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The Situation Room

NASA Officials Weighing Discovery Launch: Former U.S. Soldier Charged with Rape and Murder; North Korea Promises Nuclear Attack If America Attacks; Supreme Court Intervenes in Ongoing Battle Over a Cross in San Diego; Six Hours Away From Deadline for Kidnapped Israeli Soldier; Dramatic Developments in Iraq's Diyala Province; Osama bin Laden Calls For Attacks Against Iraqi Shiites; G.M. Becomes More Ecologically-Friendly; Population in Louisiana Town Sees Increase in Crime Rate; Seymour Hersh Discusses Potential Military Planning in Iran

Aired July 03, 2006 - 16:59   ET

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

JOHN KING, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time.
Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now, a crack whacks a whole in well-laid plans.

It's 5:00 p.m. at the Kennedy Space Center, where a small crack is causing big worries for the shuttle Discovery. But NASA still hopes a successful launch will create a dazzling July 4th display.

Nuclear war.

It's 6:00 a.m. in North Korea, where they're vowing an annihilating strike against the United States should the U.S. strike the north first.

And only on CNN.

In times of high gas prices, General Motors gas guzzlers commit some of the worse sins. But GM is hoping for consumer forgiveness with new green vehicles. Should you be driving one this holiday?

Wolf Blitzer is off today. I'm John King. You're in THE SITUATION ROOM.

Happening now, NASA officials are weighing whether or not to launch space shuttle Discovery tomorrow. The cause for concern, a small crack found in the same foam insulation blamed for the Columbia disaster.

CNN's John Zarrella is live for us now at the Kennedy Space Center with the latest -- John.

JOHN ZARRELLA, CNN CORRESPONDENT: John, that's right, it is the same old bugaboo again here at the Kennedy Space Center, foam insulation causing problems for NASA and the shuttle Discovery and the possibility of a liftoff tomorrow. Right now engineers are working through the problem to decide whether or not they are going to go ahead and attempt the launch.

Now, this is a piece of the foam insulation I'm talking about. This is a much larger piece, but this is where the crack was found. And also, a tiny piece like this fell off of the vehicle and they found it at the base of the shuttle.

Now, what happened was that last night, in the overnight hours, an inspection team went up and looked at the vehicle, and on the external tank -- and you can see it there -- that's the external tank -- right there up by the liquid oxygen connection bracket, a piece -- a crack formed in that -- that bracket area in the foam. And what happened, they think, was that during the course of tanking and de- tanking that super-cold liquid oxygen and hydrogen, that there is expansion and contraction. And during that expansion and contraction, there was a pinching that went on and ultimately formed the crack, and then, of course, the little piece of foam did manage to fall from the vehicle.

Now, NASA engineers and managers have said that there is no way that the tiny piece of foam that fell -- and that's an area the engineers are showing you where it is that the crack is in -- that there is no way that if they had lifted off that there would have been any problem by the small amount of foam that fell off. It would not have been an issue.

But again, right now engineers are working the problem to decide, are there thermal issues, do they need to go take a closer look and make sure there is no other cracking up around the area where they can't see with the cameras? And is it safe to fly?

If they decide that they have to make a fix, if they've got to fix that crack, then that would require some scaffolding to be put out there around the vehicle so that they could gain access to that area. And that would clearly force a delay in tomorrow's launch.

The mission management team, John, is going to be meeting again in about one hour at 6:00 Eastern Time, and we expect a decision perhaps -- perhaps by 8:00, a decision on whether they will go ahead and fly as is or stand down to make the repairs -- John.

KING: And John, if they have to go up and make the repairs with the scaffolding, obviously they won't know exactly what they have to do until they get up there. But any guess on how long that would take?

ZARRELLA: Not really. Again, it's exactly what you said. It depends what the fix ends up to be.

If it's a simple fix, they might be able to stand down for a day and go by Wednesday or Thursday. If they get up there and they find there's more severe cracking, that could be a whole different ball game -- John.

KING: John Zarrella for us at the Kennedy Space Center. John, we'll check back with you in the 7:00 p.m. hour. Thank you very much.

A former U.S. soldier with the 101st Airborne Division is now charged in the rape of an Iraqi woman and the killing of her and her family.

CNN Pentagon Correspondent Barbara Starr is following this trouble story for us and she joins us live -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: John, disturbing accusations that U.S. soldiers murdered an Iraqi family and tried to cover the whole thing up.

(BEGIN VIDEOTAPE)

STARR (voice over): Twenty-one-year-old Steven Green appeared in federal court in North Carolina on charges he raped and murdered a young girl and murdered her family in March while he served on active duty with the 101st Airborne Division in Mahmoudiya, Iraq. According to an FBI affidavit, he recently was discharged due to a personality disorder.

Federal prosecutors detailed the case that came to light only after soldiers from the unit had a stress counseling session following the recent murder of privates Kristian Menchaca and Thomas Tucker. One soldiers told investigators four soldiers went to a house to rape an Iraqi woman on March 12th, but first they drank alcohol and some of them changed into dark clothing, according to the affidavit.

