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On the Story

Hillary Clinton's Book Hits Stores Soon; Can Funny Cide Win Triple Crown?; Martha Stewart Indicted

Aired June 07, 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 ON THE STORY of Senator Hillary Clinton, her new book is all the talk in Washington. Who gains? Who loses when the book hits stores?
JOSIE KARP, CNN SPORTS CORRESPONDENT: I'm Josie Karp outside New York City and I'll be back later ON THE STORY of Funny Cide's quest for the Triple Crown and baseball's latest scandal.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: I'm Christine Romans. I'm ON THE STORY of Martha Stewart. The storm of publicity surrounding her indictment and how much did high-profile, big money and all these headlines count?

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: I'm Maria Hinojosa. Remember the war? I spent time this week with one West Point grad and start athlete. He lost both feet to enemy fire on the road to Baghdad. Now he's a disabled veteran.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux. I'm ON THE STORY of President Bush in the Middle East. Can he succeed where other presidents have stumbled.

We'll be talking about all of these stories. CNN producer Rose Arce, will be here late in the hour to talk about how the Gray Lady, "The New York Times" continues to stumble, shedding top editor Howell Raines Thursday.

We'll listen to the president's weekly radio address released at this hour. And let's hear from you, e-mail us at ONTHESTORY@CNN.com. Now to Kate.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I had to, I thought, write about the very many high points and good times, as well as the more difficult ones.

(END VIDEO CLIP)

SNOW: "Good times, difficult times," says senator and former first lady about her leaked but still not -- officially not released autobiography. Memoirs she calls it. She says she's going to talk about the good and the good times. "The Washington Post" this morning, in their style section, have some excerpts from this book. They managed to buy a couple of copies of the book. It's probably one of the worst kept secrets around, right now. But they've tried very hard to keep this all secret until Monday.

People are already talking in Washington. The talk of the week was, when are you going to get the book? How fast can you read this book?

I talked to someone in Hillary Clinton's inner circle, which is a very small circle. Who said they said they are thrilled by all of the publicity they've gotten so far. They don't mind that this thing was leaked out. They are already No. 2 on Amazon's best sellers' list...

MALVEAUX: Before it's even released.

SNOW: ...behind "Harry Potter."

MALVEAUX: Oh, my god.

SNOW: And this person who is close to Hillary Clinton said, you know, we're never going to beat the Muggles anyway. So we're doing pretty well.

ROMANS: I can't imagine though, that the Democratic presidential candidates -- or hopefuls, at least -- are very pleased about how she sort of overshadowed all that talk about who is positioning for 2004.

SNOW: This is just one of the beginning. I talked to one people in one of the campaigns -- I can't get anymore specific than that because these people don't want to get in trouble. But one person on a campaign said to me, you know, could she just kind of cool it a little bit? I mean, they love Hillary Clinton but they feel like they're going to get overshadowed.

They said only so much oxygen out there. There is only so much media coverage. And if she is drawing all the media coverage for the next three, four weeks maybe, that takes away from all of those candidates.

On the other hand, another Democrat source said to me, Well, you know the nine candidates have been out there yelping at each other. So maybe it won't hurt us to have Hillary Clinton.

HINOJOSA: But you know, Kate, it's interesting because it seem that at least when you have this book out there, people are realizing the possibility of Hillary running for president, it's not just out there, it's very real. So it is kind of putting this in people's minds that she will probably be a candidate -- who knows when -- but she probably will be.

ROMANS: What are you hearing, Katie?

SNOW: You know what? That is the parlor game. That is the talk in Washington. Everyone is speculating. It's all speculation. Nobody knows. I think she probably keeps it to herself or has told a couple of friends, but no one really knows what her aspirations are.

ROMANS: She has promised to stick out her current term as senator, right?

SNOW: She has, but she's kept 2008 open, as a possibility. And that is what every one is talking about. Is Hillary going to -- is Senator Clinton going to position herself for 2008? And the timing of the book, you know, Democrats have said to me is great because we're four years, five years ahead of that 2008 race. This is plenty of time for her to drop some bombshells, clear the air, talk about Monica Lewinsky. And it will all be history.

MALVEAUX: But how can it be advantageous to her? Talk about Monica Lewinsky? Because I actually covered the last nine months of the Clinton administration and we heard everything about Monica Lewinsky. What does that do to her? I mean, is the thinking is that if she gets it all out in the open, we'll hear it all over again, and perhaps people will forget by the time she runs?

SNOW: That's the thinking I think. And the people inside her camp say the book isn't just Monica Lewinsky. The book is about a lot. I mean, it's about her life. It's a memoir. It's about her record. It's about health care. It's about policy issues.

So, they're hoping that people get a fuller sense of her. Get the big picture. She's going to make a lot of money. For them they see it as all a big win-win.

ROMANS: Trying to explain, I suppose, as well, why she didn't leave Bill Clinton, because this is dinner table conversation in a lot of different places. You know, if she were to become a candidate for president -- although, it didn't hold her back in the senator for New York.

SNOW: Of course, the flipside, which I heard from some Democrats, in talking to people yesterday, was this is Bill Clinton/Monica Lewinsky stuff all over again. And the flipside is that, do Democrats really want to remind Americans that that's what Democratic party is?

HINOJOSA: But, you know what, Kate, what's really interesting is what I have heard on this street over here, is a lot of people saying oh, yeah, we are going to those bad times when all we talked about the Lewinsky scandal. But there are some people who said to me: Those were the bad times? When all we had to worry about was the president having sex with an intern.

I mean, we're talking about terrorism and potentially being attacked from the outside. So, there are a lot of people that are like, we want to go back to those times when those were our only worries, and my god, when the Dow was soaring and the markets are were great. So, you have a lot of people saying, wow, they weren't so bad after all. At least that's what I'm hearing from some people.

SNOW: I think everyone is going to probably tune in tomorrow night. Not to give publicity to another network -- but I mean, Barbara Walters sits down with her for the first big interview. It's interesting what happened this week with the leak, the Associated Press getting a copy of book, which I was told by this person close to Hillary Clinton, they say they'd like to be able to claim credit for it, but they didn't leak it, they say.

MALVEAUX: Oh, how does this happen? Wait a minute.

ROMANS: The leak has generated as much publicity as the actual book, so it has worked perfectly for whoever is trying to sell this book.

SNOW: You know, think about how many people have the book, though. Book stores are ready to sell it. Some book stores in Washington are going to open tomorrow night, like at midnight, to sell the book. So, I mean, it's out there. They could have gotten it through any number of people along that chain.

ROMANS: All right. From the political thicket of Washington to the saga of another strong woman in New York. Martha Stewart who tells millions of people how to make their lives more manageable, more beautiful and luxurious. She finds her own life in business in a shambles.

I'm ON THE STORY, back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. ATTORNEY, NEW YORK: Martha Stewart is being prosecuted not because of who she is, but because of what she did.

(END VIDEO CLIP)

ROMANS: James Comey, U.S. attorney for the Southern District of New York, point man in the case against Martha Stewart. Welcome back. We're ON THE STORY.

Is Martha Stewart a crook or a victim? As you know, this all has to do with selling 4,000 shares of ImClone stock. It's taken almost a year to bring an indictment up against Martha Stewart.

And oh, my goodness, the press and the news ink spilled this week over the case of obstruction of justice against Martha Stewart. A lot of folks are wondering if we have gone a little overboard on the Martha case. And why is it that people so obsessed with Martha Stewart case?

MALVEAUX: Yes, help me understand this, Christine, really. Because is it about corporate responsibility? She broke the law. Is it about thousands of women, who say, you know, I can't clean my rugs. My flowers aren't fresh. The souffle has fallen. I hate the woman. I mean, what is it really about?

ROMANS: It really is interesting. It has come at a time when you've got corporate responsibility. I don't know. Here is Martha Stewart, someone who has built a mini empire on teaching people how to make the perfect souffle. And her own business in life is dog food, essentially.

You know, everything has fallen apart around here. It is kind of like the Bill Bennett and the gambling story. When I asked successful women is she just being targeted and focused on because she is a successful woman and people resent that? Successful women say no, it's just like Bill Bennett. Anyone who goes out and makes a living, taking a -- in his position -- ethics and morality. And then maybe there's a chink in that armor, people like to capitalize on that chink.

HINOJOSA: Christine, interestingly, because there were a lot of women who I spoke to when this first happened, they were not Martha Stewart fans at all. In fact, they were gleeful about what was happening to her, precisely because these women can't cook, can't make souffles. They can't do anything in the kitchen and they just couldn't stand her whole aura. Thought she was arrogant.

But I have spoken to some of these same women and they say that, now, they are Martha Stewart supporters. Because when they look at what happened Enron with WorldCom, they just say show it possible that all of this attention is placed on a woman who is going to make -- how much amount of money after all? So, there's like a question there. But I find it interesting that these people who hated her are now in her court.

