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In Iraq, Attacks Up 15 percent In Past Three Months And Iraqi Casualties Up 51 Percent; Bush's Latest Sales Pitch For Iraq Mission; New Pentagon Report on Iraq Giving Democratic Critics Something New to Pounce On; Ernesto Soaking Mid-Atlantic States; How the Economy May Effect Elections

Aired September 01, 2006 - 16:00   ET

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


JOHN KING, CNN ANCHOR: Thanks you Susan and to our viewers, you are 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 new warning about civil war in Iraq. The Pentagon delivers a grim report on insurgent attacks and where they could lead. It's 4:00 p.m. in Washington where some Democratic critics of the war are saying told you so.

Also this hour the East Coast is getting drenched by Ernesto. Flood alerts and power outages are creating states of emergency. We are tracking the danger and the storm moving north along the coast.

And do Americans feel like celebrating this Labor Day weekend? Don't bank on it. We'll have the bottom line on new economic reports on the brink of the Fall campaign season. Wolf Blitzer is off today. I'm John King. You are in THE SITUATION ROOM.

Up first this hour, it may be the Pentagon's gloomiest assessment yet of the violence in Iraq and it comes even as the Bush administration is launching a new defense of the war. The just released Pentagon report says security problems in Iraq are more complex than at any time since the U.S. invasion back in 2003. Attacks are up 15 percent in the past three months and Iraqi casualties are up 51 percent.

The congressionally mandated report says conditions in Iraq could lead to civil war, but in the Pentagon's view, haven't just yet. This comes near the end of an especially bloody week in Iraq. Iraqi officials now put the death toll from a series of bombings in Baghdad yesterday at 62. More than 250 Iraqis were killed in attacks since Sunday. Ed henry and Andrea Koppel are standing by with the latest on the political war over Iraq but first to our senior Pentagon correspondent Jamie McIntyre, Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Wolf (sic), every three months the Pentagon has to submit a report to Congress showing how thing are going in Iraq and this report, which covers June, July and August, has some grim numbers in it. It does show the number of attacks jumping over the summer, up 15 percent compared to the three months in the Spring and the number of Iraqi casualties up 51 percent. The report also says that some of the casualties in Iraq, the civilian casualties, have increased by as much as 1,000 a month and warns that conditions that could lead to civil war exist in Iraq. Nevertheless it concludes the current violence is not a civil war and the movement towards a civil war can be prevented.

We heard a similar sentiment expressed today by one of the U.S. ground commanders working with U.S. and Iraqi forces on the ground in Baghdad, expressing confidence that the offensive right now to take back Baghdad is showing some results. He said he didn't see a civil war now, although he said he couldn't predict the future.

KING: Often criticized for giving an overly optimistic assessment of the war. I assume they would say in presenting such a sober report, look we don't think we are in a civil war, but we are being honest about conditions on the ground.

MCINTYRE: Yes, I think one thing you can say about this report is it doesn't present a rosy picture, although there is still a big debate about whether or not the Pentagon, the U.S. military is actually in a civil war. One of the reasons that's significant is the strategy for ending a civil war is sometimes different from battling an insurgency. If you have got rival factions trying to take control of the government, you need to work out some sort of power-sharing agreement.

Whereas if you are fighting insurgents, you can just build up the Iraqi army to try to defeat the insurgents. So that's one reason why this question about whether or not it is a civil war is a significant one.

KING: Jamie McIntyre for us at the Pentagon. Jamie, thank you very much. And now to the White House where the new Pentagon report on Iraq is stepping on the president's latest sales pitch for the mission. Some fellow Republicans aren't helping him either. Here's our White House correspondent Ed Henry, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: John, part two of the president's latest series of speeches will be next Tuesday. He will be doing it here in Washington at the Military Officers Association of America. White House spokesperson Dana Perino saying today the president will focus this speech on the, quote, state of the enemy, how it's been weakened in the eyes of the White House and how the administration is pouring all resources necessary to make sure the enemy is defeated.

Those are claims, obviously, the Democrats would dispute but nevertheless the White House feeling good about yesterday's speech. And I can tell you from being in Salt Lake City, that it was the kind of audience that gave the president a warm reception.

The American Legion seeming to like the references back to World War II, comparing the fighting in Iraq to battles like Guadalcanal, but perhaps a more important audience could be Republicans on Capitol Hill. They have to face the voters in November. Some of them concerned about being weighed down by Iraq, perhaps being weighed down by Defense Secretary Rumsfeld.

Congressman Pat Tiberi, a Republican of Ohio, today told the "Columbus Dispatch," quote, I can't defend how the president laid out the need for going to war in Iraq. I don't support Rumsfeld. Asked whether the president had operated above the law, in terms of government surveillance, Tiberi said, quote, he might have.

