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Is Bush Policy Toward Iraq Still on Schedule?; Congress Races Ahead With Homeland Security; Greenspan Calls U.S. Economy 'Soft'

Aired November 16, 2002 - 10:00   ET

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

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


ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Welcome to CNN's SATURDAY EDITION where our journalists have the inside scope on the stories we covered this week. I'm Andrea Koppel.
Did Iraq blink or just push back the final reckoning?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux. Did Iraq, opening the door to inspectors make the U.S. job harder or is Bush policy on schedule?

KYRA PHILLIPS, CNN CORRESPONDENT: I'm Kyra Phillips live in Kuwait. Views from Iraq's next door neighbor and how the U.S. military is preparing for a possible war.

DANA BASH, CNN CAPITOL HILL PRODUCER: I'm Dana Bash. Congress races ahead with homeland security and Democrats pick a new leader.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: And I'm Christine Romans. Greenspan calls the economy soft. And a new book slams Wall Street's sexism. We'll be talking about all of these stories. We'll listen to the president's weekly radio address at the end of the hour. But first, a check on what's making headlines right now at CNN headquarters in Atlanta.

(NEWS ALERT)

MALVEAUX: Well, when Iraq signaled on Wednesday its willingness to allow U.N. weapons inspectors back, the Bush administration stuck to its guns, saying that if cooperation is less than it should be, the U.S. and allies will use military force.

And the administration was quick to knock down Iraqi claims that it doesn't have any weapons of mass destruction. And so the stand-off moves into a new stage in the political, diplomatic and military tensions ratchet it up another notch.

Bottom line is, the Bush administration does not believe that Saddam Hussein is going to comply and they never have.

This morning we heard from the U.N. weapons inspector Hans Blix, who is on his way to Baghdad with a team, an inspections team, and he said, "Look, we're going to move on this very quickly. Our schedule is accelerated.

They want to test Saddam Hussein right away. The Bush administration wants to do the same. But there are some who are already arguing that Iraq is in material breach of U.N. resolutions.

KOPPEL: Well, Suzanne, that's a very good point because this week the U.N. Secretary General Kofi Annan was in town to meet with President Bush. And before that meeting, he had a breakfast with a small group of journalists. And the theme of that breakfast was to the Bush administration, "Be patient because the international community believes that your threshold for material breach, for breaking, for Iraq's breaking this resolution 441, is going to be too low."

So you know, it can't be an "Oh, an Iraqi citizen can't find the key to the room that the inspectors want to get in." And then that's a material breach. He said, "It has to be major, significant and serious so that it's credible."

BASH: Wasn't the administration even saying that the fact that Iraq was shooting at planes in the no-fly zone, that was a material breach?

MALVEAUX: Well, exactly. And that's -- they were saying, "Look, if you shoot at these planes then you are not complying with the U.N. resolution."

But I know that that doesn't really -- it doesn't specifically state that that's...

KOPPEL: Well, none of the resolution state that.

MALVEAUX: ... part of that.

KOPPEL: Yes, that's exactly right. None of the resolutions to this point, over the last 1 years, says that no-flys are illegal either in the North or the South of Iraq.

What they say is that the U.S. and the international community has the right to protect the Iraqi people. And so for years now, the U.S. and U.K. and before that, France, had been flying these sorties over the no-fly zones and almost egging on the Iraqis to fire at them.

And I know, Kyra, you actually I think covered some of those pilots who fly those -- who fly through those no-fly zones.

PHILLIPS: Yes, you're absolutely right. I'm going to sort of second what you were saying. And when I was out spending time with the strike fighter pilots and talking with the different men and the different squadrons, they were telling me about five years ago, "Yes, they were getting shot at."

But now they say that it's definitely increased. They're getting shot at even more. As a matter of fact, the F-14 pilot with whom I flew not long ago in an air-to-air combat training mission, he told me just a few nights ago they were flying over the no-fly zone. And once again, getting fired upon.

And it's -- they also feel that not everyone back in the United States understands what they're going through, and this happens on a regular basis.

BASH: Suzanne, you know it's interesting because we were talking about Kofi Annan telling the president to be patient. And we've heard that Mr. Bush is a patient man. He tells us it makes his mother and his wife laugh, but he's assuring us that he is.

How patient...

(LAUGHTER)

... how patient is the White House being, because the timeline continues to sort of dwindle for what would be optimal conditions for any kind of retaliation or...

MALVEAUX: Here's a flashpoint. The next flashpoint is December 8. That's when Iraq has to say account for all of its weapons programs. Already, they're saying this letter that was sent from Iraqi officials -- which you read the strange details in that letter -- but already they're saying in that letter it states that don't have any weapons of mass destruction. There are some in the Bush administration who are arguing that denial in and of itself, when you look at December 8, that that in and of itself, is a breach of the U.N. resolution.

And that they're going to press -- you're not only going to see the Bush administration pressing the Saddam Hussein, the Iraqis, but also the inspectors. They're going to put as much pressure as possible to say, "Look, we made this deal with you. We said -- we backed off. We're going to go to the U.N. Security Council, we're going to consult with you, but the bottom line is tough inspections. Here's the intelligence. Here's the surveillance. Look at the presidential palaces and go inside. That's your job."

KOPPEL: But you know, what there are also some within the administration who are concerned about the "what if" they don't find anything.

Saddam Hussein has had four years to hide his weapons of mass destruction program. And experts say that he's actually mobilized it to in some instances small trucks. That he has laboratories that are literally moving around the country. It would be like finding a needle in haystack.

And so, despite the fact that you do hear the Bush administration say that U.S. intelligence will be providing all it knows, British intelligence, western intelligence will be trying to help the inspectors, they really are going to have a tough job. And what happens if months from now, three months from now, four months from now, they don't find the smoking gun?

Then you're going to have a push, the U.S. fears, from the international community, saying "Come on guys, lift the sanction. Pull out the weapons inspectors. He didn't have anything, just like Saddam Hussein has maintained all along."

PHILLIPS: Special front row seats to the Iraq standoff. I'll talk to you more about U.S. military preparations for a possible war against Iraq. You'll see what's happening here out in the Persian Gulf first hand, as CNN's SATURDAY EDITION continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LT. COMMANDER SCOTT SNOW, F-14 PILOT: I'd rather do the job now and make it a better future for him and for everyone in America than to sit back and just let this threat build until the next terror act that we have.

(END VIDEO CLIP)

PHILLIPS: That was Lieutenant Commander Scott Snow, an F-14 pilot, part of the F-31, the Tomcaters. One of the squadrons involved in the awing that's on the USS Abraham Lincoln, training around the clock. He was talking about why he's doing this, not only for the freedom of everybody in America and around the world, but also for his wife and his son that is due in just three months -- Logan Scott Snow, soon to arrive.

Now Snow is just one of 5,500 men and women on the USS Abraham Lincoln, training around the clock, waiting for what President George W. Bush says they have to do.

ROMANS: Kyra, tell us why this is so important, what is happening in Kuwait, and what are people there saying about the dangerous neighborhood that they live in?

PHILLIPS: Yes, it's interesting. You get a number of -- well, a lot of different points of view. The people -- we'll talk about the troops in a minute, but the people here in Kuwait when I first arrived here, they were very -- they're living on edge.

The memories from the first Gulf War are still very strong here, even in the hotel where we're staying, there's a video tape that sits atop the TV called "Rebuilding Kuwait: A Documentary." And it's still, even 10 years later, so much on their minds. And they want everybody to come here to see what this area when through and the devastation that they experienced.

So people are on edge. They've been taking money out the bank. Trading has been low on the stock exchange. And they're just in a wait and see mode. They say that when it comes to Saddam Hussein and his actions and his words that they sort of take it with a grain of salt. They want to see if indeed, those weapons inspections do happen and if there's any conflict between the weapons inspectors and the Iraqi regime.

MALVEAUX: Kyra, is there a sense that war is inevitable? When you talk to people, do they think it's simply a matter of time?

PHILLIPS: That's a great question. And to put it bluntly, yes, they do think from the troops to the people here, they do think a war is inevitable. Just because they've been experiencing this cat and mouse game for so long and seeing that Saddam Hussein doesn't comply on a number of levels.

And specifically speaking, from the troops' point of view, I mean they're out there, on the front lines by land, air and sea on a regular basis. And they're -- they come face to face with the threat all of time.

