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U.S. Forces-Pentagon Facing Iraq War Aftermath; Remembering Strom Thurmond

Aired June 28, 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.


BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY where our journalists have the inside word on the stories we covered this week.
I'm Barbara Starr ON THE STORY of deadly attacks on U.S. forces in Iraq and a still mysterious raid on a convoy of Iraqis racing to escape to Syria.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: I'm Kate Snow in Columbia, South Carolina, ON THE STORY of the legendary Senator Strom Thurmond. He served in Congress longer than anyone else.

THELMA GUTIERREZ, CNN CORRESPONDENT: I'm Thelma Gutierrez in Phoenix, Arizona. More ON THE STORY of fugitive Andrew Luster who is back behind bars in California, while the bounty hunter who busted him faces time in a Mexican jail cell himself.

ELISE LABOTT, CNN STATE DEPARTMENT PRODUCER: I'm Elise Labott ON THE STORY of how the Bush administration is weighing promises of a terrorism cease-fire in the Mid East and what the U.S. can do to help.

KATHLEEN HAYS, CNN FINANCIAL CORRESPONDENT: And I'm Kathleen Hays in New York ON THE STORY of how interest rate cuts are a double- edged sword, helping the economy but hurting some Americans.

We'll be talking about all these stories today. Also coming up, complicated politics and fine print in the prescription drug plan cooked up by Congress. Later in the hour, we'll listen to the president's weekly radio address released in just a few minutes.

We want to hear from you as always. E-mail us at ONTHESTORY@CNN.com.

Right now, Barbara Starr and the Iraq attack.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: No question but that there are leftover remnants of the Saddam Hussein regime that are doing things that are against the coalition.

(END VIDEO CLIP)

STARR: Well, Defense Secretary Donald Rumsfeld on Capitol Hill this week talking about the attacks. But some very sad breaking news this morning, of course they have now found the two bodies of those two U.S. servicemen missing since Wednesday in Iraq. And, the belief is, of course, that somehow they died at the hands of Iraqis, that they were possibly abducted from their checkpoint late on Wednesday. Raising the stakes, raising concerns about what's really going on in Iraq at this point. A lot of concerns, and it may begin -- it may begin to cause the administration to have to think through some of what they are doing.

HAYS: Barbara, it's -- I'm just wondering about what a lot of people are beginning to speculate, are we in a guerrilla war and is it possible that Saddam Hussein had something like this in mind all along?

STARR: Well, it's interesting, Kathleen. Now Don Rumsfeld said this week he would not go so far as to call it a guerrilla war. He says it's dead enders, it's Islamic extremists, it's criminals, as we saw him say on TV.

But in the hallways of the Pentagon this week, you began to hear those words, guerrilla war, some sort of classic insurgency attack and that there is some organized effort behind it. If it's not Saddam Hussein, it's at least some organized effort of opposition groups, and they may be facing more or something different than they originally envisioned. So it's going to -- there doesn't seem to be a real sense of how to deal with this, how to make it stop, how to make it go away. It'll be difficult to see what they come up with.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Barbara, this is Dana Bash in Crawford, Texas, with the president. And you know, Ari Fleischer and many members of the president's administration are asked every single day about this question. You know, unfortunately, every day we're -- it seems like we're hearing about another soldier dying over there. And they are being asked did President Bush declare major combat over too early? Did he -- was he really prepared for this? And that is something that they always say, you know what, ask the Pentagon.

So it's something that I'm really interested to hear sort of what you're hearing in the hallways in the Pentagon. Is this something that they really are shocked about and is it something that they really do think is happening because of Saddam Hussein is -- they don't know whether he's alive or dead?

STARR: Well they do think that most Iraqis believe Saddam is alive and that this won't stop until there is a nationwide understanding in Iraq that Saddam is gone, you know, either captured or killed.

But it's interesting what you say, Dana, because what you hear from military people is sure, major combat was over. But basically what the U.S. did was it destroyed the equipment, it destroyed the infrastructure of the Iraqi military. There is no question, though, that hundreds of thousands of loyalists, if you will, people who were in the army, Ba'ath Party loyalists, loyalists to Saddam Hussein were left alive in Iraq. It was not the case. The regime collapsed so quickly once U.S. forces approached Baghdad, it was not the case that they really dealt with these people and they're still out there and that's what hasn't been dealt with yet.

LABOTT: You know I want to ask you, Barbara, about this attack on the convoy going into Syria by U.S. military men. The U.S. is still holding these Syrian border guards.

STARR: That's right. This is getting more and more strange is probably the only way to put it. We're now, what, 10 days after this attack, five Syrian border guards still being held by the U.S., being given medical assistance. The Pentagon says they are trying to make arrangements to return them to Syria. It's hard to understand why they couldn't just put them on some sort of military plane and fly them back to Damascus, why they're still undergoing questioning.

The Pentagon also tells us they have some initial results of this raid. Twenty people were taken into custody. All of them have now been released as being not people who have any information about what was going on. And they have identified one dead Iraqi at the scene. So it's hard to see what the results are at this point of this attack on this convoy that they said they had excellent intelligence it contained Iraqi leaders trying to escape to Syria. It's just hard to see at this point.

SNOW: And, Barbara, doesn't this get really strange fast, though, because there were reports then that these were -- this is a population that engages maybe in sheep smuggling over the border, but certainly, not military type people?

STARR: Well this has been a well-known -- that's exactly right, because this has been a well-known smuggling route for some time, a route that the U.S. had been watching very carefully. Intelligence officials will say well sure, maybe it was a sheep smuggling route, but on this occasion, these people were being paid to smuggle Iraqis across the border into Syria, that they had intelligence this was going on. But so far they don't have either the people alive or the dead bodies that actually proved their case just yet. They are continuing to look at the site and try and determine what happened there.

But the Syrian government, as the days go on, as you know, Elise, from the State Department, is increasingly being vocal about this. They want their people back.

LABOTT: But at the same time, they really don't want to -- they really don't want to make a big deal of this. There are a lot of tensions in the U.S. relationship with Syria right now. So they're kind of quietly saying we want a release, but they are really not making any large noise right now. But obviously, if they hold on to them for any longer, you might see a little bit more noise from the Syrians.

STARR: Yes.

HAYS: Barbara, what I want to ask you about is the criticism that is so much in the press right now that the Pentagon fought "the war," the main part of the war brilliantly. They were very prepared to do that, but they have not been prepared for the aftermath. They have not been well prepared for a period like this, you know, soldiers getting picked off daily. You just kind of wonder how does the Pentagon respond to that criticism right now? Do they take it to heart or do they have a defense?

STARR: Well there is the Pentagon and then there is Don Rumsfeld. Now Don Rumsfeld says always everything's on schedule. We anticipated all these problems. Things happen. You have really never heard him take a step back.

But I can tell you that people in the military, people involved in the reconstruction, take a much more analytical point of view. Just yesterday, we talked to Jay Garner, the man who was the first civil administrator in Iraq for the first six weeks after the war, and he said, from his point of view, the major lessons learned was as soon as you start planning a war, you have to start planning the peace. He believes that they need to get a much quicker start off the block the next time one of these operations gets under way.

It's proving -- there's just no question, it's proving to be a challenge. It's proving to be a big challenge, and it's going to -- no one is putting an end date on it at this point. U.S. troops could, in fact, be there now for years. So it's hard to see, again, where it's all going.

BASH: Barbara, it's interesting, I was talking to somebody last week who was saying at that point there was so much focus on the fact that weapons of mass destruction had not yet been found in Iraq, and this source was saying you guys are missing the story. The story isn't necessarily that, the story is the fact that it's chaos in Iraq, not only because of the soldiers being killed, but because it has been so incredibly hard for the reconstruction effort to really get up and running. And is that -- is that something that sort of weighing those two issues, those two major issues lingering in Iraq, how does the Pentagon see those two issues? Are they more concerned about the reconstruction effort?

