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On the Story

Bush Declares End to Combat in Iraq; Signs That Baghdad Returns to Normalcy; Castro Cracks Down on Dissidents

Aired May 03, 2003 - 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.


KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.
I'm Kate Snow. We are on the story this week of a war winding down in Iraq, a political battle heating up at home over taxes and spending.

RYM BRAHIMI, CNN CORRESPONDENT: I'm Rym Brahimi, and I'm in Baghdad, on the story of a city with a split personality, a power vacuum. The sound of gunfire still, but also signs life is returning to normal.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena, on the story of how the war in Iraq may have distracted some of us from the war on terrorism, but that fight keeps on going.

KATHLEEN HAYS, CNN FINANCIAL NEWS CORRESPONDENT: And I'm Kathleen Hays, on the story of the economic riddle. How does an economy that keeps shedding jobs persuade consumers to keep spending money?

And we're going to go to Cuba to talk to Havana bureau chief Lucia Newman about Fidel Castro's crackdown on dissent. We're going to go down to Kentucky to hear about the derby from Kara Henderson. We'll listen to the president's weekly radio address at the end of the hour.

And we want to hear from you. E-mail your questions and comments to onthestory@cnn.com.

We're back on the story after we see what's making news right now from CNN headquarters in Atlanta.

(NEWSBREAK)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Unlike many armies in the world, you came not to conquer, not to occupy, but to liberate. And the Iraqi people know this.

(END VIDEO CLIP)

BRAHIMI: That was Secretary of Defense Donald Rumsfeld, praising U.S. troops on his trip to Baghdad just a few days ago.

We're on the story here in Baghdad, where a lot's been happening in the past week or so in terms of trying to fill this political vacuum that is really hampering any efforts to bring a normal life back to the Iraqi people.

SNOW: Rym, tell us a little bit about life on the streets there now. I talked to someone who said it's really chaotic. What is it like?

BRAHIMI: It's extremely chaotic. And having been here in Baghdad for an entire year under the previous regime, I can tell you, it's a stunning contrast to what it was before. In a city where basically you used to have to sometimes beg people to talk to you for interviews in the streets, well, now, we can't set a foot out in the streets of Baghdad without people literally crowding around us.

And everyone has a story to tell. Everyone has a tale of someone who's been imprisoned, someone who died in their family, a job that they've lost that they would like to get back, they have five mouths to feed. Literally, they just pour all their problems at your feet. And they're hoping that anything, something, will be done, because they have nowhere to go to basically.

And it's a very, very difficult moment for people, as you can see -- a lot of desperation. And that's why a lot of them also even come to the Palestine Hotel, where the international media is based, because they want their story to come out.

HAYS: Well, what about some of those stories? What about some of the basic things of life people have to do? I mean, the ability, say, just to apply for a driver's license. I would assume some of the most mundane things cannot be done now.

BRAHIMI: You know, it's amazing how we take these things for granted wherever we live, in our day-to-day life, that there is an administration to go to and we can do these things. Because here, right now, there is absolutely none of that.

And what's interesting is I had -- a man actually came up to us in total desperation. He'd already been to the U.S. Army; he'd already been to the Red Cross. And there was no solution for his problem, because he has an 11-year-old daughter who is dying in Norway, where she's been receiving treatment for a brain tumor. She's over there with her mother. He is here with his 8-year-old son.

Now, the daughter is dying and she wants to see her father and her brother. And this man came to us literally in tears, saying, "I have a passport, but my son doesn't. And there is no administration to go to. There's no way -- I can't leave him here alone. There is nobody else here to look after him. And I want to see my daughter before she dies. I haven't seen her in eight months. And there's nowhere to go."

I went to the passport office just to see for myself. Passports all over the place. The whole place was burnt. There's no records. Nothing is left, a total void. And that, obviously, leads to many people just roaming around, lost, hoping that anyone passing on the street will maybe help to provide them with a job or something or assurance.

ARENA: Rym, what about just your basic necessities -- clean water, education systems? Are the schools back open?

BRAHIMI: Well, that again, you can see how the impact of this power vacuum has affected absolutely every sector of daily life.

Schools were supposed to resume today, and that was a very interesting experience. I went over to some of the primary schools in a neighborhood, a modest neighborhood. One of the schools usually has 400 pupils. Well, on this day that was supposed to be their first day back at school, there were only 10 kids that showed up.

And then I spoke to the parents -- I'm sorry, you can probably hear the helicopter hovering over me here. Let them go by, right.

So I was talking to some of the parents and a lot of the parents were saying, "No, I'm not prepared to send my kids to school." One of the told me, "My daughter is very pretty. There are a lot of assaults. I'm worried about her." And a lot of people came over, and some of the mothers were there, holding their children, very in fear. And they came and started, again, pouring out their problems, saying, "No, the security is not good. I can't send my children to school."

And they started talking about lack of water, lack of electricity. A lot of places have been looted. The water they were drinking was dirty. She said, "Everyone in my family is sick. We all have diarrhea because there is no clean water around."

So again, really a chaotic situation. And if you're getting that impression of confusion and chaos, well, that's exactly what we're seeing here on the ground.

SNOW: And yet, Rym, you see the U.S. officials there, General Garner, sitting, you know, in these very organized press conferences and trying to say that things are going to get back under control.

How does that play, how does the U.S. leadership of all of this play on the streets?

BRAHIMI: Again, it's a very, very difficult -- it's a very difficult moment, I think, for them. And if the U.S. administrators, the interim administrators here in Iraq, want to make some progress, well, they're going to have to really fight out this balance between time and finding a government that's truly representative. And that's where it's all being played at.

They need the time to find the people who are truly representative. But the more time that takes, the more frustrated people will become and the more risk there is that whatever government they come up with will be, if you will, tainted or will suffer from contagion of having been appointed by the U.S. and, therefore, not representative and maybe bad memories because of this whole vacuum-of- power situation.

So it's a very, very complex issue. And people complain that they want representatives who have been in the country, who have suffered with them. They don't want these people from outside. On the other hand, they want it to happen tomorrow. They can't wait anymore.

And so it's very difficult, of course, for the people in the place of the U.S. administrators trying to do that job. Although some journalists have been extremely critical -- local journalists have been extremely critical, saying even, "Well, Jay Garner is as removed away from the Iraqi people as Saddam Hussein was." And that's not a good thing.

They definitely need to really make a big push on that and move as quickly as they can if they don't want more resentment to build against the U.S. presence here that's already seen as a humiliation, as an occupation. And if they don't want this to become worse, then there needs to be some concrete results and not just words.

ARENA: Well, Rym, we say what happened in Fallujah, the conflict between citizens and the military. Do situations like that just use up any goodwill that's left?

BRAHIMI: Well, definitely that kind of situation is -- it's a very, very tense point over there. It's not an everyday occurrence, but it has been happening here and there.

Now, what happened there, as you know, was the residents of the area went to a school that was occupied by U.S. troops and had been occupied by U.S. troops for the past 10 days. The cleric at the mosque called for children to go back to school, for life to return to normal. And so they went and demonstrated. Violence just flared up like that because somebody shot gunfire. Well, in a way, it's not even relevant who shot, whether the U.S. shot first or the whether the Iraqis shot first. What it means is there is a lot of nervousness, both on the part of the U.S. troops, who feel that they're in a very hostile environment, and on the part of the Iraqis who are extremely suspicious of the presence of the U.S. here.

A lot of people you talk to will say, "They've here to take the oil. Why don't they just take the oil and leave us alone? And they're not doing any thing to help us. Why don't they just go and leave us? And we don't really care about anything else." So there is still a lot of tension points.

And again, it all depends on how fast the U.S. administrators are going to be able to put together some form of interim government and restore those basic services back to the Iraqi people.

SNOW: And meantime, the U.S. government trying to sort of turn the corner from that war winding down in Iraq to the political battles heating up here at home.

Will President Bush get what he wants to spend to stop AIDS in Africa? We're back on the story in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. HENRY HYDE (R), ILLINOIS: In the very short time that we will spend today considering this legislation, thousands of people around the world will die of HIV-AIDS.

(END VIDEO CLIP)

SNOW: Republican Congressman Henry Hyde of Illinois leading the charge in Congress this week to fight the spread of AIDS in Africa.

Welcome back. We're ON THE STORY.

The AIDS fight is about money, of course, $15 billion, but it's also about fiery political and social issues, such as what emphasis to put on abstinence, condoms, international aid groups that might not only hand out condoms but also might provide abortion or counsel on abortion. A lot of politics involved in this AIDS bill this week.

But I have to tell you, the one thing that's going to stick with me is I had a conversation this week with an aide to Henry Hyde, talking about the politics and is it going to get through the House and, you know, sort of the maneuvering over the bill. And he stopped me at one point, and he said, "Kate, we've been talking for 15 minutes, and in those 15 minutes, 250 people have died of AIDS." And it's sobering. I mean, it's just so -- the numbers are so big that you can't get a handle on it.

And I think that's how they were able to get this through the Congress -- or get it through the House this week, because the president came out this week too and said, "Look, this is just so big that it doesn't matter if you're a Republican or Democrat, we got to stop this."