Now I tried to reach the Congressman today. He would not get on the phone with me, but his office did put out a statement clarifying, number one, he still supports the mission in Iraq and number two, he's not quite calling on Rumsfeld to resign. Instead saying he wants new leadership at the Pentagon.

I think the point though here and what's significant is that even Democrats privately admit, Tiberi is a Bush loyalist, who is not really in a tough race in Ohio. Democrats not expecting to beat him. So his words could have more credibility.

Someone like moderate Republican Chris Shays, who last week was calling for perhaps troops to start coming home from Iraq, a time table perhaps. Chris Shays is in a very tough race, so maybe it makes more sense that he, with his back against the wall, he would be calling for this. Tiberi is somebody who is not necessarily in a tough race.

You have to be careful obviously about making too much about the words of one Republican, but this is one of the things the White House could be nervous about and why the president is launching this new series of speeches. If more Republicans, between now and election day, start running from the president, that obviously could be a big problem, John.

KING: Big problem. Ed Henry at the White House. Ed, thank you very much. And in the battle for Congress the new Pentagon report on Iraq is giving Democratic critics of the war something new to pounce on. Here's our Congressional correspondent Andrea Koppel. Hi Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Hi, John, and pounce they did. Within just 90 minutes of the report's release, listen to what the Senate's top Democrat Harry Reed had to say in an e-mail he immediately fired off to reporters.

The Pentagon's new report today indicates that President Bush, Vice President Cheney and Secretary Rumsfeld's speeches are increasingly disconnected from the facts on the ground in Iraq. Even the Pentagon acknowledges Iraq is tipping into civil war. Failed Republican policies have left America bogged down in Iraq, with our military stretched thin and less able to fight and win the war on terror.

The chairman of the Democratic Congressional Campaign Committee, Congressman Rahm Emanuel, directed his comments to the Secretary of Defense and in response to a question from CNN said, can someone at the Pentagon please make sure that Secretary Rumsfeld has this for his weekend reading? Instead of continuing his political barnstorm across the country, he should get to work at the Pentagon, devising a real strategy for success in Iraq.

Now so far Republicans in the House and Senate have not reacted to this report. In fact, although most Republicans, with the exception of a handful of rank and file, do support the president's policy in Iraq, don't look for them to be going out of their way, like Mr. Bush and his cabinet, to focus on Iraq between now and election day in November. Instead they are going to try to keep the public's attention focused on what they believe is still a winning strategy and the Republican strong suit, to remind voters that they are the party of national security. John?

KING: A little back and forth warmup, Andrea, just before the traditional Labor Day kickoff of the Fall campaign season. Andrea Koppel, thank you very much. And Andrea Koppel and Ed Henry both, of course, part of the best political team on television, CNN America's campaign headquarters. The nation's Capitol is on flood alert right now, along with much of the East Coast.

Tropical depression Ernesto is leaving a trail of heavy rain as it moves north. At the same time Hurricane John is pounding Mexico's Pacific coast. Meteorologist Jacqui Jeras is at the CNN Hurricane Headquarters in Atlanta, hi Jacqui.

(WEATHER REPORT)

KING: Jacqui Jeras in the hurricane headquarter. Jacqui, we'll check back with you throughout the day. Thank you very much.

And now let's get a firsthand look at Ernesto's soaking power. Keith Oppenheim joins us from Chinquapin, North Carolina.

Hi, Keith.

KEITH OPPENHEIM, CNN CORRESPONDENT: Hi, John, how are you doing?

And we are on an active road, as you can see, this vehicle goes by me. This is Highway 41, heading east towards the small town north of Chinquapin, north of Wilmington, North Carolina.

And as we just pan over and take a look at a couple of homes across the streets, you can see that there are homes that are pretty well-flooded from the fallout from the northeast Cape Fear River and its tributaries. All of this coming from Tropical Storm Ernesto.

This area, by the way, John, had some significant flooding back in 1999 from Hurricane Floyd, and it was much worse then. Back then, 600 people were evacuated. This time around, it's been about 75, 80, but the concern is that things could get significantly worse here and in other parts of this county -- Pender County -- as we go into the weekend.

Why? Basically because the water just keeps making its move down from mountains into streams and sometimes into yards and roads like the one I am standing on now. John, back to you.

KING: Keith Oppenheim for us near Chinquapin, North Carolina. Keith, thank you very much. Stay safe.

Tropical depression Ernesto is affecting traffic throughout the Mid-Atlantic. You are looking at streaming video of Virginia, Maryland and here in the nation's capital. As we head into the Labor Day weekend, there are plenty of real-time resources available on-line to help keep you current. Abbi Tatton is standing by with some details -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: John, you can see the streaming video there behind you, but what you can get on the Internet is almost as good. We are looking at trafficland.com here, which is a nationwide site, traffic cameras on the major roads around the country, those being affected, trouble spots right now like around Washington, D.C. and in Virginia, rise to the front page there and incident reports, as well.