STARR: They are concerned about reconstruction. I would say also there's another issue beginning to brew, there is concern about U.S. military morale. These units, these young men and women, they continue to see their colleagues die, and there is concern about their morale. A lot of these kids were told they could come home. Now it looks like they are staying for the foreseeable future and that could begin to affect morale in the days and weeks ahead.

SNOW: Well, from battles in Iraq to political battles back at home and a veteran of battles in Washington, Senator Thurmond, who passed away this week, we'll be talking about him. I'm here in Columbia, South Carolina, where he was from. We're back ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. STROM THURMOND (R), SOUTH CAROLINA: We're going to win. We always do. (END VIDEO CLIP)

SNOW: Strom Thurmond, who won a lot of elections in this state, became the longest serving member of Congress. We're back ON THE STORY. I'm Kate Snow in Columbia, South Carolina. Strom Thurmond, of course, passed away on Thursday night.

Let me show you the headline in the state newspaper this morning, "Thurmond's Wish Fulfilled in Final Hours." It's referring to his first grandson at the age of 100 years old. His first grandson was 10 days old and was brought to his bedside just a couple of hours before he passed.

Let me just tell you quickly, this state and the outpouring of grief from this state is incredible. People here loved Strom Thurmond. They re-elected him time and time again. Behind me is a statue of Strom Thurmond that stands in front of the state capitol here. You can see people have left flowers and people have come here and signed a book for the family. Certainly the majority of South Carolinians say they loved this man, he delivered for this state and he will be long missed.

BASH: We watched Senator Thurmond from inside the capital. And there's one story that I can't get out of my head that it was really lost to history because it wasn't captured on camera, and this is a couple of years ago when Hillary Clinton was sworn in the Senate. She was walking down across in front of Strom Thurmond's seat. And Strom Thurmond, with all of his strength, without anybody helping him, stood up and he basically gave her a bear hug. And he said give me a hug. And Hillary Clinton just looked absolutely shocked.

But it was very typical of Senator Thurmond. First of all, of the fact that he was always had a warm welcome for the female senators and a nice kind word for them. But it was also -- it was also it really it's sort of an interesting thing to watch somebody who was nearly 100 years old coming to work every single day in the capitol.

SNOW: And that's what his constituents here tell me that they thought was so special about him. I mean, No. 1, somebody said to me yesterday, you could always go to Washington, you could stop at his office, he would do anything for you. His constituent service was known throughout the state. It's a small state. Everyone knew you could call on Strom to help you with any problem you had. He would come -- if he saw you on the street, he would shake your hand, he would make time for you. In fact, in the paper this morning it says his interest in small people stood out, and that's what they're celebrating here.

One other note, last night I was watching the local television here, they were doing full specials on Strom Thurmond for half hour, hour at a time. One station here ran 11 hours of programming about Mr. Thurmond's death in the last 24 hours.

STARR: But, Kate, there is, of course, another side to the political history of Strom Thurmond. And so the question is today, how do the African-Americans in that state really feel about this man? SNOW: Yes, that's true, Barbara. I mean he has a complicated political history, 100 years, so it's very complicated. He ran as a segregationist candidate, a Dixiecrat, back in 1948, you'll recall. He later sort of renounced those views. He later said look, I understand the state is changing, I'm going to change my politics. He later endorsed -- he had long fought civil rights, but then he later endorsed it. He voted to extend the Voting Rights Act for African- Americans.

I talked to some African-Americans here yesterday who said you know he changed and so I voted for him. And I would say about 20 percent of African-Americans in the last two elections voted for Strom Thurmond. I also talked to a lot of African-Americans yesterday, many of whom didn't want to go on camera, who said that those old -- those old wounds run too deep, that, you know, they didn't believe he had truly changed in his heart and they could never vote for him. And in fact, one woman I talked to on camera yesterday said you know she was glad, in a way, that this chapter is over in their history.

LABOTT: Kate, the first thing that comes to mind when you think of Strom Thurmond is how old he was and how long he served in the Senate. What do you think his actual legacy is going to be? Do you think it's going to be more of a personality and his age and his longevity? Or do you think it's going to be that checkered past and the way he overcame all of that? And what's going to follow? Who is going to follow him, do you think? Is there talk about that yet?

SNOW: Well, there's -- sure. There's a few different answers there. I mean I think certainly the longevity will go down in the -- in the history books. One thing that a lot of politicians and political watchers will remember him for is, you know, he switched parties from Democrat to Republican, and he was part of this movement to get white southerners to vote Republican. And really starting in the '50s and '60s, he was instrumental in getting a lot of white votes down in the South, which helped elect Richard Nixon, for example, in the late '60s. He campaigned for Richard Nixon at that time. So that's one of the legacies that political watchers talk about in terms of Strom Thurmond.

I mean the people here, as I said, talk about his service as a legacy. They say he brought so much to this state. I mean it's not just the statue behind me, there are dams named after him, lakes named after him, buildings named after him. He is everywhere you look in the state. And of course he has been succeeded by Senator Lindsey Graham, formerly a member of Congress. He's now the senator who took over his seat back in January.

HAYS: Of course, Kate, this is going to be a question of history. The question how Strom Thurmond is viewed, but the future, so much tied up in this prescription drug benefit that was just passed, and I think many people are kind of stunned. It seems like this was going to be a legislative battle that would be unending. All of a sudden the logjam broke. What's going on there?

SNOW: Yes, speaking of senior citizens and older people, the drug coverage that passed the House and the Senate, two very different bills, and they passed in the middle of the night Friday morning, very early Friday morning. The key thing in the Senate was Senator Ted Kennedy. Senator Kennedy, a long time supporter of healthcare reform, put his weight behind this bill and said look, I think it's a first step. Maybe it's not perfect, but it's a first step toward adding an entitlement for seniors on Medicare, giving them prescription drugs.

In the House it was a last luck closer. As you know, there was -- it only won by one vote. That means as they try to reconcile these two bills over the next few weeks, it is going to be very, very tough, and it's not a done deal yet. We're not sure that we're going to get a prescription benefit for seniors, but it looks better than it has in a lot of years.

STARR: Well one prescription for getting away from Washington was a story that is still playing out in Mexico that has a millionaire convicted rapist living the good life in a beach resort and a self- promoting bounty hunter that got the fugitive but ended up behind bars himself. CNN's Thelma Gutierrez has the story and is back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO TAPE)

DUANE "DOG" CHAPMAN, BOUNTY HUNTER: Nothing about Luster.

QUESTION: What about this (UNINTELLIGIBLE)?

CHAPMAN: Nothing about Luster. That's it. I'm done.

(END VIDEO CLIP)

GUTIERREZ: That's colorful bounty hunter "Dog" Duane Chapman in Mexico brushing off questions on cosmetics heir Andrew Luster. Now, he was the man that Duane Chapman grabbed while he was in Puerto Vallarta, Mexico. Far from a bounty or a congratulations, Chapman and his crew of five ended up in a Mexican jail cell himself. Now Chapman, his brother, and his son have all been bound over for trial in Puerto Vallarta by a Mexican judge just recently.

LABOTT: Thelma, tell us about this guy. He seems like such a colorful character. He went over the border. That's really not allowed for bounty hunters, not allowed in Mexico. Explain a little bit about why he did it and who he is.

GUTIERREZ: Well that's a good question, Elise. First of all, you have this very colorful character. He is -- he is -- he is pumped up, he wears tight clothes, gold watch, he has long hair. He is the perfect kind of a character that you would want for a TV show. And incidentally, that's exactly why he was there.

He went there with his son, with his brother and a television crew. The whole idea was to go there to have the crew follow him around as he arrested Andrew Luster. But of course things did not turn out anywhere what he expected. He thought that he would get a bounty, and of course, that he would get a big congratulations. Instead, he did something that is considered illegal in Mexico and was taken in by Mexican police.

