, being enthusiastic, being calm, are less susceptible to infection when they're exposed to cold viruses.

KAGAN: This sounds kind of like common sense. So can you put a few numbers with it, to tell us how much healthier happy people are?

COHEN: Well, the less happy people, the people who report less enthusiasm, less happiness, are almost three times more likely -- I think it's 2.9 times more likely to catch a cold than the people who are the happiest.

KAGAN: Well, Dr. Drew seems pretty happy. He's happy just that he's here with us tonight.

So you're looking pretty healthy. What do you make out of this study?

DR. DREW PINSKY, ADDICTION SPECIALIST: I think it's a wonderful experiment. I think it opens us up to a discussion about a new holism, I think.

We're so concerned about putting things in our mouth to make ourselves healthier. I just saw on the strip running under your picture that a new study at the University of Washington shows echinacea does nothing for colds with young people. Surprise, surprise. We are a holistic being. And what goes on in our brain affects the rest of our physiology.

And we should paying much more attention to our mental health. And, indeed, we've known for a long time people with suboptimal mental health get more illness. And here's a great study that shows not only cancer and heart disease and other things that may be related to behaviors, but here's an explicit example of an infectious disease being more easily fought off by people who have better flexibility, better resilience emotionally, better interpersonal connectedness, and better satisfaction in their work, play and relationships.

KAGAN: Well, and Dr. Sheldon -- Dr. Sheldon Cohen -- let's take this one step further and say, well, why just stop with the common cold? If you're happy, are you less likely not just to get the cold, but the flu, cancer, heart disease as well?

COHEN: Well, we don't have direct evidence on this, but we do have some findings in this study that are very suggestive.

People with this positive emotional style, the happier people, have better lifestyle practices. They exercise more. They drink less. They -- and they smoke less. And they sleep better.

KAGAN: And those are some really big things. That's a lot more than just putting a smile on your face.

COHEN: Right.

They also have lower levels of stress hormones. So, all of these things are potential issues in other diseases. So, it certainly leads us to think that there is this possibility that positive emotions may be related to the development of other diseases as well.

KAGAN: And what about the part about social life? How did that come into the study?

COHEN: Well, we've actually looked at the notion of extroversion for several years several different times, and very consistently find that extroverts and people who have diverse social networks, have friends, family, social groups, belong to churches are more resistant to cold viruses.

And this is kind of a mixed finding in a sense, because, in our studies, we expose people to cold viruses. We're really interested in their body's ability to fight off the infection to prevent you from getting a cold.

KAGAN: So part of your job, you give people colds,or try to?

COHEN: We actually give people colds. So, in an extroversion study, for example, we would measure extroversion in people. We would bring them in. We give them nasal drops in each nostril that contain particles of cold viruses. And then we follow them for six or seven days, depending on the study, and we see if they develop a cold. And not everybody gets a cold when they're exposed to a virus. And whether they get a cold or not depends on their immune system's ability to fight off the infectious disease.

KAGAN: And, Dr. Drew, I'll just wrap it up with you. We're not telling people, well, it's important to be happy, but don't bother watching your hands or, you know, your mother tells you, put a sweater on before you go outside.

(CROSSTALK)

PINSKY: Absolutely.

If you get a virus on your hands, your risk of getting this disease is there. There's no risk if the virus doesn't get on your hands. But I think one of the nice things we can extrapolate from the study is that intersubjective interpersonal experiences, which we've known for a long time build self-function, build regulation, build resiliency, these sorts of things that we've not been paying attention to for a long time may and -- well, clearly do affect health.

KAGAN: Well, be happy, be social and be healthy.

Appreciate the information. Dr. Sheldon Cohen and Dr. Drew Pinsky, thanks for being with us.

A revolt in the magic kingdom. Has CEO Michael Eisner worn out his welcome in Disney World?

And was a 7-year-old boy punished at school for saying the word gay? We will talk to his mother.

(COMMERCIAL BREAK)

KAGAN: The wonderful world of Disney is anything but these days, and the atmosphere is positively goofy in the boardroom.