ARENA: But you still had so many competing factions at work here.

SNOW: You did.

ARENA: What was the key to the compromise?

SNOW: The key in the House was that the conservatives who were upset that some of this money might go to distributing condoms overseas, they got an amendment tacked on this bill to promote abstinence, to send a third of the money that goes toward prevention, make sure a third of it is ear-marked for abstinence-only programs until people are married. And that's critical.

What's so interesting about this compromise, and what's brilliant about it, Henry Hyde and Tom Lantos, the Democrat, orchestrated this, is that you got conservatives voting for a bill that allows for condom distribution and liberals voting for a bill that says abstinence-only education is very important. So it really was a brilliant compromise.

BRAHIMI: Kate, let me ask you this. When we went out in the streets and asked people to react here to Bush's speech announcing, basically, that the major combat operations of the war were over, the reaction we got here was pretty much, "The war between President Bush and Saddam Hussein may be over militarily, but the war is not over, with getting jobs and restoring those basic services."

Is there a sense that the U.S. president and Congress are leaving this war in Iraq and moving on to other issues?

SNOW: Hate to say it, but there is that sense. I mean, the word of the week was "pivot." I had any number of Republicans say to me and say to the press that we're pivoting now from the war in Iraq, we're pivoting back to the domestic front.

I had a Republican member say to me this week, "If we don't do something about this economy, we're in a world of hurt." Those weren't her exact words, but I mean, they know that they've got to do something about this economy. They see this tax-cut bill as their saving grace. You know, they think it's going to create jobs, and that's...

HAYS: But that's a big...

SNOW: ... what they've got to get passed, and fast.

HAYS: That's the big question, though. And I think one of the interesting themes that's come out as sort of a chuckling kind of criticism of Bush, maybe not so chuckling, is, "You got a fever? How about a tax cut?"

SNOW: Right.

HAYS: You know, "You got a broken leg? How about a tax cut?" Everything, the answer is a tax cut.

I think the interesting thing about the speech on the carrier, he's thrown this back on Congress. "I won the war. Now it's your job, it's your job, to pass my package and get this economy going."

SNOW: Right. And there's been a lot of talk about, remember when the president first presented the tax cut, it was going to be get rid of the tax on dividends, get rid of what they called double taxation of dividends? Well, now, if you've been following it, Congress is scaling that way back. The president's not going to get the full repeal of that tax on dividends. But I had several Republicans say to me this week that he's playing it just -- the White House is playing it just right. They go -- they aim high -- they do this all the time. They aim for what they say they want, you know, they push, push, push, "We want a full repeal, a full repeal." And this week, the House came up with a bill that's not that much, but it -- you, Kathleen, could talk about this -- it is pretty significant. It lowers both capital gains to 15 percent and the tax on dividends to 15 percent.

HAYS: And what's interesting about that is people would still get a very sizable reduction in their dividend tax.

But I wonder, what about some of the other elements that are floating around in Congress?

I mean, is it all going to be about the tax cuts? There's the whole thing of health insurance, state aid. Look what's happening to Medicaid. All the stories this week about children that can't get medical care. I would think this is going to be a big deal for Congress and for the president now.

SNOW: Oh, those are all big deals. But, I mean, I think, politically speaking, it's all going to...

(CROSSTALK)

HAYS: ... biggest deal for the campaign?

SNOW: Exactly. It's all going to come down to the economy, it's all going to come down to whether people have jobs. And the Republicans are arguing that this tax bill will create jobs. The Democrats, of course, are still stuck on their message, saying, "No, no, no, the economy's hurting, and this isn't the right solution."

HAYS: So what are the Democrats proposing? Again, there's so much -- you know, we've been so focused on the war. I'm kind of confused over who is offering what.

SNOW: The Democrats are going to come out, Senator Daschle and Nancy Pelosi, the minority leader in the House, are going to come out probably this week -- well, they have to come out this week with their own proposal.

Now, remember, though, the Republicans control both the Senate and the House. So the dynamic is that the Democrats -- I mean, hate to say they don't matter, but, you know, they're not going to be able, really, to get -- they're not even going to have a seat at the table, really. It's really going to be about -- and one other quick note is that the House has felt really pushed aside in all of this. Because, you know, the Senate is really the big game, and the House -- the speaker, the other day, was complaining to reporters. He said, "I hate the fact that we have to work with the Senate's numbers," because it's all about what the Senate can do.

Anyway, there's one other thing we wanted to talk about this week, because this is going to be a huge political story, and that is a big book that's coming out. It's coming out in early June.

Here's how "Detroit News" cartoonist, Larry Wright (ph), previewed it. It's going to be published by Hillary Rodham Clinton, Senator Clinton of New York, the former first lady. She's on the left there, and she's reading her book, saying, "I can't recall." And then the cartoonist imagines Bill Clinton, on the right there, reading his book, saying, "I forget."

(LAUGHTER) The book already getting a lot of publicity. But here's what's interesting. I made a round of calls in preparation for the show today -- nobody is talking about this book. There is the tightest lid on this book.

ARENA: Well, it's sort of like, even a little bit -- like, doesn't she talk about -- well, supposedly talks about Monica...

SNOW: She has said that she's going to address everything in this book.

HAYS: And it won't be a good seller if it doesn't, because, again, people may be interested in how tough it was and disappointing when her big health care plan didn't get through in '92, and all the political fallout. But I think most people really care about the dirt.

SNOW: That's not bedside reading.

ARENA: Her as a mother, her as a wife...

HAYS: Right.

ARENA: ... and, you know, living through that -- I mean, that is very...

SNOW: Yes, and she has said it's more of a memoir, it's not supposed to be a history, an exact history. It's supposed to be her memoir of being in the White House.

Interesting, though, you know, it raises all kinds of -- it starts all kinds of rumors on Capitol Hill...

ARENA: Oh, sure.

SNOW: ... and here in Washington about what her political ambitions are. Here's she's got a book coming out before her husband's book even comes out.

HAYS: Well, I know one thing for sure, whoever took her photograph, I want them to take mine. That's the most beautiful photograph, on the book cover.

ARENA: All right, well, first, we'd like to think Rym.

Thank you for joining us. We know you have to get back on the story in Baghdad. But before you go, tell us, what's on the agenda today?

BRAHIMI: Well, when I went to the book market on Friday, I bumped into an Iraqi artist that I knew. Now, he's been painting and he was painting during the war. So I'm going to go up to his studio and see a big painting that he's called "Baghdad," that he says he painted every single day during the war and worked and that. Should be interesting. But there's a huge well of stories now that we're also more free to go about and do those stories without government minders. So I'll keep you posted hopefully soon.

ARENA: Great. Well, thanks a lot, Rym. You have a good one.

Congress did serve up something President Bush wanted this week, an Amber Alert bill that brings new federal muscle into the fight to protect children. We're back on the story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Every person who would think of abducting a child can know that a wide net will be cast. They may be found by a police cruiser or by the car right next to them on a highway.

(END VIDEO CLIP)

ARENA: President Bush on Wednesday, talking up the new Amber Alert law, designed to push states to move quickly to get out information about abducted children.

Welcome back. We're ON THE STORY.

The new law also does much more to fight abductions and other crimes against children. This was a major child-protection package. I mean, obviously, the centerpiece of this legislation was the Amber Alert.

And for those who don't know what the Amber Alert is, you know, you get information out on highway signs, radio and television immediately, because they say that the first couple of hours after a child is abducted, a parent realizes something is wrong, are the vital hours, in terms of finding a child or bringing them back alive and well.

But this was a major accomplishment.

HAYS: What's interesting to me is -- I mean, I haven't been, obviously, on the story as closely as you have, Kelli, so I know -- especially, like, with Ed Smart, the father of Elizabeth Smart, who was so miraculously kidnapped and found, was adamant this had to be passed quickly.

I didn't realize it was such a comprehensive bill, in terms of prohibiting child pornography, virtual child pornography, all kinds of monitoring. I mean, anyone who is strongly in favor of that kind of move is in favor of the bill, but it's interesting to me that this really mammoth act is being passed.

ARENA: Oh, it's huge. I mean, I had to bring a list because there's so much that's in this bill. I mean, there are background checks for people who want to work with children. As you said, it bans virtual child pornography. That's expected to be very controversial.

HAYS: That's huge.

ARENA: It also makes it illegal to take a child out of the United States in a custody battle.

So there are so many things in this bill -- it doesn't allow judges as much discretion in terms of sentencing of child sex offenders. It allows for supervision for life. It allows a judge to say you, as a child sex offender, need to be supervised for life. It allow for registration in the National Sex Offenders Registry of people who have been convicted.

So it does equip parents with much more information if they have someone living in their area who was convicted before...

HAYS: It's not just money for billboards and for signs.

ARENA: Right, exactly. It is major.

HAYS: Lots of stories on your beat this week. I want to turn you to another one, al Qaeda, which, as the president emphasized on the carrier the other day, is still going strong.

ARENA: The war on terror, still going strong.