SNOW: Thelma, were you able to talk to Mexican authorities about this? I mean why did they -- why did they take him in? Do they always take in someone who tries to grab somebody on the street, who tries to be a bounty hunter, because in the U.S. I think it's legal?

GUTIERREZ: Well, I talked to the district attorney in Mexico, and he says, you know, frankly, this kind of thing is just not allowed. I mean if you want to make a citizen's arrest, you have to consult with Mexican authorities first. You can't just simply go and nab someone off the street.

Now keep in mind that in Mexico there have been many, many kidnappings of late and so they take kidnapping very seriously. All of a sudden you have a group of people in front of a taco stand at 5:00 in the morning. You have this bounty hunter with a television crew show up. They grab Luster, wrestle him to the ground, handcuff him. All the people who are standing around are wondering what the heck is going on here. They don't know who any of the players are and so they all jump on their cell phones, they call authorities. They say we think that there is a kidnapping in progress.

The crew takes off with Luster in tow. They run into a blockade. And so you have (UNINTELLIGIBLE) getting out with their AK-47s and saying hey, what's going on here? We're taking you all into custody. And so Mexican authorities say that could have all been avoided had the producer, had Duane Chapman made some kind of a contact with authorities, which they clearly did not.

BASH: Thelma, this story is really remarkable. Hollywood could not have written a better script than this. But I'm interested in the couple...

UNIDENTIFIED FEMALE: Isn't there already a movie in production?

BASH: If not, I'm sure there will be momentarily. But, Thelma, I'm interested in the couple that met Andrew Luster on vacation and came back. And they were looking through the pictures and realized that he was the guy who everybody was on the hunt for. Apparently they were the ones who found this "Dog" Chapman guy?

GUTIERREZ: Yes, that's correct. You have this couple from Seattle. They are visiting this very remote area of Puerto Vallarta or actually, it was Tapik Nirarit (ph). It was another state. And they're in their villa. All of a sudden this fellow comes up, makes contact with them. He wants to buy property in this remote area, which is apparently in a wonderful surfing area, and of course Luster loved to surf. And so he makes contact. He says I want to buy property. They drink out on the terrace. Have a wonderful time.

The couple ends up going back home. They see a television program. They see Luster's picture. All of a sudden they think, oh my gosh, this is the guy that we were partying with at out -- at our villa. They call the owner of the property and they say that -- to -- they ought to look at the FBI's most wanted list. And there they find Andrew Luster's photograph. And so you can imagine they were all very, very surprised.

BASH: Thelma, I want to thank you for joining us. But before we let you go, you're in Phoenix, Arizona, right now for a meeting with the Latinos, a political meeting. Tell us a little bit about that.

GUTIERREZ: Yes, I'm here in Phoenix, Arizona, and basically you have 1,300 elected Latino leaders who are attending the conference of the National Association of Elected Latino Officials, NALEO. And there are 1300 people here. And, the candidates, all the democratic candidates will be showing up today. They will discuss many issues in an open forum. The issues being immigration, education and economic growth for the Latino community. All of this, of course, very significant because they will be addressing those leaders who will, in turn, go back and spread the word among the thousands and thousands of people that they represent back home.

BASH: Well, we are going to be talking about politics next and that is the political fund raising marathon that George W. Bush has been engaged in, that and the headlines. Back in two minutes.

(NEWS BREAK)

(COMMERCIAL BREAK)

STARR: We're going to be joined for a few minutes by our Gary Tuchman in Atlanta who's covering the funeral today in Atlanta of former Mayor Maynard Jackson that passed away a few days ago. Quite a significant figure, of course, in the south in Georgia in Atlanta.

Gary, you're there today. Tell us a little bit about what's unfolding there this morning as people begin to arrive for the funeral service.

GARY TUCHMAN, CNN CORRESPONDENT: Well, Barbara, as we speak, members of the general public as well as dignitaries are going inside the Atlanta Civic Center, here in downtown Atlanta. The facility fits 4600 people; they expect every seat to be filled. They say they'll take a few standing room, but pretty much they anticipate having to turn back people because of the popularity of this man, Maynard Jackson. He was the first black mayor of Atlanta, Georgia; also the first black mayor of any big city in the southern United States.

You know, Atlanta, this city, did not have a lot of the violence that many other southern cities had during the civil rights era. But they had same problems here in Atlanta and this being the largest city in the south, it was very significant when back in 1973 Maynard Jackson was elected as the first black mayor. Ever since then, there have been all black mayors in the city, three other mayors, including the current Mayor Shirley Franklin, who is also happens to be the first woman mayor of Atlanta.

So, he's a very, significant figure in the city. Larger than life physically, larger than life in every other sense in terms of what he did politically for the city of Atlanta. Many here people believe -- many white people and certainly many black people believe he helped to make the city a fairer place. So, it's considered very tragic, especially tragic when he passed away last week because he was only 65 years old. But he served three terms as mayor in Atlanta from 1974 to 1982, also from 1990 to 1994.

And because of that a wide range of speakers today, including the former president of the United States, Bill Clinton, including Jesse Jackson, including the current mayor of Atlanta, including the former Mayor Andrew Young, the former governor of the state Roy Barnes, and Corretta Scott King, the widow of Martin Luther King -- Barbara.

SNOW: Gary, it's Kate Snow in Columbia, South Carolina. Tell us a little bit more about what Mr. Jackson did for the city. I know I've read and I've lived in Atlanta. He built the big airport there for one thing. What else did he do?

TUCHMAN: Well, Hartsfield Airport here in Atlanta used to be a very small, relatively regional airport. It is the busiest airport in the world in terms of number of people who fly in and out every year, and yes, he was the man behind it who helped build it. But not only did he build this airport; but back in the early days in the '60s, 1 percent of the business associated with the airport like the concessions were operated by black people. He raised that percentage, some people call them set aside programs other people say it's just more fair. But now you're talking about 40 percent of the businesses associated with the airport are operated by black business people.

But he also, according to many people who lived here in Atlanta for decades and decades, just made the city a fairer place. Not just for black people, but for the white residents here of Atlanta, Georgia.

One thing I want to tell you guys, it's very interesting. And we hear a lot about this politician, we haven't heard much about him as a human being. I want to read you one last thing before we go, from his wife, Valerie Jackson, writes in a memorial book that's being used today, this quote talking about his sense of humor.

Quote, "We had a running joke between us that somehow he always managed to be out of town when a crisis hit. The beginning of labor for the birth of our first child, floods from the rains, hailstorms, the first earthquake. At times, when nothing seems certain, one thing I could always count on was my husband out of town. When I got the call, I never expected to receive so soon last week, I had a smile through my tears to realize in during the greatest crisis of my life, Maynard was, again, out of town."

Back to you.

STARR: Well, Gary, thank you. We know that you'll have live coverage of the funeral of Maynard Jackson at the top of the hour. And now, back to ON THE STORY.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: I'm loosened up. I'm getting ready. But I'm going to need your help.

(END VIDEO CLIP)

BASH: President Bush began the week with a New York City fundraiser. Ended the week in California fund raising.

Welcome back. I'm Dana Bash in Crawford, Texas where President Bush arrived early this morning, stayed up very late, especially for a president who admits he doesn't like to stay up late. And that is because he had a very long day in California yesterday, headlining fund-raisers in San Francisco and Los Angeles. He raised more than $5 million in one day. And now his campaign is saying that he could get to the total -- grand total of $30 million or close to it by the end of this filing period. And that is, according to Democratic sources, probably more than all nine Democrats are going to report that they have fund raised combined.

So it is been a huge week for the president in terms of getting his money together. And I should note that last week as the president started the fund raising in Washington and for people who paid $2,000 they got hot dogs and they got nachos. But by yesterday, I was checking out the plates in the ballroom in Los Angeles, and all is right with the world because it was a traditional rubber chicken dinner.