So they're just waiting to see when it's going to happen.

KOPPEL: Kyra, how much of an impact do you think it will have in Kuwait to see whether or not the Saudis will support military action?

PHILLIPS: Yes, everybody is talking about that. More so they think they won't be supportive as much as the United States would want them to be. That's sort of the feeling here, and they feel that a war would definitely devastate their economy, devastate their way of life. They've been talking about places they would want to move to. People even, in the region have been telling me how they've been looking for other jobs, but it's not so easy. I mean, it's very hard to come by. And this is an area where people are very tied to this region. They've got big families. They have lots of children. They love living here. They've never left this area. So, it has a lot of people very nervous.

BASH: Kyra, you've been spending a lot of time with the U.S. troops in the region. Tell me what's the morale like? What are you hearing from them? What are their feelings about what may or may not happen over there?

PHILLIPS: Well, morale-wise, when you want to talk about the morale and the carriers, the morale on the various ships in the battle group, the morale when they're out training, out in the Persian Gulf or even on land, they're pumped up. They're focused. They're mission focused. They're supporting each other. They're talking about what they have to do. They're being prepared. They're excited about new technology that they have.

They have no worries about winning a war. That's not even an issue to them. They're very confident that once they're sent out on a specific mission that they'll be able to handle it without a problem. Very positive attitude.

But then when you start talking about families and children and going back home, that's when they start to let their guard down a little bit and talking about how much they just...

(CROSSTALK)

PHILLIPS: ... miss being with their friends.

Yes, that's the toughest part.

You've got Thanksgiving around the corner, you've got Christmas just ahead. A lot of them were banking on going home, and it doesn't look like that's going to happen.

KOPPEL: How many troops are actually out there now, Kyra? Do you have a sense of that? I know that they're at any given time -- they're are thousands of soldiers who are training in Kuwait. But has the build-up been in the last number of weeks?

PHILLIPS: Well, there's 5,500 people out on the carrier USS Abraham Lincoln out in the Persian Gulf. And that's just on the carrier. And then you have a number of sailors and officers on the various ships within the battle group. So the Persian Gulf has thousands and thousands of personnel out there.

When you want to talk about troops on land, I mean the numbers are mixed. They don't want to reveal that. A lot of that is classified information. I know of thousands, definitely. Special operations forces and various branches of the military out there in certain areas within the region. But it's really hard to get a specific number because of course, they want to keep that classified.

ROMANS: Kyra, I'm wondering about how open and vigorous the training is? I mean, we're watching you, and we're seeing what's happening in Kuwait and in the region. What kind of message is that sending? Is this perhaps part of the United States military policy and its statement toward Iraq?

PHILLIPS: Yes, it's been really hard. I've been very lucky to have some really good friends and good contacts within the military for a number of years. So I've been able to gain exclusive access into Special Forces training and air-to-air combat training and other things going on, the offer the meal (ph) operations, the maritime interdiction (ph) operation. And that's the military and coalition forces coming together trying to stop the smuggling that's going on in the waterways and enforcing U.N. sanctions out on the maritime front.

So I've been very lucky in the sense that I've kind of had a front row seat to be able to see some of the training that's going on. Not everyone has been able to do that.

And it's something they really don't always like to talk about, but they feel that we've done it right so far, have been able to explain it in a unclassified way, but also be able to give Americans and the world a glimpse of what they're doing and proving that they're prepared and they're ready.

KOPPEL: Well, we've really been enjoying your reports, Kyra. And we look forward to seeing more of them in the days to come.

From possible war against Iraq, to the already ongoing war against terrorism, we'll talk about the latest message from Osama bin Laden when CNN's SATURDAY EDITION comes right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (through translator): Why is it acceptable for us to live with fear, murder, destruction, displacement, the orphaning of children and the widowing of women, but peace security and happiness should be for you? This is not fair. Now is the time to become equals. Just like you kill us, we will kill you.

(BEGIN VIDEO CLIP)

KOPPEL: A blunt threat, "We will kill you," on the tape released this week. U.S. officials believe the person speaking on the tape was al Qaeda leader Osama bin Laden.

Welcome back to CNN's SATURDAY EDITION.

You know, equally worrisome to U.S. Officials, beyond the fact that this is the first time that they would have heard from bin Laden in a year and the fact that he's still alive, is the fact that it's a foreboding, perhaps, of a major terrorist attack.

Previously, back in 1998, Osama bin Laden went on TV before the U.S. embassy attacks in East Africa in October of 2000. There was the attack on the USS Cole. Bin Laden had a video tape that came out before that one. And then before 9/11 as well.

So they're really, really concerned right now that this could be a harbinger of some major attack out there.

BASH: You know, Andrea, the Senate Democratic Leader Tom Daschle came out the morning that this was all in the newspapers, came out in his regular briefing and started saying -- unsolicited -- started saying, "You know, look at this, this is -- how can we look at the fact that bin Laden seems to be out there and the administration is saying that we're winning the war on terrorism."

KOPPEL: Yes.

BASH: He said that, "We're not, we're not." Let's take a look at what Senator Daschle had to say.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: We haven't found bin Laden. We haven't made any real progress in many of the other areas involving the key elements of al Qaeda. They continue to be as great a threat today as they were a year and a half ago. So by what measure can we say this has been successful so far?

(END VIDEO CLIP)

BASH: The Democrats are feeling their way, and are now happy, I guess, about the fact that they aren't in the majority in the Senate any more so they really can oppose the president and...

MALVEAUX: Talk about -- talk about making the Bush administration cringe, though.

BASH: Oh...

MALVEAUX: I mean, to hear Daschle say that, I mean, you had National Security Adviser Condi Rice out there saying, "Look, you know, this war on terror is much bigger than Osama bin Laden." She said, "Bush doesn't wake up and just talk about Iraq." I mean, really putting the Bush administration on the defensive, the president cringing at this.

That is the last thing that they want to be accused of. But I mean, it's very frustrating.

ROMANS: But Osama bin Laden is the -- is the face and the voice of terrorism. I mean, you know...

BASH: And that's exactly what...

ROMANS: ... and whether it matters or not he's alive or dead, he is the person that people watch on the evening news and watch on CNN all across America and say, "What is going on? This is still a problem."

BASH: ... and that's exactly what Senator Daschle was trying to say is, "The president himself said, 'We have to find Osama bin Laden dead or alive.' If we haven't done that, he cannot say that we're winning the war on terrorism."

End of story. That's what he's saying.

MALVEAUX: And this week too, you had an increase in these terror alerts. You had that memo that came out, the weekly memo for the FBI. And people looked at that and they said, "Spectacular -- the word spectacular -- attacks." I mean, talk about worrisome. Now that's something that was out there in the public domain that the administration was aware of.

But then you had the FBI also saying, "Look, there may be these hospitals that are being attacked in four cities."

Bush administration, I mean the aides were just livid, just went back to the FBI and said, "Look, this is just alarmist. This isn't necessary. It's such a low credible -- credibility level, that this isn't necessary. BASH: Right.

KOPPEL: Another thing that they're not saying publicly, but privately are conceding that is equally worrisome in the bin Laden tape is the fact that he mentions and threatens that if the U.S. attacks Iraq, that that would be another cause for Muslims around the world to rise up against Americans.

That's something -- I don't what you're hearing, Kyra, in terms of the reaction to the bin Laden tape. What are they saying in Kuwait?

PHILLIPS: Well, they're definitely concerned about terrorist attacks. You will remember last month the attack that happened on Failaka Island, Operation Eager Mace, and one of the soldiers was killed, another was injured. The two attackers were killed. It was definitely defined as terrorists attacks. I mean, that changed security in this entire region. I mean, with military, with people here in Kuwait. Kuwaitis were embarrassed because they didn't want any type of tie between Kuwait and terrorism. And that incident, that infiltration of a terrorist, of two terrorists, changed everything with regard to security.

So it is constantly on their minds. They have changed policy in a number of ways, a number of ways of course I can't talk about. But I am seeing that as I -- it's on the forefront of all of their minds.

ROMANS: And what about in terms of security and safety in the region, another fresh attack in Israel as well. What are people saying about the stability of the region and as the process with Iraq continues, I mean there's no improvement there.