Well, we had a major arrest this week in Pakistan. And one -- a key al Qaeda leader, Whalid Attash (ph), was taken into custody. He was involved in the bombing of the USS Cole. He's also thought to have some involvement in the September 11 attacks, because he met with two of the hijackers pre-9/11 in Malaysia.

But what was most interesting was that this so-called cell in Pakistan, according to our sources, was right in the middle of planning an attack on the U.S. consulate in Karachi. But what is even more important than that -- that's important enough -- is that they were planning to use an explosive-laden aircraft to do this, which only underscores the continued interest that al Qaeda has in using aircraft for attacks.

I mean, they were very successful on September 11. And so, a warning went out to the airline industry here in the United States, saying, "Hello, be aware."

SNOW: It's chilling. At a time when we just cut back the money for baggage handlers, by the way, because the terror alert was reduced, only (UNINTELLIGIBLE) dollars nevertheless.

But let's end on a happy note, the story of the man who helped -- was so key to the rescue of Jessica Lynch.

ARENA: Mohammed. It's such a -- it's a wonderful story. We only knew him...

HAYS: I worry for this guy, though. I worry because we all know where he is now. We know he's living in the... ARENA: Well, nobody really knows where he is. He's in the United States. He's in the D.C. area right now. But we only knew him as Mohammed. This was the man who, you know, had trekked the six miles to get to the Marines to tell them that he had seen Jessica Lynch in the hospital, went back to the hospital, provided them a layout so they could, you know, get her rescued.

Big hero. He comes to the United States, got asylum. He, his wife, his 6-year-old daughter, offered a job by the Livingston Group, which is a Washington lobbying firm. Was also, apparently, injured -- got an eye injury during the Jessica Lynch rescue. And so there is an eye surgeon here that's providing him with free medical care.

There was a big push in West Virginia, obviously, to have him come and live there, because of course Jessica's hometown -- you know, they wanted him. But it looks like he's going to stay in the Washington area.

SNOW: How much in danger, realistically, do authorities think he is, at this point?

ARENA: Well, they do say that he did receive very specific threats when he was in Iraq, and he was granted humanitarian parole as a result of that and they got him out of there pretty quickly. But there was a very big anti-American sentiment. And of course, the longer the U.S. stays there, the more that would build up. And so they really thought that his life was in danger.

SNOW: But he did an amazing thing.

From U.S. justice to justice Cuban-style. While much of the world was watching the war, Cuban leader Fidel Castro was executing hijackers and throwing political opponents in prison. CNN Havana bureau chief, on the story, Lucia Newman, in two minutes, right after a check on what's making headlines at this hour.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: The Castro regime is cracking down on Cuban citizens who dare ask for a voice in how they are governed. Far from offering liberty and hope, the regime is turning to arrest and harsh prison sentences.

(END VIDEO CLIP)

LUCIA NEWMAN, CNN HAVANA BUREAU CHIEF: U.S. Secretary of State Colin Powell started the week by blasting Cuba's president, Fidel Castro.

I'm Lucia Newman in Havana, on the story.

Castro, in turn, is accusing the United States of wanting to invade this country again, amid a growing wave of international criticism against his government for the crackdown on dissidents.

So it looks again like back to square one, just as it seemed like things between the United States and Cuba were beginning to get better -- Kate.

SNOW: Lucia, I was there, what, about a year ago now with you when President Carter was down there, and everyone thought things were sort of turning for the better. The Congress was considering maybe lifting some of the travel restrictions.

Do you get the sense that this is -- that things have completely changed now?

NEWMAN: They've certainly changed a lot. I mean, the tables really have turned. I mean, it seems that every time that relations between Cuba and the United States are getting better, that there's a move toward normalization, the Cuban government does something to put an end to it, to stop it.

For example, back in 1994, it was the shooting down of the Brothers to the Rescue's planes by Cuban MIG fighter jets. Now, of course, it's the jailing of 75 dissidents and the execution by firing squad of three men who tried to hijack a passenger ferry.

Now, each time the Cuban government says, of course, that it's responding to a provocation from the United States. But if that's the case, why then is the Castro government taking the bait? Why is it letting itself be provoked if what it really wants is a normalization with the United States?

And as you say, there are a lot of people in Congress who have been pushing very, very hard against the will of the Bush administration to open up to this country and to ease travel restrictions and even trade restrictions.

HAYS: But so, Lucia, answer the question you're raising. What is in it for Fidel Castro? He -- it is a critical juncture. The economy is still very, very poor. You know, they just got a deal they could have made with the European Union shot down. So where does this leave Castro? And again, what is in it for him?

NEWMAN: Exactly. I mean, there are so many theories about that.

But first, I've got to tell you, in this country for the last 44 years, people here see a conspiracy under every rug, behind every corner. And certainly people in the Cuban government see a big conspiracy brewing in the Bush administration.

They're feeling very, very threatened. They've seen that the opposition movement here has been getting bigger and certainly bolder. Although they say that really people here don't really care, that the majority of Cubans are in favor of the revolution, that is something they feel threatened about. They also feel threatened by the Bush administration's bolder position to support the opposition in this country.

And so, there are many here who say that what President Castro really wants is to have a meaner, stronger enemy just across the Florida Straits to justify and diffuse attention away from the problems in this country. Because there are a lot of people that are sick and tired of waiting for an improvement in the economy, and for -- to have more freedoms to do what they want of course.

SNOW: When I was there, Lucia, people were often scared -- and I know you know this better than anyone -- people were scared to talk to us. And I'm sure you struggle with this as the bureau chief there. Are people more scared even now, with what's just happened?

NEWMAN: Well, I can tell you, when you were last here, people were reluctant to talk to us, but they were opening up. I mean, people were loosening up in this country. The opposition certainly felt a lot freer to speak and organize.

Now, since they were -- since this crackdown began, and since the government revealed very openly and very deliberately that it had spies not only in the opposition movement but all around, people are much, much more reluctant to say what they really think. They're feeling frightened and intimidated.

ARENA: Lucia, what's your sense at this point? Will diplomacy work? Will the threat that relations will not get better economically work? Where do we go from here?

NEWMAN: Well, you know, I really think the ball is now in Washington's court, because if the idea was to go back to the old Cold War mentality, we can have one of two things.

The Bush administration can go ahead with what it's saying. They want to review its policy toward Cuba. There's been talk even of cutting of remittances to Cubans here sent by Cuban Americans in the United States. That's a lot of money, and that would certainly make the Americans look like the bad guys again.

Or, as others in Congress are saying, let's not give President Castro what he perhaps wants, and that is to keep isolating Cuba. But on the contrary, it's time to continue with some kind of dialogue and some kind of attempt to open up toward this country so that they don't isolate the Cuban people and also the Cuban dissidents and everybody else who wants some sort of a change here.

HAYS: Well, and unfortunately, it's time for us to say goodbye to you. Thank you for joining us today, Lucia. Appreciate it. We know you have to get back on the story.

And of course, what are you going to be watching for?

NEWMAN: Well, certainly we want to go talk to more ordinary people, to Cubans now, and see what it is that they're feeling. Do they really think now that there is a threat of an American military invasion, some Iraq-style move against this country, as the government here is saying?

HAYS: OK. Lucia Newman, from Havana, thank you very much.

From a controlled economy to the wild ride of U.S. capitalism, where, once again, the number of jobs, and that means paychecks, went down last month.

We're back on the story in just a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN SNOW, TREASURY SECRETARY: While the United States is in a recovery, it's a slow and uncertain recovery. It's a recovery that isn't creating enough new jobs.

(END VIDEO CLIP)

HAYS: Treasury Secretary John Snow admitting concern all the way up to the top that the country is losing jobs.

We're ON THE STORY. Welcome back.

The economy lost another, what, 48,000 in April.

ARENA: Oh, is that all?

HAYS: I know. Well, only 550,000 jobs in three months. So that 6 percent unemployment rate maybe isn't quite as reassuring as you would think, you'd (ph) say it's not that high yet.

But you know, on my show "On the Flip Side," one day we took calls, and we had two people calling in with a similar story. One man in particular: "I'm 53-years old. I work in the computer industry. My job was cut. It was outsourced. It probably went to India. It's not coming back."

I think that's really a big concern right now for economists and policymakers. Yes, we're in a business cycle, things are weak. The economy will pick up. We'll get some job growth at some point. But I think there is also this long-term problem about globalization. It's good in some ways, but it's sending jobs overseas. And that's a challenge, I think, for them as well.

ARENA: What are you seeing, though, underneath those numbers? As you said, you know, you see 6 percent unemployment and you think, "All right, maybe, maybe starting a recovering process here."

What are you seeing underneath those numbers, though, about...

HAYS: You saw a work week in April that was cut. What does that mean? Well, it means not only did they not hire, they must be seeing less demand, companies that is, because they cut back people's hours on average. We're seeing the number of discouraged workers up more than 100,000 since last year.

ARENA: Discouraged workers being workers that...

HAYS: "I can't find a job." And remember...

ARENA: ... just don't even file for unemployment. OK.