STARR: Well, Dana, he's raising this ton of money. He doesn't have a primary opponent. This is going to be for the general election. How much money does he think he really needs and this going to start translating into votes for him? Is there any guarantee of that?

BASH: You know, Barbara, what's interesting is this money is actually for the primary. And you're right; he doesn't have a primary opponent, which is what is so extraordinary about the amounts that he is going to raise. You know, his campaign, they think he might raise close to $200 million in a primary season where he doesn't have anybody to run against; at least the Republicans.

So, what is likely to happen is that he is going to amass this money and do something along the lines of what we saw Bill Clinton do in 1996. Which is put up ads early, somewhat to inoculate himself, to talk about the issues he wants to talk about. And also just to have the campaign money in reserve just in case. You never know what is going to happen.

But in terms of the Democrat, Barbara, you know I have talked to a couple of campaigns yesterday they say, look, they understand that nobody can tell you that money doesn't matter. But they say money doesn't buy you love and they are watching the economy closely because they feel that is the No. 1 issue.

HAYS: You know Dana, I want to ask you though, is there any sense that if Bush is just steam rolling and the bucks are pouring in, that this could backfire. People who are not pro-Bush have criticized the tax cuts for helping the wealthy. There's been more than one Democrats saying, see, he gave the friends big tax cuts. Now they're paying him back with big contributions. Are they sensitive to that? Do they feel that this could just look like, as his opponents would say, Bush buying another election?

BASH: Well, you know, President Bush raised a lot of money in 2000 you know when he did have Republican opponents. And you're right; the Democratic line has been that this is pay back. This is the -- some of his big donors giving back the money that they got because of his tax cut.

But when you talk to the folks in his campaign, what they're pointing to is the fact that the RNC, not the campaign, but the committee has gotten about 900,000 new donors in the past few months. Some of those donors have only given like, $28 or something like that. But I talked to an official saying it doesn't matter $2,000 or $28, it's a vote. And that is something they're watching very closely, not only the amount of money that they're raising, but the breadth of his support and whether or not it is actually on the rise.

Well, while the president was on the campaign trail, his national security team has been keeping watch on the world. I'll be back with the story of a possible Israeli withdrawal from Gaza and how talk of a terrorism cease-fire in the Mid East is being viewed back here in Washington.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: I'll believe it when I see it, knowing the history of the terrorists in the Middle East. But the true test for Hamas and terrorist organizations is the complete dismantlement of their terrorist networks, their capacity to blow up the peace process.

(END VIDEO CLIP)

LABOTT: President Bush on Wednesday saying the true test of a promised Mid East terrorism cease-fire is not talk, but action.

Welcome back. We're on the story and I have to say, this cease- fire comes as Condi Rice is arriving in the region today. There's talk of a possible Israeli withdrawal from areas Gaza and later Bethlehem.

And the true test is this cease-fire is for three months. What happens after the three months? The Palestinians are really going to be under pressure to crack down on Hamas and Islamic Jihad and these other groups. And it kind of makes you wonder, why theses groups if they know they're going to be dismantled eventually, are talking about a cease fire in the first place.

SNOW: Elise, it all sounds very positive, too, but what does the U.S. have to do now? You mentioned Condoleezza Rice is already in the region. Do we just have to keep -- does the U.S. keep having to send people over there to make sure it really happens?

LABOTT: Well, I think what's interesting is you've seen an unprecedented level of engagement by the Bush administration. You saw President Bush out at the summit. Then Secretary Powell. Now Condi. It's really going to take, Kate, a real increased level of engagement, a consistent level. Secretary Powell was giving a speech about diplomacy as tending a garden. But this garden needs daily maintenance so those weeds are going to keep popping up.

You know and they also have to give Prime Minister Abbas some breathing room. If there is a little attack here or something like that, they have to give him some breathing room to crack down. And they also have to be tough on the Israelis now to not take these assassinated -- these targeted killings, so to speak, and to get both sides to really follow through on the commitments to this Mid East Rose Map.

BASH: Elise, you were talking about engagement, and you know, the White House, of course, put out a statement yesterday saying that this agreement is a good first step. It's sort of could be read as cautiously optimistic. But in talking to some officials behind the scenes, they made it very clear that U.S. envoys and the U.S. officials on the ground were instrumental in getting this thing done. What are you hearing about the interaction between Ambassador Wolf there and others and how they actually got this thing together? How did it happen?

LABOTT: Well, it's been a long process. They've been talking about this for a long time when Secretary Powell was out there. Then they sent Wolf. Now they sent Condi. It's a step-by-step process.

And it really came together because you have talk of the Palestinian cease-fire; the Israelis are really not going to pull out of the areas unless they have a pretty good idea that maybe these terrorism attacks could stop. And the Egyptians were also instrumental in kind of getting this all together. Getting the Palestinian groups to say, OK, we'll give this a chance and see what happens.

STARR: But Elise, on the streets of Gaza, on the streets of the West Bank, what do they do about the radical groups on the streets; the al Aqsa Martyrs Brigade. What about Yasser Arafat? How do you change the behavior on the street?

LABOTT: Well, I think what the U.S. is hoping is that the Israelis will follow through on some of their commitments. They have released already some of these tax revenues. They also want to release -- they want the Israelis to release some prisoners that you know, haven't really been charged with anything. Just being held. They want the Israelis to ease up on some of those checkpoints.

And if they give them some breathing room, if they give the Palestinians a better climate, they can see that there's a better way of life, this will make the extremists ideology such as Hamas and these other groups less popular. And the Palestinians are going to see, yes, we can get our state. It's a better way of life, we're going to support Prime Minister Abbas and really go for it this time.

HAYS: Well, it's certainly, a story that everyone likes to see, making progress. And of course, politicians and the rest of us certainly have one eye on the Middle East. But we're paying close attention to the bottom line in the paycheck and interest rates back home. Check out this cartoon from Daryl Kagle of slate.com, showing Federal Reserve Chairman Alan Greenspan pruning interest rates down to the stump, maybe thinking he's cut as far as he can without killing the whole tree. I'm back in two minutes ON THE STORY of low rates and high hopes.

UNIDENTIFIED MALE: Kathleen Hays is a business correspondent for CNN. She hosts on "THE FLIP SIDE" on CNN FM, 11:00 a.m. to 12:30 p.m. She has a bachelor's and master's degree in economics from Stamford University.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DIANE SWONK, BANK ONE: This is a consumer-dominated economy not a saver-dominated economy. So clearly, lower interests rates do on not stimulate the economy.

(END VIDEO CLIP)

HAYS: Stimulate the economy, that's the Federal Reserve's hope. And that's Diane Swonk, Bank One with a fairly upbeat response to the cut in the interest rates.

Welcome back, we're ON THE STORY.

The Federal Reserve did cut its key short-term rate to 1 percent. That's the lowest level since 1958, that's back when kids doing rock n roll and Dwight D. Eisenhower was in the White House. Another thing back then, inflation very low as it is now. The Federal Reserve worried that the low inflation rate is a reflection of a weak economy.

They want to make sure that the economy, which is shown signs of growing and getting back on track continues to do so. Little disappointment on Wall Street that they didn't make an even bigger cut, but the stock market didn't perform too badly. And now all eyes are on the future. The optimists saying it's going to help, the economy is going to start growing again.

BASH: You know, Kathleen, older Americans got some good news this week because Congress seems to be closer to giving them a prescription drug benefit for Medicare. But this is not good news in terms of the interest rate, right? It's not something that they actually would welcome.

HAYS: Oh, and the howls really coming from a lot of people. I have to tell you on CNNFM, we take calls on a lot of our programs. A lot of people called in to say, hey, what is the Fed doing?