ROMANS: She has this brand, this Martha Stewart brand, which is -- you know, that's why I think people just say Martha. They don't say the Stewart case, they say the Martha case. Because she is a household name and she has spent years building on that. But now she's got a household name defense. A Marthatalks.com, she took out a big ad in "USA Today". Marthatalks.com, with Robin's egg blue and Citrus Green and very stylish and understated.

SNOW: Even her defense was stylish.

ROMANS: Even her defense is using that branding. But it is interesting how it divides people. There are those who say though that this is just sort of a media sideshow. It is not an Enron. It is not a WorldCom. Her company had nothing to do with accounting scandals. This is a case of a woman who sold 4,000 shares of a different company's stock. And that's what this is all about.

SNOW: And she's not being -- help me understand this -- she's not being charged criminally anyway for what she did. It's more of what they think she covered up.

ROMANS: Well, there are several different counts, but the most important of those being the obstruction of justice count. And technically, you are talking about statutes that point to 30 years under sentencing stat -- now, nobody thinks that the government would go for that kind of a sentencing.

But Martha Stewart says she is going to fight this. She did not do anything wrong. Plea negotiations have fallen apart. This is a woman who does not want to go to jail. Does not think she did anything wrong and has been fighting this tooth and nail. So, we're going to be seeing more on this for sure.

HINOJOSA: Christine, it took a year. Why did it take a year to build a case?

ROMANS: That is something that when you talk to defense attorneys they say that that is a good sign for Martha Stewart that it did take so long to put this together.

HINOJOSA: Now, Christine, what can in fact, when people raise the issue of how, like say these Enron guys or the WorldCom guys, how does that play into what happens in court? Does it have any impact whatsoever or is it just spin?

ROMANS: Some people say it's prosecutorial, you know, aggression. That they're trying to get somebody in the executive suite. They haven't been able to got a top dog in any of the other big places. There's no one in jail yet for doing anything wrong, you know in the big heyday of accounting shenanigans. Some people think that maybe Martha Stewart was just in the wrong place at wrong time. Maybe four, five years ago this would have quietly been settled a long time ago. But not the case now.

SNOW: Meanwhile, her stock? How is her stock doing? And then the whole market this week did really well?

ROMANS: Right. Well, Martha Stewart stock has been cut in half over the past year. Concerns about what this is going to mean for her company. She has stepped down as CEO. So, Martha Stewart Living Omnimedia is no longer being run by Martha Stewart. The brand that made it the public company that it is.

Switching gears to the stock market, however, if you haven't noticed the market is up some 20 percent since March. Slowly but surely anticipating some kind of economic recovery later this year. It's been a good -- I mean, some of these Internet stocks are up spectacularly over the past six or seven months.

Now, be careful, everyone, because there's already big a move. If you go in jumping right now, some people say that the easy money, if there is such a thing as easy money in the stock market, the easy money has already been made.

But there has been a steady appreciation. Some people are hoping that despite a jobless rate, 6.1 percent, which is a little troubling this week, maybe the stock market has been sending some positive signals and get people a little bit more confident about spending a little money and keeping the consumers driving this economy.

SNOW: A Democrat said to me yesterday, if you are going to talk about Hillary and Martha, can you also please talk about unemployment numbers?

[LAUGHTER] SNOW: From walking down Wall Street to running a race at Belmont. Lot's of hoopla surrounding a horse call Funny Cide. Potentially the first Triple Crown winner in 25 years. Josie Karp is back with us ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Fortunately, horses can't feel the emotions that we're feeling or they wouldn't be able to take three steps out of that starting gate. I couldn't.

(END VIDEO CLIP)

KARP: What a ride it has been for that man and the other owners of Funny Cide. Six of the 10 owners of this horse, that has become the most beloved horse in America, come from a tiny town in upstate New York. They are just regular guys.

They call this the sport of kings. These guys couldn't be further from kings. They could be your neighbor or your friend. And that's really why this horse and this story really seems to resonate with people.

Just one quick thing, to illustrate just how regular they are, they were surprised entrants in the Kentucky Derby. They don't have a lot of money. They couldn't afford to take a big fancy limousine or a big fancy bus from their hotel over to the track. So they rented a yellow school bus because it was cheap. They've continued that. And it has gotten up now to four yellow school buses, because their entourage has grown so big.

HINOJOSA: Josie, I have to tell you, I am one of those people who really doesn't know anything about sports at all, which is why I love talking to you, because I learn so much. I don't know anything about horse racing. I love to watch horses.

But just set me straight here. Is this really about the horse race or is it about the betting? Because if it's about the betting then I kind of wonder about the whole Bill Bennett thing getting trashed for $8 million worth of slot machines, and then on the other hand we have this national obsession with this horse race and the betting on it?

KARP: Well, it is interesting. Normal circumstances, a lot of people are turned off by horse racing, people who normally like sports because they think it's so dependent on the money. But horse really seems to have transcended that and that is why a lot of people think that Funny Cide could be great for the sport of horse racing.

I am sure you heard about Sea Biscuit, way back last century. And there is a movie coming out. And this was a horse that was so big. It was the biggest story in the country. And we haven't had anything like that in so long. So, again, the knock on horse racing is it's too dependent on the betting, but when you have a horse that brings people together the way this horse seems to, it could really change that. And that's at least what horse racing people are hoping.

ROMANS: Josie, what about the weather there? There has been so much talk about the field there, or the track, or whatever it is exactly that they run on, is like. Give us a little bit of the fundamentals of this particular race. What people are saying, the inside buzz there today?

KARP: Well, it's raining right now. And it started raining earlier than the forecast so who knows if that's means it's going to end earlier and we'll get an ability for the track to dry out a little bit. But it certainly looks, right now, it's got going to be a fast track and that it is an ideal tracks. But that's not so bad for Funny Cide. If you're out there hoping to see the first Triple Crown victory in 25 years, Funny Cide has had some experience in less than ideal conditions. So, this isn't necessarily a bad thing for him.

SNOW: Why is it so hard to win the Triple Crown? It is because -- the Belmont is apparently the hardest, of the three?

KARP: The reason it is so hard is because of the different distances. This is the longest race. And by the time you get to it you have already run two races in five weeks and there is a chance that you are just spent. And that is why over the years it's been so difficult for horse racing and for the American public to see another horse win the Triple Crown.

There was a period of time when they had a few back-to-back, to- back, in a short period of time. But it's been a long wait right now. And other things come into play, the soundness of horse. A horse can get injured and again they won't have that opportunity.

HINOJOSA: Josie, can you tell us what it's like. I actually did go to a horse race when I was seven. So, I don't have a lot of memory about it. What's the feel like? Because actually the woman who did my makeup was saying that her boyfriend was on her way and she was very worried because he didn't have a tie to wear. So, is it all of that kind of hoity-toity situation? What is it like?

KARP: Well, it's not that hoity-toity. You get a lot of people out to have a good time. The owners of this horse are guys who like to have a good time. So, they sort of set the precedent. It's a big party. If the weather was better, by now we would have people all crowded around us sitting on blankets with their coolers having a great time.

They were hoping to have close to 120,000 people here. They couldn't all be the regular insider when it comes to thoroughbred racing. So the rain could dampen things, but it is normally a very festive atmosphere.

ROMANS: OK, Josie, I have to tell you that Kate and I, both, last week, unbeknownst to each other both in Chicago watching Sammy Sosa. And this turned out to be such a big story. In fact, to segue a little bit from Sammy Sosa to Martha, a lot of people want to forgive Sammy Sosa. Nobody wants to forgive Martha Stewart, quite yet. What about the big Sammy Sosa story this week? KARP: Isn't that interesting that people are so quick to forgive Sammy Sosa. That is probably because he's been a great ambassador for the sport.

This is, obviously, back on Tuesday when he shattered his bat and it was discovered that there was cork in it and cork bats are illegal. You can't come to the plate during a game and use a cork bat. You're going to get suspended. And that's what happened top Sammy Sosa. He got suspended for eight games.

But it was a big shock to people because, again, this is a guy who is so beloved. You can't compare to Martha Stewart, because so often, the public is criticized for building people up and then wanting to tear them down. But in Sammy Sosa case -- and it has been a little bit of a surprise to me -- they really seem to want to support him.

MALVEAUX: Does he have a believable case, Josie, to you think? I mean, he said he didn't know. Is that possible to believe? Does it sound right?

KARP: Yeah, the first gut instinct is to say no way. How could he not know? But they've done a lot of checks on a lot of his bats. They went through every single one of the bats that he had in the clubhouse during that game. And they even went and X-rayed the bats that they have in the Hall of Fame for him.

You know, he was involved with that great home race against Mark McGuire back in 1998. He just hit his 500th home run. So, they X-rayed all of those bats and they all came back clean. Because of the evidence, I am more inclined to believe him now. But this is certainly something that could be a black eye definitely on the game and on Sosa for a long time.

SNOW: OK, my mother-in-law would hate me for asking this, because she's a huge Sammy Sosa fan. But, come on, he's in a slump right now. Isn't it possible that he picked up this corked bat because he's in a slump and he needed some help?