HAYS: And remember, if you're not looking for a job, you're not in the labor force.

ARENA: Right.

HAYS: And if you're not in the labor force, you can't be counted as unemployed. One reason we haven't seen that 6 percent number go higher, more people taking part-time jobs because they can't find full-time work, even though they want full-time work.

SNOW: People just saying, "To heck with it, I'm out of the labor market. I can't even to do this."

HAYS: That's right, that's right. Now I don't want to sound so bleak, because the bulls on the economy are going to say, "But look, the war is over, the uncertainty has gone. Energy prices are coming down. That's going to put a lot of money back in people's pockets." So these are the hopeful signs looking ahead.

SNOW: How significant this week was the settlement that was made, securities firms settling, huge settlement?

HAYS: Well, it was important that it happened. It was important, that you know, the regulators led by Eliot Spitzer, the New York state attorney general, got this done. $1.4 billion being paid out by 11 Wall Street firms. But...

ARENA: Yes, but it doesn't got to the investors.

HAYS: And not only that, but think about it. Merrill Lynch's net income last year was $2.2 billion. What did they pay out, $100 million?

ARENA: Right, so that's pennies to most...

HAYS: Do we think this is just a slap on the hand maybe? Now, they, of course, are (ph) taking seriously.

Another...

ARENA: But didn't it kind of uncover more than we even knew that was bad?

HAYS: Yes. When they started to combing through the documents, things like -- they were much worse things than I think a lot of people thought. Can you imagine that a Wall Street firm that was going to do an initial public offering, for example, not only did they try to give business in the IPO to companies or people they wanted to do investment banking business with, they paid other Wall Street firms for positive research.

Now we had Jacob Zamansky on my show this week. He's the attorney who sued Henry Blodget, the Internet analyst at Merrill Lynch who really kicked this whole thing off...

ARENA: Right.

HAYS: ... on behalf of a plaintiff, an investor, who feels that he got burned. This was the guy, the e-mails going back and forth, "This is a dog, this is a piece of crap," while they were maintaining positive ratings.

We asked Jake, "So what is this going to take? Is this going to restore investor confidence." He says, "No, not until we see someone in an orange suit, someone really going to jail."

Now, who knows? Down in Houston...

SNOW: I thought we already saw a lot of orange suits.

HAYS: Well, we need to see more, maybe.

(LAUGHTER)

But have you seen -- Kelli, you're a business head from the past -- Andy Fastow, the chief financial officer, Enron, the collapsed firm. Now he has, what, 118 indictments against him, and his wife has been indicted as well.

ARENA: His wife, too.

HAYS: So maybe these are people -- I'm not gloating. I'm not gleefully saying I want anybody to go to jail. But looks like this is the couple that might be the poster child for really getting some punishment reeked, yes.

SNOW: And if Wall Street seems like a bad bet, there's always the ponies. Just ahead, CNN sports reporter, Kara Henderson is on the story at the Kentucky Derby. Great assignment.

Back in two minutes.

(COMMERCIAL BREAK)

HAYS: Welcome back. We're ON THE STORY.

We're seeing live pictures from Churchill Downs, Louisville, Kentucky, where they're running the Kentucky Derby today. CNN's sports correspondent Kara Henderson is there.

Big hats, big money, big parties. One of the biggest sports spectacles of the year. Kara, what are you on the lookout for today?

KARA HENDERSON, CNN SPORTS CORRESPONDENT: Well, today, we have about 140,000 people here. We're on the lookout for people drinking mint juleps, which we'll see plenty of...

(LAUGHTER)

... people doing that. And we'll also be on the lookout for Empire Maker. Empire Maker is the favorite in this field, despite some concerns over a bruise in the right front foot. So Empire Maker the six-to-five favorite today. A lot of people think that this horse, the most talented in the field, might run away with it if it isn't actually hurt. So that's the big story here today. HAYS: And also, Steven Spielberg also owns one of these horses, right? I mean, he apparently got bitten by the horse bug when he was making his last movie?

HENDERSON: Absolutely. And he has a horse called 'At's What I'm Talking About. He was filming the movie "Seabiscuit" after the famed, legendary race horse who won here. And he decided that he wanted to, along with some of his business partners, buy about a one-tenth stake in a derby horse.

So they bought a horse called 'At's What I'm Talking About, which, by the way, is the longest name of a horse that you can actually have in this field. And he will be here today to watch his horse, so I'm sure there will be quite a spectacle surrounding him.

HAYS: Kara, how about Superblitz? Now, that's the horse, 50-to- 1 odds, it's the horse that the female jockey known as Junior is riding.

HENDERSON: Absolutely. Rosemary Homeister, Jr. -- her mom, Rosemary Homeister, was asked when she was born what her name was. She didn't realize they were talking about what her name was, so she said Rosemary Homeister, so that's why she's a junior.

(LAUGHTER)

She is on a longshot, 50-to-1 odds, on Superblitz. But if you're female, as we all are, this is the one probably to pull for. Because if she does win today, which is very much a long shot, she will make history. No female rider has ever won the Kentucky Derby. She's the fifth female ever to ride here.

SNOW: So if you're covering the derby, do you get to have a mint julep or not?

(LAUGHTER)

HENDERSON: No. We had somebody actually explain to us how to make them this morning. And to be honest with you, I don't think I really want one. I've heard, after a little straw poll that we conducted, that they really don't taste good. It's bourbon...

(CROSSTALK)

ARENA: But, you know, we do have to go, though, so go have some fun while you're working.

Our thanks to Kara Henderson.

HENDERSON: Thanks, guys.

ARENA: And thank you for watching ON THE STORY. We'll be back next week.

Up at the top of the hour, CNN's "PEOPLE IN THE NEWS" focusing today on Vice President Dick Cheney. At noon Eastern, "CNN LIVE SATURDAY," the roadblocks along the new road map to peace in the Middle East.

And at 1:00 p.m. Eastern, "IN THE MONEY" with Jack Cafferty, on the cost of the SARS epidemic.

Coming up at the top of the hour, a news alert, but first the president's weekly radio address.

(BEGIN AUDIOTAPE)

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

On Thursday, I visited the USS Abraham Lincoln, now headed home after the longest carrier deployment in recent history. I delivered good news to the men and women who fought in the cause of freedom: Their mission is complete, and major combat operations in Iraq have ended. Our coalition is now engaged in securing and reconstructing that country. The United States and our allies have prevailed.

Operation Iraqi Freedom was carried out with a combination of precision, speed and boldness the enemy did not expect and the world had not seen before. From distant bases or ships at sea, we sent planes and missiles that could destroy an enemy division or strike a single building or bunker. Marines and soldiers charged to Baghdad across 350 miles of hostile ground in one of the swiftest mass advances of heavy arms in history. The world has seen the might of the American armed forces.

In this victory, America received valuable help from our allies. This weekend, I am hosting Australian Prime Minister John Howard at my ranch in Crawford, Texas. Prime Minister Howard has been a strong ally in the war on terror, and Australian forces have played an important role in the liberation of Iraq.

Australian Special Forces entered Iraq with their American and British counterparts at the very beginning of Operation Iraqi Freedom. They helped to secure sites in western Iraq that could have been used to launch Scud missiles. And they disrupted Iraqi troop movements and command posts, paving the way for Army and Marine units making their way to Baghdad.

Australia FA-18 fighters carried out deep bombing runs in Iraq. The Australian Navy worked with British forces to take control of the Faw Peninsula. Australian Navy divers cleared mines in the port of Umm Qasr, opening sea lanes to deliver humanitarian assistance. And Australian transport planes delivered emergency supplies and equipment for Iraqi hospitals.

All told, about 2,000 Australian service members contributed to the destruction of Saddam Hussein's regime and the liberation of the Iraqi people. All Australians can be justly proud of the superb performance of Australian's air, naval and special forces in Operation Iraqi Freedom. America is deeply grateful for their important contributions. Our coalition still has much work to do in Iraq. We are bringing order to parts of that country that remain dangerous. We are pursuing and finding leaders of the old regime who will be held to account for their crimes. We have begun the search for hidden chemical and biological weapons at hundreds of locations. We are helping to rebuild Iraq, where the dictator built palaces for himself, instead of hospitals and schools for the people.

And we will stand with the new leaders of Iraq as they establish a government of, by and for the Iraqi people. The transition from dictatorship to democracy is hard and will take time, but it is worth every effort. Our coalition will stay until our work is done. Then we will leave, and we will leave behind a free Iraq.

The battle of Iraq is one victory in a war on terror that still goes on. al Qaeda is wounded, not destroyed. The scattered cells of the terrorist networks still operate in many nations, and we know from daily intelligence that they continue to plot against free people. The proliferation of deadly weapons remains a serious danger. The enemies of freedom are not idle, and neither are we. Our government has taken unprecedented measures to defend our homeland, and more importantly, we will continue to hunt the enemy down before he can strike.

No act of terrorists will change our purpose or weaken our resolve or alter their fate. Their cause is lost. Free nations will press on to victory.

Thank you for listening.