Now, if you are traveling, it's also useful to go to the department of transportation for the state that you are in. There are many Webcams along there as well, and you can zoom in on them and have a look at what's happening on the route that you are going. They are updating every second or two seconds or so.

Also incident reports -- we are looking at Virginia's Department of Transportation right now. State police there reported about 40 traffic accidents related to this storm. Instant reports and alerts on this site. We'll tell you about those hazards, John.

KING: Great resource. Abbi Tatton, thank you very much.

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

ZAIN VERJEE, CNN ANCHOR: Hi, John.

Empathy and apologies. New Orleans Mayor Ray Nagin arrives in New York City just days after the first anniversary of Hurricane Katrina and two weeks before the fifth anniversary of the 9/11 attacks. During a television interview last week, Nagin called the site of New York's World Trade Center "a hole in the ground." Today, apologies for that remark and an emphasis on the suffering that both cities have endured.

(BEGIN VIDEO CLIP)

MAYOR RAY NAGIN, NEW ORLEANS: And I want to make sure that everyone in New York understands I love New York City. I have been here on many occasions, and I think that we, as new Orleanians and New Yorkers, understand what tragedies are all about and we understand the difficulties in trying to recover from a tragedy.

(END VIDEO CLIP)

VERJEE: And we will have more on this story in the next hour where we will bring you a live report.

Rescuers in Iran search for victims of the crash of an Iranian airliner. The plane was landing in the northern city of Mashhad today when a tire blew out, causing the Russian-made jet to just skid off the runway and catch fire. A hundred and forty-seven passengers were on board. Now, there are conflicting reports on the number of survivors, but there are 28 confirmed deaths.

The U.S. military is celebrating a successful test of the country's missile defense system. Pentagon officials say a ground- based interceptor missile shut down a target missile over the Pacific. The test was designed to gauge the level of U.S. protection against a limited, long-range missile attack -- John.

KING: Thank you very much, Zain Verjee.

We want to go back now to take another look at Ernesto's power as it makes its way up the coast. Kathleen Koch joins us live now from Goldsboro, North Carolina.

Hi, Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Hi, John.

Well, as you can see behind me, Ernesto right now, but they're feeling his punch (ph) here. We're right now in front of the Barnyard Shopping Center. Water from nearby Stoneycreek came gushing into back doors of these storm doors (INAUDIBLE). Business owners reported they have to clean out about a foot of water (INAUDIBLE).

And they (INAUDIBLE) a frantic, frantic series of efforts to try to salvage what they could bringing out all their supplies, their equipment, all the goods they were selling. But it's been a futile effort for some of them. A couple of the stores really believe they've lost much of the goods inside. And that said (INAUDIBLE) businesses do not have flood insurance, back to you.

KING: Kathleen Koch in Goldsboro, North Carolina. Kathleen, thank you very much.

Time now for "The Cafferty File." Jack Cafferty joins us from New York. Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: John, when money gets tight most people cut back on things they don't need. You know, skip the trip to Europe, cut back on the expensive dinners out, unnecessary shopping sprees, but the federal government has never read that book.

Thursday, Lockheed Martin won a $3.9 billion contract from NASA to build the Orion Spacecraft. I have no idea what those pictures are, but it doesn't look like a spacecraft to me. It's part of the Bush administration's grand plan to return to moon and go to Mars. Total cost, $230 billion by 2025.

Oh, by the way, the last time NASA gave Lockheed Martin a contract to build a spaceship, they spent $912 million of our money and never built anything. No spaceship. Reason? Technical problem. Did I mention we are fighting a war or that we've done very little to secure our borders or that 46 million Americans have no health insurance or that our total national debt is $9 trillion?

Here's the question: Should returning to the moon be a national priority at this time? E-mail your thoughts to CaffertyFile@CNN.com, or go to CNN/CaffertyFile.

KING: I think I know your answer to the question, Jack. We'll wait for the e-mails to see the others. Jack Cafferty, thank you very much.

Coming up, what's left of the Ernesto is drenching the Carolinas and the Mid-Atlantic states, leaving hundreds of thousands without power. Stick with us for the most up-to-date coverage of the stormy weather.

Plus, the war in Iraq. Does today's new Pentagon report give the Democrats more ammunition in the political battle over the fighting?