Think about it. If you're retired person and maybe one of the things, a nice, safe conservative investment would be a bank certificate of deposit, a bank CD. You might have had some paying you an interest rate of 5 percent. Now, they're going to expire and you're going to have to buy some new bank CDs, maybe they're only paying you 2 percent.

Some people think that the reason that the Federal Reserve may not have cut its key rate actually to 0.75, a full half percentage point cut, something more dramatic, is because of money market funds. Some of them only yielding maybe a half percent right now; by the time you take out expenses, people said that if the Fed cut too much, those money market fund returns could go to zero and that's the kind of thing that could really rattle a lot of investors.

SNOW: Kathleen, here's the flip side, though. All of my friends and my family are refinancing their houses again because the rates dropped keem to seep drop -- keem to -- seem to keep -- excuse me, dropping. Is that still going to keep happening? Are the mortgage rates going to keep going down because of this?

HAYS: Now, see this is the irony and something that's very, tricky about watching the financial markets. The Federal Reserve controls really short term rates. But longer term rates in the bond market, which determines those mortgage rates, well, that's determined by the market.

And the irony of the Fed's move and why to a certain extent it wasn't maybe quite the success they hoped for, is that after they cut their short term rate, the bond market said, gee, I guess the Fed's signaling they're not going to cut anymore. And we actually saw bond yields rising. So, we're going to see mortgage rise a bit now.

The good news for you and your friends Kate, and for everybody really is that people don't expect mortgage rates to rise that much. You know, if they go to 5.5, even 6 percent, they're still a bargain. But again, in the world of, you know, assessing what the Fed did, some people say if they had done the more aggressive move, they might have gotten that better response. And we might have seen mortgage rates a bit lower.

LABOTT: Kathleen, what is this going do to the dollar overseas? I was abroad recently and the dollar is so weak. You can't afford a thing.

HAYS: Well, you know if you're a tourist, that's a great question. It's tough to go to Italy and then you can't afford the great leather bag, may be you could have, or that great leather jacket.

But the point is we're trying to help U.S. manufacturers. And they feel that the dollar is not weak. They just feel like it's getting back to a point where it's level where they can compete. Where we can sell our goods overseas. So that's always a two-edged sword.

But actually the Fed is probably hoping to see that dollar weak, maybe even weaker at least below where it was, and very happy to see stocks rising. They're hoping the stock market will say that this, you know, this latest rate cut along with the tax cuts is really going to have the economy back in the rate second half where it's growing and really creating jobs again. STARR: OK, Kathleen. No insider trading tips from on Wall Street. We don't want you to do that. But just amongst us, what in all of this looks now like a good investment? If you're interested in income.

HAYS: If you're interested in income, take a look at REIT, which are real estate investment trusts, they're holding up fairly well. Dividend paying stocks, remember we got tax relief on dividends. A lot of people are saying it's not a double-digit return but it might be a pretty, good bet for a lot of people on those blue chip stocks.

STARR: Well, thanks to Kathleen. Thanks to all of my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Still ahead, a CNN special, remembering former Atlanta mayor Maynard Jackson. At 11:30 Eastern, 8:30 Pacific, CNN's "PEOPLE IN THE NEWS" focuses this week on Arnold Schwarzenegger and his possible run for governor. And at 12:30 p.m. Eastern, 9:30 a.m. Pacific, "CNN LIVE SATURDAY. "

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

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Remembering Strom Thurmond>


Aired June 28, 2003 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY where our journalists have the inside word on the stories we covered this week.
I'm Barbara Starr ON THE STORY of deadly attacks on U.S. forces in Iraq and a still mysterious raid on a convoy of Iraqis racing to escape to Syria.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: I'm Kate Snow in Columbia, South Carolina, ON THE STORY of the legendary Senator Strom Thurmond. He served in Congress longer than anyone else.

THELMA GUTIERREZ, CNN CORRESPONDENT: I'm Thelma Gutierrez in Phoenix, Arizona. More ON THE STORY of fugitive Andrew Luster who is back behind bars in California, while the bounty hunter who busted him faces time in a Mexican jail cell himself.

ELISE LABOTT, CNN STATE DEPARTMENT PRODUCER: I'm Elise Labott ON THE STORY of how the Bush administration is weighing promises of a terrorism cease-fire in the Mid East and what the U.S. can do to help.

KATHLEEN HAYS, CNN FINANCIAL CORRESPONDENT: And I'm Kathleen Hays in New York ON THE STORY of how interest rate cuts are a double- edged sword, helping the economy but hurting some Americans.

We'll be talking about all these stories today. Also coming up, complicated politics and fine print in the prescription drug plan cooked up by Congress. Later in the hour, we'll listen to the president's weekly radio address released in just a few minutes.

We want to hear from you as always. E-mail us at ONTHESTORY@CNN.com.

Right now, Barbara Starr and the Iraq attack.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: No question but that there are leftover remnants of the Saddam Hussein regime that are doing things that are against the coalition.

(END VIDEO CLIP)

STARR: Well, Defense Secretary Donald Rumsfeld on Capitol Hill this week talking about the attacks. But some very sad breaking news this morning, of course they have now found the two bodies of those two U.S. servicemen missing since Wednesday in Iraq. And, the belief is, of course, that somehow they died at the hands of Iraqis, that they were possibly abducted from their checkpoint late on Wednesday. Raising the stakes, raising concerns about what's really going on in Iraq at this point. A lot of concerns, and it may begin -- it may begin to cause the administration to have to think through some of what they are doing.

HAYS: Barbara, it's -- I'm just wondering about what a lot of people are beginning to speculate, are we in a guerrilla war and is it possible that Saddam Hussein had something like this in mind all along?

STARR: Well, it's interesting, Kathleen. Now Don Rumsfeld said this week he would not go so far as to call it a guerrilla war. He says it's dead enders, it's Islamic extremists, it's criminals, as we saw him say on TV.

But in the hallways of the Pentagon this week, you began to hear those words, guerrilla war, some sort of classic insurgency attack and that there is some organized effort behind it. If it's not Saddam Hussein, it's at least some organized effort of opposition groups, and they may be facing more or something different than they originally envisioned. So it's going to -- there doesn't seem to be a real sense of how to deal with this, how to make it stop, how to make it go away. It'll be difficult to see what they come up with.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Barbara, this is Dana Bash in Crawford, Texas, with the president. And you know, Ari Fleischer and many members of the president's administration are asked every single day about this question. You know, unfortunately, every day we're -- it seems like we're hearing about another soldier dying over there. And they are being asked did President Bush declare major combat over too early? Did he -- was he really prepared for this? And that is something that they always say, you know what, ask the Pentagon.

So it's something that I'm really interested to hear sort of what you're hearing in the hallways in the Pentagon. Is this something that they really are shocked about and is it something that they really do think is happening because of Saddam Hussein is -- they don't know whether he's alive or dead?

STARR: Well they do think that most Iraqis believe Saddam is alive and that this won't stop until there is a nationwide understanding in Iraq that Saddam is gone, you know, either captured or killed.

But it's interesting what you say, Dana, because what you hear from military people is sure, major combat was over. But basically what the U.S. did was it destroyed the equipment, it destroyed the infrastructure of the Iraqi military. There is no question, though, that hundreds of thousands of loyalists, if you will, people who were in the army, Ba'ath Party loyalists, loyalists to Saddam Hussein were left alive in Iraq. It was not the case. The regime collapsed so quickly once U.S. forces approached Baghdad, it was not the case that they really dealt with these people and they're still out there and that's what hasn't been dealt with yet.

LABOTT: You know I want to ask you, Barbara, about this attack on the convoy going into Syria by U.S. military men. The U.S. is still holding these Syrian border guards.