(END AUDIOTAPE)

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




Returns to Normalcy; Castro Cracks Down on Dissidents>


Aired May 3, 2003 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.
I'm Kate Snow. We are on the story this week of a war winding down in Iraq, a political battle heating up at home over taxes and spending.

RYM BRAHIMI, CNN CORRESPONDENT: I'm Rym Brahimi, and I'm in Baghdad, on the story of a city with a split personality, a power vacuum. The sound of gunfire still, but also signs life is returning to normal.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena, on the story of how the war in Iraq may have distracted some of us from the war on terrorism, but that fight keeps on going.

KATHLEEN HAYS, CNN FINANCIAL NEWS CORRESPONDENT: And I'm Kathleen Hays, on the story of the economic riddle. How does an economy that keeps shedding jobs persuade consumers to keep spending money?

And we're going to go to Cuba to talk to Havana bureau chief Lucia Newman about Fidel Castro's crackdown on dissent. We're going to go down to Kentucky to hear about the derby from Kara Henderson. We'll listen to the president's weekly radio address at the end of the hour.

And we want to hear from you. E-mail your questions and comments to onthestory@cnn.com.

We're back on the story after we see what's making news right now from CNN headquarters in Atlanta.

(NEWSBREAK)

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Unlike many armies in the world, you came not to conquer, not to occupy, but to liberate. And the Iraqi people know this.

(END VIDEO CLIP)

BRAHIMI: That was Secretary of Defense Donald Rumsfeld, praising U.S. troops on his trip to Baghdad just a few days ago.

We're on the story here in Baghdad, where a lot's been happening in the past week or so in terms of trying to fill this political vacuum that is really hampering any efforts to bring a normal life back to the Iraqi people.

SNOW: Rym, tell us a little bit about life on the streets there now. I talked to someone who said it's really chaotic. What is it like?

BRAHIMI: It's extremely chaotic. And having been here in Baghdad for an entire year under the previous regime, I can tell you, it's a stunning contrast to what it was before. In a city where basically you used to have to sometimes beg people to talk to you for interviews in the streets, well, now, we can't set a foot out in the streets of Baghdad without people literally crowding around us.

And everyone has a story to tell. Everyone has a tale of someone who's been imprisoned, someone who died in their family, a job that they've lost that they would like to get back, they have five mouths to feed. Literally, they just pour all their problems at your feet. And they're hoping that anything, something, will be done, because they have nowhere to go to basically.

And it's a very, very difficult moment for people, as you can see -- a lot of desperation. And that's why a lot of them also even come to the Palestine Hotel, where the international media is based, because they want their story to come out.

HAYS: Well, what about some of those stories? What about some of the basic things of life people have to do? I mean, the ability, say, just to apply for a driver's license. I would assume some of the most mundane things cannot be done now.

BRAHIMI: You know, it's amazing how we take these things for granted wherever we live, in our day-to-day life, that there is an administration to go to and we can do these things. Because here, right now, there is absolutely none of that.

And what's interesting is I had -- a man actually came up to us in total desperation. He'd already been to the U.S. Army; he'd already been to the Red Cross. And there was no solution for his problem, because he has an 11-year-old daughter who is dying in Norway, where she's been receiving treatment for a brain tumor. She's over there with her mother. He is here with his 8-year-old son.

Now, the daughter is dying and she wants to see her father and her brother. And this man came to us literally in tears, saying, "I have a passport, but my son doesn't. And there is no administration to go to. There's no way -- I can't leave him here alone. There is nobody else here to look after him. And I want to see my daughter before she dies. I haven't seen her in eight months. And there's nowhere to go."

I went to the passport office just to see for myself. Passports all over the place. The whole place was burnt. There's no records. Nothing is left, a total void. And that, obviously, leads to many people just roaming around, lost, hoping that anyone passing on the street will maybe help to provide them with a job or something or assurance.

ARENA: Rym, what about just your basic necessities -- clean water, education systems? Are the schools back open?

BRAHIMI: Well, that again, you can see how the impact of this power vacuum has affected absolutely every sector of daily life.

Schools were supposed to resume today, and that was a very interesting experience. I went over to some of the primary schools in a neighborhood, a modest neighborhood. One of the schools usually has 400 pupils. Well, on this day that was supposed to be their first day back at school, there were only 10 kids that showed up.

And then I spoke to the parents -- I'm sorry, you can probably hear the helicopter hovering over me here. Let them go by, right.

So I was talking to some of the parents and a lot of the parents were saying, "No, I'm not prepared to send my kids to school." One of the told me, "My daughter is very pretty. There are a lot of assaults. I'm worried about her." And a lot of people came over, and some of the mothers were there, holding their children, very in fear. And they came and started, again, pouring out their problems, saying, "No, the security is not good. I can't send my children to school."

And they started talking about lack of water, lack of electricity. A lot of places have been looted. The water they were drinking was dirty. She said, "Everyone in my family is sick. We all have diarrhea because there is no clean water around."

So again, really a chaotic situation. And if you're getting that impression of confusion and chaos, well, that's exactly what we're seeing here on the ground.

SNOW: And yet, Rym, you see the U.S. officials there, General Garner, sitting, you know, in these very organized press conferences and trying to say that things are going to get back under control.

How does that play, how does the U.S. leadership of all of this play on the streets?

BRAHIMI: Again, it's a very, very difficult -- it's a very difficult moment, I think, for them. And if the U.S. administrators, the interim administrators here in Iraq, want to make some progress, well, they're going to have to really fight out this balance between time and finding a government that's truly representative. And that's where it's all being played at.

They need the time to find the people who are truly representative. But the more time that takes, the more frustrated people will become and the more risk there is that whatever government they come up with will be, if you will, tainted or will suffer from contagion of having been appointed by the U.S. and, therefore, not representative and maybe bad memories because of this whole vacuum-of- power situation.

So it's a very, very complex issue. And people complain that they want representatives who have been in the country, who have suffered with them. They don't want these people from outside. On the other hand, they want it to happen tomorrow. They can't wait anymore.

And so it's very difficult, of course, for the people in the place of the U.S. administrators trying to do that job. Although some journalists have been extremely critical -- local journalists have been extremely critical, saying even, "Well, Jay Garner is as removed away from the Iraqi people as Saddam Hussein was." And that's not a good thing.

They definitely need to really make a big push on that and move as quickly as they can if they don't want more resentment to build against the U.S. presence here that's already seen as a humiliation, as an occupation. And if they don't want this to become worse, then there needs to be some concrete results and not just words.

ARENA: Well, Rym, we say what happened in Fallujah, the conflict between citizens and the military. Do situations like that just use up any goodwill that's left?

BRAHIMI: Well, definitely that kind of situation is -- it's a very, very tense point over there. It's not an everyday occurrence, but it has been happening here and there.

Now, what happened there, as you know, was the residents of the area went to a school that was occupied by U.S. troops and had been occupied by U.S. troops for the past 10 days. The cleric at the mosque called for children to go back to school, for life to return to normal. And so they went and demonstrated. Violence just flared up like that because somebody shot gunfire. Well, in a way, it's not even relevant who shot, whether the U.S. shot first or the whether the Iraqis shot first. What it means is there is a lot of nervousness, both on the part of the U.S. troops, who feel that they're in a very hostile environment, and on the part of the Iraqis who are extremely suspicious of the presence of the U.S. here.

A lot of people you talk to will say, "They've here to take the oil. Why don't they just take the oil and leave us alone? And they're not doing any thing to help us. Why don't they just go and leave us? And we don't really care about anything else." So there is still a lot of tension points.

And again, it all depends on how fast the U.S. administrators are going to be able to put together some form of interim government and restore those basic services back to the Iraqi people.

SNOW: And meantime, the U.S. government trying to sort of turn the corner from that war winding down in Iraq to the political battles heating up here at home.

Will President Bush get what he wants to spend to stop AIDS in Africa? We're back on the story in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. HENRY HYDE (R), ILLINOIS: In the very short time that we will spend today considering this legislation, thousands of people around the world will die of HIV-AIDS.

(END VIDEO CLIP)

SNOW: Republican Congressman Henry Hyde of Illinois leading the charge in Congress this week to fight the spread of AIDS in Africa.

Welcome back. We're ON THE STORY.

The AIDS fight is about money, of course, $15 billion, but it's also about fiery political and social issues, such as what emphasis to put on abstinence, condoms, international aid groups that might not only hand out condoms but also might provide abortion or counsel on abortion. A lot of politics involved in this AIDS bill this week.

But I have to tell you, the one thing that's going to stick with me is I had a conversation this week with an aide to Henry Hyde, talking about the politics and is it going to get through the House and, you know, sort of the maneuvering over the bill. And he stopped me at one point, and he said, "Kate, we've been talking for 15 minutes, and in those 15 minutes, 250 people have died of AIDS." And it's sobering. I mean, it's just so -- the numbers are so big that you can't get a handle on it.

And I think that's how they were able to get this through the Congress -- or get it through the House this week, because the president came out this week too and said, "Look, this is just so big that it doesn't matter if you're a Republican or Democrat, we got to stop this."