But next, lately it's been the overlooked issue, but gas prices and the economy do weigh heavily among voters. But which party benefits from the current conditions? Stay with us. You are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

JOHN KING, CNN ANCHOR: Heading into the heart of the fall campaign season, many candidates are looking closely at the bottom line. A new government report out today showed the unemployment rate dropped a notch last month to 4.7 percent. But are voters seeing green or red? Here's our senior political analyst, Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: John. Here's how the economy affects elections. Times are good, stay the course. Times are bad, throw the bums out. So, which is it?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The economy is growing faster than expected, the government says. But do people believe times are good? The early '90s saw a recession and a health insurance crisis. In '92, only 11 percent of Americans thought the economy was in excellent or good shape. 94 was a little better, but not great, 30 percent. The late '90s were good times, the dotcom boom, the stock market bubble.

In 1998, 66 percent of Americans thought the economy was in good shape. In 2000, 71 percent. How do people think things are going now? The answer is, not so hot. Thirty-six percent say the economy is going well. Gas prices, a slowdown in the housing market. Economists talk about the wealth effect of home values.

DAVID LEREAH, NATIONAL ASSOCIATION OF REALTORS: Because housing prices are flat or coming down, so the wealth effect is going to hurt the purchase -- the consumption of goods and services throughout the economy.

SCHNEIDER: Not all the news coming from the government is good. DAVID JOHNSON, U.S. CENSUS BUREAU: The median household income in 2005 rose by 1.1 percent. Real median earnings of men and women working full time all year declined between 2004 and 2005.

SCHNEIDER: How can incomes go up if wages go down? Because the gains in income have been happening at the very top.

ANDY SERWER, CNN CORRESPONDENT: Executives are taking more and more of a share out of a company's earning. That's leaving fewer dollars for the average Americans.

SCHNEIDER: What about the more than 5.7 million new jobs that have been created in the past three years according to the White House?

SERWER: They are service sector jobs, and those jobs are not the high-paying jobs that many Americans enjoyed in the '40s, '50s, '60s and '70s. Those are going, going, gone.

(END VIDEOTAPE)

SCHNEIDER: When voters think the economy is bad they take it out on the party in power. That meant the Republicans in '92 and the Democrats in '94. Well, this year a growing economy that is not benefiting most workers spells trouble for Republicans -- John.

KING: And Bill, what's your assessment, how much does Iraq factor in, how much does just a generally sour mood about the war maybe get some Americans in regions that are doing pretty well economically simply to maybe not see it as much?

SCHNEIDER: Well, most people expect Iraq to be the central issue of the election. A lot of voters are angry about Iraq, exasperated by it, but my point is the economy doesn't really help and it doesn't gain the Republicans many points.

KING: Double whammy against the Republicans perhaps in many races. Bill Schneider, thanks very much, Bill. And next up, the political battle over Iraq. Does today's new report from the Pentagon to give the Democrats new firepower? I'll ask two of our experts, Donna Brazile and Bay Buchanan, right here in today's "Strategy Session."

And later, you don't see this all the time, why was this Senate candidate dragged out of a debate last night? Stick around, you are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Welcome back to THE SITUATION ROOM, I'm John King in Washington.

In our "Strategy Session," the Pentagon's downbeat new report on the violence in Iraq, the administration's newly declared war on Fascism and new calls for Secretary of Defense Donald Rumsfeld's head. Joining us now, CNN political analyst, Democratic strategist Donna Brazile, and Bay Buchanan, president for the American Cause. Thank you both for joining us.

Let's start with this report. It runs almost 70 pages, pretty sober assessment of the war in Iraq, including this. This is on page 28 of this new Defense Department report. It says, "Thus, the violence in Iraq cannot be categorized as the result of a single organized or unified opposition or insurgency. The security situation is currently at its most complex state since the initiation of Operation Iraqi Freedom."

So Bay, more than there-and-a-half years into this war, more than $300 billion spent, a rising American and Iraqi death toll and the security situation at its most complex point. A tough message for a president and his party two months before the election, isn't it?

BAY BUCHANAN, PRESIDENT, AMERICAN CAUSE: It sure is. And I think it's something that the American people are well aware of. I think there's a feeling in this nation that we don't know what to over there. The people are concerned, they want us to come home. But I don't think the American people are ready to abandon it yet, either.

And so we're looking for guidance. We're looking for direction. We're looking for some kind of a sense that the administration does have a handle on what's happening over there, and it's going to be tough to give it to them.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, that's the missing ingredient. What we need now is not another P.R. speech or another speech by the president or vice president or Secretary Rumsfeld. What we need is a strategy session inside the White House where we decide that it's time for us to redeploy our troops, allow the Iraqi troops that are already trained to begin to take position in those places. And it's time that we give the Iraqi people keys back to their own capital and their future so that they can take responsibility for the reconstruction effort.

KING: I know you disagree with the policy, but let me play devil's advocate for a second. Many Democrats often accuse the administration of giving this overly rosy, overly optimistic picture of the situation in Iraq. It's a pretty sober report. They say there's not a civil war.