KOPPEL: I mean, well, it's no surprise that there would be an attack in Israel. It's been going on for two years all of these terrorist attacks. And this latest one only adds to the ammunition for the Israeli government to say why it is unreasonable to expect them to engage in any kind of peace talks with the Palestinians side.

ROMANS: Right.

KOPPEL: Nevertheless, the Bush administration, at least publicly is trying to push this blueprint for peace, this road map for peace that they put together in which three years from now there would be two states -- Palestine and Israel -- living side by side in peace.

BASH: Well, I just want to thank Kyra for joining us from Kuwait.

PHILLIPS: That's definitely on the mind of...

BASH: Kyra, sorry about that. I want to thank you for joining us from Kuwait.

PHILLIPS: I know there's a bit of a delay. Sorry about that.

BASH: Exactly.

(LAUGHTER)

We know she's far away on video phone as we see. Thank you very much.

Well, Congress is feeling aftershocks of the election and its failure to act on homeland security.

We'll see how fast Congress can move when CNN's SATURDAY EDITION comes back.

But first this News Alert from CNN headquarters in Atlanta.

(NEWS ALERT)

BASH: Still ahead on SATURDAY EDITION. Lame ducks and homeland security. How Congress is racing through passage of a bill that was dead in the water before election day. New focus on how some women on Wall Street get a bad deal and how Princess Diana's butler has rocked the palace.

Plus, President Bush's weekly radio address at the end of the hour, all ahead on CNN's SATURDAY EDITION.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: We stand shoulder to shoulder with the president in the support of our young men and women in uniform and in the fight against terrorism. Where we can find our common ground on the economy and other domestic issues, we shall seek it.

(END VIDEO CLIP)

BASH: Newly elected leader of the House Democrats, Nancy Pelosi of California, the first woman ever to lead either party in Congress.

Welcome back to CNN's SATURDAY EDITION.

Who says elections don't matter? The Democrats are already working to stave off another defeat at the polls, and Nancy Pelosi's new role is just one example.

I have to say that a lot of people are making a big deal of course about the fact that Nancy Pelosi comes from the left part of the party, and that maybe this is a signal that the party is looking to the left and it's going to become more liberal.

But as one veteran aide in the House, a Democrat, said to me, "You know, you have to remember the dirty little secret of these leadership elections is that they're about favors a lot more than they are about ideology."

Nancy Pelosi raised a lot of money for a lot of her colleagues. She campaigned for a lot of them, and you know, she probably did -- we think she lined up a lot of these votes before the election even happened, assuming that if the Democrats didn't get back the House, that Dick Gephardt would step down.

MALVEAUX: What about, what about Congressman Ford? I mean, he said "I'm the new fresh face here. Look at me." But he only got about 22, 29 votes.

BASH: Twenty-nine votes, 29 votes. Harold Ford, Jr., he was running. He would have been the first African-American leader of either party. He only got 29 votes. And Nancy Pelosi got 177 votes.

I talked to Congressman Ford yesterday and he was saying, "Yes," he was disappointed with the fact that he didn't get very many votes, at all. But he said, "You know, I feel like my campaign, it was only six days long so there was no way I would get very many votes -- my campaign really will make her a better leader because I forced the issues of the moderates" -- he considers himself a centrist Democrat -- "out there in the public, and it will force her to pay attention to people like me."

That's what he said.

ROMANS: Meanwhile, homeland security...

BASH: Homeland security...

ROMANS: ... it's moving fast.

BASH: It is amazing how elections can change things. I've got to tell you.

(LAUGHTER)

It's unbelievable. Well, homeland security was stuck in the Senate for a long time, for the whole fall. Republicans successfully used the issue against Democrats, picked off one, probably two on the issue. And Democrats came back and they said, "We want to just get this thing out of here. We want to pass it."

(CROSSTALK)

MALVEAUX: The Bush folks knew it though, too. I mean, absolutely. They were like this lame duck session. "Let's build this momentum. We have this going for us . Let's just push this through...

BASH: But is that necessarily good?

MALVEAUX: ... it is possible."

BASH: It's interesting though because this is a 500 page bill. It is the biggest change in the federal government, the creation of a new department, since 1947. You're talking about moving 22 agencies into one, 170,000 people. And this is monumental.

And I was talking to one Democrat who was very involved in negotiating last weekend and early this week, the final deal to get this thing through. And I asked him about an issue that some of his colleagues had found in this bill as they were mining through the bill to try to see what was in here, in there. Something that said, "Companies that provide products for Homeland Security Department, they can go offshore where they can avoid taxes." I said, "Senator, did you know that's in there?" I saw him in the hallway. He said, "That's in there."

(LAUGHTER)

He said, "I didn't know that. This is the guy who negotiated the bill, OK. So, I mean, this is just -- people show you -- read the fine print. And Democrats actually have a list of about a handful of things that they say is a Christmas tree, Christmas tree items that they're calling it on this bill. That -- there's an item in there that would protect drug companies who are being sued -- this really doesn't have anything to do with homeland security -- who are being sued by families of kids who have autism because they think that vaccines that their children got cause the autism. This doesn't have very much to do with homeland security.

Democrats are trying to get these things out of there. But you know what they say, even if they don't these get these items out of there, they're still going to vote for it because they have to.

ROMANS: Interesting.

Democrats and Republicans can agree on something. They would like the economy to perk up.

And a new book paints a dark picture about equality of the sexes on Wall Street.

We'll have that when CNN's SATURDAY EDITION continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: Evidence has accumulated that the economy is getting softer. Households have become more cautious in their purchase, yet business spending is yet to show any substantial (UNINTELLIGIBLE).

(END VIDEO CLIP)

ROMANS: The Alan Greenspan oracle talking about a soft patch for the U.S. economy. Welcome back to CNN's SATURDAY EDITION.

Consumers, investors and, yes, even the chairman of the Federal Reserve are united in concerns over an economy that is nervous about war and uncertain about the direction of U.S. economic growth.

Mr. Greenspan speaking this week, answering questions of the Joint Economic Committee, very closely watched on Wall Street. He said there's a soft patch in the U.S. economy. Some people were actually encouraged by that, because, you know, you can weather a soft patch.

And don't forget, we just had a big Fed rate cut just a week ago. So there's a little more optimism on the economy, the Dow up six weeks in a row. That hasn't happened in three years. So we'll keep you posted and see if there is some slight optimism yet about the economy.

KOPPEL: What are you hearing about the William Webster resignation from the oversight board of the SEC?

ROMANS: It's really interesting. Wall Street is still mired in concern about the credibility of U.S. accounting in corporate American. William Webster, an impeccable reputation, used to run the FBI and the CIA, appointed to head up this new accounting oversight board.

And then his appointment completely controversial because he actually used to be a board member of a company that is having some trouble with its accounting.

And apparently, SEC Chairman Harvey Pitt knew about this. The White House did not, nor did the other commissioners.

So anyway, this big deal about this. He stepped back this week. Harvey Pitt also said that when a replacement is found, he will be gone. Also the chief accountant of the SEC has resigned.

So you've got three major resignations in just the past week and a half. So it's sort of like Washington-style political issues very felt on Wall Street.

BASH: I want to know about the boom-boom room. This is not Washington, by the way. The boom-boom room, tell us about that.

ROMANS: What is the boom-boom room? A new book out this week called "Inside the Boom-Boom Room: Women vs. Wall Street" by a very respected journalist named Susan Antilla.

In the late 1990's, throughout the 1990's, a Smith Barney branch in Garden City, Long Island, had a party room in the basement with a toilet hanging from the ceiling and a bicycle, and a garbage can with a garbage bag -- liner where they would mix up drinks in the afternoon. It was run by a particularly unseemly fellow the whole office, where women felt very, very uncomfortable there. There was rampant sexual harassment documented in this book. And it just sort of brings back to the fore this old, old image that has dogged Wall Street for some time, you know, from the days of that old movie "Wall Street," you know, it's a man's world, and it's just sort of bringing it back into the forefront what's it like there.

KOPPEL: I was going to say, just from having read a little bit about the book -- I know you've read the book -- it seems as if we're not just talking about...

ROMANS: No.

KOPPEL: ... a pinch on the fanny. We're talking about some really...

ROMANS: Very lewd behavior.

KOPPEL: ... over the top, offensive...

ROMANS: Now, you know, I've worked on Wall Street for several years. I've worked in the markets for 10 years, and you know, there are always these tales like this.