ARENA: But you still had so many competing factions at work here.

SNOW: You did.

ARENA: What was the key to the compromise?

SNOW: The key in the House was that the conservatives who were upset that some of this money might go to distributing condoms overseas, they got an amendment tacked on this bill to promote abstinence, to send a third of the money that goes toward prevention, make sure a third of it is ear-marked for abstinence-only programs until people are married. And that's critical.

What's so interesting about this compromise, and what's brilliant about it, Henry Hyde and Tom Lantos, the Democrat, orchestrated this, is that you got conservatives voting for a bill that allows for condom distribution and liberals voting for a bill that says abstinence-only education is very important. So it really was a brilliant compromise.

BRAHIMI: Kate, let me ask you this. When we went out in the streets and asked people to react here to Bush's speech announcing, basically, that the major combat operations of the war were over, the reaction we got here was pretty much, "The war between President Bush and Saddam Hussein may be over militarily, but the war is not over, with getting jobs and restoring those basic services."

Is there a sense that the U.S. president and Congress are leaving this war in Iraq and moving on to other issues?

SNOW: Hate to say it, but there is that sense. I mean, the word of the week was "pivot." I had any number of Republicans say to me and say to the press that we're pivoting now from the war in Iraq, we're pivoting back to the domestic front.

I had a Republican member say to me this week, "If we don't do something about this economy, we're in a world of hurt." Those weren't her exact words, but I mean, they know that they've got to do something about this economy. They see this tax-cut bill as their saving grace. You know, they think it's going to create jobs, and that's...

HAYS: But that's a big...

SNOW: ... what they've got to get passed, and fast.

HAYS: That's the big question, though. And I think one of the interesting themes that's come out as sort of a chuckling kind of criticism of Bush, maybe not so chuckling, is, "You got a fever? How about a tax cut?"

SNOW: Right.

HAYS: You know, "You got a broken leg? How about a tax cut?" Everything, the answer is a tax cut.

I think the interesting thing about the speech on the carrier, he's thrown this back on Congress. "I won the war. Now it's your job, it's your job, to pass my package and get this economy going."

SNOW: Right. And there's been a lot of talk about, remember when the president first presented the tax cut, it was going to be get rid of the tax on dividends, get rid of what they called double taxation of dividends? Well, now, if you've been following it, Congress is scaling that way back. The president's not going to get the full repeal of that tax on dividends. But I had several Republicans say to me this week that he's playing it just -- the White House is playing it just right. They go -- they aim high -- they do this all the time. They aim for what they say they want, you know, they push, push, push, "We want a full repeal, a full repeal." And this week, the House came up with a bill that's not that much, but it -- you, Kathleen, could talk about this -- it is pretty significant. It lowers both capital gains to 15 percent and the tax on dividends to 15 percent.

HAYS: And what's interesting about that is people would still get a very sizable reduction in their dividend tax.

But I wonder, what about some of the other elements that are floating around in Congress?

I mean, is it all going to be about the tax cuts? There's the whole thing of health insurance, state aid. Look what's happening to Medicaid. All the stories this week about children that can't get medical care. I would think this is going to be a big deal for Congress and for the president now.

SNOW: Oh, those are all big deals. But, I mean, I think, politically speaking, it's all going to...

(CROSSTALK)

HAYS: ... biggest deal for the campaign?

SNOW: Exactly. It's all going to come down to the economy, it's all going to come down to whether people have jobs. And the Republicans are arguing that this tax bill will create jobs. The Democrats, of course, are still stuck on their message, saying, "No, no, no, the economy's hurting, and this isn't the right solution."

HAYS: So what are the Democrats proposing? Again, there's so much -- you know, we've been so focused on the war. I'm kind of confused over who is offering what.

SNOW: The Democrats are going to come out, Senator Daschle and Nancy Pelosi, the minority leader in the House, are going to come out probably this week -- well, they have to come out this week with their own proposal.

Now, remember, though, the Republicans control both the Senate and the House. So the dynamic is that the Democrats -- I mean, hate to say they don't matter, but, you know, they're not going to be able, really, to get -- they're not even going to have a seat at the table, really. It's really going to be about -- and one other quick note is that the House has felt really pushed aside in all of this. Because, you know, the Senate is really the big game, and the House -- the speaker, the other day, was complaining to reporters. He said, "I hate the fact that we have to work with the Senate's numbers," because it's all about what the Senate can do.

Anyway, there's one other thing we wanted to talk about this week, because this is going to be a huge political story, and that is a big book that's coming out. It's coming out in early June.

Here's how "Detroit News" cartoonist, Larry Wright (ph), previewed it. It's going to be published by Hillary Rodham Clinton, Senator Clinton of New York, the former first lady. She's on the left there, and she's reading her book, saying, "I can't recall." And then the cartoonist imagines Bill Clinton, on the right there, reading his book, saying, "I forget."

(LAUGHTER) The book already getting a lot of publicity. But here's what's interesting. I made a round of calls in preparation for the show today -- nobody is talking about this book. There is the tightest lid on this book.

ARENA: Well, it's sort of like, even a little bit -- like, doesn't she talk about -- well, supposedly talks about Monica...

SNOW: She has said that she's going to address everything in this book.

HAYS: And it won't be a good seller if it doesn't, because, again, people may be interested in how tough it was and disappointing when her big health care plan didn't get through in '92, and all the political fallout. But I think most people really care about the dirt.

SNOW: That's not bedside reading.

ARENA: Her as a mother, her as a wife...

HAYS: Right.

ARENA: ... and, you know, living through that -- I mean, that is very...

SNOW: Yes, and she has said it's more of a memoir, it's not supposed to be a history, an exact history. It's supposed to be her memoir of being in the White House.

Interesting, though, you know, it raises all kinds of -- it starts all kinds of rumors on Capitol Hill...

ARENA: Oh, sure.

SNOW: ... and here in Washington about what her political ambitions are. Here's she's got a book coming out before her husband's book even comes out.

HAYS: Well, I know one thing for sure, whoever took her photograph, I want them to take mine. That's the most beautiful photograph, on the book cover.

ARENA: All right, well, first, we'd like to think Rym.

Thank you for joining us. We know you have to get back on the story in Baghdad. But before you go, tell us, what's on the agenda today?

BRAHIMI: Well, when I went to the book market on Friday, I bumped into an Iraqi artist that I knew. Now, he's been painting and he was painting during the war. So I'm going to go up to his studio and see a big painting that he's called "Baghdad," that he says he painted every single day during the war and worked and that. Should be interesting. But there's a huge well of stories now that we're also more free to go about and do those stories without government minders. So I'll keep you posted hopefully soon.

ARENA: Great. Well, thanks a lot, Rym. You have a good one.

Congress did serve up something President Bush wanted this week, an Amber Alert bill that brings new federal muscle into the fight to protect children. We're back on the story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Every person who would think of abducting a child can know that a wide net will be cast. They may be found by a police cruiser or by the car right next to them on a highway.

(END VIDEO CLIP)

ARENA: President Bush on Wednesday, talking up the new Amber Alert law, designed to push states to move quickly to get out information about abducted children.

Welcome back. We're ON THE STORY.

The new law also does much more to fight abductions and other crimes against children. This was a major child-protection package. I mean, obviously, the centerpiece of this legislation was the Amber Alert.

And for those who don't know what the Amber Alert is, you know, you get information out on highway signs, radio and television immediately, because they say that the first couple of hours after a child is abducted, a parent realizes something is wrong, are the vital hours, in terms of finding a child or bringing them back alive and well.

But this was a major accomplishment.

HAYS: What's interesting to me is -- I mean, I haven't been, obviously, on the story as closely as you have, Kelli, so I know -- especially, like, with Ed Smart, the father of Elizabeth Smart, who was so miraculously kidnapped and found, was adamant this had to be passed quickly.

I didn't realize it was such a comprehensive bill, in terms of prohibiting child pornography, virtual child pornography, all kinds of monitoring. I mean, anyone who is strongly in favor of that kind of move is in favor of the bill, but it's interesting to me that this really mammoth act is being passed.

ARENA: Oh, it's huge. I mean, I had to bring a list because there's so much that's in this bill. I mean, there are background checks for people who want to work with children. As you said, it bans virtual child pornography. That's expected to be very controversial.

HAYS: That's huge.

ARENA: It also makes it illegal to take a child out of the United States in a custody battle.

So there are so many things in this bill -- it doesn't allow judges as much discretion in terms of sentencing of child sex offenders. It allows for supervision for life. It allows a judge to say you, as a child sex offender, need to be supervised for life. It allow for registration in the National Sex Offenders Registry of people who have been convicted.

So it does equip parents with much more information if they have someone living in their area who was convicted before...

HAYS: It's not just money for billboards and for signs.

ARENA: Right, exactly. It is major.

HAYS: Lots of stories on your beat this week. I want to turn you to another one, al Qaeda, which, as the president emphasized on the carrier the other day, is still going strong.

ARENA: The war on terror, still going strong.