KARP: That's definitely possible. I think those people who are less inclined to support him are probably looking at that, and saying hey, he was in a slump.

And the other thing -- and this is not to cast any aspersions -- but you have to go back to what has gone on with baseball, with the steroid testing. There was so much furor last year. I don't know if you remember, Sammy Sosa was involved in an incident with a reporter from "Sports Illustrated", who came up and after Sammy said, I will be first in line when they want to test for steroids. Well, he brought him a cup. And said, OK, here. I've arranged for you to take a test. And Sammy blew up. So, it brings into the forefront again, not just this idea of a cork bat, but others ways of cheating.

HINOJOSA: Well, you know, there are a lot of Dominicans who are somewhat upset about what's happening with Sammy Sosa, but they are celebrating, because Miss Dominican Republic won Miss Universe. But tell me something, Josie. What do you do now in the couple of hours before the race starts?

KARP: Well, they are actually going to have racing here at noon. So, again, things will start building. There are a lot of races going on. And hopefully the people will show up, and again, make this a more festive atmosphere. But I'll be watching what goes on and talking to other people throughout the day, giving live reports.

HINOJOSA: Thanks a lot, Josie.

Well, we're going to segue from the diversions of the sport's world to the very serious cost and sacrifices of war. A long road home for one West Point grad gravely wounded on the road to Baghdad.

A break, and a check on the headlines, and I'll be back ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEO CLIP)

JOHN FERNANDEZ, INJURED U.S. SOLDIER: I just feel that I'm lucky and I'm here. I know how lucky I am. That's why I don't feel bad -- I don't feel bad for myself at all. I mean I'm alive.

(END VIDEO CLIP)

HINOJOSA: John Fernandez, West Point graduate a national lacrosse star, injured in the Iraq War, his life changed in an instant.

Welcome back. We are ON THE STORY. Well, I spent some time with John Fernandez this week. My god, what an incredible young man. He's 25 years old. On April 3, on the road to Baghdad, he's asleep when all of a sudden, an explosion happens literally right on top of him. He wakes up from this explosion, and he looks down, and he realizes, he says, in an instant, when I saw my feet, when I saw my feet, I new my life was never going to be the same.

He ends up trying to get one of his buddies some help, who is gravely injured as well. It turns out that he lost three guys on that explosion. Three guys who he had spent months with, and as he said, he's just happy to be alive. He has lost both feet. But last week, he took his first steps so he's just an extraordinary young man. What a spirit.

SNOW: He went back to West Point. Tell that story. He went there and went back for the graduation just a little while ago.

HINOJOSA: Yes, that was a week ago. He went back, and in 2001, he was one of the cadets who was there graduating with all of the pomp there at West Point graduation. This time, he was a special invited guest of the superintendent of West Point.

But something that was a little bit difficult as well. Because even though he was a special invited guest, he wasn't put on the dais. He was set off to the side on the ground. And someone at West Point said to me that they had not wanted to have him on the dais and have all the parents looking at him the entire time.

When I spoke to him about this, he said, you know, for me it was more important to be able to see all of the cadets. So, again, he's finds the positive outlook into something that some people might criticize.

ROMANS: Amazing that he can see bright side of things, that he wasn't killed in that attack. What about his wife and his family? I mean, he is just newly married right?

HINOJOSA: Oh, my god, his wife is fabulous. His wife is Christy (ph), and what I love about them is they have -- well, they are total partnership. They got married just before he went off to war. And they are this young couple. I mean, you kind of expect of that you are seeing here would be from a mature couple that has been married for years. They are like bread and butter together. She spends all of his time -- all of her time with him, and they joke a lot about this.

I mean, when they were doing the interview, she was like kicking him, and she said, oh, here I am kicking on his foot, but he can't feel anything. What do you think about that? There were joking about -- she was joking with about, hey, don't run me over and, you know, you are always running me with the wheelchair, my feet are black and blue. They have this extraordinary ability to laugh about what's happened. They know it's serious, but it's the humor that keeps them going.

ROMANS: So, what's next for him? I mean, he's still active in the Military? What happens to him? What is his next move?

HINOJOSA: Well, you know, it's unclear because the Military, the Army does not have a very defined policy about what happens when you have a double amputee. So, it's not clear what his future will be in the Army, and that is kind of difficult.

And when I talked to him about this, he understands, he looks very clearly at what is laid out for his life, and he just says, what I want to do is just take it one day at a time, but he did say, and this is incredible, he said he want to be playing lacrosse in October. And I'm telling you, when I saw him walking around just less than a week with his prosthetics, he was doing great.

MALVEAUX: And, Maria, another extraordinary story out of New York, as well, that you covered about a young woman -- a tragedy of a young woman.

HINOJOSA: Yes, the story of the Sakia Gunn. The gay activists in this area are calling her the urban Matthew Shepherd story.

Sakia Gunn, on Mother's Day was coming back from New York City. She lives in Newark. She was with a group of young African-American girls, all of them gay. They were in downtown Newark waiting for the bus when some guys pulled up and started cat calling them, and finally one of the girls said, hey, why don't you just leave us alone. Can't you tell that we are gay?

The guy gets out of car, starts beating up, choking on of the girls. Sakia comes to her rescue, and then this guy just starts belting out about, what are they doing about being gay, and he just says all of this anti-gay stuff. According to them, he stabs her in the heart, and she dies in her best friend's arms. It's just devastating.

A lot of interest now among activists here. There were protests earlier this week in Newark.

SNOW: And those protests drawing, you were saying, people from all over the city.

HINOJOSA: Yes, amazing, amazing. You saw a real diversity of people there. There were a couple of businessman, gay businessmen, from New York City who came down, and they said, we came down precisely because we want to make it clear that this is part of our community. It can't just be that Matthew Shepard, when he's killed in such a brutal matter, ends up on the cover of "Time" magazine, and when a young African-American woman in Newark -- the same thing happens, that she doesn't get the same attention.

So, it is going to be interesting to see how it plays out within the gay community.

MALVEAUX: Maria, thank you very much for that touching story, that significant story.

From war to what the Bush administration hopes is a new stab with peace, I am back in two minutes and ON THE STORY of why President Bush took a job that stumped his predecessors, making Mideast peace.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Israel's got responsibilities. Israel must deal with the settlements. Israel must make sure there's a continuous territory that the Palestinians can call home.

(END VIDEO CLIP)

MALVEAUX: President Bush off the script, but on the message to all sides in the Mideast. Everyone must compromise.

Welcome back. We're ON THE STORY. This was a huge story this past week. A historic Middle East summit but, of course, the President came back to Washington and already, huge challenges ahead. Hamas said, we are not talking with the new Palestinian Prime Minister, Mahmoud Abbas. We don't want to compromise. I mean, this is clearly a huge test for the administration.

Is he up for the task? Do his words match his actions?

ROMANS: Call me crazy, but I feel like it's that movie, "Groundhog Day", when you are talking about Middle East peace. You know, a president trying to bring two parties to the table and begin, you know, a frame work under which they can begin to talk. It just seems like it's just such a nuisance part of the process.

MALVEAUX: And they reason why they think, OK, we've got a shot at this -- and they recognize that President Clinton tried this. You know, his predecessors will say yes, a difficult task, but we've got a different team on board. We've got Mahmoud Abbas, we are willing to work with him. We've sidelined Yasser Arafat. We have a new -- well, we have a prime minister of Israel, who says, you know, I'm willing to work with the Palestinians, and we have gotten rid of Saddam Hussein.

It's a whole new stage they have set in the Middle East. So, they're confident they can make some headway here.

HINOJOSA: Interestingly, I was watching a lot of the news this week, and I also felt that I was having this strange moment when all of a sudden, you're seeing all of these White House correspondents that are raising serious questions about a different topic, the issue of weapons of mass destruction, some of the correspondents going so far as saying, was -- you know, I mean, they were pushing it. You know, was this all made up? Was the reasons going to war quote/unquote, as the administration had played it out, in fact not there?

So, I'm wondering what was the feeling like within the White House as they are seeing this level of criticism in the media?

MALVEAUX: Well, sure, that was another huge story, of course. You had that report coming out of the Pentagon with the Defense Intelligence Agency, more questions about the intelligence over weapons of mass destruction. Did it really exist? The White House very defense about this, but also have to say quite confident about it.

I mean, first of all, they say, yes, we have a case. Take the big picture. Don't just take one single report. Take all of our intelligent resources, put them together, and follow the logic, that he had weapons of mass destruction. It's unaccounted for. They do admit, however, that they don't know the exact location of where those weapons are, but clearly a lot of controversy, a lot of questions.

Why is the administration confident about it? They said, well, we're not alone. We had the international community back this whole thing. The United Nations last year. You had Congress. Everybody on board saying Saddam Hussein has weapons of mass destruction. The only person didn't say -- who said, I don't have weapons of mass destruction was Saddam Hussein.