For the most part, I think people who work on Wall Street -- the men who work on Wall Street are, you know, normal, family men. There are some loud and rambunctious few. As a kind of business, it's very strange. You know, it's yelling and screaming and sweating in ceiling deals at the last minute. It's bravado, and so it's a very difficult place -- it can be -- for women to break in.

There have been a lot of strides, and because...

BASH: Well, whatever happened...

(CROSSTALK)

ROMANS: Whatever happened -- Salomon Smith Barney settled that case, pledge $15 million to diversity training and says that they have made great strides to correcting this sort of behavior.

Merrill Lynch settled 95 percent of similar cases against it. Morgan Stanley still has a big case pending against it.

But I will say, and this is interesting, when I was calling around, getting updates from all of the different firms about what the status is about the complaints against them, I was always directed to a woman who handled the issue with the press, and I was always told that they've got great day care facilities and great kind of flex working for women. And I kept saying, I'm not talking about, you know, work-life issues. I'm talking about sexual harassment; is it any better?

So it's interesting to see how that was handled.

KOPPEL: Well, from troubles on Wall Street to a big payoff in Britain and a reminder that stocks and other investments go up and down, but royal family gossip is worth its weight in gold. More when SATURDAY EDITION continues.

(COMMERCIAL VIEW)

(BEGIN VIDEO CLIP)

PAUL BURRELL, FORMER ROYAL BUTLER: I've told my side of the story and always had in mind my loyalty and respect for her Majesty the Queen, for the Prince of Wales, Prince William and Prince Harry, and for my boss, Diana, Princess of Wales.

(END VIDEO CLIP)

KOPPEL: Former royal butler Paul Burrell saying he speaks the truth about the indiscretions of the royals, including Princess Diana. The queen cut short his trial for theft. He's been selling his story. And newspapers around the world are full of accusations of homosexual rape and cover-ups.

Remember this is the guy who said that he never was in this because of the money and has gotten upwards of $.5 million for selling his story, telling all sorts of tales out of school, airing lots of dirty laundry, smuggling in some of Diana's -- allegedly smuggling in -- some Diana's lovers in the back of his car, sent out to buy porn for Prince William. I mean, a lot of stuff that they're...

MALVEAUX: Do people believe this?

KOPPEL: I -- they do.

MALVEAUX: Is it believable? I don't know.

BASH: I know they want to read about it.

(LAUGHTER)

(CROSSTALK)

BASH: But what's interesting, apparently the princes, William and Harry, are still standing behind him, right? I mean, this is the guy who Princess Diana who -- or he says -- Princess Diana called him her rock and that he was very, very close with the princess.

ROMANS: Was he sort of cornered in all of this? I mean, he didn't mean to go on trial for having these personal affects. I mean, he sort of seems like somebody who got cornered and then -- you know, I don't know. KOPPEL: Right. Well, the question is the queen has said that she asked him to take her some of Diana's personal possessions, to keep them safe. And there's all sorts of speculation that the reason the queen spoke up for him at the 11th hour during his trial as opposed to weeks before, was the fact that all of this dirty laundry would be aired, which it was anyway.

BASH: Was anyway.

Well, I want to talk quickly about a commoner of sorts here in the United States...

(LAUGHTER)

... who has made good. Senator Dean Barkley, who is the new senator from Minnesota came to Washington. Officially -- was officially sworn in. There you see him being sworn in on Tuesday.

What a breath of fresh air. I mean, just covering these senators day in and day out, to talk to somebody like Dean Barkley. I went over to his makeshift office, which had no windows, barely had a phone, barely a computer. Certainly no dial-up access to the internal system.

And he -- all he wanted to talk about was he was so excited because he had the nameplate on the door that said "Senator Dean Barkley."

ROMANS: And he got the Senate pin, right?

BASH: And he got the Senate pin which he's absolutely amazed with...

(LAUGHTER)

... because he says, "I don't even have to go through security," once I have this pin.

MALVEAUX: Didn't he talk about like buying suits at Men's Warehouse?

BASH: Men's Warehouse.

MALVEAUX: You don't admit that kind of thing, but he said, "Yeah, I doubled my -- the number of suits that I have."

BASH: Yes, exactly, exactly. He really -- now having said all of that, he did have Washington kind of pins and needles at the beginning of the week because the Republicans wanted him to come along with them, and that would have given Trent Lott, the Senate Republican leader, the majority during this lame duck session.

And he said, "You know, I'm going to stand my ground. I'm an Independent. I'm gong to be an Independent. And I'm not going to go with anybody." He said that Senator Lott was a little bit upset with him about that, but he said, "I understand." He understands the Senate enough to know that every senator is king, to stay on the...

MALVEAUX: He got an invite to the White House as well. I mean, the president had him face to face. I mean there was a moment when they said, "Homeland security, you're our guy, you're our swing vote," before they got those three Democrats.

BASH: Right, exactly. And did you see what he said when he came out of the White House? This is my favorite. He came out and he said "You know, this is the first time I've ever been to the White House." And he said, "I met with the president in the Oval Office. How cool is that?"

(LAUGHTER)

Senators don't say that, I'll tell you.

MALVEAUX: Very cool.

So before we leave you, I want to say congratulations to Kate Snow. She has almost always been with us here on SATURDAY EDITION. But she had her baby Tuesday evening -- Zachary Christopher. He is 6 pounds 3 ounces and 19 inches we are told.

Thanks for watching CNN's SATURDAY EDITION. Coming up, CNN's "PEOPLE IN THE NEWS," focusing on the fictional Harry Potter and the real Mike Myers.

And a News Alert.

But first, the president's weekly radio address.

(BEGIN AUDIO TAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good morning.

This was a productive week in the war against terror, both at home and abroad.

Congress returned to Washington with renewed energy and a commitment to make progress on key issues. Members of the House and Senate reached a crucial agreement to create a new Department of Homeland Security. With Congress' vote on the final legislation, America will have a single agency with the full time duty of protecting our people against attack.

This new department will focus and unify responsibilities that are now spread among dozens of government agencies. The Customs Service, the INS, the Coast Guard, the Federal Emergency Management Agency, the Transportation Security Administration and many others will report to the new secretary of Homeland Security.

The department will significantly improve our ability to protect our borders, our coasts and our communities. It will pull together the best intelligence information and coordinate our response. The new department will help develop the technology America needs to detect and defeat chemical, biological and nuclear threats.

And under the agreement reached this week, I will have the authority and flexibility to move people and resources to where they are needed without bureaucratic rules and lengthy labor negotiations.

This compromise is the result of months of hard work and negotiation, and it will take additional time to put the agreement into place.

The threat of terror will be with us for years to come, and we remain resolved to see this conflict through to its end.

In the Department of Homeland Security, we will have good people, well organized and well equipped, working day and night to oppose the serious dangers of our time.

Now that we have reached broad agreement on a homeland security bill, I look forward to signing it into law as soon as possible.

We're committed to defending the nation. Yet wars are not won on the defensive. The best way to keep America safe from terrorism is to go after terrorists where they plan and hide. And that work goes on around the world.

The United States is working with more than 90 countries to disrupt and defeat terror networks. So far, we have frozen more than $113 million in terrorist assets, denying them the means to finance their murder. We've cracked down on charities that were exploiting American compassion to fund terrorists. We have captured and interrogated thousands of terrorists while others have met their fate in caves and mountains in Afghanistan.

We've deployed troops to train forces in the Philippines and Yemen, the former Soviet Republic of Georgia and other nations where terrorists have gathered.

We're sending a clear message to the enemies of freedom: No terrorist will escape the patient justice of America.

To win the war on terror, we're also opposing the growing thereat of weapons of mass destruction in the hands of outlaw regimes. This week, the dictator of Iraq told the U.N. he would give weapons inspectors unrestricted access to his country. We've heard such pledges before, and they have been uniformly betrayed.

America and the world are now watching Saddam Hussein closely. Any act of defiance or delay will indicate that he is taking the path of deception once again. And this time, the consequences would be severe.

Our goal is not merely the return of inspectors to Iraq. Our goal is the disarmament of Iraq. The dictator of Iraq will give up his weapons of mass destruction, or the United States will lead a coalition to disarm him. Our war against terrorists and their supporters is advancing on all fronts. We're moving aggressively to protect our people and to oppose a great threat to the peace of the world.

Thank you for listening.