There's a debate about whether -- what's the definition of a civil bar. But it's a pretty sober assessment of the political situation, pretty sober assessment of the security challenges, pretty sober assessment of the current economic conditions, oil production, otherwise, in Iraq.

Do they deserve credit? This is a Pentagon report, from a Pentagon many Democrats say has its head in the sand. Do they deserve credit for a sober assessment here?

BRAZILE: Oh, look, General Abizaid last month said before the Senate that they -- you know, Iraq is on the brink of a civil war, some more sectarian violence. So perhaps it's time for the administration to read that report and, again, convene people who know better how to redeploy and how to strategize for victory. We all want victory. The president is absolutely right that we are resolved, but we're resolved to win the war, not to continue to stay the course. That's where Democrats and many Republicans now agree with this administration.

BUCHANAN: You know, John, your point is a good one. I think the American people will be most respectful of the fact that this administration is not trying to hide the situation from them. They're not trying to say it's something that it's not. They've said it is tough, it is difficult, it is most complex as it's ever been.

And I think the American people will respect that and now look for some positive way to address what the crisis is. But that is where the American administration has to move next. However, they are going to get credit for making certain that the American people are knowledgeable about what the situation is.

KING: This very sober report comes at a time of some escalating -- if it can get any more escalated -- rhetoric...

(LAUGHTER)

KING: ... about the political debate about the war, and, yet, both the president and the secretary of defense giving big speeches to the American Legion Convention this week, the defense secretary being more aggressive, if you will, and saying, if you are criticizing the administration right now, saying, get out of Iraq now, you are appeasing the insurgents and the terrorists, much like those who appeased the Nazis and the fascists.

I want to read you Senate Barbara Boxer, Democrat of California, her reaction to that: "This latest Rumsfeld rampage cannot stand. By comparing critics of this administration's policies in Iraq to those who wanted to appease fascism and Nazism in the run-up to World War II, he is slandering the majority of the American people, who pose -- who oppose the war in Iraq."

Appropriate rhetoric, Bay?

BUCHANAN: You know, it's what they do. It's politics John. It's what they do. I have been there.

You know, you make this position, and you can poll it. The American people do not -- do not want to go to be isolationists. It's something that makes them nervous. And, so, if you accuse your opponent of being isolationist, of being -- appeasing the enemy, and rather than trying to take them on, you will win in the polls. You will win. People will start to move towards your direction.

The word fascism is so overused in this country. I mean, I'm a fascist, if you listen to either the Bush people, of -- Bush, one day's, or you listen to liberal Democrats, any right-wing extremist -- or they call us extremists. Any conservative is a fascist. This is an overused term. But they use it for politics. It's to frighten people from the message of the other side. And, so, both sides have used it. It's very legitimate nowadays. It to be expected by both sides. I mean, it's unfortunate the Democrats can't recognize it's a term that has been used against -- that they have used many, many times. It's now time to expect...

(CROSSTALK)

BRAZILE: Well, Democrats are sick and tired of this administration, and Donald Rumsfeld in particular, questioning our patriotism and questioning our resolve to fight the war on terror.

That is just a bunch of half-truths and naked lies. And I think it's time that Donald Rumsfeld, you know, give the president his, you know, resignation letter again. And, hopefully, this time, the president will accept it.

KING: There's -- you are having the partisan debate here. There is a partisan debate between Democrats and Republicans.

There's also a bit of a crack in the Republican Party. I want you to listen to Congressman Chris Shays. I interviewed him on this show just the other day. And he's one of those who was a strong supporter of the war, been there 14 times, said earlier this month a timeline would be crazy. Now he thinks a timeline might be necessary to bring the U.S. troops home.

Let's listen to Congressman Shays.

(BEGIN VIDEO CLIP)

REP. CHRISTOPHER SHAYS (R), CONNECTICUT: Well, I think the president has an opinion, but I think he's dead wrong. It's a timeline, not about when a war ends, because who knows when the war ends. The fighting will still continue. It's a timeline to transfer the power to the Iraqis.

(END VIDEO CLIP)

KING: What is the effect, politically, of a senior Republican, like Chris Shays, saying, we need a timeline to bring the troops home, Mr. President?

BUCHANAN: Well, as you -- there's no question there's -- that people across the country, Republicans, Democrats, are moving in this direction. They're beginning to think there's -- we have got to get a way out of this mess over there. And, so, I don't think it's really surprising, at all.

But I think the key here is, what does Shays say? He says, look it. He distinguishes it. He explains that we are not abandoning. And he makes a case for it.

That's not what the Democrats are doing. They're just saying: You can't call us names. You can't call us unpatriotic. It's time for the Democrats to say, listen, if you don't like what Rumsfeld is saying, don't just call for his resignation. Tell us why it's wrong. Why is that not what you are saying? Why is what you're suggesting not appeasement? And make your case. Shays did. It's time that the Democrats did as well.