STARR: That's right. This is getting more and more strange is probably the only way to put it. We're now, what, 10 days after this attack, five Syrian border guards still being held by the U.S., being given medical assistance. The Pentagon says they are trying to make arrangements to return them to Syria. It's hard to understand why they couldn't just put them on some sort of military plane and fly them back to Damascus, why they're still undergoing questioning.

The Pentagon also tells us they have some initial results of this raid. Twenty people were taken into custody. All of them have now been released as being not people who have any information about what was going on. And they have identified one dead Iraqi at the scene. So it's hard to see what the results are at this point of this attack on this convoy that they said they had excellent intelligence it contained Iraqi leaders trying to escape to Syria. It's just hard to see at this point.

SNOW: And, Barbara, doesn't this get really strange fast, though, because there were reports then that these were -- this is a population that engages maybe in sheep smuggling over the border, but certainly, not military type people?

STARR: Well this has been a well-known -- that's exactly right, because this has been a well-known smuggling route for some time, a route that the U.S. had been watching very carefully. Intelligence officials will say well sure, maybe it was a sheep smuggling route, but on this occasion, these people were being paid to smuggle Iraqis across the border into Syria, that they had intelligence this was going on. But so far they don't have either the people alive or the dead bodies that actually proved their case just yet. They are continuing to look at the site and try and determine what happened there.

But the Syrian government, as the days go on, as you know, Elise, from the State Department, is increasingly being vocal about this. They want their people back.

LABOTT: But at the same time, they really don't want to -- they really don't want to make a big deal of this. There are a lot of tensions in the U.S. relationship with Syria right now. So they're kind of quietly saying we want a release, but they are really not making any large noise right now. But obviously, if they hold on to them for any longer, you might see a little bit more noise from the Syrians.

STARR: Yes.

HAYS: Barbara, what I want to ask you about is the criticism that is so much in the press right now that the Pentagon fought "the war," the main part of the war brilliantly. They were very prepared to do that, but they have not been prepared for the aftermath. They have not been well prepared for a period like this, you know, soldiers getting picked off daily. You just kind of wonder how does the Pentagon respond to that criticism right now? Do they take it to heart or do they have a defense?

STARR: Well there is the Pentagon and then there is Don Rumsfeld. Now Don Rumsfeld says always everything's on schedule. We anticipated all these problems. Things happen. You have really never heard him take a step back.

But I can tell you that people in the military, people involved in the reconstruction, take a much more analytical point of view. Just yesterday, we talked to Jay Garner, the man who was the first civil administrator in Iraq for the first six weeks after the war, and he said, from his point of view, the major lessons learned was as soon as you start planning a war, you have to start planning the peace. He believes that they need to get a much quicker start off the block the next time one of these operations gets under way.

It's proving -- there's just no question, it's proving to be a challenge. It's proving to be a big challenge, and it's going to -- no one is putting an end date on it at this point. U.S. troops could, in fact, be there now for years. So it's hard to see, again, where it's all going.

BASH: Barbara, it's interesting, I was talking to somebody last week who was saying at that point there was so much focus on the fact that weapons of mass destruction had not yet been found in Iraq, and this source was saying you guys are missing the story. The story isn't necessarily that, the story is the fact that it's chaos in Iraq, not only because of the soldiers being killed, but because it has been so incredibly hard for the reconstruction effort to really get up and running. And is that -- is that something that sort of weighing those two issues, those two major issues lingering in Iraq, how does the Pentagon see those two issues? Are they more concerned about the reconstruction effort?

STARR: They are concerned about reconstruction. I would say also there's another issue beginning to brew, there is concern about U.S. military morale. These units, these young men and women, they continue to see their colleagues die, and there is concern about their morale. A lot of these kids were told they could come home. Now it looks like they are staying for the foreseeable future and that could begin to affect morale in the days and weeks ahead.

SNOW: Well, from battles in Iraq to political battles back at home and a veteran of battles in Washington, Senator Thurmond, who passed away this week, we'll be talking about him. I'm here in Columbia, South Carolina, where he was from. We're back ON THE STORY in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. STROM THURMOND (R), SOUTH CAROLINA: We're going to win. We always do. (END VIDEO CLIP)

SNOW: Strom Thurmond, who won a lot of elections in this state, became the longest serving member of Congress. We're back ON THE STORY. I'm Kate Snow in Columbia, South Carolina. Strom Thurmond, of course, passed away on Thursday night.

Let me show you the headline in the state newspaper this morning, "Thurmond's Wish Fulfilled in Final Hours." It's referring to his first grandson at the age of 100 years old. His first grandson was 10 days old and was brought to his bedside just a couple of hours before he passed.

Let me just tell you quickly, this state and the outpouring of grief from this state is incredible. People here loved Strom Thurmond. They re-elected him time and time again. Behind me is a statue of Strom Thurmond that stands in front of the state capitol here. You can see people have left flowers and people have come here and signed a book for the family. Certainly the majority of South Carolinians say they loved this man, he delivered for this state and he will be long missed.

BASH: We watched Senator Thurmond from inside the capital. And there's one story that I can't get out of my head that it was really lost to history because it wasn't captured on camera, and this is a couple of years ago when Hillary Clinton was sworn in the Senate. She was walking down across in front of Strom Thurmond's seat. And Strom Thurmond, with all of his strength, without anybody helping him, stood up and he basically gave her a bear hug. And he said give me a hug. And Hillary Clinton just looked absolutely shocked.

But it was very typical of Senator Thurmond. First of all, of the fact that he was always had a warm welcome for the female senators and a nice kind word for them. But it was also -- it was also it really it's sort of an interesting thing to watch somebody who was nearly 100 years old coming to work every single day in the capitol.

SNOW: And that's what his constituents here tell me that they thought was so special about him. I mean, No. 1, somebody said to me yesterday, you could always go to Washington, you could stop at his office, he would do anything for you. His constituent service was known throughout the state. It's a small state. Everyone knew you could call on Strom to help you with any problem you had. He would come -- if he saw you on the street, he would shake your hand, he would make time for you. In fact, in the paper this morning it says his interest in small people stood out, and that's what they're celebrating here.

One other note, last night I was watching the local television here, they were doing full specials on Strom Thurmond for half hour, hour at a time. One station here ran 11 hours of programming about Mr. Thurmond's death in the last 24 hours.

STARR: But, Kate, there is, of course, another side to the political history of Strom Thurmond. And so the question is today, how do the African-Americans in that state really feel about this man? SNOW: Yes, that's true, Barbara. I mean he has a complicated political history, 100 years, so it's very complicated. He ran as a segregationist candidate, a Dixiecrat, back in 1948, you'll recall. He later sort of renounced those views. He later said look, I understand the state is changing, I'm going to change my politics. He later endorsed -- he had long fought civil rights, but then he later endorsed it. He voted to extend the Voting Rights Act for African- Americans.

I talked to some African-Americans here yesterday who said you know he changed and so I voted for him. And I would say about 20 percent of African-Americans in the last two elections voted for Strom Thurmond. I also talked to a lot of African-Americans yesterday, many of whom didn't want to go on camera, who said that those old -- those old wounds run too deep, that, you know, they didn't believe he had truly changed in his heart and they could never vote for him. And in fact, one woman I talked to on camera yesterday said you know she was glad, in a way, that this chapter is over in their history.

LABOTT: Kate, the first thing that comes to mind when you think of Strom Thurmond is how old he was and how long he served in the Senate. What do you think his actual legacy is going to be? Do you think it's going to be more of a personality and his age and his longevity? Or do you think it's going to be that checkered past and the way he overcame all of that? And what's going to follow? Who is going to follow him, do you think? Is there talk about that yet?

SNOW: Well, there's -- sure. There's a few different answers there. I mean I think certainly the longevity will go down in the -- in the history books. One thing that a lot of politicians and political watchers will remember him for is, you know, he switched parties from Democrat to Republican, and he was part of this movement to get white southerners to vote Republican. And really starting in the '50s and '60s, he was instrumental in getting a lot of white votes down in the South, which helped elect Richard Nixon, for example, in the late '60s. He campaigned for Richard Nixon at that time. So that's one of the legacies that political watchers talk about in terms of Strom Thurmond.