Well, we had a major arrest this week in Pakistan. And one -- a key al Qaeda leader, Whalid Attash (ph), was taken into custody. He was involved in the bombing of the USS Cole. He's also thought to have some involvement in the September 11 attacks, because he met with two of the hijackers pre-9/11 in Malaysia.

But what was most interesting was that this so-called cell in Pakistan, according to our sources, was right in the middle of planning an attack on the U.S. consulate in Karachi. But what is even more important than that -- that's important enough -- is that they were planning to use an explosive-laden aircraft to do this, which only underscores the continued interest that al Qaeda has in using aircraft for attacks.

I mean, they were very successful on September 11. And so, a warning went out to the airline industry here in the United States, saying, "Hello, be aware."

SNOW: It's chilling. At a time when we just cut back the money for baggage handlers, by the way, because the terror alert was reduced, only (UNINTELLIGIBLE) dollars nevertheless.

But let's end on a happy note, the story of the man who helped -- was so key to the rescue of Jessica Lynch.

ARENA: Mohammed. It's such a -- it's a wonderful story. We only knew him...

HAYS: I worry for this guy, though. I worry because we all know where he is now. We know he's living in the... ARENA: Well, nobody really knows where he is. He's in the United States. He's in the D.C. area right now. But we only knew him as Mohammed. This was the man who, you know, had trekked the six miles to get to the Marines to tell them that he had seen Jessica Lynch in the hospital, went back to the hospital, provided them a layout so they could, you know, get her rescued.

Big hero. He comes to the United States, got asylum. He, his wife, his 6-year-old daughter, offered a job by the Livingston Group, which is a Washington lobbying firm. Was also, apparently, injured -- got an eye injury during the Jessica Lynch rescue. And so there is an eye surgeon here that's providing him with free medical care.

There was a big push in West Virginia, obviously, to have him come and live there, because of course Jessica's hometown -- you know, they wanted him. But it looks like he's going to stay in the Washington area.

SNOW: How much in danger, realistically, do authorities think he is, at this point?

ARENA: Well, they do say that he did receive very specific threats when he was in Iraq, and he was granted humanitarian parole as a result of that and they got him out of there pretty quickly. But there was a very big anti-American sentiment. And of course, the longer the U.S. stays there, the more that would build up. And so they really thought that his life was in danger.

SNOW: But he did an amazing thing.

From U.S. justice to justice Cuban-style. While much of the world was watching the war, Cuban leader Fidel Castro was executing hijackers and throwing political opponents in prison. CNN Havana bureau chief, on the story, Lucia Newman, in two minutes, right after a check on what's making headlines at this hour.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: The Castro regime is cracking down on Cuban citizens who dare ask for a voice in how they are governed. Far from offering liberty and hope, the regime is turning to arrest and harsh prison sentences.

(END VIDEO CLIP)

LUCIA NEWMAN, CNN HAVANA BUREAU CHIEF: U.S. Secretary of State Colin Powell started the week by blasting Cuba's president, Fidel Castro.

I'm Lucia Newman in Havana, on the story.

Castro, in turn, is accusing the United States of wanting to invade this country again, amid a growing wave of international criticism against his government for the crackdown on dissidents.

So it looks again like back to square one, just as it seemed like things between the United States and Cuba were beginning to get better -- Kate.

SNOW: Lucia, I was there, what, about a year ago now with you when President Carter was down there, and everyone thought things were sort of turning for the better. The Congress was considering maybe lifting some of the travel restrictions.

Do you get the sense that this is -- that things have completely changed now?

NEWMAN: They've certainly changed a lot. I mean, the tables really have turned. I mean, it seems that every time that relations between Cuba and the United States are getting better, that there's a move toward normalization, the Cuban government does something to put an end to it, to stop it.

For example, back in 1994, it was the shooting down of the Brothers to the Rescue's planes by Cuban MIG fighter jets. Now, of course, it's the jailing of 75 dissidents and the execution by firing squad of three men who tried to hijack a passenger ferry.

Now, each time the Cuban government says, of course, that it's responding to a provocation from the United States. But if that's the case, why then is the Castro government taking the bait? Why is it letting itself be provoked if what it really wants is a normalization with the United States?

And as you say, there are a lot of people in Congress who have been pushing very, very hard against the will of the Bush administration to open up to this country and to ease travel restrictions and even trade restrictions.

HAYS: But so, Lucia, answer the question you're raising. What is in it for Fidel Castro? He -- it is a critical juncture. The economy is still very, very poor. You know, they just got a deal they could have made with the European Union shot down. So where does this leave Castro? And again, what is in it for him?

NEWMAN: Exactly. I mean, there are so many theories about that.

But first, I've got to tell you, in this country for the last 44 years, people here see a conspiracy under every rug, behind every corner. And certainly people in the Cuban government see a big conspiracy brewing in the Bush administration.

They're feeling very, very threatened. They've seen that the opposition movement here has been getting bigger and certainly bolder. Although they say that really people here don't really care, that the majority of Cubans are in favor of the revolution, that is something they feel threatened about. They also feel threatened by the Bush administration's bolder position to support the opposition in this country.

And so, there are many here who say that what President Castro really wants is to have a meaner, stronger enemy just across the Florida Straits to justify and diffuse attention away from the problems in this country. Because there are a lot of people that are sick and tired of waiting for an improvement in the economy, and for -- to have more freedoms to do what they want of course.

SNOW: When I was there, Lucia, people were often scared -- and I know you know this better than anyone -- people were scared to talk to us. And I'm sure you struggle with this as the bureau chief there. Are people more scared even now, with what's just happened?

NEWMAN: Well, I can tell you, when you were last here, people were reluctant to talk to us, but they were opening up. I mean, people were loosening up in this country. The opposition certainly felt a lot freer to speak and organize.

Now, since they were -- since this crackdown began, and since the government revealed very openly and very deliberately that it had spies not only in the opposition movement but all around, people are much, much more reluctant to say what they really think. They're feeling frightened and intimidated.

ARENA: Lucia, what's your sense at this point? Will diplomacy work? Will the threat that relations will not get better economically work? Where do we go from here?

NEWMAN: Well, you know, I really think the ball is now in Washington's court, because if the idea was to go back to the old Cold War mentality, we can have one of two things.

The Bush administration can go ahead with what it's saying. They want to review its policy toward Cuba. There's been talk even of cutting of remittances to Cubans here sent by Cuban Americans in the United States. That's a lot of money, and that would certainly make the Americans look like the bad guys again.

Or, as others in Congress are saying, let's not give President Castro what he perhaps wants, and that is to keep isolating Cuba. But on the contrary, it's time to continue with some kind of dialogue and some kind of attempt to open up toward this country so that they don't isolate the Cuban people and also the Cuban dissidents and everybody else who wants some sort of a change here.

HAYS: Well, and unfortunately, it's time for us to say goodbye to you. Thank you for joining us today, Lucia. Appreciate it. We know you have to get back on the story.

And of course, what are you going to be watching for?

NEWMAN: Well, certainly we want to go talk to more ordinary people, to Cubans now, and see what it is that they're feeling. Do they really think now that there is a threat of an American military invasion, some Iraq-style move against this country, as the government here is saying?

HAYS: OK. Lucia Newman, from Havana, thank you very much.

From a controlled economy to the wild ride of U.S. capitalism, where, once again, the number of jobs, and that means paychecks, went down last month.

We're back on the story in just a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN SNOW, TREASURY SECRETARY: While the United States is in a recovery, it's a slow and uncertain recovery. It's a recovery that isn't creating enough new jobs.

(END VIDEO CLIP)

HAYS: Treasury Secretary John Snow admitting concern all the way up to the top that the country is losing jobs.

We're ON THE STORY. Welcome back.

The economy lost another, what, 48,000 in April.

ARENA: Oh, is that all?

HAYS: I know. Well, only 550,000 jobs in three months. So that 6 percent unemployment rate maybe isn't quite as reassuring as you would think, you'd (ph) say it's not that high yet.

But you know, on my show "On the Flip Side," one day we took calls, and we had two people calling in with a similar story. One man in particular: "I'm 53-years old. I work in the computer industry. My job was cut. It was outsourced. It probably went to India. It's not coming back."

I think that's really a big concern right now for economists and policymakers. Yes, we're in a business cycle, things are weak. The economy will pick up. We'll get some job growth at some point. But I think there is also this long-term problem about globalization. It's good in some ways, but it's sending jobs overseas. And that's a challenge, I think, for them as well.

ARENA: What are you seeing, though, underneath those numbers? As you said, you know, you see 6 percent unemployment and you think, "All right, maybe, maybe starting a recovering process here."

What are you seeing underneath those numbers, though, about...

HAYS: You saw a work week in April that was cut. What does that mean? Well, it means not only did they not hire, they must be seeing less demand, companies that is, because they cut back people's hours on average. We're seeing the number of discouraged workers up more than 100,000 since last year.

ARENA: Discouraged workers being workers that...

HAYS: "I can't find a job." And remember...

ARENA: ... just don't even file for unemployment. OK.

HAYS: And remember, if you're not looking for a job, you're not in the labor force.