Court documents also allege that when they got to the house, three of the family members were taken by Green into a bedroom and shot. One was a girl estimated to be 5 years old, and her parents.

According to the criminal complaint, witnesses told investigators that Green said, "I just killed them. All are dead."

Witnesses told investigators that then Green and another soldier raped the family's older daughter. The same witnesses told investigators they saw Green shoot her in the head at least two times.

(END VIDEOTAPE)

STARR: John, Green has not yet entered a plea in this matter, and his attorney did not return phone calls CNN made for a comment. This, of course, now is the fifth case in recent months of allegations in cases in which U.S. troops are said to be involved in the killing of Iraqi civilians -- John.

KING: Barbara Starr for us live at the Pentagon. A very troubling story.

Barbara, thank you very much.

On the nuclear impasse with Iran, the United States says Iran has two roads to go down but not much time to decide. Today the Bush administration and the United Nations diplomats warned Iran to make a decision on a nuclear offer by July 12th or possibly face punishment or sanctions at the United Nations. The United States and its partners have offered Iran incentives to stop enriching uranium. This week, Iran's chief nuclear negotiator will meet with a European Union representative to discuss the offer.

Now to another nation President Bush once put on an "axis of evil." North Korea says it has its finger on the nuclear button and is promising to push should it find itself the target of an American attack.

Our Brian Todd is here with more on this escalating rhetoric -- Brian.

BRIAN TODD, CNN CORRESPONDENT: John, from a nation claiming to have a nuclear weapon, this kind of brinkmanship now carries a more ominous tone.

(BEGIN VIDEOTAPE)

TODD (voice over): Even from an erratic, hostile government prone to exaggeration, the latest threat from North Korea is provocative and comes at a time of heightened tension. Through one of its newspapers, the regime of Kim Jong-il says it is prepared "... to answer a pre-emptive attack with a relentless annihilating strike and a nuclear war..." The newspaper says this is in response to recent U.S. military exercises in the region.

Asked about the threat, a White House official said he wouldn't respond to a hypothetical situation. But the White House is concerned with North Korea's preparations to test a long-range ballistic missile that some analysts believe has the capability to reach the U.S.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A launching of the missile is unacceptable. There has been no briefings as to what's on top of the missile. He hadn't told anybody where the missile is going.

TODD: U.S. intelligence officials believe North Korea has nuclear devices, but they don't believe the regime can deploy a nuclear warhead on a missile yet. Still, two former top Clinton administration officials say the president should be prepared to order a strike on the long-range missile site.

JAMES WOOLSEY, FMR. CIA DIRECTOR: It should be relatively easy to do. A few submarine-launched cruise missiles, not nuclear, simply high explosives, could take this out very easily.

TODD: But the White House cautions about North Korea's response capability.

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: If you're going to launch strikes at another nation, you better be prepared to not just fire one shot.

TODD: Weapons tests, war-like rhetoric, we have seen it before from Kim Jong-il, who experts say is a master at forcing the world's only superpower to worry, calculate, react.

JERROLD POST, FMR. CIA PROFILER: That brinkmanship really for the most part has worked for him. He's crossed red line after red line.

(END VIDEOTAPE)

TODD: And how far will he go this time? Unclear, as always. But North Korea's top ally, China, has urged Kim Jong-il not to go ahead with the missile test. And analysts say this could be an exercise designed to extract political concessions or to steal attention on the nuclear issue away from Iran -- John.

KING: Certainly getting attention. I'm not sure if it's stealing it from Iran, but it's getting attention.

Brian Todd for us.

Brian, thank you very much.

And time now for what we call "The Cafferty File." Jack is standing by in New York.

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: John, there is a debate going on these days about whether or not it's OK for doctors and parents to tell kids they're fat. Since 1998, the government has avoided calling children "obese." They don't call them "tubby," "little lard buckets" or "butterballs" either. Instead, the government uses politically correct terms -- "at risk for overweight," or "overweight."

Now there is a proposal that would label fat kids the same as fat adults. That means the government would call them overweight or obese. In other words, confront the problem head on, belly to belly, as it were.

One pediatrician says, "There are a thousand reasons why this obesity epidemic is so out of control, and one is them is nobody wants to talk about it." But critics say telling kids they're fat is too harsh, it could perpetuate eating disorders.

Meanwhile, more than half of American kids weigh more than they should. More than half of American kids weigh more than they should.

Here's the question: Is it OK to tell kids they're fat?

E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- John.

KING: I suspect this is going to be an interesting one.

CAFFERTY: Let's hope.

KING: We'll check back in a little bit, Jack. Thank you. And if you want a sneak preview of Jack's questions, plus an early read on the day's political news and what's ahead here in THE SITUATION ROOM, sign up for our daily e-mail alert. Just go to CNN.com/situationroom.

Up ahead, a cross controversy gripping San Diego. Now a Supreme Court justice steps in. We'll take you to California live for the latest developments.

Also, automakers scrambling to keep up with the high price of gas. We'll show you what they're doing to try to help you spare some pain at the pump.

Plus, a booming population and a spike in crime. Katrina fallout hits hard in one Louisiana city. We'll take you there for a look at what they're doing about it.