Two board members, including Roy Disney, resigned this week. And both called for the exit of longtime CEO Michael Eisner. Is a changing of the guard coming to the magic kingdom?

Joining us now, media analyst Ken Auletta.

Good evening. Thanks for being here with us.

KEN AULETTA, MEDIA ANALYST: Hi. Pleasure.

KAGAN: Corporate boardrooms can be nasty places. We know this. But the public airing of some of this dirty laundry is just absolutely jaw-breaking this week from the magic kingdom. AULETTA: Well, it's not good news for Michael Eisner. It's good news in that he gets rid of two adversaries from his board. It's bad news in that no one wants to pick up the newspaper and see yourself on the front page humiliated and accused of being incompetent, as he's been.

And, secondly, it's not good news for him, because these two people, one of whose name is on the door, Roy Disney, and the other who is a very experienced financial manager, are as committed to getting rid of Michael Eisner as they were to hiring him 20 years ago.

KAGAN: Well, and they went away, but they are not going away quietly. And they're not completely going away. Some of the charges that we've heard not only from Roy Disney, but Stanley Gold, charges that he's running ABC terribly, the ABC Family channel, talking about micromanagement, running a soulless company, scaring away their most talented employees. These are scathing remarks.

AULETTA: They're scathing remarks uttered by people who have been pushed aside within Disney, as Michael Eisner has managed to push aside anyone who was his adversary over a period of years.

He's a very successful infighter, which is why I would not sell him short in terms, of in the long run, winning this battle. But, in the long run, it's not good news for Michael Eisner to be attacked that way and to have people out there who are your enemy and who are trying to agitate among shareholders, and people who are obviously concerned that ABC has not performed as well as promised, that the theme parks are not in great shape, that the company doesn't have a succession plan in place.

So there are lots of problems hanging over Michael Eisner's head. But I would not say -- if you put a gun to my head and you ask me, do I think Michael Eisner is out tomorrow?

KAGAN: Yes, is he going?

AULETTA: I don't think he's going tomorrow.

KAGAN: You don't think so?

AULETTA: Now, he may be going a year from now. I don't know.

But he won this battle. He kicked Roy Disney off the board and he basically got rid of Mr. Gold. So, in that sense, he's won in the short term. In the long term, I don't know.

KAGAN: But are the charges legitimate? Is Michael Eisner the problem with a company that used to have, in mid-2000, a stock that was selling for $44 and then dropped down into the mid-teens?

AULETTA: And he'll come back and say, well, my stock is twice what it was a year ago.

But it's not good enough. And it's not what it was. That's true. I think, if you like at Michael Eisner, a way to look at him is to say, his first act, the first 10 years he ran that company, was a brilliant first act. He put Disney back on the map. He rejuvenated that company.

The second act, the next decade, was not a brilliant performance. So the question is, will he have a third act?

KAGAN: Well, and let me ask you about that performance, because one of the criticisms coming about Michael Eisner are these huge bonuses, $5 million bonus not tied to performance. Is that legitimate, given the current corporate environment?

AULETTA: This was a very insular company, a company where he put a former schoolteacher of his on the board. He put his architect on the board. It was not a great board.

And, by the way, this is very common in corporate America. So he deserves to be attacked for that board and deserves to be attacked for some of the extravagant bonuses given to himself and other executives. Now, the question is, has he learned something from that? Will he have a new third act? And I don't know the answer to that, nor does anyone else.

KAGAN: And just a final question. This is interesting to business insiders like you, people who follow it for a living. But for the millions of parents who are at home watching the "Finding Nemo" DVD with their kids, do they care what happens in the corporate boardroom of Disney?

AULETTA: Well, they care whether ABC, which is a Disney division, has good shows on the air. They care whether the theme parks are rejuvenated and exciting places to go on family vacations. They care about ESPN, which is owned by Disney.

KAGAN: And they scare about that stock price, which is in a lot of portfolios.

AULETTA: And more important.

And, by the way, more than 50 percent of Americans own stock. So, yes, they care about that stock price.