I mean the people here, as I said, talk about his service as a legacy. They say he brought so much to this state. I mean it's not just the statue behind me, there are dams named after him, lakes named after him, buildings named after him. He is everywhere you look in the state. And of course he has been succeeded by Senator Lindsey Graham, formerly a member of Congress. He's now the senator who took over his seat back in January.

HAYS: Of course, Kate, this is going to be a question of history. The question how Strom Thurmond is viewed, but the future, so much tied up in this prescription drug benefit that was just passed, and I think many people are kind of stunned. It seems like this was going to be a legislative battle that would be unending. All of a sudden the logjam broke. What's going on there?

SNOW: Yes, speaking of senior citizens and older people, the drug coverage that passed the House and the Senate, two very different bills, and they passed in the middle of the night Friday morning, very early Friday morning. The key thing in the Senate was Senator Ted Kennedy. Senator Kennedy, a long time supporter of healthcare reform, put his weight behind this bill and said look, I think it's a first step. Maybe it's not perfect, but it's a first step toward adding an entitlement for seniors on Medicare, giving them prescription drugs.

In the House it was a last luck closer. As you know, there was -- it only won by one vote. That means as they try to reconcile these two bills over the next few weeks, it is going to be very, very tough, and it's not a done deal yet. We're not sure that we're going to get a prescription benefit for seniors, but it looks better than it has in a lot of years.

STARR: Well one prescription for getting away from Washington was a story that is still playing out in Mexico that has a millionaire convicted rapist living the good life in a beach resort and a self- promoting bounty hunter that got the fugitive but ended up behind bars himself. CNN's Thelma Gutierrez has the story and is back in two minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO TAPE)

DUANE "DOG" CHAPMAN, BOUNTY HUNTER: Nothing about Luster.

QUESTION: What about this (UNINTELLIGIBLE)?

CHAPMAN: Nothing about Luster. That's it. I'm done.

(END VIDEO CLIP)

GUTIERREZ: That's colorful bounty hunter "Dog" Duane Chapman in Mexico brushing off questions on cosmetics heir Andrew Luster. Now, he was the man that Duane Chapman grabbed while he was in Puerto Vallarta, Mexico. Far from a bounty or a congratulations, Chapman and his crew of five ended up in a Mexican jail cell himself. Now Chapman, his brother, and his son have all been bound over for trial in Puerto Vallarta by a Mexican judge just recently.

LABOTT: Thelma, tell us about this guy. He seems like such a colorful character. He went over the border. That's really not allowed for bounty hunters, not allowed in Mexico. Explain a little bit about why he did it and who he is.

GUTIERREZ: Well that's a good question, Elise. First of all, you have this very colorful character. He is -- he is -- he is pumped up, he wears tight clothes, gold watch, he has long hair. He is the perfect kind of a character that you would want for a TV show. And incidentally, that's exactly why he was there.

He went there with his son, with his brother and a television crew. The whole idea was to go there to have the crew follow him around as he arrested Andrew Luster. But of course things did not turn out anywhere what he expected. He thought that he would get a bounty, and of course, that he would get a big congratulations. Instead, he did something that is considered illegal in Mexico and was taken in by Mexican police.

SNOW: Thelma, were you able to talk to Mexican authorities about this? I mean why did they -- why did they take him in? Do they always take in someone who tries to grab somebody on the street, who tries to be a bounty hunter, because in the U.S. I think it's legal?

GUTIERREZ: Well, I talked to the district attorney in Mexico, and he says, you know, frankly, this kind of thing is just not allowed. I mean if you want to make a citizen's arrest, you have to consult with Mexican authorities first. You can't just simply go and nab someone off the street.

Now keep in mind that in Mexico there have been many, many kidnappings of late and so they take kidnapping very seriously. All of a sudden you have a group of people in front of a taco stand at 5:00 in the morning. You have this bounty hunter with a television crew show up. They grab Luster, wrestle him to the ground, handcuff him. All the people who are standing around are wondering what the heck is going on here. They don't know who any of the players are and so they all jump on their cell phones, they call authorities. They say we think that there is a kidnapping in progress.

The crew takes off with Luster in tow. They run into a blockade. And so you have (UNINTELLIGIBLE) getting out with their AK-47s and saying hey, what's going on here? We're taking you all into custody. And so Mexican authorities say that could have all been avoided had the producer, had Duane Chapman made some kind of a contact with authorities, which they clearly did not.

BASH: Thelma, this story is really remarkable. Hollywood could not have written a better script than this. But I'm interested in the couple...

UNIDENTIFIED FEMALE: Isn't there already a movie in production?

BASH: If not, I'm sure there will be momentarily. But, Thelma, I'm interested in the couple that met Andrew Luster on vacation and came back. And they were looking through the pictures and realized that he was the guy who everybody was on the hunt for. Apparently they were the ones who found this "Dog" Chapman guy?

GUTIERREZ: Yes, that's correct. You have this couple from Seattle. They are visiting this very remote area of Puerto Vallarta or actually, it was Tapik Nirarit (ph). It was another state. And they're in their villa. All of a sudden this fellow comes up, makes contact with them. He wants to buy property in this remote area, which is apparently in a wonderful surfing area, and of course Luster loved to surf. And so he makes contact. He says I want to buy property. They drink out on the terrace. Have a wonderful time.

The couple ends up going back home. They see a television program. They see Luster's picture. All of a sudden they think, oh my gosh, this is the guy that we were partying with at out -- at our villa. They call the owner of the property and they say that -- to -- they ought to look at the FBI's most wanted list. And there they find Andrew Luster's photograph. And so you can imagine they were all very, very surprised.

BASH: Thelma, I want to thank you for joining us. But before we let you go, you're in Phoenix, Arizona, right now for a meeting with the Latinos, a political meeting. Tell us a little bit about that.

GUTIERREZ: Yes, I'm here in Phoenix, Arizona, and basically you have 1,300 elected Latino leaders who are attending the conference of the National Association of Elected Latino Officials, NALEO. And there are 1300 people here. And, the candidates, all the democratic candidates will be showing up today. They will discuss many issues in an open forum. The issues being immigration, education and economic growth for the Latino community. All of this, of course, very significant because they will be addressing those leaders who will, in turn, go back and spread the word among the thousands and thousands of people that they represent back home.

BASH: Well, we are going to be talking about politics next and that is the political fund raising marathon that George W. Bush has been engaged in, that and the headlines. Back in two minutes.

(NEWS BREAK)

(COMMERCIAL BREAK)

STARR: We're going to be joined for a few minutes by our Gary Tuchman in Atlanta who's covering the funeral today in Atlanta of former Mayor Maynard Jackson that passed away a few days ago. Quite a significant figure, of course, in the south in Georgia in Atlanta.

Gary, you're there today. Tell us a little bit about what's unfolding there this morning as people begin to arrive for the funeral service.

GARY TUCHMAN, CNN CORRESPONDENT: Well, Barbara, as we speak, members of the general public as well as dignitaries are going inside the Atlanta Civic Center, here in downtown Atlanta. The facility fits 4600 people; they expect every seat to be filled. They say they'll take a few standing room, but pretty much they anticipate having to turn back people because of the popularity of this man, Maynard Jackson. He was the first black mayor of Atlanta, Georgia; also the first black mayor of any big city in the southern United States.

You know, Atlanta, this city, did not have a lot of the violence that many other southern cities had during the civil rights era. But they had same problems here in Atlanta and this being the largest city in the south, it was very significant when back in 1973 Maynard Jackson was elected as the first black mayor. Ever since then, there have been all black mayors in the city, three other mayors, including the current Mayor Shirley Franklin, who is also happens to be the first woman mayor of Atlanta.