SNOW: It's interesting that Democrats haven't completely, you know -- on the Hill, always sort of can tell when there is a wave coming, and when your e-mail starting filling up with tons and tons of e-mail on a certain subject. That hasn't happened yet. I don't think the Democrats have seized quite yet, although there certainly have been a few, making -- you know, even some of the presidential candidates making hay out of this weapons of mass destruction argument, but I don't sense that the Democrats have seized on it yet as something that can really damage the president.

MALVEAUX: And one of the reasons why is because insiders say, look, this is not an issue that voters really care about. If you look at the polls, the numbers show that the war -- the popularity for the war is still very high. This is not on people's radars, weapons of mass destruction. The war was quick. It was over. And, you know, Saddam Hussein's regime has been toppled.

We want to get on with the economy, but if this does become a problem, if they keep making noise about it, sure, this administration's going to have to deal with that and, of course, it's a huge credibility problem overseas.

ROMANS: All right, this is the point where we have to bid farewell to Maria Hinojosa in New York. Maria, tell us again about your piece on the wounded soldier, when that is going to run.

HINOJOSA: It is going to run Tuesday night at 10:00 p.m. on NEWSNIGHT, and I leave you with my producer, Rose Arce, who has got great information for you all. Nice to see you.

ROMANS: Excellent, thank you, Maria. We will get back to New York in a moment. As she said, CNN senior producer, Rose Arce is ON THE STORY. Top dogs at "The New York Times" pushed out.

(COMMERCIAL BREAK)

ROMANS: The ON THE STORY question, can "The New York Times" weather the storm and the Raines? The command, and now the departure of Howell Raines. Joining us now in New York, CNN senior producer, Rose Arce, who is on the story.

Rose, has "The Times" come through the worst now?

ROSE ARCE, CNN SENIOR PRODUCER: Well, I think one of the question is has "The Times" come through the worst, has journalism come through the worst? One interesting thing about this story, it had started within the seeds of one reporter, and I think initially, we were all going to say, well, one bad egg does not make a dozen eggs raw, right?

But now, I think that we've seen that this scandal is much more than just Jayson Blair and his plagiarism. I think it's about the credibility in all of us in journalism, particularly the second incident that happened at "The New York Times", the resignation of Rick Bragg, a Pulitzer prize winning reporter, who wasn't making stuff up, who was publicly defending the practice of rewriting the work of other reporters, in this case, a freelancer, you might call him, someone who is paid basically lunch money to go out and do his reporting for him. ROMANS: It wasn't making stuff up, Rose, but he was drawing beautiful pictures of a place where he hadn't been, flopping fish and the sun on the water. You know, I mean, it's starting to really blur a line, isn't it?

ARCE: Absolutely, and I that think it calls into the question the creditability of all journalists. I mean, he was actually galled that the public thought that these stories underneath the bylines of these prominent "New York Times" reporters were actually cowabunga. They were written and reported by them? What an expectation, he would say.

And a lot of other "Times" reporters, and I know them because I am a former print reporter, came out of woodwork and said, wait a minute, hold on. That's not how professionals do their work. We do write and report our own material.

SNOW: So, what is the feeling now? You do know a lot of these reporters, Rose. What's the feeling among "New York Times" reporters now, specifically with the resignation of their two top dogs Thursday, right?

ARCE: I think there's a sense of relief. I think there is a sense of relief that finally someone at the upper levels of "The New York Times" have taken responsibility for this entire scandal, not just for the misdeeds of Jayson Blair, but also for what Rick Bragg said, that they have taken this as an opportunity to stand up and say, the way that I managed this newspaper led to a abuses that have undermined our credibility with the public, and all "The New York Times" has is its credibility. In essence, that's the product they produce every day.

So, for all of the reporters for that paper for the last few weeks, they have been saying, wow, it's not just "The Times" reputation that is on the line, it's my reputation that's on the line, it's journalism that's in question.

MALVEAUX: How difficult that was for the two top to actually step down? How much pressure was there on those two individuals? Because that was necessary to do that, to make that statement.

ARCE: Well, interestingly, I think that much of the pressure came from below. There were reporters there that were telling me that they had lost respect for the people that they had worked for, that their level of enthusiasm in the newsroom was very, very low. People told me that on the third floor, where a lot of news is done there, there was no work getting done. People weren't proposing stories. They were not going out an coming up with ideas. It was just an absolute dead zone.

SNOW: And I heard through the grapevine that it was sort of a witch hunt. Is that still -- maybe that's wrong. Is that still going on? Are people worried that, you know, that's Not -- Jayson Blair and the other aren't the only people that are going to be singled out here? ARCE: Absolutely. I think that there was a sense of panic because I think the Jayson Blair situation has enabled critics, both of "The New York Times" and of journalism, to go in, use him as sort of as anecdote with which to justify the attacks on "The Times".

What about this other reporter? You know, is "The Times" too liberal? You know, is "The Times" -- does "The Times" have shoddy standards overall? And this was this ongoing sort of investigation. There were rumors that other newspapers, other prominent newspapers, were looking into other reporters. And everyone thought, wow, this is like a deck of cards, and when is it going to fall on me?

ROMANS: You know, Rose, what does Jayson Blair have to say about all of this? Because I tell you, you know, in the New York -- as you know, in the New York journalism world, he is, frankly, much hated right now for all of this. And now two respected editors from "The New York Times" go down. What does he say about it?

ARCE: Well, interestingly, I've had several communications both with him and Rick Bragg. I think neither of them had any idea that what they had done would bring about such a tremendous sea change at "The New York Times". I think they are absolutely stunned. And I think that there is some sense regret, at least on the part of Jayson Blair, that hat he did has come to this.

SNOW: One would hope so. He lied. He made things up.

ARCE: Yes, I think with Jayson Blair particularly, there's a sense of pain over the fact that he, as a young African-American man, has called some to question affirmative action efforts and diversify efforts at "The Times" and has led the demise of its top African- American editor.

I mean, Gerald Boyd, in the world of minority journalists, is an icon. He is a man tremendous success. Him and his wife, Robin Stone (ph), the past editor of "Essence" magazine, have a scholarship that they give out every year to young minority journalists. I mean, these are people that are very much respected. Now, this man has to resign because of a young African-American reporter. What a tragedy.

MALVEAUX: Rose, thank you very much, and thanks to all of my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS" focusing this week on Martha Stewart and Ozzy Osbourne.

At 12:00 noon Eastern, 9:00 a.m. Pacific, a CNN special, "Eric Rudolph: The Investigation". How did the bombing suspect survive in the wild, and what's his defense?

And at 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY" and whether real estate price are headed for a fall.

Coming up at top of the hour, a news alert. But first, the president's weekly radio address. (BEGIN VIDEOTAPE)

BUSH: Good morning.

This week, the House and Senate will be working on one of the most important issues facing Congress: improving Medicare to offer prescription drug coverage to American seniors.

And on Wednesday, I will travel to Chicago and talk about our responsibility to give seniors more choices and better benefits, including help with the rising costs of prescription drugs. We have a tremendous opportunity to reform Medicare and help our seniors. The budget I proposed, and which the Congress passed, provides $400 billion in additional funds over the next 10 years to strengthen and improve Medicare. So we have the resources to make reform work.

We're also seeing a growing consensus, in both houses of Congress and both parties, that our seniors need a strengthened Medicare system that includes prescription drug coverage. The time is right to make progress.

Our nation has made a binding commitment to bring affordable health care to our seniors. We must honor that commitment by making sure Medicare stays current with the needs of today's seniors.

When Medicare was launched 38 years ago, medicine focused on surgery and hospital stays -- and that is mainly what Medicare covers. Today, doctors routinely treat their patients with prescription drugs, preventive care and ground-breaking medical devices, but Medicare coverage has not kept pace with these changes.

Our goal is to give seniors the best, most innovative care. This will require a strong, up-to-date Medicare system that relies on innovation and competition, not bureaucratic rules and regulations.

My views on Medicare are clear: First, those who like the Medicare system as it is should be able to stay just where they are, and also receive prescription drug benefits.

Second, those who want more coverage for preventive care and other benefits should be able to choose from multiple health plans under an enhanced Medicare program. This option would be similar to the health care coverage available to every federal employee. If that coverage is good enough for members of Congress and federal employees, it is good for our seniors.

Third, seniors who want the benefits of managed care plans, including prescription drug coverage, should be able to choose from a range of plans that best fit their personal needs.

And, fourth, we must provide extra help for low-income seniors, so that all seniors will have the ability to choose the Medicare option that serves them best -- and every senior will have the option of a prescription drug benefit.

In a Medicare system that reflects these principles, every senior in America would enjoy better benefits than they do today. And they would continue to benefit from the most important strength of American medicine: the ability to choose your own doctor. We want seniors and doctors, not government bureaucrats, to be in charge of the important health care decisions.

Members of Congress are working hard on this issue, and I encourage their efforts. I also urge Americans to make their voices heard. If we work together, Congress will pass a strong Medicare bill, and our seniors will finally get the prescription drug benefits and choices they need and deserve.

Thank you for listening.