(END AUDIO TAPE)

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




Races Ahead With Homeland Security; Greenspan Calls U.S. Economy 'Soft'>


Aired November 16, 2002 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Welcome to CNN's SATURDAY EDITION where our journalists have the inside scope on the stories we covered this week. I'm Andrea Koppel.
Did Iraq blink or just push back the final reckoning?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux. Did Iraq, opening the door to inspectors make the U.S. job harder or is Bush policy on schedule?

KYRA PHILLIPS, CNN CORRESPONDENT: I'm Kyra Phillips live in Kuwait. Views from Iraq's next door neighbor and how the U.S. military is preparing for a possible war.

DANA BASH, CNN CAPITOL HILL PRODUCER: I'm Dana Bash. Congress races ahead with homeland security and Democrats pick a new leader.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: And I'm Christine Romans. Greenspan calls the economy soft. And a new book slams Wall Street's sexism. We'll be talking about all of these stories. We'll listen to the president's weekly radio address at the end of the hour. But first, a check on what's making headlines right now at CNN headquarters in Atlanta.

(NEWS ALERT)

MALVEAUX: Well, when Iraq signaled on Wednesday its willingness to allow U.N. weapons inspectors back, the Bush administration stuck to its guns, saying that if cooperation is less than it should be, the U.S. and allies will use military force.

And the administration was quick to knock down Iraqi claims that it doesn't have any weapons of mass destruction. And so the stand-off moves into a new stage in the political, diplomatic and military tensions ratchet it up another notch.

Bottom line is, the Bush administration does not believe that Saddam Hussein is going to comply and they never have.

This morning we heard from the U.N. weapons inspector Hans Blix, who is on his way to Baghdad with a team, an inspections team, and he said, "Look, we're going to move on this very quickly. Our schedule is accelerated.

They want to test Saddam Hussein right away. The Bush administration wants to do the same. But there are some who are already arguing that Iraq is in material breach of U.N. resolutions.

KOPPEL: Well, Suzanne, that's a very good point because this week the U.N. Secretary General Kofi Annan was in town to meet with President Bush. And before that meeting, he had a breakfast with a small group of journalists. And the theme of that breakfast was to the Bush administration, "Be patient because the international community believes that your threshold for material breach, for breaking, for Iraq's breaking this resolution 441, is going to be too low."

So you know, it can't be an "Oh, an Iraqi citizen can't find the key to the room that the inspectors want to get in." And then that's a material breach. He said, "It has to be major, significant and serious so that it's credible."

BASH: Wasn't the administration even saying that the fact that Iraq was shooting at planes in the no-fly zone, that was a material breach?

MALVEAUX: Well, exactly. And that's -- they were saying, "Look, if you shoot at these planes then you are not complying with the U.N. resolution."

But I know that that doesn't really -- it doesn't specifically state that that's...

KOPPEL: Well, none of the resolution state that.

MALVEAUX: ... part of that.

KOPPEL: Yes, that's exactly right. None of the resolutions to this point, over the last 1 years, says that no-flys are illegal either in the North or the South of Iraq.

What they say is that the U.S. and the international community has the right to protect the Iraqi people. And so for years now, the U.S. and U.K. and before that, France, had been flying these sorties over the no-fly zones and almost egging on the Iraqis to fire at them.

And I know, Kyra, you actually I think covered some of those pilots who fly those -- who fly through those no-fly zones.

PHILLIPS: Yes, you're absolutely right. I'm going to sort of second what you were saying. And when I was out spending time with the strike fighter pilots and talking with the different men and the different squadrons, they were telling me about five years ago, "Yes, they were getting shot at."

But now they say that it's definitely increased. They're getting shot at even more. As a matter of fact, the F-14 pilot with whom I flew not long ago in an air-to-air combat training mission, he told me just a few nights ago they were flying over the no-fly zone. And once again, getting fired upon.

And it's -- they also feel that not everyone back in the United States understands what they're going through, and this happens on a regular basis.

BASH: Suzanne, you know it's interesting because we were talking about Kofi Annan telling the president to be patient. And we've heard that Mr. Bush is a patient man. He tells us it makes his mother and his wife laugh, but he's assuring us that he is.

How patient...

(LAUGHTER)

... how patient is the White House being, because the timeline continues to sort of dwindle for what would be optimal conditions for any kind of retaliation or...

MALVEAUX: Here's a flashpoint. The next flashpoint is December 8. That's when Iraq has to say account for all of its weapons programs. Already, they're saying this letter that was sent from Iraqi officials -- which you read the strange details in that letter -- but already they're saying in that letter it states that don't have any weapons of mass destruction. There are some in the Bush administration who are arguing that denial in and of itself, when you look at December 8, that that in and of itself, is a breach of the U.N. resolution.

And that they're going to press -- you're not only going to see the Bush administration pressing the Saddam Hussein, the Iraqis, but also the inspectors. They're going to put as much pressure as possible to say, "Look, we made this deal with you. We said -- we backed off. We're going to go to the U.N. Security Council, we're going to consult with you, but the bottom line is tough inspections. Here's the intelligence. Here's the surveillance. Look at the presidential palaces and go inside. That's your job."

KOPPEL: But you know, what there are also some within the administration who are concerned about the "what if" they don't find anything.

Saddam Hussein has had four years to hide his weapons of mass destruction program. And experts say that he's actually mobilized it to in some instances small trucks. That he has laboratories that are literally moving around the country. It would be like finding a needle in haystack.

And so, despite the fact that you do hear the Bush administration say that U.S. intelligence will be providing all it knows, British intelligence, western intelligence will be trying to help the inspectors, they really are going to have a tough job. And what happens if months from now, three months from now, four months from now, they don't find the smoking gun?

Then you're going to have a push, the U.S. fears, from the international community, saying "Come on guys, lift the sanction. Pull out the weapons inspectors. He didn't have anything, just like Saddam Hussein has maintained all along."

PHILLIPS: Special front row seats to the Iraq standoff. I'll talk to you more about U.S. military preparations for a possible war against Iraq. You'll see what's happening here out in the Persian Gulf first hand, as CNN's SATURDAY EDITION continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LT. COMMANDER SCOTT SNOW, F-14 PILOT: I'd rather do the job now and make it a better future for him and for everyone in America than to sit back and just let this threat build until the next terror act that we have.

(END VIDEO CLIP)

PHILLIPS: That was Lieutenant Commander Scott Snow, an F-14 pilot, part of the F-31, the Tomcaters. One of the squadrons involved in the awing that's on the USS Abraham Lincoln, training around the clock. He was talking about why he's doing this, not only for the freedom of everybody in America and around the world, but also for his wife and his son that is due in just three months -- Logan Scott Snow, soon to arrive.

Now Snow is just one of 5,500 men and women on the USS Abraham Lincoln, training around the clock, waiting for what President George W. Bush says they have to do.

ROMANS: Kyra, tell us why this is so important, what is happening in Kuwait, and what are people there saying about the dangerous neighborhood that they live in?

PHILLIPS: Yes, it's interesting. You get a number of -- well, a lot of different points of view. The people -- we'll talk about the troops in a minute, but the people here in Kuwait when I first arrived here, they were very -- they're living on edge.

The memories from the first Gulf War are still very strong here, even in the hotel where we're staying, there's a video tape that sits atop the TV called "Rebuilding Kuwait: A Documentary." And it's still, even 10 years later, so much on their minds. And they want everybody to come here to see what this area when through and the devastation that they experienced.

So people are on edge. They've been taking money out the bank. Trading has been low on the stock exchange. And they're just in a wait and see mode. They say that when it comes to Saddam Hussein and his actions and his words that they sort of take it with a grain of salt. They want to see if indeed, those weapons inspections do happen and if there's any conflict between the weapons inspectors and the Iraqi regime.

MALVEAUX: Kyra, is there a sense that war is inevitable? When you talk to people, do they think it's simply a matter of time?

PHILLIPS: That's a great question. And to put it bluntly, yes, they do think from the troops to the people here, they do think a war is inevitable. Just because they've been experiencing this cat and mouse game for so long and seeing that Saddam Hussein doesn't comply on a number of levels.

And specifically speaking, from the troops' point of view, I mean they're out there, on the front lines by land, air and sea on a regular basis. And they're -- they come face to face with the threat all of time.

So they're just waiting to see when it's going to happen.