KAGAN: They care. And so do we. Thanks for coming in, Ken Auletta. Appreciate it.

Tomorrow on PAULA ZAHN NOW, an exclusive interview with Roy Disney.

We'll go to Louisiana and talk to a mom who says her 7-year-old boy was punished at school for using the word gay.

(COMMERCIAL BREAK)

KAGAN: To Louisiana now.

And the mother of a 7-year-old second grader says her son was punished the other day for using the word gay in school. Sharon Huff's son Marcus was asked at recess about his mom and his dad. Marcus explained that he -- quote -- "had two moms." And then he was sent to the principal's office.

As you might imagine, Marcus' mom is not happy about this. Sharon Huff joins us live from New Orleans in Louisiana. And with me here in New York, ACLU attorney Ken Choe.

Sharon, I'm going to start with you.

Take us to that line after recess, and your son Marcus not just saying he had two moms, but explaining, as I understand, to the other second grader what gay means.

SHARON HUFF, MOTHER: OK.

The other boy asked him how he had two moms. And he said, because my mother is gay and our family has two mothers. They live together and we're a family. And the little boy said that he didn't understand that. And he said that gay meant that it was when two girls like each other, as a 7-year-old would say.

KAGAN: And, as I understand it, the teacher overheard your son talking to this other boy and sent a note home, saying she didn't want that discussed in her school and her classroom.

HUFF: Right. She said that that type of discussion was inappropriate in her classroom.

KAGAN: And do you understand how that might represent some other families out there, that they don't want their 7-year-old learning what gay means at school, that this is something they want to be able to talk to their kids about in the privacy of their home?

HUFF: Actually, I totally understand, if it meant that he was talking about something explicit, like sexual conduct or something.

And this had nothing to do with that. This just had to do with the fact that he had two moms and not a mom and a dad.

(CROSSTALK)

HUFF: And so I compare this to being like -- like being adopted or any other nontraditional family.

KAGAN: We have a statement from the school, from the school district. And it's from the Lafayette Parish school superintendent, James Easton. He says: "It would surprise me if this accusation is accurate. A child can't be disciplined for using the term gay. If one were, it would be a violation of their rights."

And yet you say your son has been disciplined. So what's the discipline for?

HUFF: He was disciplined for using the word gay. And if this does not represent the school board, somebody has disciplined him at school. And he had to be sent for further action. So I would say, yes, he has been. And, no, he shouldn't have been. And it's not legal, no. And it's not right. And it shouldn't be done. But it has.

KAGAN: All right, Ken, let's bring you in here. Let's bring in the ACLU. What would you like to see happen?

KEN CHOE, ACLU: Well, we have two goals here.

The first is to ensure that the censorship and discrimination against Marcus stops, to be sure that he can talk about his family in school, just like any other student can. We also are seeking an apology. We think it's important that the school correct the damaging message that it sent to Marcus, which is that his family is so unworthy that, if he talks about his family, he's subject to punishment.

The second thing we want is to send a message to schools and school districts across the country that they have children in their schools that are children of lesbian and gay parents, and they should not be sending them this damaging message.

KAGAN: Any response from the school yet?

CHOE: We have not received a formal response from the school.

KAGAN: And to the families that say, I don't want my kid learning about that at school, what would you say to them?

CHOE: Well, families are certainly entitled to talk about this issue with their children as they wish. But it's not the place of the school or the government to police those conversations.

KAGAN: And, Sharon, just real quickly -- we have about 10 seconds left -- where is Marcus? Is he in school? And how is he dealing with this controversy?

HUFF: He's in school, but he told me he's really confused and he feels sad, because he can't talk about his parents, like other kids can. And it's not fair.

KAGAN: We will be tracking it. And it's difficult for a 7-year- old.

Thank you, Sharon Huff. Ken Choe, thank you so much.

HUFF: Thank you.

KAGAN: That's going to do it for us. Paula Zahn will be back tomorrow.

"LARRY KING LIVE" up next with "The Bachelorette," Trista Rehn. And the wedding is right around the corner.

Good night.

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





Eisner Facing Revolt>