(END VIDEOTAPE)

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




Win Triple Crown?; Martha Stewart Indicted>


Aired June 7, 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 ON THE STORY of Senator Hillary Clinton, her new book is all the talk in Washington. Who gains? Who loses when the book hits stores?
JOSIE KARP, CNN SPORTS CORRESPONDENT: I'm Josie Karp outside New York City and I'll be back later ON THE STORY of Funny Cide's quest for the Triple Crown and baseball's latest scandal.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: I'm Christine Romans. I'm ON THE STORY of Martha Stewart. The storm of publicity surrounding her indictment and how much did high-profile, big money and all these headlines count?

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: I'm Maria Hinojosa. Remember the war? I spent time this week with one West Point grad and start athlete. He lost both feet to enemy fire on the road to Baghdad. Now he's a disabled veteran.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux. I'm ON THE STORY of President Bush in the Middle East. Can he succeed where other presidents have stumbled.

We'll be talking about all of these stories. CNN producer Rose Arce, will be here late in the hour to talk about how the Gray Lady, "The New York Times" continues to stumble, shedding top editor Howell Raines Thursday.

We'll listen to the president's weekly radio address released at this hour. And let's hear from you, e-mail us at ONTHESTORY@CNN.com. Now to Kate.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I had to, I thought, write about the very many high points and good times, as well as the more difficult ones.

(END VIDEO CLIP)

SNOW: "Good times, difficult times," says senator and former first lady about her leaked but still not -- officially not released autobiography. Memoirs she calls it. She says she's going to talk about the good and the good times. "The Washington Post" this morning, in their style section, have some excerpts from this book. They managed to buy a couple of copies of the book. It's probably one of the worst kept secrets around, right now. But they've tried very hard to keep this all secret until Monday.

People are already talking in Washington. The talk of the week was, when are you going to get the book? How fast can you read this book?

I talked to someone in Hillary Clinton's inner circle, which is a very small circle. Who said they said they are thrilled by all of the publicity they've gotten so far. They don't mind that this thing was leaked out. They are already No. 2 on Amazon's best sellers' list...

MALVEAUX: Before it's even released.

SNOW: ...behind "Harry Potter."

MALVEAUX: Oh, my god.

SNOW: And this person who is close to Hillary Clinton said, you know, we're never going to beat the Muggles anyway. So we're doing pretty well.

ROMANS: I can't imagine though, that the Democratic presidential candidates -- or hopefuls, at least -- are very pleased about how she sort of overshadowed all that talk about who is positioning for 2004.

SNOW: This is just one of the beginning. I talked to one people in one of the campaigns -- I can't get anymore specific than that because these people don't want to get in trouble. But one person on a campaign said to me, you know, could she just kind of cool it a little bit? I mean, they love Hillary Clinton but they feel like they're going to get overshadowed.

They said only so much oxygen out there. There is only so much media coverage. And if she is drawing all the media coverage for the next three, four weeks maybe, that takes away from all of those candidates.

On the other hand, another Democrat source said to me, Well, you know the nine candidates have been out there yelping at each other. So maybe it won't hurt us to have Hillary Clinton.

HINOJOSA: But you know, Kate, it's interesting because it seem that at least when you have this book out there, people are realizing the possibility of Hillary running for president, it's not just out there, it's very real. So it is kind of putting this in people's minds that she will probably be a candidate -- who knows when -- but she probably will be.

ROMANS: What are you hearing, Katie?

SNOW: You know what? That is the parlor game. That is the talk in Washington. Everyone is speculating. It's all speculation. Nobody knows. I think she probably keeps it to herself or has told a couple of friends, but no one really knows what her aspirations are.

ROMANS: She has promised to stick out her current term as senator, right?

SNOW: She has, but she's kept 2008 open, as a possibility. And that is what every one is talking about. Is Hillary going to -- is Senator Clinton going to position herself for 2008? And the timing of the book, you know, Democrats have said to me is great because we're four years, five years ahead of that 2008 race. This is plenty of time for her to drop some bombshells, clear the air, talk about Monica Lewinsky. And it will all be history.

MALVEAUX: But how can it be advantageous to her? Talk about Monica Lewinsky? Because I actually covered the last nine months of the Clinton administration and we heard everything about Monica Lewinsky. What does that do to her? I mean, is the thinking is that if she gets it all out in the open, we'll hear it all over again, and perhaps people will forget by the time she runs?

SNOW: That's the thinking I think. And the people inside her camp say the book isn't just Monica Lewinsky. The book is about a lot. I mean, it's about her life. It's a memoir. It's about her record. It's about health care. It's about policy issues.

So, they're hoping that people get a fuller sense of her. Get the big picture. She's going to make a lot of money. For them they see it as all a big win-win.

ROMANS: Trying to explain, I suppose, as well, why she didn't leave Bill Clinton, because this is dinner table conversation in a lot of different places. You know, if she were to become a candidate for president -- although, it didn't hold her back in the senator for New York.

SNOW: Of course, the flipside, which I heard from some Democrats, in talking to people yesterday, was this is Bill Clinton/Monica Lewinsky stuff all over again. And the flipside is that, do Democrats really want to remind Americans that that's what Democratic party is?

HINOJOSA: But, you know what, Kate, what's really interesting is what I have heard on this street over here, is a lot of people saying oh, yeah, we are going to those bad times when all we talked about the Lewinsky scandal. But there are some people who said to me: Those were the bad times? When all we had to worry about was the president having sex with an intern.

I mean, we're talking about terrorism and potentially being attacked from the outside. So, there are a lot of people that are like, we want to go back to those times when those were our only worries, and my god, when the Dow was soaring and the markets are were great. So, you have a lot of people saying, wow, they weren't so bad after all. At least that's what I'm hearing from some people.

SNOW: I think everyone is going to probably tune in tomorrow night. Not to give publicity to another network -- but I mean, Barbara Walters sits down with her for the first big interview. It's interesting what happened this week with the leak, the Associated Press getting a copy of book, which I was told by this person close to Hillary Clinton, they say they'd like to be able to claim credit for it, but they didn't leak it, they say.

MALVEAUX: Oh, how does this happen? Wait a minute.

ROMANS: The leak has generated as much publicity as the actual book, so it has worked perfectly for whoever is trying to sell this book.

SNOW: You know, think about how many people have the book, though. Book stores are ready to sell it. Some book stores in Washington are going to open tomorrow night, like at midnight, to sell the book. So, I mean, it's out there. They could have gotten it through any number of people along that chain.

ROMANS: All right. From the political thicket of Washington to the saga of another strong woman in New York. Martha Stewart who tells millions of people how to make their lives more manageable, more beautiful and luxurious. She finds her own life in business in a shambles.

I'm ON THE STORY, back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAMES COMEY, U.S. ATTORNEY, NEW YORK: Martha Stewart is being prosecuted not because of who she is, but because of what she did.

(END VIDEO CLIP)

ROMANS: James Comey, U.S. attorney for the Southern District of New York, point man in the case against Martha Stewart. Welcome back. We're ON THE STORY.

Is Martha Stewart a crook or a victim? As you know, this all has to do with selling 4,000 shares of ImClone stock. It's taken almost a year to bring an indictment up against Martha Stewart.

And oh, my goodness, the press and the news ink spilled this week over the case of obstruction of justice against Martha Stewart. A lot of folks are wondering if we have gone a little overboard on the Martha case. And why is it that people so obsessed with Martha Stewart case?

MALVEAUX: Yes, help me understand this, Christine, really. Because is it about corporate responsibility? She broke the law. Is it about thousands of women, who say, you know, I can't clean my rugs. My flowers aren't fresh. The souffle has fallen. I hate the woman. I mean, what is it really about?

ROMANS: It really is interesting. It has come at a time when you've got corporate responsibility. I don't know. Here is Martha Stewart, someone who has built a mini empire on teaching people how to make the perfect souffle. And her own business in life is dog food, essentially.

You know, everything has fallen apart around here. It is kind of like the Bill Bennett and the gambling story. When I asked successful women is she just being targeted and focused on because she is a successful woman and people resent that? Successful women say no, it's just like Bill Bennett. Anyone who goes out and makes a living, taking a -- in his position -- ethics and morality. And then maybe there's a chink in that armor, people like to capitalize on that chink.

HINOJOSA: Christine, interestingly, because there were a lot of women who I spoke to when this first happened, they were not Martha Stewart fans at all. In fact, they were gleeful about what was happening to her, precisely because these women can't cook, can't make souffles. They can't do anything in the kitchen and they just couldn't stand her whole aura. Thought she was arrogant.

But I have spoken to some of these same women and they say that, now, they are Martha Stewart supporters. Because when they look at what happened Enron with WorldCom, they just say show it possible that all of this attention is placed on a woman who is going to make -- how much amount of money after all? So, there's like a question there. But I find it interesting that these people who hated her are now in her court.