KOPPEL: Kyra, how much of an impact do you think it will have in Kuwait to see whether or not the Saudis will support military action?

PHILLIPS: Yes, everybody is talking about that. More so they think they won't be supportive as much as the United States would want them to be. That's sort of the feeling here, and they feel that a war would definitely devastate their economy, devastate their way of life. They've been talking about places they would want to move to. People even, in the region have been telling me how they've been looking for other jobs, but it's not so easy. I mean, it's very hard to come by. And this is an area where people are very tied to this region. They've got big families. They have lots of children. They love living here. They've never left this area. So, it has a lot of people very nervous.

BASH: Kyra, you've been spending a lot of time with the U.S. troops in the region. Tell me what's the morale like? What are you hearing from them? What are their feelings about what may or may not happen over there?

PHILLIPS: Well, morale-wise, when you want to talk about the morale and the carriers, the morale on the various ships in the battle group, the morale when they're out training, out in the Persian Gulf or even on land, they're pumped up. They're focused. They're mission focused. They're supporting each other. They're talking about what they have to do. They're being prepared. They're excited about new technology that they have.

They have no worries about winning a war. That's not even an issue to them. They're very confident that once they're sent out on a specific mission that they'll be able to handle it without a problem. Very positive attitude.

But then when you start talking about families and children and going back home, that's when they start to let their guard down a little bit and talking about how much they just...

(CROSSTALK)

PHILLIPS: ... miss being with their friends.

Yes, that's the toughest part.

You've got Thanksgiving around the corner, you've got Christmas just ahead. A lot of them were banking on going home, and it doesn't look like that's going to happen.

KOPPEL: How many troops are actually out there now, Kyra? Do you have a sense of that? I know that they're at any given time -- they're are thousands of soldiers who are training in Kuwait. But has the build-up been in the last number of weeks?

PHILLIPS: Well, there's 5,500 people out on the carrier USS Abraham Lincoln out in the Persian Gulf. And that's just on the carrier. And then you have a number of sailors and officers on the various ships within the battle group. So the Persian Gulf has thousands and thousands of personnel out there.

When you want to talk about troops on land, I mean the numbers are mixed. They don't want to reveal that. A lot of that is classified information. I know of thousands, definitely. Special operations forces and various branches of the military out there in certain areas within the region. But it's really hard to get a specific number because of course, they want to keep that classified.

ROMANS: Kyra, I'm wondering about how open and vigorous the training is? I mean, we're watching you, and we're seeing what's happening in Kuwait and in the region. What kind of message is that sending? Is this perhaps part of the United States military policy and its statement toward Iraq?

PHILLIPS: Yes, it's been really hard. I've been very lucky to have some really good friends and good contacts within the military for a number of years. So I've been able to gain exclusive access into Special Forces training and air-to-air combat training and other things going on, the offer the meal (ph) operations, the maritime interdiction (ph) operation. And that's the military and coalition forces coming together trying to stop the smuggling that's going on in the waterways and enforcing U.N. sanctions out on the maritime front.

So I've been very lucky in the sense that I've kind of had a front row seat to be able to see some of the training that's going on. Not everyone has been able to do that.

And it's something they really don't always like to talk about, but they feel that we've done it right so far, have been able to explain it in a unclassified way, but also be able to give Americans and the world a glimpse of what they're doing and proving that they're prepared and they're ready.

KOPPEL: Well, we've really been enjoying your reports, Kyra. And we look forward to seeing more of them in the days to come.

From possible war against Iraq, to the already ongoing war against terrorism, we'll talk about the latest message from Osama bin Laden when CNN's SATURDAY EDITION comes right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (through translator): Why is it acceptable for us to live with fear, murder, destruction, displacement, the orphaning of children and the widowing of women, but peace security and happiness should be for you? This is not fair. Now is the time to become equals. Just like you kill us, we will kill you.

(BEGIN VIDEO CLIP)

KOPPEL: A blunt threat, "We will kill you," on the tape released this week. U.S. officials believe the person speaking on the tape was al Qaeda leader Osama bin Laden.

Welcome back to CNN's SATURDAY EDITION.

You know, equally worrisome to U.S. Officials, beyond the fact that this is the first time that they would have heard from bin Laden in a year and the fact that he's still alive, is the fact that it's a foreboding, perhaps, of a major terrorist attack.

Previously, back in 1998, Osama bin Laden went on TV before the U.S. embassy attacks in East Africa in October of 2000. There was the attack on the USS Cole. Bin Laden had a video tape that came out before that one. And then before 9/11 as well.

So they're really, really concerned right now that this could be a harbinger of some major attack out there.

BASH: You know, Andrea, the Senate Democratic Leader Tom Daschle came out the morning that this was all in the newspapers, came out in his regular briefing and started saying -- unsolicited -- started saying, "You know, look at this, this is -- how can we look at the fact that bin Laden seems to be out there and the administration is saying that we're winning the war on terrorism."

KOPPEL: Yes.

BASH: He said that, "We're not, we're not." Let's take a look at what Senator Daschle had to say.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: We haven't found bin Laden. We haven't made any real progress in many of the other areas involving the key elements of al Qaeda. They continue to be as great a threat today as they were a year and a half ago. So by what measure can we say this has been successful so far?

(END VIDEO CLIP)

BASH: The Democrats are feeling their way, and are now happy, I guess, about the fact that they aren't in the majority in the Senate any more so they really can oppose the president and...

MALVEAUX: Talk about -- talk about making the Bush administration cringe, though.

BASH: Oh...

MALVEAUX: I mean, to hear Daschle say that, I mean, you had National Security Adviser Condi Rice out there saying, "Look, you know, this war on terror is much bigger than Osama bin Laden." She said, "Bush doesn't wake up and just talk about Iraq." I mean, really putting the Bush administration on the defensive, the president cringing at this.

That is the last thing that they want to be accused of. But I mean, it's very frustrating.

ROMANS: But Osama bin Laden is the -- is the face and the voice of terrorism. I mean, you know...

BASH: And that's exactly what...

ROMANS: ... and whether it matters or not he's alive or dead, he is the person that people watch on the evening news and watch on CNN all across America and say, "What is going on? This is still a problem."

BASH: ... and that's exactly what Senator Daschle was trying to say is, "The president himself said, 'We have to find Osama bin Laden dead or alive.' If we haven't done that, he cannot say that we're winning the war on terrorism."

End of story. That's what he's saying.

MALVEAUX: And this week too, you had an increase in these terror alerts. You had that memo that came out, the weekly memo for the FBI. And people looked at that and they said, "Spectacular -- the word spectacular -- attacks." I mean, talk about worrisome. Now that's something that was out there in the public domain that the administration was aware of.

But then you had the FBI also saying, "Look, there may be these hospitals that are being attacked in four cities."

Bush administration, I mean the aides were just livid, just went back to the FBI and said, "Look, this is just alarmist. This isn't necessary. It's such a low credible -- credibility level, that this isn't necessary. BASH: Right.

KOPPEL: Another thing that they're not saying publicly, but privately are conceding that is equally worrisome in the bin Laden tape is the fact that he mentions and threatens that if the U.S. attacks Iraq, that that would be another cause for Muslims around the world to rise up against Americans.

That's something -- I don't what you're hearing, Kyra, in terms of the reaction to the bin Laden tape. What are they saying in Kuwait?

PHILLIPS: Well, they're definitely concerned about terrorist attacks. You will remember last month the attack that happened on Failaka Island, Operation Eager Mace, and one of the soldiers was killed, another was injured. The two attackers were killed. It was definitely defined as terrorists attacks. I mean, that changed security in this entire region. I mean, with military, with people here in Kuwait. Kuwaitis were embarrassed because they didn't want any type of tie between Kuwait and terrorism. And that incident, that infiltration of a terrorist, of two terrorists, changed everything with regard to security.

So it is constantly on their minds. They have changed policy in a number of ways, a number of ways of course I can't talk about. But I am seeing that as I -- it's on the forefront of all of their minds.

ROMANS: And what about in terms of security and safety in the region, another fresh attack in Israel as well. What are people saying about the stability of the region and as the process with Iraq continues, I mean there's no improvement there.

KOPPEL: I mean, well, it's no surprise that there would be an attack in Israel. It's been going on for two years all of these terrorist attacks. And this latest one only adds to the ammunition for the Israeli government to say why it is unreasonable to expect them to engage in any kind of peace talks with the Palestinians side.