(COMMERCIAL BREAK)

KING: New developments this hour in an ongoing battle over a cross at a San Diego war memorial, with the Supreme Court now stepping in.

CNN's Chris Lawrence joins us now live with more on this story -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, John, there is a battle going on in the country over what constitutes a violation of separation church and state. And up until now, this giant cross had been probably the biggest symbol of that battle.

Take a look. This is 43-feet high, it rises high over the top of a mountain in southern California. And it's overlooked the city of San Diego for more than 50 years. But after the city council voted to reject a plan to keep it where it is, the cross is about to be moved.

It basically comes down to this: it's a large Christian symbol on public land owned by San Diego. An atheist sued to have it moved, and a federal judge has repeatedly ordered the city to move it. But several Republican congressmen, including representatives Duke Cunningham and Duncan Hunter, had tried to save it by having it designated a national veterans memorial. President Bush even signed that bill.

But just last week, a city attorney looked at this and said, you know, for the city to donate land to the federal government for a religious purpose would violate the state constitution. Ultimately, the city council didn't want to do this. A lot of the people didn't want it moved. But it just violates the law and violates the principle of church and state, the separation church and state.

So, within the next 90 days, the giant cross is going to be moved for the first time. But for a lot of the people who are interested in seeing it preserved, several churches, including some that are very close to where it is now, have already offered to place the cross on their property. We're expecting to hear from the mayor of San Diego some time in the next hour as he makes his comments about this -- John.

KING: Interesting story. We'll keep watching it. Fascinating to try to move that. That's a pretty big cross to move.

Chris Lawrence live for us in L.A.

Thank you very much, Chris.

And our Zain Verjee joins us with a look at other stories making news right now.

Hi, Zain.

ZAIN VERJEE, CNN ANCHOR: Hi, John.

Senator Joe Lieberman's announced plans to petition for a place on the November ballot as an Independent candidate. The Connecticut Democrat faces a tough primary challenge for the office he's held since 1989. He says the petition is political insurance in case he loses.

You can see John King's full interview with Senator Lieberman. That's coming up in THE SITUATION ROOM at 7:00 p.m. Eastern.

Mexico has voted, but so far there is no clear winner. Election officials say that they're going to manually review every single ballot box because the results of the presidential race are so close.

Ruling party candidate Felipe Calderon has logged a slim one- point lead over opponent candidate Andres Lopez Obrador. But election officials say that they're not going to declare a winner until they've completely finished the review.

A government spokesman in Spain says today's deadly subway train crash in Valencia does not appear to be the result of terrorism. Reports say the cause can be traced to a broken wheel. Dozens of people died when the train left the track at a curve in a subway tunnel. A lot more people were injured -- John.

KING: Zain Verjee.

Thank you very much, Zain.

And coming up, a threat and a deadline issued by Palestinian militants holding an Israeli soldier. We'll take you live to Gaza for the latest.

Plus, high gas prices move a major U.S. automaker to action. We'll show you what it is doing to help save you money at the pump.

(COMMERCIAL BREAK)

KING: A developing story this hour in the Middle East. A deadline is set, but the consequences of missing it are unclear. Right now we're six hours away from a deadline that Palestinian militants have set for a kidnapped Israeli soldier. The militants say Israel must meet their demands, or else.

Our John Vause is in Gaza City with new developments -- John.

JOHN VAUSE, CNN CORRESPONDENT: John, we may be seeing the Israeli response to those demands by the Palestinian militants playing out right now in the north of the Gaza Strip, around the town of Beit Hanun. Palestinian security services report that at least 30 tanks and other personnel carriers have moved in to forward positions around that town of Beit Hanun.

There has also been an airstrike once again, according to Palestinian sources, killing at least one person. That airstrike, we are told, was carried out by an Israeli drone. At least three others have been heard.

Once again, according to Palestinian witnesses in the area of northern Gaza, they are telling us that Israeli bulldozers, armored bulldozers, are digging sand berms in the area that it used as cover for Israeli forces. All this as the Palestinian militants demand an end to the Israeli military operation here in the Gaza Strip, an end to the airstrikes, and an end to the Israeli artillery shelling which has been going on now for six days.

The militants are demanding also the release of all Palestinian women and inmates under the age of 18 from Israeli jails, and also the release of another 1,000 prisoners.

In a statement which was sent to news organizations today, including CNN, this is the statement here. It reads, in part, "If the enemy does not meet our demands, we will consider the case closed."

The Israeli response to all of this so far during the day has been mixed. The prime minister, Ehud Olmert, said he would not negotiate with -- would not negotiate for prisoner release.

And also, from the military head, Dan Halut (ph), he said that all options are on the table and that right now a list of prisoners is being drawn up. They could be set free, those who do not have blood on their hands. But at this hour, as Israeli tanks and armor move into the north of the Gaza Strip, we could be seeing the Israeli response to those militant demands -- John.

KING: And John, spell out exactly what we know about what the militants will do. What is the "or else," if you will? Will they simply kill the one soldier they have hostage, as Israel puts it, or are they threatening other attacks as well?