BRAZILE: Well, Democrats have done that over and over and over again.

And I think Democrats have beat this tired horse to death. And the truth is, is that Congressman Shays is not alone. Diane Farrell, his opponent, has been drumbeating him to -- to really take a position.

But, look, you have Congressman Gutknecht of Minnesota. You have Congressman Tiberi now coming out. You have Congressman Jones down in North Carolina. These are Republicans. They are sick and tired of, also, the stay-the-course strategy. It's time for the administration to get out of the politics, the political business, and start focusing on winning this war in Iraq.

BUCHANAN: And you have Democrats like Lieberman on our side. It's split both ways.

BRAZILE: I'm so glad you got one Democrat to talk about.

(CROSSTALK)

BRAZILE: Well, he's an independent today.

(CROSSTALK)

BRAZILE: He's an independent now.

KING: We're going to call time out.

(CROSSTALK)

KING: I think it's fair to say there are politics on both sides on this issue...

(CROSSTALK)

KING: ... in this political season.

Donna Brazile, Bay Buchanan, thank you very much for being right here with us.

BRAZILE: Thank you.

(CROSSTALK)

KING: And Donna and Bay, of course, part of the best political team on television -- CNN, campaign -- CNN is America's campaign headquarters. And up next: Do some new comments from Hillary Clinton give us a clue of whether she will run for the White House? We will tell you exactly what she said.

Plus: why this candidate for the Senate was dragged away and arrested. We will tell exactly why in today's "Political Radar."

Stay right here. You are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Our Zain Verjee joins us now with a closer look at other stories making news.

Hi, Zain.

VERJEE: Hi, John.

A truck driver is charged with five counts of reckless homicide over an April Crash. Thirty-seven-year-old Robert Spencer was arrested today at his home near Detroit. Last April, four students and a staff member from Taylor University were killed when Spencer's truck veered in to oncoming traffic.

Officials initially confused the survivor, Whitney Cerak, shown here on the left, with victim Laura VanRyn. VanRyn's parents kept a five-week-long vigil at Cerak's bedside before she regained consciousness and revealed her identity.

At least 10 children were killed and -- excuse me -- were injured Maryland today when a van plowed into them as they waited for their school bus. Officials say the 29-year-old driver of the van was coming around a curve, ran off the road, and into the group of children. The students are between the ages 10 of 14. Six of the children are seriously injured. But doctors say that no injuries are life-threatening.

Today, hundreds of Russians lit candles, laid flowers, and filed past photographers of the -- photographs of the victims to mark the anniversary of Russia's worst terror attack. It was two years ago when Chechen rebels stormed into Beslan's School Number One. At least 333 people -- more than half of them were students -- were killed during the three-day seize. Dissident groups believe most of the victims were killed when security forces launched grenades into the building.

And, for the first time, the head of the Roman Catholic Church has visited the sanctuary that houses a possible Christian relic. The 17th century Church of Manoppello houses a shroud known as the Holy Face that some believe was used to wipe the blood and sweat of Jesus before his crucifixion. Today, Pope Benedict XVI visited the church in central Italy -- John.

KING: Thank you very much, Zain Verjee.

And on to our "Political Radar" this Friday. Is Senator Clinton dropping hints about her White House ambitions? In an ABC News interview last night, the New York Democrat ducked questions about whether she will run for president in 2008. But she did say she hopes America will be ready for its first woman president. The former first lady said -- quote -- "It just depends on when and if that happens." And then she added, "Stay tuned."

I think we will.

An arresting development, literally, in the U.S. Senate race in Maryland. Democratic candidate Alan Lichtman and his wife were carted away in handcuffs by police last night. They had been protesting his exclusion from a debate featuring his party's two top Senate contenders, Ben Cardin and Kweisi Mfume.

Lichtman didn't have enough support in opinion polls to qualify for the debate, but he demanded he be admitted anyway, and was arrested after repeatedly being asked to leave.

New fallout from Senator George Allen's controversial "macaca" comment. The Virginia Republican is turning down an award from a minority scholarship fund. Some donors threatened to withhold contributions if Senator Allen received that honor. Senator Allen recently apologized for referring to man of Indian descent as "macaca," a term some consider a racial slur. Allen says he didn't want the controversy to hurt -- quote -- "deserving students."

Senator Conrad Burns is also trying to take the sting out of his own controversial comments. This week, the Montana Republican implied that taxi drivers are terrorists. His campaign spokesman says the senator was simply pointing out that terror suspects can be anywhere in the country.

Here's exactly what Burns said at a fund-raiser, with first lady Laura Bush, on Wednesday.