ROMANS: Right.

KOPPEL: Nevertheless, the Bush administration, at least publicly is trying to push this blueprint for peace, this road map for peace that they put together in which three years from now there would be two states -- Palestine and Israel -- living side by side in peace.

BASH: Well, I just want to thank Kyra for joining us from Kuwait.

PHILLIPS: That's definitely on the mind of...

BASH: Kyra, sorry about that. I want to thank you for joining us from Kuwait.

PHILLIPS: I know there's a bit of a delay. Sorry about that.

BASH: Exactly.

(LAUGHTER)

We know she's far away on video phone as we see. Thank you very much.

Well, Congress is feeling aftershocks of the election and its failure to act on homeland security.

We'll see how fast Congress can move when CNN's SATURDAY EDITION comes back.

But first this News Alert from CNN headquarters in Atlanta.

(NEWS ALERT)

BASH: Still ahead on SATURDAY EDITION. Lame ducks and homeland security. How Congress is racing through passage of a bill that was dead in the water before election day. New focus on how some women on Wall Street get a bad deal and how Princess Diana's butler has rocked the palace.

Plus, President Bush's weekly radio address at the end of the hour, all ahead on CNN's SATURDAY EDITION.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: We stand shoulder to shoulder with the president in the support of our young men and women in uniform and in the fight against terrorism. Where we can find our common ground on the economy and other domestic issues, we shall seek it.

(END VIDEO CLIP)

BASH: Newly elected leader of the House Democrats, Nancy Pelosi of California, the first woman ever to lead either party in Congress.

Welcome back to CNN's SATURDAY EDITION.

Who says elections don't matter? The Democrats are already working to stave off another defeat at the polls, and Nancy Pelosi's new role is just one example.

I have to say that a lot of people are making a big deal of course about the fact that Nancy Pelosi comes from the left part of the party, and that maybe this is a signal that the party is looking to the left and it's going to become more liberal.

But as one veteran aide in the House, a Democrat, said to me, "You know, you have to remember the dirty little secret of these leadership elections is that they're about favors a lot more than they are about ideology."

Nancy Pelosi raised a lot of money for a lot of her colleagues. She campaigned for a lot of them, and you know, she probably did -- we think she lined up a lot of these votes before the election even happened, assuming that if the Democrats didn't get back the House, that Dick Gephardt would step down.

MALVEAUX: What about, what about Congressman Ford? I mean, he said "I'm the new fresh face here. Look at me." But he only got about 22, 29 votes.

BASH: Twenty-nine votes, 29 votes. Harold Ford, Jr., he was running. He would have been the first African-American leader of either party. He only got 29 votes. And Nancy Pelosi got 177 votes.

I talked to Congressman Ford yesterday and he was saying, "Yes," he was disappointed with the fact that he didn't get very many votes, at all. But he said, "You know, I feel like my campaign, it was only six days long so there was no way I would get very many votes -- my campaign really will make her a better leader because I forced the issues of the moderates" -- he considers himself a centrist Democrat -- "out there in the public, and it will force her to pay attention to people like me."

That's what he said.

ROMANS: Meanwhile, homeland security...

BASH: Homeland security...

ROMANS: ... it's moving fast.

BASH: It is amazing how elections can change things. I've got to tell you.

(LAUGHTER)

It's unbelievable. Well, homeland security was stuck in the Senate for a long time, for the whole fall. Republicans successfully used the issue against Democrats, picked off one, probably two on the issue. And Democrats came back and they said, "We want to just get this thing out of here. We want to pass it."

(CROSSTALK)

MALVEAUX: The Bush folks knew it though, too. I mean, absolutely. They were like this lame duck session. "Let's build this momentum. We have this going for us . Let's just push this through...

BASH: But is that necessarily good?

MALVEAUX: ... it is possible."

BASH: It's interesting though because this is a 500 page bill. It is the biggest change in the federal government, the creation of a new department, since 1947. You're talking about moving 22 agencies into one, 170,000 people. And this is monumental.

And I was talking to one Democrat who was very involved in negotiating last weekend and early this week, the final deal to get this thing through. And I asked him about an issue that some of his colleagues had found in this bill as they were mining through the bill to try to see what was in here, in there. Something that said, "Companies that provide products for Homeland Security Department, they can go offshore where they can avoid taxes." I said, "Senator, did you know that's in there?" I saw him in the hallway. He said, "That's in there."

(LAUGHTER)

He said, "I didn't know that. This is the guy who negotiated the bill, OK. So, I mean, this is just -- people show you -- read the fine print. And Democrats actually have a list of about a handful of things that they say is a Christmas tree, Christmas tree items that they're calling it on this bill. That -- there's an item in there that would protect drug companies who are being sued -- this really doesn't have anything to do with homeland security -- who are being sued by families of kids who have autism because they think that vaccines that their children got cause the autism. This doesn't have very much to do with homeland security.

Democrats are trying to get these things out of there. But you know what they say, even if they don't these get these items out of there, they're still going to vote for it because they have to.

ROMANS: Interesting.

Democrats and Republicans can agree on something. They would like the economy to perk up.

And a new book paints a dark picture about equality of the sexes on Wall Street.

We'll have that when CNN's SATURDAY EDITION continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: Evidence has accumulated that the economy is getting softer. Households have become more cautious in their purchase, yet business spending is yet to show any substantial (UNINTELLIGIBLE).

(END VIDEO CLIP)

ROMANS: The Alan Greenspan oracle talking about a soft patch for the U.S. economy. Welcome back to CNN's SATURDAY EDITION.

Consumers, investors and, yes, even the chairman of the Federal Reserve are united in concerns over an economy that is nervous about war and uncertain about the direction of U.S. economic growth.

Mr. Greenspan speaking this week, answering questions of the Joint Economic Committee, very closely watched on Wall Street. He said there's a soft patch in the U.S. economy. Some people were actually encouraged by that, because, you know, you can weather a soft patch.

And don't forget, we just had a big Fed rate cut just a week ago. So there's a little more optimism on the economy, the Dow up six weeks in a row. That hasn't happened in three years. So we'll keep you posted and see if there is some slight optimism yet about the economy.

KOPPEL: What are you hearing about the William Webster resignation from the oversight board of the SEC?

ROMANS: It's really interesting. Wall Street is still mired in concern about the credibility of U.S. accounting in corporate American. William Webster, an impeccable reputation, used to run the FBI and the CIA, appointed to head up this new accounting oversight board.

And then his appointment completely controversial because he actually used to be a board member of a company that is having some trouble with its accounting.

And apparently, SEC Chairman Harvey Pitt knew about this. The White House did not, nor did the other commissioners.

So anyway, this big deal about this. He stepped back this week. Harvey Pitt also said that when a replacement is found, he will be gone. Also the chief accountant of the SEC has resigned.

So you've got three major resignations in just the past week and a half. So it's sort of like Washington-style political issues very felt on Wall Street.

BASH: I want to know about the boom-boom room. This is not Washington, by the way. The boom-boom room, tell us about that.

ROMANS: What is the boom-boom room? A new book out this week called "Inside the Boom-Boom Room: Women vs. Wall Street" by a very respected journalist named Susan Antilla.

In the late 1990's, throughout the 1990's, a Smith Barney branch in Garden City, Long Island, had a party room in the basement with a toilet hanging from the ceiling and a bicycle, and a garbage can with a garbage bag -- liner where they would mix up drinks in the afternoon. It was run by a particularly unseemly fellow the whole office, where women felt very, very uncomfortable there. There was rampant sexual harassment documented in this book. And it just sort of brings back to the fore this old, old image that has dogged Wall Street for some time, you know, from the days of that old movie "Wall Street," you know, it's a man's world, and it's just sort of bringing it back into the forefront what's it like there.

KOPPEL: I was going to say, just from having read a little bit about the book -- I know you've read the book -- it seems as if we're not just talking about...

ROMANS: No.

KOPPEL: ... a pinch on the fanny. We're talking about some really...

ROMANS: Very lewd behavior.

KOPPEL: ... over the top, offensive...

ROMANS: Now, you know, I've worked on Wall Street for several years. I've worked in the markets for 10 years, and you know, there are always these tales like this.