VAUSE: They have not spelled out the either/or situation. They have not been explicit. However, the assumption that everybody is working under is that unless that deadline is met by 6:00 tomorrow morning, Gaza time, then the soldier will be executed.

That is not a hard, fast deadline because it has not been spelled out as clearly as that. So we expecting another statement from the militants who are holding the Israeli corporal.

Once that deadline comes and goes, we are expecting some kind of statement. But if they do, in fact, execute this corporal, several Israeli ministers and government officials are warning of very severe punishment, a severe raid here in the Gaza Strip should that eventuate -- John.

KING: John Vause, past midnight for us in Gaza, tracking these developing -- this developing story, escalating tensions.

John, thank you very much.

And coming up, General Motors hopes for a second look. After years of selling some of the most gas-guzzling trucks on the road, it's now hoping for redemption with some gas savers. It's a story you'll see only here on CNN.

And in our 7:00 p.m. hour, Saddam Hussein's flesh and blood now fugitives of the law. We'll tell you why Hussein's first wife and daughter are most wanted and what they're most wanted for.

(COMMERCIAL BREAK)

KING: You're in THE SITUATION ROOM. Wolf Blitzer is off today. I'm John King.

Dramatic developments in Iraq's Diyala Province, home to a split Shia-Sunni community.

CNN Senior International Correspondent Nic Robertson is embedded there with U.S. troops. He saw these dramatic events unfold.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: John, in a ceremony near the Iranian border, the Iraqi army 5th division took over control of Diyala Province from the U.S. military. But the day didn't go quite as everyone expected.

(BEGIN VIDEOTAPE)

ROBERTSON (voice over): This wasn't the way the day was expected to go, Colonel Thomas Fisher (ph) and his U.S. soldiers coming to the aid of the Iraqi governor of Diyala Province on the very day the Iraqi army took control here.

UNIDENTIFIED MALE: We just had the governor attacked up there in some palm groves. And we see some Iraqi army and some Iraqi police. They took fire from both sides in the palm groves. So put all your guys at red direct and get up there and give them assistance. All right?

ROBERTSON: The transition ceremony, which was the main planned event of the day, had taken place hours earlier. The U.S. command turning over control of the entire Diyala Province, just north of Baghdad, to Major General Ahmed and the Iraqi army's 5th division.

UNIDENTIFIED MALE: General Ahmed is assuming responsibility for a province that covers 17,000 square miles and is home to a population of over 1.7 million people.

ROBERTSON (on camera): Because this province, Diyala, is a mixed Sunni-Shia area where sectarian tensions fuel killing, the new Iraqi commanders find themselves at the forefront of their government's toughest battle: building national reconciliation.

(voice over): General Ahmed's division is the first Iraqi army division, as U.S. commanders like to say, to own its own battle space in the north of Iraq. The general is under no illusion of the problems he's inheriting.

"It's like a small Iraq," he says. "All the problems around Iraq, you see them here in Diyala."

UNIDENTIFIED MALE: Tell them I need about 10 minutes to clear this up.

ROBERTSON: And it was into one of those problems Colonel Fisher drove later in the day. The shot-out bloodied police car telling its own tale of the attack on the governor. Colonel Fisher's job now, step in and help the Iraqis get their governor home safely.

UNIDENTIFIED MALE: Hello.

UNIDENTIFIED MALE: You OK?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: Boy, taking care of you is getting to be a full-time job.

ROBERTSON: Not the day that was expected. But a day of progress, nonetheless.

UNIDENTIFIED MALE: I will see you on Friday. I just wanted to make sure you got home OK.

(END VIDEOTAPE)

ROBERTSON: No commanders here, U.S. or Iraqi, willing to say just how long it will take before the Iraqi army doesn't need any support at all -- John.

KING: Nic Robertson for us in Diyala Province, Iraq.

And there is a new audiotape out from Osama bin Laden with a sharply different tone than the recent flurry of messages from al Qaeda leaders.

CNN National Security Correspondent David Ensor has details.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: John, in his fifth taped message this year, Osama bin Laden calls for attacks against Shiites in Iraq, and all those who support the government of Prime Minister al-Maliki or the United States.

(BEGIN VIDEOTAPE)

OSAMA BIN LADEN, AL QAEDA LEADER (through translator): Our Muslim people in Iraq need to learn that no truce should be accepted with the crusaders and the apostates. There shouldn't be any half solutions, and there is no way out for them except by fighting and holding on to their struggle. Do not be fooled by the invitations to join political parties and taking part in the so-called political process.

ENSOR (voice over): It is a sharper tone than bin Laden and his deputy have so far taken against Iraqi Shiite, apostates, as he calls them, though he only calls for killing those who support the Iraqi government.

In the past, bin Laden's deputy, Ayman al-Zawahiri, wrote to the now-dead al Qaeda leader in Iraq, Abu Musab al-Zarqawi, urging him not to kill so many Shiite Muslims because the carnage was bad for the group's image. Zarqawi ignored him. An Iraqi minister argues the flurry of al Qaeda tapes of late and the continued large-scale attacks are not a sign of strength.