ROMANS: She has this brand, this Martha Stewart brand, which is -- you know, that's why I think people just say Martha. They don't say the Stewart case, they say the Martha case. Because she is a household name and she has spent years building on that. But now she's got a household name defense. A Marthatalks.com, she took out a big ad in "USA Today". Marthatalks.com, with Robin's egg blue and Citrus Green and very stylish and understated.

SNOW: Even her defense was stylish.

ROMANS: Even her defense is using that branding. But it is interesting how it divides people. There are those who say though that this is just sort of a media sideshow. It is not an Enron. It is not a WorldCom. Her company had nothing to do with accounting scandals. This is a case of a woman who sold 4,000 shares of a different company's stock. And that's what this is all about.

SNOW: And she's not being -- help me understand this -- she's not being charged criminally anyway for what she did. It's more of what they think she covered up.

ROMANS: Well, there are several different counts, but the most important of those being the obstruction of justice count. And technically, you are talking about statutes that point to 30 years under sentencing stat -- now, nobody thinks that the government would go for that kind of a sentencing.

But Martha Stewart says she is going to fight this. She did not do anything wrong. Plea negotiations have fallen apart. This is a woman who does not want to go to jail. Does not think she did anything wrong and has been fighting this tooth and nail. So, we're going to be seeing more on this for sure.

HINOJOSA: Christine, it took a year. Why did it take a year to build a case?

ROMANS: That is something that when you talk to defense attorneys they say that that is a good sign for Martha Stewart that it did take so long to put this together.

HINOJOSA: Now, Christine, what can in fact, when people raise the issue of how, like say these Enron guys or the WorldCom guys, how does that play into what happens in court? Does it have any impact whatsoever or is it just spin?

ROMANS: Some people say it's prosecutorial, you know, aggression. That they're trying to get somebody in the executive suite. They haven't been able to got a top dog in any of the other big places. There's no one in jail yet for doing anything wrong, you know in the big heyday of accounting shenanigans. Some people think that maybe Martha Stewart was just in the wrong place at wrong time. Maybe four, five years ago this would have quietly been settled a long time ago. But not the case now.

SNOW: Meanwhile, her stock? How is her stock doing? And then the whole market this week did really well?

ROMANS: Right. Well, Martha Stewart stock has been cut in half over the past year. Concerns about what this is going to mean for her company. She has stepped down as CEO. So, Martha Stewart Living Omnimedia is no longer being run by Martha Stewart. The brand that made it the public company that it is.

Switching gears to the stock market, however, if you haven't noticed the market is up some 20 percent since March. Slowly but surely anticipating some kind of economic recovery later this year. It's been a good -- I mean, some of these Internet stocks are up spectacularly over the past six or seven months.

Now, be careful, everyone, because there's already big a move. If you go in jumping right now, some people say that the easy money, if there is such a thing as easy money in the stock market, the easy money has already been made.

But there has been a steady appreciation. Some people are hoping that despite a jobless rate, 6.1 percent, which is a little troubling this week, maybe the stock market has been sending some positive signals and get people a little bit more confident about spending a little money and keeping the consumers driving this economy.

SNOW: A Democrat said to me yesterday, if you are going to talk about Hillary and Martha, can you also please talk about unemployment numbers?

[LAUGHTER] SNOW: From walking down Wall Street to running a race at Belmont. Lot's of hoopla surrounding a horse call Funny Cide. Potentially the first Triple Crown winner in 25 years. Josie Karp is back with us ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Fortunately, horses can't feel the emotions that we're feeling or they wouldn't be able to take three steps out of that starting gate. I couldn't.

(END VIDEO CLIP)

KARP: What a ride it has been for that man and the other owners of Funny Cide. Six of the 10 owners of this horse, that has become the most beloved horse in America, come from a tiny town in upstate New York. They are just regular guys.

They call this the sport of kings. These guys couldn't be further from kings. They could be your neighbor or your friend. And that's really why this horse and this story really seems to resonate with people.

Just one quick thing, to illustrate just how regular they are, they were surprised entrants in the Kentucky Derby. They don't have a lot of money. They couldn't afford to take a big fancy limousine or a big fancy bus from their hotel over to the track. So they rented a yellow school bus because it was cheap. They've continued that. And it has gotten up now to four yellow school buses, because their entourage has grown so big.

HINOJOSA: Josie, I have to tell you, I am one of those people who really doesn't know anything about sports at all, which is why I love talking to you, because I learn so much. I don't know anything about horse racing. I love to watch horses.

But just set me straight here. Is this really about the horse race or is it about the betting? Because if it's about the betting then I kind of wonder about the whole Bill Bennett thing getting trashed for $8 million worth of slot machines, and then on the other hand we have this national obsession with this horse race and the betting on it?

KARP: Well, it is interesting. Normal circumstances, a lot of people are turned off by horse racing, people who normally like sports because they think it's so dependent on the money. But horse really seems to have transcended that and that is why a lot of people think that Funny Cide could be great for the sport of horse racing.

I am sure you heard about Sea Biscuit, way back last century. And there is a movie coming out. And this was a horse that was so big. It was the biggest story in the country. And we haven't had anything like that in so long. So, again, the knock on horse racing is it's too dependent on the betting, but when you have a horse that brings people together the way this horse seems to, it could really change that. And that's at least what horse racing people are hoping.

ROMANS: Josie, what about the weather there? There has been so much talk about the field there, or the track, or whatever it is exactly that they run on, is like. Give us a little bit of the fundamentals of this particular race. What people are saying, the inside buzz there today?

KARP: Well, it's raining right now. And it started raining earlier than the forecast so who knows if that's means it's going to end earlier and we'll get an ability for the track to dry out a little bit. But it certainly looks, right now, it's got going to be a fast track and that it is an ideal tracks. But that's not so bad for Funny Cide. If you're out there hoping to see the first Triple Crown victory in 25 years, Funny Cide has had some experience in less than ideal conditions. So, this isn't necessarily a bad thing for him.

SNOW: Why is it so hard to win the Triple Crown? It is because -- the Belmont is apparently the hardest, of the three?

KARP: The reason it is so hard is because of the different distances. This is the longest race. And by the time you get to it you have already run two races in five weeks and there is a chance that you are just spent. And that is why over the years it's been so difficult for horse racing and for the American public to see another horse win the Triple Crown.

There was a period of time when they had a few back-to-back, to- back, in a short period of time. But it's been a long wait right now. And other things come into play, the soundness of horse. A horse can get injured and again they won't have that opportunity.

HINOJOSA: Josie, can you tell us what it's like. I actually did go to a horse race when I was seven. So, I don't have a lot of memory about it. What's the feel like? Because actually the woman who did my makeup was saying that her boyfriend was on her way and she was very worried because he didn't have a tie to wear. So, is it all of that kind of hoity-toity situation? What is it like?

KARP: Well, it's not that hoity-toity. You get a lot of people out to have a good time. The owners of this horse are guys who like to have a good time. So, they sort of set the precedent. It's a big party. If the weather was better, by now we would have people all crowded around us sitting on blankets with their coolers having a great time.

They were hoping to have close to 120,000 people here. They couldn't all be the regular insider when it comes to thoroughbred racing. So the rain could dampen things, but it is normally a very festive atmosphere.

ROMANS: OK, Josie, I have to tell you that Kate and I, both, last week, unbeknownst to each other both in Chicago watching Sammy Sosa. And this turned out to be such a big story. In fact, to segue a little bit from Sammy Sosa to Martha, a lot of people want to forgive Sammy Sosa. Nobody wants to forgive Martha Stewart, quite yet. What about the big Sammy Sosa story this week? KARP: Isn't that interesting that people are so quick to forgive Sammy Sosa. That is probably because he's been a great ambassador for the sport.

This is, obviously, back on Tuesday when he shattered his bat and it was discovered that there was cork in it and cork bats are illegal. You can't come to the plate during a game and use a cork bat. You're going to get suspended. And that's what happened top Sammy Sosa. He got suspended for eight games.

But it was a big shock to people because, again, this is a guy who is so beloved. You can't compare to Martha Stewart, because so often, the public is criticized for building people up and then wanting to tear them down. But in Sammy Sosa case -- and it has been a little bit of a surprise to me -- they really seem to want to support him.

MALVEAUX: Does he have a believable case, Josie, to you think? I mean, he said he didn't know. Is that possible to believe? Does it sound right?

KARP: Yeah, the first gut instinct is to say no way. How could he not know? But they've done a lot of checks on a lot of his bats. They went through every single one of the bats that he had in the clubhouse during that game. And they even went and X-rayed the bats that they have in the Hall of Fame for him.

You know, he was involved with that great home race against Mark McGuire back in 1998. He just hit his 500th home run. So, they X-rayed all of those bats and they all came back clean. Because of the evidence, I am more inclined to believe him now. But this is certainly something that could be a black eye definitely on the game and on Sosa for a long time.

SNOW: OK, my mother-in-law would hate me for asking this, because she's a huge Sammy Sosa fan. But, come on, he's in a slump right now. Isn't it possible that he picked up this corked bat because he's in a slump and he needed some help?

KARP: That's definitely possible. I think those people who are less inclined to support him are probably looking at that, and saying hey, he was in a slump.