ARENA: Right.

HAYS: And if you're not in the labor force, you can't be counted as unemployed. One reason we haven't seen that 6 percent number go higher, more people taking part-time jobs because they can't find full-time work, even though they want full-time work.

SNOW: People just saying, "To heck with it, I'm out of the labor market. I can't even to do this."

HAYS: That's right, that's right. Now I don't want to sound so bleak, because the bulls on the economy are going to say, "But look, the war is over, the uncertainty has gone. Energy prices are coming down. That's going to put a lot of money back in people's pockets." So these are the hopeful signs looking ahead.

SNOW: How significant this week was the settlement that was made, securities firms settling, huge settlement?

HAYS: Well, it was important that it happened. It was important, that you know, the regulators led by Eliot Spitzer, the New York state attorney general, got this done. $1.4 billion being paid out by 11 Wall Street firms. But...

ARENA: Yes, but it doesn't got to the investors.

HAYS: And not only that, but think about it. Merrill Lynch's net income last year was $2.2 billion. What did they pay out, $100 million?

ARENA: Right, so that's pennies to most...

HAYS: Do we think this is just a slap on the hand maybe? Now, they, of course, are (ph) taking seriously.

Another...

ARENA: But didn't it kind of uncover more than we even knew that was bad?

HAYS: Yes. When they started to combing through the documents, things like -- they were much worse things than I think a lot of people thought. Can you imagine that a Wall Street firm that was going to do an initial public offering, for example, not only did they try to give business in the IPO to companies or people they wanted to do investment banking business with, they paid other Wall Street firms for positive research.

Now we had Jacob Zamansky on my show this week. He's the attorney who sued Henry Blodget, the Internet analyst at Merrill Lynch who really kicked this whole thing off...

ARENA: Right.

HAYS: ... on behalf of a plaintiff, an investor, who feels that he got burned. This was the guy, the e-mails going back and forth, "This is a dog, this is a piece of crap," while they were maintaining positive ratings.

We asked Jake, "So what is this going to take? Is this going to restore investor confidence." He says, "No, not until we see someone in an orange suit, someone really going to jail."

Now, who knows? Down in Houston...

SNOW: I thought we already saw a lot of orange suits.

HAYS: Well, we need to see more, maybe.

(LAUGHTER)

But have you seen -- Kelli, you're a business head from the past -- Andy Fastow, the chief financial officer, Enron, the collapsed firm. Now he has, what, 118 indictments against him, and his wife has been indicted as well.

ARENA: His wife, too.

HAYS: So maybe these are people -- I'm not gloating. I'm not gleefully saying I want anybody to go to jail. But looks like this is the couple that might be the poster child for really getting some punishment reeked, yes.

SNOW: And if Wall Street seems like a bad bet, there's always the ponies. Just ahead, CNN sports reporter, Kara Henderson is on the story at the Kentucky Derby. Great assignment.

Back in two minutes.

(COMMERCIAL BREAK)

HAYS: Welcome back. We're ON THE STORY.

We're seeing live pictures from Churchill Downs, Louisville, Kentucky, where they're running the Kentucky Derby today. CNN's sports correspondent Kara Henderson is there.

Big hats, big money, big parties. One of the biggest sports spectacles of the year. Kara, what are you on the lookout for today?

KARA HENDERSON, CNN SPORTS CORRESPONDENT: Well, today, we have about 140,000 people here. We're on the lookout for people drinking mint juleps, which we'll see plenty of...

(LAUGHTER)

... people doing that. And we'll also be on the lookout for Empire Maker. Empire Maker is the favorite in this field, despite some concerns over a bruise in the right front foot. So Empire Maker the six-to-five favorite today. A lot of people think that this horse, the most talented in the field, might run away with it if it isn't actually hurt. So that's the big story here today. HAYS: And also, Steven Spielberg also owns one of these horses, right? I mean, he apparently got bitten by the horse bug when he was making his last movie?

HENDERSON: Absolutely. And he has a horse called 'At's What I'm Talking About. He was filming the movie "Seabiscuit" after the famed, legendary race horse who won here. And he decided that he wanted to, along with some of his business partners, buy about a one-tenth stake in a derby horse.

So they bought a horse called 'At's What I'm Talking About, which, by the way, is the longest name of a horse that you can actually have in this field. And he will be here today to watch his horse, so I'm sure there will be quite a spectacle surrounding him.

HAYS: Kara, how about Superblitz? Now, that's the horse, 50-to- 1 odds, it's the horse that the female jockey known as Junior is riding.

HENDERSON: Absolutely. Rosemary Homeister, Jr. -- her mom, Rosemary Homeister, was asked when she was born what her name was. She didn't realize they were talking about what her name was, so she said Rosemary Homeister, so that's why she's a junior.

(LAUGHTER)

She is on a longshot, 50-to-1 odds, on Superblitz. But if you're female, as we all are, this is the one probably to pull for. Because if she does win today, which is very much a long shot, she will make history. No female rider has ever won the Kentucky Derby. She's the fifth female ever to ride here.

SNOW: So if you're covering the derby, do you get to have a mint julep or not?

(LAUGHTER)

HENDERSON: No. We had somebody actually explain to us how to make them this morning. And to be honest with you, I don't think I really want one. I've heard, after a little straw poll that we conducted, that they really don't taste good. It's bourbon...

(CROSSTALK)

ARENA: But, you know, we do have to go, though, so go have some fun while you're working.

Our thanks to Kara Henderson.

HENDERSON: Thanks, guys.

ARENA: And thank you for watching ON THE STORY. We'll be back next week.

Up at the top of the hour, CNN's "PEOPLE IN THE NEWS" focusing today on Vice President Dick Cheney. At noon Eastern, "CNN LIVE SATURDAY," the roadblocks along the new road map to peace in the Middle East.

And at 1:00 p.m. Eastern, "IN THE MONEY" with Jack Cafferty, on the cost of the SARS epidemic.

Coming up at the top of the hour, a news alert, but first the president's weekly radio address.

(BEGIN AUDIOTAPE)

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

On Thursday, I visited the USS Abraham Lincoln, now headed home after the longest carrier deployment in recent history. I delivered good news to the men and women who fought in the cause of freedom: Their mission is complete, and major combat operations in Iraq have ended. Our coalition is now engaged in securing and reconstructing that country. The United States and our allies have prevailed.

Operation Iraqi Freedom was carried out with a combination of precision, speed and boldness the enemy did not expect and the world had not seen before. From distant bases or ships at sea, we sent planes and missiles that could destroy an enemy division or strike a single building or bunker. Marines and soldiers charged to Baghdad across 350 miles of hostile ground in one of the swiftest mass advances of heavy arms in history. The world has seen the might of the American armed forces.

In this victory, America received valuable help from our allies. This weekend, I am hosting Australian Prime Minister John Howard at my ranch in Crawford, Texas. Prime Minister Howard has been a strong ally in the war on terror, and Australian forces have played an important role in the liberation of Iraq.

Australian Special Forces entered Iraq with their American and British counterparts at the very beginning of Operation Iraqi Freedom. They helped to secure sites in western Iraq that could have been used to launch Scud missiles. And they disrupted Iraqi troop movements and command posts, paving the way for Army and Marine units making their way to Baghdad.

Australia FA-18 fighters carried out deep bombing runs in Iraq. The Australian Navy worked with British forces to take control of the Faw Peninsula. Australian Navy divers cleared mines in the port of Umm Qasr, opening sea lanes to deliver humanitarian assistance. And Australian transport planes delivered emergency supplies and equipment for Iraqi hospitals.

All told, about 2,000 Australian service members contributed to the destruction of Saddam Hussein's regime and the liberation of the Iraqi people. All Australians can be justly proud of the superb performance of Australian's air, naval and special forces in Operation Iraqi Freedom. America is deeply grateful for their important contributions. Our coalition still has much work to do in Iraq. We are bringing order to parts of that country that remain dangerous. We are pursuing and finding leaders of the old regime who will be held to account for their crimes. We have begun the search for hidden chemical and biological weapons at hundreds of locations. We are helping to rebuild Iraq, where the dictator built palaces for himself, instead of hospitals and schools for the people.

And we will stand with the new leaders of Iraq as they establish a government of, by and for the Iraqi people. The transition from dictatorship to democracy is hard and will take time, but it is worth every effort. Our coalition will stay until our work is done. Then we will leave, and we will leave behind a free Iraq.

The battle of Iraq is one victory in a war on terror that still goes on. al Qaeda is wounded, not destroyed. The scattered cells of the terrorist networks still operate in many nations, and we know from daily intelligence that they continue to plot against free people. The proliferation of deadly weapons remains a serious danger. The enemies of freedom are not idle, and neither are we. Our government has taken unprecedented measures to defend our homeland, and more importantly, we will continue to hunt the enemy down before he can strike.

No act of terrorists will change our purpose or weaken our resolve or alter their fate. Their cause is lost. Free nations will press on to victory.

Thank you for listening.

(END AUDIOTAPE)

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Returns to Normalcy; Castro Cracks Down on Dissidents>