UNIDENTIFIED MALE: At the moment, they are on the run, and some of the ruthless attacks that have taken place in civilian areas indicates the desperation of these people to stay and to continue grabbing terrible headlines.

ENSOR: On the tape bin Laden also calls on Somalis to support the Islamic court militia now controlling Mogadishu.

(END VIDEOTAPE)

ENSOR: And the fugitive terrorist chieftain congratulates on the tape the man he calls Abu Hamza al-Muhajer, the new head al Qaeda in Iraq, wishing him good luck -- John.

KING: David Ensor.

And still to come, what will Iran do and when will Tehran do it? It concerns the incentive offer for Iran to give up its nuclear program. Does the United States have a plan for whatever happens?

Another unintended consequence of Hurricane Katrina. We'll tell you why one Louisiana town is dealing with increased crime.

(COMMERCIAL BREAK)

KING: Are you getting ready to hit the road for the holiday? Right now, the cost of a gallon of regular unleaded is $2.93. That's up almost 10 cents from a month ago. If you thought that would make more people stay home, well, think again. AAA says more than 40 million people will be traveling for the holiday, and that's a record.

So how much do car companies care about your gas grievances? At least one of them wants you to know, we feel your pain. It is a story you'll see only on CNN.

(BEGIN VIDEOTAPE)

KING (voice-over): The Chevy Impala, a household name from the glory days of General Motors, and a test case now as the struggling automaker tries to remake its image and adapt to a market reshaped by high gas prices.

At first glance, this 2007 model looks the same as the 2006. But watch the dashboard. Six cylinders of engine strength as it accelerates, but a seamless shift to just three cylinders and dramatically better mileage as the car reaches coasting speed.

(on camera): For my July 4th family trip, and I'm driving a few hundred miles on the highway, with this as opposed to the standard V6 that's available today, what am I going to save in terms of fuel?

GARY HORVAT, GENERAL MOTORS ASSISTANT CHIEF ENGINEER: For every 11 gallons, you get one free.

KING (voice-over): G.M. calls its cylinder deactivation technology active fuel management, and hopes to sell two million cars with this efficiency over the next two years, just one piece of its effort to reach consumers looking to save at the pump, and of its broader, urgent effort to convince those who equate G.M. with gas- guzzling clunkers to take a fresh look.

The stakes for the world's largest automaker are enormous. G.M. lost nearly $11 billion last year, and is confronting a long list of critics who say when it comes it cutting America's dependence on foreign oil, G.M. is the problem, not the solution.

BRENDAN BELL, SIERRA CLUB: They sell some of the worst gas- guzzlers on the road, like the Hummer H-2, like some of the GMC Yukons. And they're very specifically going out and trying to delude the American public that they are making progress when they are actually taking us backwards.

KING: G.M.'s aggressive market of SUVs led "New York Times" columnist Tom Friedman to label the company "dangerous to America's future."

(on camera): We're at the July 4th holiday period where Americans are getting in their cars, they're driving to the beach, they're driving to their vacation, and you have people like him who say you are part of the problem.

RICK WAGONER, GENERAL MOTORS CEO: We have more vehicles that get more than 30 miles per gallon on the highway than any other manufacturer, or our commitment to ethanol, or the upcoming launch of several new hybrids. If we get that story out and tell it, than I think any perception issues will be handled in the right way.

KING (voice-over): G.M. granted CNN unprecedented access to its testing facilities as part of an effort to prove its critics wrong, show off a 2007 product line the company says offers a number of options for consumers looking to save at the pump. This yellow gas cap means the vehicle can run on E85, ethanol. G.M. and other U.S. automakers last week promised to double annual production of these flex fuel cars, the most high-profile option for those looking to reduce U.S. dependence on foreign oil. But of the 170,000 gas stations in the United States, only about 700 sell E85.

BELL: Ninety-nine percent of those vehicles never run on a drop of ethanol. These vehicles don't actually cut our dependence on oil. What can make a difference is investing in fuel economy.

KING: For all the attention on ethanol and talk of new fuel sources like next-generation batteries or hydrogen, to visit G.M. is to reminded gas is the fuel of the foreseeable future.

So as they oppose new mileage mandates from Washington, carmakers are highlighting new technologies like direct fuel injection, an efficiency already common in diesel engine, to make modest improvements in fuel efficiency. Six speed transmissions instead of the usual four means about an extra mile per gallon.

BOB VARGO, GENERAL MOTORS: So that's about three million gallons of gas that we could save for the model year 2010.

KING: And after lagging behind Toyota and Ford, G.M. is making a major investment in hybrids.

(on camera): This is the first G.M. ...

BLY: This is the first high-volume hybrid that we'll have on the market.

KING: (voice-over): The Saturn VUE hybrid will be available in a few weeks.

(on camera): What's this go for roughly now?

BLY: This one is probably around $23,000.

KING: That's not bad.

(voice-over): The green eco light means the VUE is performing at above average fuel efficiency.