And the other thing -- and this is not to cast any aspersions -- but you have to go back to what has gone on with baseball, with the steroid testing. There was so much furor last year. I don't know if you remember, Sammy Sosa was involved in an incident with a reporter from "Sports Illustrated", who came up and after Sammy said, I will be first in line when they want to test for steroids. Well, he brought him a cup. And said, OK, here. I've arranged for you to take a test. And Sammy blew up. So, it brings into the forefront again, not just this idea of a cork bat, but others ways of cheating.

HINOJOSA: Well, you know, there are a lot of Dominicans who are somewhat upset about what's happening with Sammy Sosa, but they are celebrating, because Miss Dominican Republic won Miss Universe. But tell me something, Josie. What do you do now in the couple of hours before the race starts?

KARP: Well, they are actually going to have racing here at noon. So, again, things will start building. There are a lot of races going on. And hopefully the people will show up, and again, make this a more festive atmosphere. But I'll be watching what goes on and talking to other people throughout the day, giving live reports.

HINOJOSA: Thanks a lot, Josie.

Well, we're going to segue from the diversions of the sport's world to the very serious cost and sacrifices of war. A long road home for one West Point grad gravely wounded on the road to Baghdad.

A break, and a check on the headlines, and I'll be back ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEO CLIP)

JOHN FERNANDEZ, INJURED U.S. SOLDIER: I just feel that I'm lucky and I'm here. I know how lucky I am. That's why I don't feel bad -- I don't feel bad for myself at all. I mean I'm alive.

(END VIDEO CLIP)

HINOJOSA: John Fernandez, West Point graduate a national lacrosse star, injured in the Iraq War, his life changed in an instant.

Welcome back. We are ON THE STORY. Well, I spent some time with John Fernandez this week. My god, what an incredible young man. He's 25 years old. On April 3, on the road to Baghdad, he's asleep when all of a sudden, an explosion happens literally right on top of him. He wakes up from this explosion, and he looks down, and he realizes, he says, in an instant, when I saw my feet, when I saw my feet, I new my life was never going to be the same.

He ends up trying to get one of his buddies some help, who is gravely injured as well. It turns out that he lost three guys on that explosion. Three guys who he had spent months with, and as he said, he's just happy to be alive. He has lost both feet. But last week, he took his first steps so he's just an extraordinary young man. What a spirit.

SNOW: He went back to West Point. Tell that story. He went there and went back for the graduation just a little while ago.

HINOJOSA: Yes, that was a week ago. He went back, and in 2001, he was one of the cadets who was there graduating with all of the pomp there at West Point graduation. This time, he was a special invited guest of the superintendent of West Point.

But something that was a little bit difficult as well. Because even though he was a special invited guest, he wasn't put on the dais. He was set off to the side on the ground. And someone at West Point said to me that they had not wanted to have him on the dais and have all the parents looking at him the entire time.

When I spoke to him about this, he said, you know, for me it was more important to be able to see all of the cadets. So, again, he's finds the positive outlook into something that some people might criticize.

ROMANS: Amazing that he can see bright side of things, that he wasn't killed in that attack. What about his wife and his family? I mean, he is just newly married right?

HINOJOSA: Oh, my god, his wife is fabulous. His wife is Christy (ph), and what I love about them is they have -- well, they are total partnership. They got married just before he went off to war. And they are this young couple. I mean, you kind of expect of that you are seeing here would be from a mature couple that has been married for years. They are like bread and butter together. She spends all of his time -- all of her time with him, and they joke a lot about this.

I mean, when they were doing the interview, she was like kicking him, and she said, oh, here I am kicking on his foot, but he can't feel anything. What do you think about that? There were joking about -- she was joking with about, hey, don't run me over and, you know, you are always running me with the wheelchair, my feet are black and blue. They have this extraordinary ability to laugh about what's happened. They know it's serious, but it's the humor that keeps them going.

ROMANS: So, what's next for him? I mean, he's still active in the Military? What happens to him? What is his next move?

HINOJOSA: Well, you know, it's unclear because the Military, the Army does not have a very defined policy about what happens when you have a double amputee. So, it's not clear what his future will be in the Army, and that is kind of difficult.

And when I talked to him about this, he understands, he looks very clearly at what is laid out for his life, and he just says, what I want to do is just take it one day at a time, but he did say, and this is incredible, he said he want to be playing lacrosse in October. And I'm telling you, when I saw him walking around just less than a week with his prosthetics, he was doing great.

MALVEAUX: And, Maria, another extraordinary story out of New York, as well, that you covered about a young woman -- a tragedy of a young woman.

HINOJOSA: Yes, the story of the Sakia Gunn. The gay activists in this area are calling her the urban Matthew Shepherd story.

Sakia Gunn, on Mother's Day was coming back from New York City. She lives in Newark. She was with a group of young African-American girls, all of them gay. They were in downtown Newark waiting for the bus when some guys pulled up and started cat calling them, and finally one of the girls said, hey, why don't you just leave us alone. Can't you tell that we are gay?

The guy gets out of car, starts beating up, choking on of the girls. Sakia comes to her rescue, and then this guy just starts belting out about, what are they doing about being gay, and he just says all of this anti-gay stuff. According to them, he stabs her in the heart, and she dies in her best friend's arms. It's just devastating.

A lot of interest now among activists here. There were protests earlier this week in Newark.

SNOW: And those protests drawing, you were saying, people from all over the city.

HINOJOSA: Yes, amazing, amazing. You saw a real diversity of people there. There were a couple of businessman, gay businessmen, from New York City who came down, and they said, we came down precisely because we want to make it clear that this is part of our community. It can't just be that Matthew Shepard, when he's killed in such a brutal matter, ends up on the cover of "Time" magazine, and when a young African-American woman in Newark -- the same thing happens, that she doesn't get the same attention.

So, it is going to be interesting to see how it plays out within the gay community.

MALVEAUX: Maria, thank you very much for that touching story, that significant story.

From war to what the Bush administration hopes is a new stab with peace, I am back in two minutes and ON THE STORY of why President Bush took a job that stumped his predecessors, making Mideast peace.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Israel's got responsibilities. Israel must deal with the settlements. Israel must make sure there's a continuous territory that the Palestinians can call home.

(END VIDEO CLIP)

MALVEAUX: President Bush off the script, but on the message to all sides in the Mideast. Everyone must compromise.

Welcome back. We're ON THE STORY. This was a huge story this past week. A historic Middle East summit but, of course, the President came back to Washington and already, huge challenges ahead. Hamas said, we are not talking with the new Palestinian Prime Minister, Mahmoud Abbas. We don't want to compromise. I mean, this is clearly a huge test for the administration.

Is he up for the task? Do his words match his actions?

ROMANS: Call me crazy, but I feel like it's that movie, "Groundhog Day", when you are talking about Middle East peace. You know, a president trying to bring two parties to the table and begin, you know, a frame work under which they can begin to talk. It just seems like it's just such a nuisance part of the process.

MALVEAUX: And they reason why they think, OK, we've got a shot at this -- and they recognize that President Clinton tried this. You know, his predecessors will say yes, a difficult task, but we've got a different team on board. We've got Mahmoud Abbas, we are willing to work with him. We've sidelined Yasser Arafat. We have a new -- well, we have a prime minister of Israel, who says, you know, I'm willing to work with the Palestinians, and we have gotten rid of Saddam Hussein.

It's a whole new stage they have set in the Middle East. So, they're confident they can make some headway here.

HINOJOSA: Interestingly, I was watching a lot of the news this week, and I also felt that I was having this strange moment when all of a sudden, you're seeing all of these White House correspondents that are raising serious questions about a different topic, the issue of weapons of mass destruction, some of the correspondents going so far as saying, was -- you know, I mean, they were pushing it. You know, was this all made up? Was the reasons going to war quote/unquote, as the administration had played it out, in fact not there?

So, I'm wondering what was the feeling like within the White House as they are seeing this level of criticism in the media?

MALVEAUX: Well, sure, that was another huge story, of course. You had that report coming out of the Pentagon with the Defense Intelligence Agency, more questions about the intelligence over weapons of mass destruction. Did it really exist? The White House very defense about this, but also have to say quite confident about it.

I mean, first of all, they say, yes, we have a case. Take the big picture. Don't just take one single report. Take all of our intelligent resources, put them together, and follow the logic, that he had weapons of mass destruction. It's unaccounted for. They do admit, however, that they don't know the exact location of where those weapons are, but clearly a lot of controversy, a lot of questions.

Why is the administration confident about it? They said, well, we're not alone. We had the international community back this whole thing. The United Nations last year. You had Congress. Everybody on board saying Saddam Hussein has weapons of mass destruction. The only person didn't say -- who said, I don't have weapons of mass destruction was Saddam Hussein.