For the most part, I think people who work on Wall Street -- the men who work on Wall Street are, you know, normal, family men. There are some loud and rambunctious few. As a kind of business, it's very strange. You know, it's yelling and screaming and sweating in ceiling deals at the last minute. It's bravado, and so it's a very difficult place -- it can be -- for women to break in.

There have been a lot of strides, and because...

BASH: Well, whatever happened...

(CROSSTALK)

ROMANS: Whatever happened -- Salomon Smith Barney settled that case, pledge $15 million to diversity training and says that they have made great strides to correcting this sort of behavior.

Merrill Lynch settled 95 percent of similar cases against it. Morgan Stanley still has a big case pending against it.

But I will say, and this is interesting, when I was calling around, getting updates from all of the different firms about what the status is about the complaints against them, I was always directed to a woman who handled the issue with the press, and I was always told that they've got great day care facilities and great kind of flex working for women. And I kept saying, I'm not talking about, you know, work-life issues. I'm talking about sexual harassment; is it any better?

So it's interesting to see how that was handled.

KOPPEL: Well, from troubles on Wall Street to a big payoff in Britain and a reminder that stocks and other investments go up and down, but royal family gossip is worth its weight in gold. More when SATURDAY EDITION continues.

(COMMERCIAL VIEW)

(BEGIN VIDEO CLIP)

PAUL BURRELL, FORMER ROYAL BUTLER: I've told my side of the story and always had in mind my loyalty and respect for her Majesty the Queen, for the Prince of Wales, Prince William and Prince Harry, and for my boss, Diana, Princess of Wales.

(END VIDEO CLIP)

KOPPEL: Former royal butler Paul Burrell saying he speaks the truth about the indiscretions of the royals, including Princess Diana. The queen cut short his trial for theft. He's been selling his story. And newspapers around the world are full of accusations of homosexual rape and cover-ups.

Remember this is the guy who said that he never was in this because of the money and has gotten upwards of $.5 million for selling his story, telling all sorts of tales out of school, airing lots of dirty laundry, smuggling in some of Diana's -- allegedly smuggling in -- some Diana's lovers in the back of his car, sent out to buy porn for Prince William. I mean, a lot of stuff that they're...

MALVEAUX: Do people believe this?

KOPPEL: I -- they do.

MALVEAUX: Is it believable? I don't know.

BASH: I know they want to read about it.

(LAUGHTER)

(CROSSTALK)

BASH: But what's interesting, apparently the princes, William and Harry, are still standing behind him, right? I mean, this is the guy who Princess Diana who -- or he says -- Princess Diana called him her rock and that he was very, very close with the princess.

ROMANS: Was he sort of cornered in all of this? I mean, he didn't mean to go on trial for having these personal affects. I mean, he sort of seems like somebody who got cornered and then -- you know, I don't know. KOPPEL: Right. Well, the question is the queen has said that she asked him to take her some of Diana's personal possessions, to keep them safe. And there's all sorts of speculation that the reason the queen spoke up for him at the 11th hour during his trial as opposed to weeks before, was the fact that all of this dirty laundry would be aired, which it was anyway.

BASH: Was anyway.

Well, I want to talk quickly about a commoner of sorts here in the United States...

(LAUGHTER)

... who has made good. Senator Dean Barkley, who is the new senator from Minnesota came to Washington. Officially -- was officially sworn in. There you see him being sworn in on Tuesday.

What a breath of fresh air. I mean, just covering these senators day in and day out, to talk to somebody like Dean Barkley. I went over to his makeshift office, which had no windows, barely had a phone, barely a computer. Certainly no dial-up access to the internal system.

And he -- all he wanted to talk about was he was so excited because he had the nameplate on the door that said "Senator Dean Barkley."

ROMANS: And he got the Senate pin, right?

BASH: And he got the Senate pin which he's absolutely amazed with...

(LAUGHTER)

... because he says, "I don't even have to go through security," once I have this pin.

MALVEAUX: Didn't he talk about like buying suits at Men's Warehouse?

BASH: Men's Warehouse.

MALVEAUX: You don't admit that kind of thing, but he said, "Yeah, I doubled my -- the number of suits that I have."

BASH: Yes, exactly, exactly. He really -- now having said all of that, he did have Washington kind of pins and needles at the beginning of the week because the Republicans wanted him to come along with them, and that would have given Trent Lott, the Senate Republican leader, the majority during this lame duck session.

And he said, "You know, I'm going to stand my ground. I'm an Independent. I'm gong to be an Independent. And I'm not going to go with anybody." He said that Senator Lott was a little bit upset with him about that, but he said, "I understand." He understands the Senate enough to know that every senator is king, to stay on the...

MALVEAUX: He got an invite to the White House as well. I mean, the president had him face to face. I mean there was a moment when they said, "Homeland security, you're our guy, you're our swing vote," before they got those three Democrats.

BASH: Right, exactly. And did you see what he said when he came out of the White House? This is my favorite. He came out and he said "You know, this is the first time I've ever been to the White House." And he said, "I met with the president in the Oval Office. How cool is that?"

(LAUGHTER)

Senators don't say that, I'll tell you.

MALVEAUX: Very cool.

So before we leave you, I want to say congratulations to Kate Snow. She has almost always been with us here on SATURDAY EDITION. But she had her baby Tuesday evening -- Zachary Christopher. He is 6 pounds 3 ounces and 19 inches we are told.

Thanks for watching CNN's SATURDAY EDITION. Coming up, CNN's "PEOPLE IN THE NEWS," focusing on the fictional Harry Potter and the real Mike Myers.

And a News Alert.

But first, the president's weekly radio address.

(BEGIN AUDIO TAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good morning.

This was a productive week in the war against terror, both at home and abroad.

Congress returned to Washington with renewed energy and a commitment to make progress on key issues. Members of the House and Senate reached a crucial agreement to create a new Department of Homeland Security. With Congress' vote on the final legislation, America will have a single agency with the full time duty of protecting our people against attack.

This new department will focus and unify responsibilities that are now spread among dozens of government agencies. The Customs Service, the INS, the Coast Guard, the Federal Emergency Management Agency, the Transportation Security Administration and many others will report to the new secretary of Homeland Security.

The department will significantly improve our ability to protect our borders, our coasts and our communities. It will pull together the best intelligence information and coordinate our response. The new department will help develop the technology America needs to detect and defeat chemical, biological and nuclear threats.

And under the agreement reached this week, I will have the authority and flexibility to move people and resources to where they are needed without bureaucratic rules and lengthy labor negotiations.

This compromise is the result of months of hard work and negotiation, and it will take additional time to put the agreement into place.

The threat of terror will be with us for years to come, and we remain resolved to see this conflict through to its end.

In the Department of Homeland Security, we will have good people, well organized and well equipped, working day and night to oppose the serious dangers of our time.

Now that we have reached broad agreement on a homeland security bill, I look forward to signing it into law as soon as possible.

We're committed to defending the nation. Yet wars are not won on the defensive. The best way to keep America safe from terrorism is to go after terrorists where they plan and hide. And that work goes on around the world.

The United States is working with more than 90 countries to disrupt and defeat terror networks. So far, we have frozen more than $113 million in terrorist assets, denying them the means to finance their murder. We've cracked down on charities that were exploiting American compassion to fund terrorists. We have captured and interrogated thousands of terrorists while others have met their fate in caves and mountains in Afghanistan.

We've deployed troops to train forces in the Philippines and Yemen, the former Soviet Republic of Georgia and other nations where terrorists have gathered.

We're sending a clear message to the enemies of freedom: No terrorist will escape the patient justice of America.

To win the war on terror, we're also opposing the growing thereat of weapons of mass destruction in the hands of outlaw regimes. This week, the dictator of Iraq told the U.N. he would give weapons inspectors unrestricted access to his country. We've heard such pledges before, and they have been uniformly betrayed.

America and the world are now watching Saddam Hussein closely. Any act of defiance or delay will indicate that he is taking the path of deception once again. And this time, the consequences would be severe.

Our goal is not merely the return of inspectors to Iraq. Our goal is the disarmament of Iraq. The dictator of Iraq will give up his weapons of mass destruction, or the United States will lead a coalition to disarm him. Our war against terrorists and their supporters is advancing on all fronts. We're moving aggressively to protect our people and to oppose a great threat to the peace of the world.

Thank you for listening.

(END AUDIO TAPE)

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Races Ahead With Homeland Security; Greenspan Calls U.S. Economy 'Soft'>