BLY: The energy is now off. You're running purely on electric mode now, so you're sitting here as long as you want with electric mode. And then if you lift your foot off the brake, it will start the engine up and ready to go.

KING: New hybrid sedans will follow the VUE, the bigger Tahoe hybrid debuts next year, as a company that admits it is late to this growing market hopes its new entries can create a buzz, to help G.M. gain a better footing with consumers and to make an environmental statement or at least looking to make your gas money go a little further.

(END VIDEOTAPE) KING: Tomorrow, we'll show you a sneak peek at a car that's a very big deal for General Motors. I got an exclusive look at G.M.'s new hydrogen-powered crossover vehicle. They call it the Sequel. G.M. says it can run 300 miles per hydrogen supply, and it emits only water. I was the first non-G.M. employee to test drive it. More on that in an exclusive sneak peak tomorrow.

And up ahead, the transplant of some New Orleans residents apparently means the transplant of more crime. How one city that took in Katrina victims is coping now with the fallout.

And later, on hunt for the women in Saddam Hussein's life. Why his first wife and daughter find themselves on Iraq's most wanted list, ahead in our 7:00 p.m. Eastern hour. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: It's population soared after Hurricane Katrina. Now one Louisiana town finds its crime rate is soaring, too. CNN's Sean Callebs joins us live from New Orleans with a look at what's being done. Hey, Sean.

SEAN CALLEBS, CNN CORRESPONDENT: Hey, John. The town is Slidell. It's a bedroom community just about 30 miles or so to the east of this city. And really it didn't become a haven for so many people who were flooded out by Hurricane Katrina.

But that boom in population is also translated into something that is being called spillover crime. The town's police chief says it is getting worse and now he's reaching out for help.

(BEGIN VIDEOTAPE)

CALLEBS (voice-over): To the casual observer, Slidell, Louisiana, a 30-minute drive east of New Orleans, is rebounding well after Katrina. But police chief Freddy Drennan says crime here is escalating here and lately has become a critical problem.

FREDDY DRENNAN, CHIEF, SLIDELL POLICE: Has my residents scared to death, and rightly so.

CALLEBS: He's talking about the murder of four family members at the end of June. Execution-style killings that shocked this community. Authorities believe the shootings were drug related.

DRENNAN: When you get the homicides factored in, you get the carjackings that occur and the bank robberies occurring, and you get the things that go on, that's starting to go on -- in a weekly basis that we don't see here.

CALLEBS: Drennan asked the state police to come in and take over traffic detail so his officers can work on curbing violent crime. Ronnie Dunaway has lived in Slidell all his 51 years. His bread and butter is cashing checks, about $1.2 million worth a month. He, too, is concerned about spillover crime, people who fled New Orleans and are now setting in Slidell.

RONNIE DUNAWAY, SLIDELL RESIDENT: They come over here with that attitude and they come over here with that big city mentality and we're not going to tolerate that here.

CALLEBS: Slidell's population has ballooned from 30,000 pre- hurricane to about 50,000 now. Many, the chief says, are contractors, taking jobs by day and taking liberties by night.

DRENNAN: You know, they come in by day and they're seeing what is sitting around someone's home that they've been able to salvage that's still good and they come back by night and steal it.

(END VIDEOTAPE)

CALLEBS: Now Drennan says he doesn't want to paint the influx of new citizens with a broad brush. In fact, he says most of them are good citizens and a good addition to Slidell. But he says there is that certain percentage of the population that simply want to get rich and John, he says, they don't care how they do it.

KING: Tough story, Sean Callebs for us live in New Orleans. Thank you, Sean. And our Zain Verjee joins us now with a look at other stories making news. Hi, Zain.

VERJEE: Hi, John. We have a developing story from CNN's affiliate WBAL. We want to show you some live pictures coming to us from Catonsville in Maryland -- our affiliate is reporting that divers and emergency rescue services, as you see there, are searching for a child or a missing teen. The child's mother reported that the child entered the water somewhere in this area. This is the Patapsco Valley State Park and the search, as you see, is underway near the dam in the area. We'll bring you more details when we get them.

Eight young women are wounded, the victims of an explosion in their classroom at a university in western Afghanistan today. Police say the blast was caused by a device that had been planted in a trash bin. They suspect it was placed there by someone opposed to the education of women. Taliban extremists have bombed a number of schools that admit girls and women.

A spectacular view for passengers aboard China's first train from Beijing to Tibet. The train arrived in Lhasa today on the final leg of its two-day journey on the world's highest railway. It's so high that many passengers had to use extra oxygen that was piped in through tubes as they passed the trip's highest point, more than 16,000 feet.

Film critic Roger Ebert is listed in serious condition following emergency surgery. The operation was performed to repair complications from a previous cancer procedure for a growth on his salivary gland. The Pulitzer Prize winning columnist has written for the "Chicago Sun Times" since 1967. He's also the co-host of T.V.'s "Ebert and Roper." Ebert's wife says doctors tell her that her husband is stable and responding well. John?

KING: And we certainly wish him well. Zain Verjee, thank you very much.