SNOW: It's interesting that Democrats haven't completely, you know -- on the Hill, always sort of can tell when there is a wave coming, and when your e-mail starting filling up with tons and tons of e-mail on a certain subject. That hasn't happened yet. I don't think the Democrats have seized quite yet, although there certainly have been a few, making -- you know, even some of the presidential candidates making hay out of this weapons of mass destruction argument, but I don't sense that the Democrats have seized on it yet as something that can really damage the president.

MALVEAUX: And one of the reasons why is because insiders say, look, this is not an issue that voters really care about. If you look at the polls, the numbers show that the war -- the popularity for the war is still very high. This is not on people's radars, weapons of mass destruction. The war was quick. It was over. And, you know, Saddam Hussein's regime has been toppled.

We want to get on with the economy, but if this does become a problem, if they keep making noise about it, sure, this administration's going to have to deal with that and, of course, it's a huge credibility problem overseas.

ROMANS: All right, this is the point where we have to bid farewell to Maria Hinojosa in New York. Maria, tell us again about your piece on the wounded soldier, when that is going to run.

HINOJOSA: It is going to run Tuesday night at 10:00 p.m. on NEWSNIGHT, and I leave you with my producer, Rose Arce, who has got great information for you all. Nice to see you.

ROMANS: Excellent, thank you, Maria. We will get back to New York in a moment. As she said, CNN senior producer, Rose Arce is ON THE STORY. Top dogs at "The New York Times" pushed out.

(COMMERCIAL BREAK)

ROMANS: The ON THE STORY question, can "The New York Times" weather the storm and the Raines? The command, and now the departure of Howell Raines. Joining us now in New York, CNN senior producer, Rose Arce, who is on the story.

Rose, has "The Times" come through the worst now?

ROSE ARCE, CNN SENIOR PRODUCER: Well, I think one of the question is has "The Times" come through the worst, has journalism come through the worst? One interesting thing about this story, it had started within the seeds of one reporter, and I think initially, we were all going to say, well, one bad egg does not make a dozen eggs raw, right?

But now, I think that we've seen that this scandal is much more than just Jayson Blair and his plagiarism. I think it's about the credibility in all of us in journalism, particularly the second incident that happened at "The New York Times", the resignation of Rick Bragg, a Pulitzer prize winning reporter, who wasn't making stuff up, who was publicly defending the practice of rewriting the work of other reporters, in this case, a freelancer, you might call him, someone who is paid basically lunch money to go out and do his reporting for him. ROMANS: It wasn't making stuff up, Rose, but he was drawing beautiful pictures of a place where he hadn't been, flopping fish and the sun on the water. You know, I mean, it's starting to really blur a line, isn't it?

ARCE: Absolutely, and I that think it calls into the question the creditability of all journalists. I mean, he was actually galled that the public thought that these stories underneath the bylines of these prominent "New York Times" reporters were actually cowabunga. They were written and reported by them? What an expectation, he would say.

And a lot of other "Times" reporters, and I know them because I am a former print reporter, came out of woodwork and said, wait a minute, hold on. That's not how professionals do their work. We do write and report our own material.

SNOW: So, what is the feeling now? You do know a lot of these reporters, Rose. What's the feeling among "New York Times" reporters now, specifically with the resignation of their two top dogs Thursday, right?

ARCE: I think there's a sense of relief. I think there is a sense of relief that finally someone at the upper levels of "The New York Times" have taken responsibility for this entire scandal, not just for the misdeeds of Jayson Blair, but also for what Rick Bragg said, that they have taken this as an opportunity to stand up and say, the way that I managed this newspaper led to a abuses that have undermined our credibility with the public, and all "The New York Times" has is its credibility. In essence, that's the product they produce every day.

So, for all of the reporters for that paper for the last few weeks, they have been saying, wow, it's not just "The Times" reputation that is on the line, it's my reputation that's on the line, it's journalism that's in question.

MALVEAUX: How difficult that was for the two top to actually step down? How much pressure was there on those two individuals? Because that was necessary to do that, to make that statement.

ARCE: Well, interestingly, I think that much of the pressure came from below. There were reporters there that were telling me that they had lost respect for the people that they had worked for, that their level of enthusiasm in the newsroom was very, very low. People told me that on the third floor, where a lot of news is done there, there was no work getting done. People weren't proposing stories. They were not going out an coming up with ideas. It was just an absolute dead zone.

SNOW: And I heard through the grapevine that it was sort of a witch hunt. Is that still -- maybe that's wrong. Is that still going on? Are people worried that, you know, that's Not -- Jayson Blair and the other aren't the only people that are going to be singled out here? ARCE: Absolutely. I think that there was a sense of panic because I think the Jayson Blair situation has enabled critics, both of "The New York Times" and of journalism, to go in, use him as sort of as anecdote with which to justify the attacks on "The Times".

What about this other reporter? You know, is "The Times" too liberal? You know, is "The Times" -- does "The Times" have shoddy standards overall? And this was this ongoing sort of investigation. There were rumors that other newspapers, other prominent newspapers, were looking into other reporters. And everyone thought, wow, this is like a deck of cards, and when is it going to fall on me?

ROMANS: You know, Rose, what does Jayson Blair have to say about all of this? Because I tell you, you know, in the New York -- as you know, in the New York journalism world, he is, frankly, much hated right now for all of this. And now two respected editors from "The New York Times" go down. What does he say about it?

ARCE: Well, interestingly, I've had several communications both with him and Rick Bragg. I think neither of them had any idea that what they had done would bring about such a tremendous sea change at "The New York Times". I think they are absolutely stunned. And I think that there is some sense regret, at least on the part of Jayson Blair, that hat he did has come to this.

SNOW: One would hope so. He lied. He made things up.

ARCE: Yes, I think with Jayson Blair particularly, there's a sense of pain over the fact that he, as a young African-American man, has called some to question affirmative action efforts and diversify efforts at "The Times" and has led the demise of its top African- American editor.

I mean, Gerald Boyd, in the world of minority journalists, is an icon. He is a man tremendous success. Him and his wife, Robin Stone (ph), the past editor of "Essence" magazine, have a scholarship that they give out every year to young minority journalists. I mean, these are people that are very much respected. Now, this man has to resign because of a young African-American reporter. What a tragedy.

MALVEAUX: Rose, thank you very much, and thanks to all of my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS" focusing this week on Martha Stewart and Ozzy Osbourne.

At 12:00 noon Eastern, 9:00 a.m. Pacific, a CNN special, "Eric Rudolph: The Investigation". How did the bombing suspect survive in the wild, and what's his defense?

And at 1:00 p.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY" and whether real estate price are headed for a fall.

Coming up at top of the hour, a news alert. But first, the president's weekly radio address. (BEGIN VIDEOTAPE)

BUSH: Good morning.

This week, the House and Senate will be working on one of the most important issues facing Congress: improving Medicare to offer prescription drug coverage to American seniors.

And on Wednesday, I will travel to Chicago and talk about our responsibility to give seniors more choices and better benefits, including help with the rising costs of prescription drugs. We have a tremendous opportunity to reform Medicare and help our seniors. The budget I proposed, and which the Congress passed, provides $400 billion in additional funds over the next 10 years to strengthen and improve Medicare. So we have the resources to make reform work.

We're also seeing a growing consensus, in both houses of Congress and both parties, that our seniors need a strengthened Medicare system that includes prescription drug coverage. The time is right to make progress.

Our nation has made a binding commitment to bring affordable health care to our seniors. We must honor that commitment by making sure Medicare stays current with the needs of today's seniors.

When Medicare was launched 38 years ago, medicine focused on surgery and hospital stays -- and that is mainly what Medicare covers. Today, doctors routinely treat their patients with prescription drugs, preventive care and ground-breaking medical devices, but Medicare coverage has not kept pace with these changes.

Our goal is to give seniors the best, most innovative care. This will require a strong, up-to-date Medicare system that relies on innovation and competition, not bureaucratic rules and regulations.

My views on Medicare are clear: First, those who like the Medicare system as it is should be able to stay just where they are, and also receive prescription drug benefits.

Second, those who want more coverage for preventive care and other benefits should be able to choose from multiple health plans under an enhanced Medicare program. This option would be similar to the health care coverage available to every federal employee. If that coverage is good enough for members of Congress and federal employees, it is good for our seniors.

Third, seniors who want the benefits of managed care plans, including prescription drug coverage, should be able to choose from a range of plans that best fit their personal needs.

And, fourth, we must provide extra help for low-income seniors, so that all seniors will have the ability to choose the Medicare option that serves them best -- and every senior will have the option of a prescription drug benefit.

In a Medicare system that reflects these principles, every senior in America would enjoy better benefits than they do today. And they would continue to benefit from the most important strength of American medicine: the ability to choose your own doctor. We want seniors and doctors, not government bureaucrats, to be in charge of the important health care decisions.

Members of Congress are working hard on this issue, and I encourage their efforts. I also urge Americans to make their voices heard. If we work together, Congress will pass a strong Medicare bill, and our seniors will finally get the prescription drug benefits and choices they need and deserve.

Thank you for listening.

(END VIDEOTAPE)

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Win Triple Crown?; Martha Stewart Indicted>