(BEGIN VIDEO CLIP)

SEN. CONRAD BURNS (R), MONTANA: We are living in a world now where we have an enemy that is much different than the enemy, than any enemy we have ever -- that we have ever faced.

They are faceless. They operate in the shadows. They drive taxicabs in the daytime, and kill at night, kill indiscriminately, our elderly, our children and women.

(END VIDEO CLIP)

KING: Now, Burns made that comment just days after raising eyebrows for calling his house painter "a nice little Guatemalan man."

It appears this isn't the first time Senator Burns has shared these sorts of sentiments publicly.

Standing by with some new developments is our Internet reporter, Abbi Tatton. Hi, Abbi.

TATTON: John, and this is something the campaign of Senator Burns' Democratic opinion is keen to point out online.

Just posted in the last hour on the video sharing site YouTube, the campaign of Democratic Jon Tester has put up two sound bites they attribute to Senator Burns in the past week, where he talks about taxi drivers, making similar comments. This is a tactic, putting video up on YouTube, that the campaign of Jon Tester has been doing now for a few weeks. We counted four of them up there right now. They have a tracker following Senator Burns around wherever he goes -- John.

KING: Abbi Tatton -- Abbi, thank you very much.

And coming up: It was a very good week for Arnold Schwarzenegger. We will tell you why and what it means for his reelection chances, when he comes back.

Plus: dangerous weather from coast to coast. We will go live to the storm fronts in the mid-Atlantic states and in Baja California.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: As we begin this long holiday weekend, some political figures have more reason to kick back and enjoy themselves than others.

Let's bring back our Bill Schneider to reveal -- drumroll, please -- the "Political Play of the Week."

(LAUGHTER)

KING: Hi, Bill.

SCHNEIDER: John, Arnold Schwarzenegger is a Republican governor of a strongly Democratic state up for reelection this year with a weak job approval rating. This week, he reached a landmark deal with the Democratic state legislature that would make California the first state to try to limit greenhouse gas emissions.

Now, the new law would require a 25 percent reduction in carbon dioxide pollution produced inside the state by 2020. The explicit objective is to start a movement that would spread across the country, and force the federal government to act.

Schwarzenegger's action makes a political point: that divided government can work, if both sides are willing to compromise, something the governor was not willing to do last year, with the result that he saw his political fortunes sink.

Now it's the "Political Play of the Week" -- John.

KING: And his campaign is looking pretty good at the moment. SCHNEIDER: Right now, yes.

KING: Bill Schneider, thank you very much for that.

And up next: Shooting for the moon, should that be a national priority right now. Jack Cafferty is standing by with your answers.

Plus: much more on that new Pentagon report on the bloodshed in Iraq. I will talk with our military analyst, retired General Spider Marks.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Here's a look at some of the "Hot Shots" coming in from the Associated Press, pictures likely to be in your newspaper tomorrow.

In Beijing, police special forces show off their skills during a training exercise.

On to the Middle East: Iranian President Mahmoud Ahmadinejad raises his arms for the crowds, before delivering a speech.

In Japan, Prime Minister Koizumi greets supporters at an earthquake drill. The drill commemorates a massive 1923 earthquake that killed 140,000 people.

Vienna, Austria: Marco Hort puts 259 drinking straws in his mouth. That's a world record. And guess what? He holds it. Later this month, he will try to beat it at the upcoming Vienna World Record Day.

(LAUGHTER)

KING: And that's today's "Hot Shots," pictures often worth 1,000 words.

Jack Cafferty is back now with "The Cafferty File."

Hi, Jack.

(LAUGHTER)

KING: Don't even.

(LAUGHTER)

CAFFERTY: Yes, maybe I better not.

(LAUGHTER)

CAFFERTY: We mentioned earlier that Lockheed Martin was awarded $3.9 billion to build a new spacecraft this week, part of a space initiative that will likely cost this country $230 billion by the year 2025. The question is, should returning to the moon be a national priority at this time?

Lisa writes from Idaho: "Our priorities need to be affordable health care, solving the energy crisis, saving Social Security, and better schools. Wouldn't this be a better way of spending the billions of dollars that would be blasted into the black hole of space?"

Norm in Ontario: "We will always have wars on the go and poverty to address. The spinoffs from the space program will stimulate the economy and give a much-needed boost to your national pride at this time."

George in Florida: "Unless we discover untapped reserves of gourmet cheese, we have nothing to gain from visiting the moon again. It's scandalous the greatest scientific experiment since Galileo, the Hubble space telescope, is being permitted to expire, because of a lack of maintenance."

Andy writes from Nevada: "With the Russians and Chinese gearing up for a trip to the moon, we had better get there and stake our claim. I don't think it would be a good idea to let them get over us like that."