Well we've heard of the dangers they may pose to kids. But are social networking sites risky for college students? Universities across the country are warning incoming students on the dangers of putting too much personal information on the Web. Our Internet reporter Jacki Schechner has details. Jacki?

JACKI SCHECHNER, CNN INTERNET REPORTER: Jack, the resident's life staff at Mercyhurst College decided that students were putting too much personal information on these social networking sites, like Facebook.com, so they created this brochure they handed out to the 4,900 students and faculty affiliated with the university.

And it's since been downloaded an additional 2,800 times. It's being used by other universities and colleges. It was designed to look like Facebook because this is the most popular social networking site for colleges.

The idea is that what you put online today can come back and haunt you tomorrow. And they want to warn kids that not only do they have to worry about potential employers seeing this information, but also someone who may want to stalk them. You don't put your agenda, your class schedule, your Social Security number online.

Now they're not the only college doing this. For example, the University of Virginia and Cornell University are also having their I.T. departments address the issue. John?

KING: Jacki, thank you very much. And as we reported at the top of the other, the Bush administration and United Nations diplomats are warning Iran to make a decision on the incentive package being offered to Tehran to stop enriching uranium. They say Iran could face sanctions unless it accepts this offer by July 12th.

But does the Bush administration have much more in its pocket than just sanctions? The "New Yorker's" Seymour Hersh has written extensively about the mission in Iraq and also now a provocative new article about potential military planning in Iran. He joins us here in THE SITUATION ROOM.

Sy Hersh, as you know, the administration is already trying to respond to your article, although it is interesting that the official line at the Pentagon is no comment. The White House, we're still waiting for official comment there as well.

But you make some pretty weighty allegations. I want to start with one by quoting from the article about the nuclear option, that you say the administration has been bent on in this.

I want to read from the article. "In late April the military leadership, headed by General Pace, achieved a major victory when the White House dropped its insistence that the plan for bombing campaign include the possible use of a nuclear device to destroy Iran's uranium enrichment plant at Natanz, nearly 200 miles south of Tehran. The huge complex includes large underground facilities built into 75-foot deep holes in the ground, designed to hold as many as 50,000 centrifuges. Bush and Cheney were dead serious about the nuclear planning."

A former senior intelligence official told you, according to the article, "And General Pace stood up to them." Then the word came back, "OK, the nuclear option is politically unacceptable."

That's a pretty weighty allegation to lay out in this article, that you have the president and the vice president of the United States leaning in favor of a nuclear option at a time, when as you well know and discuss in the article, it would have interesting geopolitics having any military action at all.

SEYMOUR HERSH, THE NEW YORKER: It's an option. They tell the military planners we want a decisive plan, we want to go from certainty to uncertainty. And the one way you come up with a plan that can guarantee knocking out an underground facility that is buried pretty deep in hard rock as deep as 75 feet, as the story said, is one way you come up with a plan that says let's use a low-yield technical nuke.

And then you go back to the White House and you say, "Well look, just put that in the plan. This is this winter. Nobody's going to use it, let's take it off." And the White House refuses. And then the senior generals go to the president and say, look, if you don't get this out of the plan, I'm going to lose some people, I am going to have some resignations in my staff. Some senior guys are morally appalled by this. And nobody is going to quit publicly; they're just going to retire early, some of the generals.

And so then the White House says, OK, take it off. And instead, now we have, as I was writing about this week, the Air Force has come up with a very strong sort of concentrated plan. And these are just plans for taking action in case Iran doesn't come through in the talks.

KING: Just plans. But as you discussed these plans, according to your sources, you're going through some of the arguments we went through with the Iraq deployment as well. And I want to read from your article. "Secretary of Defense Rumsfeld and his senior aides really think they can do this on the cheap, and they underestimate the capability of the adversary." So once again, we're talking about civil war within the Pentagon, if you will, over Secretary Rumsfeld trying to do things on the cheap, as you put it?

HERSH: There is a lot of anxiety and a lot of hostility towards Rumsfeld, as everybody knows. We've seen it. We had a bunch of generals going public just three or four months ago, two months ago actually in April. And so there is a lot of people who don't like his style, don't like his management style, and certainly there was a lot of objections before the Iraq war. The military wanted more troops. We know about it. General Shinseki, the former chief of staff of the Army, asked for a couple hundred thousand, and he was sort of slapped around.

I think they don't want to do again -- they don't want to fail this time like they did before. This time, they're making it clear, they're going to tell the command authorities, if you want to go and you want to bomb, you are going to have to be prepared that it won't work and we're going to need boots on ground. We don't have the Marines and the soldiers.

The real issue, John, the real underlying issue in all of this that's got everybody on edge in the Pentagon, many of them, is simply that there is no intelligence that Iran is actually going ahead and has a secret nuclear weapons facility.

KING: You say there is no intelligence they have this facility, and yet you also write this about the president, who has of course told the American people for months and months and months that he wants diplomacy to work. But you write, "several current and former officials I spoke to express doubt that President Bush would settle for a negotiated resolution of the nuclear crisis. A former high level Pentagon civilian official, who still deals with sensitive issues for the government, said that Bush remains confident in his military decisions."

I sat down with the vice president just a week ago, and he said, no, diplomacy, diplomacy, diplomacy. You think the president and the vice president are being disingenuous?

HERSH: No, what I think is -- it is a little more complicated than that. I think what the president has done in the current negotiations, the reason why the Iranians are not running to the table -- the Iranians, like the rest of the world, were delighted when the White House announced -- Condoleezza Rice announced I think May 31st, the secretary of state, that we're joining the talks, we're willing to, but there is a precondition. And the precondition, it turns out to be a stopper.

The precondition is that Iran stop all of its nuclear weapons development or its nuclear development. Iran says they're only doing peaceful use. Iran stop all enrichment of uranium right now, even though they're doing low-level stuff. They're only enriching to a weapons grade; they're enriching to enough -- of a high enough concentration to run a commercial power reactor.

But the president says they have to stop everything, and it has to be verified. And this has to be absolutely definitively done before he's going to come to the table.

This is a stopper. And that's what I meant when there are some people -- the context of that, there were some people who believed that he's setting such a high threshold, he's never going to get them to the table. And then sort of, you know, deja vu Iraq all over again, he can say, look, I've tried, we've gone to the U.N. This didn't happen. That's what their fear is, that there is some sort of a repeat pattern here.

KING: And we'll note for the record, no comment from the Pentagon. We're unfortunately out of time, but Seymour Hersh, thank you for joining us in THE SITUATION ROOM, and it's recommended reading as we follow this crisis.

And remember, the new July 12th deadline for Iran to respond to the administration and the European proposal.

And up next, Jack Cafferty is back with "The Cafferty File." His question this hour: Is it OK to tell kids they're fat? You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: NASA officials are meeting tonight to discuss a piece of cracked foam found on the external fuel tank of the Space Shuttle Discovery. And you can get a closeup of this tank online. Our Internet reporter Abbi Tatton has more -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: John, an alert on the front page of the NASA Web site here, talking about in the next 30 minutes that meeting is going to happen to take place to decide just what's going to happen next.

At issue here is the external fuel tank. There was an inspection, a routine inspection, overnight, that revealed a small crack. It is very small, four or five inches here. But it did result in the loss of a small piece of foam. That meeting is going to happen in a half-hour to decide whether that launch will happen today or tomorrow, if it does take place. Check in online at the NASA site for the virtual launch control center; minute by minute updates there online -- John.

KING: Abbi, thank you. And a live report from Kennedy Space Center coming up in just a few minutes at the top of the hour.

For us though, time to check back in with Jack Cafferty. Hey, Jack.

CAFFERTY: I like Sy Hersh's look. The sleeves rolled up, no jacket. Very tasteful.

KING: The Jack look, we call it.

CAFFERTY: Exactly.

Since 1998, the government has avoided calling fat kids obese. Instead, the government uses politically correct terms -- at risk for overweight, or overweight. Now there is a proposal that would label fat kids the same way as we label fat adults.

The question is, is it OK to tell kids they're tat?

A lot of mail.

Robert in New York, "politically correct my blank, Jack. They're fat. Fat little fatties, and they should be made to understand how bad it is for them. Never mind hurting the little piggy's feelings, let's save their lives, the little tubbies. PC talk has been the ruination of our culture, and only straight talk will get it back on track."

Kevin from West Lafayette, Indiana, "no kid deserves to be told they're fat. We should instead promote healthy eating, exercise, and overall wellness. Let's use positive influences instead of damaging their self-esteem at a young age."

Vick in Roxboro, North Carolina. "No, never call them fat. The proper words are chunky, big-boned, heavyset, jelly belly, distended, swollen, pudgy, stubby, butterball, lard, blimp, cow, plump, rolly polly."

Charles writes, "Another American honesty issue. We choose to suffer by politically correct responses. The American way: Smoke, mirrors, deceit, prosperity and fat kids."

Gordon writes, "I do counseling with kids on drugs. The only way to get people to deal with a problem is to admit it's real. Call it baby fat, they think it will pass. It won't. Tell them straight out they're fat and put physical education back in school like it used to be, required. How can my generation retire if we still have to spoonfeed our kids?"

Finally, Craig writes from Tampa, Florida: "I'll tell your kids they're fat, you tell my wife she is. We'll see who's on TV tomorrow."

And finally, if you didn't see your email here, you can go to CNN.com/CaffertyFile, where we've posted some more. We've got -- saw some great stuff. Go check it out there.

KING: You're willing to take that last challenge?

CAFFERTY: No, sir.

KING: No, sir?

CAFFERTY: No, sir. I don't go near those family issues.

KING: And after reading all this e-mail, what does Jack think about this issue?

CAFFERTY: Jack has no opinion. I'm like the Wolfman.

KING: Jack has no opinion. A very smart man. A very smart man.

And remember, we're here every weekday afternoon from 4:00 to 6:00 Eastern, and we're back on the air, of course, at 7:00 p.m. Eastern, just one hour from now. Until then, I'm John King in THE SITUATION ROOM. "LOU DOBBS TONIGHT" starts right now. Kitty Pilgrim is in for Lou.

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