John in California: "Our national objectives should be jobs for the middle class, health care for all Americans, and the repair of the national infrastructure. In order to accomplish this, send George Bush to the moon immediately. He's the major..."

(LAUGHTER)

CAFFERTY: "... obstacle to solving our national problems."

Aaron in Minnesota: "Sure, we need to find some place to inhabit after we destroy this planet."

And Craig in Florida: "Border security will better on the moon."

If you are sick of your job, and you're thinking of a change -- or maybe you haven't even decided what you want to do with the rest of your life yet, we invite you to watch "IN THE MONEY" this weekend, Saturdays at 1:00, Sundays at 3:00. That's Eastern time.

We are going to talk about a list of jobs that pay more $100,000 a year, some of them quite a bit more than that. And you don't even need a college degree to hold them -- "IN THE MONEY," a tidy little business show that we're involved in on the weekends -- John.

KING: If I am not bailing the water out of my basement, Jack, I will be happy to watch.

CAFFERTY: There you go.

(LAUGHTER)

KING: Jack Cafferty.

CAFFERTY: That's right. You are going to get a lot of rain this weekend, aren't you?

KING: It is upon us. I'm a little worried about going home tonight.

KING: We need some more reports on that rain.

(LAUGHTER)

KING: Jack Cafferty, thank you very much.

We need to show that picture again about the straw contest.

Still to come: Can President Bush win votes for his party by reframing the war in Iraq? Our Jeff Greenfield looks at wartime battles for control of Congress.

And the threat of civil war in Iraq -- can coalition forces fight back in the news media? We will tell you about a new battle plan that is unfolding.

Stay right here. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Just a little more than two months left until congressional elections, President Bush is waging a new P.R. campaign for the mission in Iraq. But history shows that midterm elections held during wartime can prove costly for the party in power.

Here's our senior analyst, Jeff Greenfield.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SENIOR ANALYST: John, the political strategy of the White House that emerged this week is about as subtle as a police siren: Try once again to frame Iraq as part of a broad global struggle against dangerous enemies, and suggest that too many Democrats lack the will to win that struggle.

This isn't the first time that a party has had to fight midterm elections in the midst of a war. So, what does the past tell us?

(voice-over): In November 1942, America's entry into World War II was almost a year old, and the war was not going well at all. Japan was battling fiercely, from the Aleutians to Guadalcanal.

Franklin Roosevelt toured the country, preaching optimism. But voters' discontent on the war, coupled with Republican attacks on domestic policy, led to big Democratic losses, 45 seats in the House, nine in the Senate.

(BEGIN VIDEO CLIP, 1950)

HARRY TRUMAN, PRESIDENT OF THE UNITED STATES: Communist forces have..

(END VIDEO CLIP)

GREENFIELD: In 1950, four months in the Korean War, President Truman chose not to use the war as a campaign issue, apparently thinking it was unseemly.

Republicans had no such compunctions. One of the party's slogans that year was, "Why Korea?" And one GOP senator said, "The blood of our boys in Korea is on Truman's shoulders, and no one else." With no counterattack from Truman, Democrats lost 29 House seats and six Senate seats.

In 1966, losses for the Democrats were inevitable, if only because they had won so many seats two years earlier in the Lyndon Johnson landslide. But the major escalation of Vietnam a year earlier, with hundreds of American soldiers dying each week, was a big political liability for Democrats.

(BEGIN VIDEO CLIP)

UNIDENTIFIED PROTESTERS: Stop the war!

(END VIDEO CLIP)

GREENFIELD: Republicans charged that Johnson and his defense secretary, Robert McNamara, were not letting the military use its power to win in Vietnam. Along with domestic upheaval, the war helped cost Democrats 47 House seats and four Senate seats.

Four years ago, in the first campaign after September 11, the president campaigned for Republicans on a strong national security theme.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And I got some suggestions for you when you get inside the voting booth.

(END VIDEO CLIP)

GREENFIELD: Probably the key reason why, even with economic pessimism, Republicans actually gained two seats in the Senate and six in the House.

But that was before the invasion of Iraq.

(GUNFIRE)

GREENFIELD: As this fall campaign begins, Republicans appear to be facing a stiff political wind. Polls suggest they have lost much or all of their advantages on Iraq and broader issues of combating terror.

So, it's not surprising that, the week before the Labor Day kickoff, the president, the vice president, and the secretary of defense have all tried to reframe the debate, with Cheney and Rumsfeld charging that Democrats do not understand the conflict and will leave America weaker.

(on camera): Four years ago, Democrats tried to finesse the national security issue and run on domestic concerns. That didn't work.

This time, they're trying something else, arguing that the Bush approach has actually made America less safe, which means the two parties do agree on something: The issues of Iraq, terror and national security are going to decide this election -- John.

(END VIDEOTAPE)

KING: Thank you, Jeff.

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