So, he's a very, significant figure in the city. Larger than life physically, larger than life in every other sense in terms of what he did politically for the city of Atlanta. Many here people believe -- many white people and certainly many black people believe he helped to make the city a fairer place. So, it's considered very tragic, especially tragic when he passed away last week because he was only 65 years old. But he served three terms as mayor in Atlanta from 1974 to 1982, also from 1990 to 1994.

And because of that a wide range of speakers today, including the former president of the United States, Bill Clinton, including Jesse Jackson, including the current mayor of Atlanta, including the former Mayor Andrew Young, the former governor of the state Roy Barnes, and Corretta Scott King, the widow of Martin Luther King -- Barbara.

SNOW: Gary, it's Kate Snow in Columbia, South Carolina. Tell us a little bit more about what Mr. Jackson did for the city. I know I've read and I've lived in Atlanta. He built the big airport there for one thing. What else did he do?

TUCHMAN: Well, Hartsfield Airport here in Atlanta used to be a very small, relatively regional airport. It is the busiest airport in the world in terms of number of people who fly in and out every year, and yes, he was the man behind it who helped build it. But not only did he build this airport; but back in the early days in the '60s, 1 percent of the business associated with the airport like the concessions were operated by black people. He raised that percentage, some people call them set aside programs other people say it's just more fair. But now you're talking about 40 percent of the businesses associated with the airport are operated by black business people.

But he also, according to many people who lived here in Atlanta for decades and decades, just made the city a fairer place. Not just for black people, but for the white residents here of Atlanta, Georgia.

One thing I want to tell you guys, it's very interesting. And we hear a lot about this politician, we haven't heard much about him as a human being. I want to read you one last thing before we go, from his wife, Valerie Jackson, writes in a memorial book that's being used today, this quote talking about his sense of humor.

Quote, "We had a running joke between us that somehow he always managed to be out of town when a crisis hit. The beginning of labor for the birth of our first child, floods from the rains, hailstorms, the first earthquake. At times, when nothing seems certain, one thing I could always count on was my husband out of town. When I got the call, I never expected to receive so soon last week, I had a smile through my tears to realize in during the greatest crisis of my life, Maynard was, again, out of town."

Back to you.

STARR: Well, Gary, thank you. We know that you'll have live coverage of the funeral of Maynard Jackson at the top of the hour. And now, back to ON THE STORY.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: I'm loosened up. I'm getting ready. But I'm going to need your help.

(END VIDEO CLIP)

BASH: President Bush began the week with a New York City fundraiser. Ended the week in California fund raising.

Welcome back. I'm Dana Bash in Crawford, Texas where President Bush arrived early this morning, stayed up very late, especially for a president who admits he doesn't like to stay up late. And that is because he had a very long day in California yesterday, headlining fund-raisers in San Francisco and Los Angeles. He raised more than $5 million in one day. And now his campaign is saying that he could get to the total -- grand total of $30 million or close to it by the end of this filing period. And that is, according to Democratic sources, probably more than all nine Democrats are going to report that they have fund raised combined.

So it is been a huge week for the president in terms of getting his money together. And I should note that last week as the president started the fund raising in Washington and for people who paid $2,000 they got hot dogs and they got nachos. But by yesterday, I was checking out the plates in the ballroom in Los Angeles, and all is right with the world because it was a traditional rubber chicken dinner.

STARR: Well, Dana, he's raising this ton of money. He doesn't have a primary opponent. This is going to be for the general election. How much money does he think he really needs and this going to start translating into votes for him? Is there any guarantee of that?

BASH: You know, Barbara, what's interesting is this money is actually for the primary. And you're right; he doesn't have a primary opponent, which is what is so extraordinary about the amounts that he is going to raise. You know, his campaign, they think he might raise close to $200 million in a primary season where he doesn't have anybody to run against; at least the Republicans.

So, what is likely to happen is that he is going to amass this money and do something along the lines of what we saw Bill Clinton do in 1996. Which is put up ads early, somewhat to inoculate himself, to talk about the issues he wants to talk about. And also just to have the campaign money in reserve just in case. You never know what is going to happen.

But in terms of the Democrat, Barbara, you know I have talked to a couple of campaigns yesterday they say, look, they understand that nobody can tell you that money doesn't matter. But they say money doesn't buy you love and they are watching the economy closely because they feel that is the No. 1 issue.

HAYS: You know Dana, I want to ask you though, is there any sense that if Bush is just steam rolling and the bucks are pouring in, that this could backfire. People who are not pro-Bush have criticized the tax cuts for helping the wealthy. There's been more than one Democrats saying, see, he gave the friends big tax cuts. Now they're paying him back with big contributions. Are they sensitive to that? Do they feel that this could just look like, as his opponents would say, Bush buying another election?

BASH: Well, you know, President Bush raised a lot of money in 2000 you know when he did have Republican opponents. And you're right; the Democratic line has been that this is pay back. This is the -- some of his big donors giving back the money that they got because of his tax cut.

But when you talk to the folks in his campaign, what they're pointing to is the fact that the RNC, not the campaign, but the committee has gotten about 900,000 new donors in the past few months. Some of those donors have only given like, $28 or something like that. But I talked to an official saying it doesn't matter $2,000 or $28, it's a vote. And that is something they're watching very closely, not only the amount of money that they're raising, but the breadth of his support and whether or not it is actually on the rise.

Well, while the president was on the campaign trail, his national security team has been keeping watch on the world. I'll be back with the story of a possible Israeli withdrawal from Gaza and how talk of a terrorism cease-fire in the Mid East is being viewed back here in Washington.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: I'll believe it when I see it, knowing the history of the terrorists in the Middle East. But the true test for Hamas and terrorist organizations is the complete dismantlement of their terrorist networks, their capacity to blow up the peace process.

(END VIDEO CLIP)

LABOTT: President Bush on Wednesday saying the true test of a promised Mid East terrorism cease-fire is not talk, but action.

Welcome back. We're on the story and I have to say, this cease- fire comes as Condi Rice is arriving in the region today. There's talk of a possible Israeli withdrawal from areas Gaza and later Bethlehem.

And the true test is this cease-fire is for three months. What happens after the three months? The Palestinians are really going to be under pressure to crack down on Hamas and Islamic Jihad and these other groups. And it kind of makes you wonder, why theses groups if they know they're going to be dismantled eventually, are talking about a cease fire in the first place.

SNOW: Elise, it all sounds very positive, too, but what does the U.S. have to do now? You mentioned Condoleezza Rice is already in the region. Do we just have to keep -- does the U.S. keep having to send people over there to make sure it really happens?

LABOTT: Well, I think what's interesting is you've seen an unprecedented level of engagement by the Bush administration. You saw President Bush out at the summit. Then Secretary Powell. Now Condi. It's really going to take, Kate, a real increased level of engagement, a consistent level. Secretary Powell was giving a speech about diplomacy as tending a garden. But this garden needs daily maintenance so those weeds are going to keep popping up.

You know and they also have to give Prime Minister Abbas some breathing room. If there is a little attack here or something like that, they have to give him some breathing room to crack down. And they also have to be tough on the Israelis now to not take these assassinated -- these targeted killings, so to speak, and to get both sides to really follow through on the commitments to this Mid East Rose Map.

BASH: Elise, you were talking about engagement, and you know, the White House, of course, put out a statement yesterday saying that this agreement is a good first step. It's sort of could be read as cautiously optimistic. But in talking to some officials behind the scenes, they made it very clear that U.S. envoys and the U.S. officials on the ground were instrumental in getting this thing done. What are you hearing about the interaction between Ambassador Wolf there and others and how they actually got this thing together? How did it happen?

LABOTT: Well, it's been a long process. They've been talking about this for a long time when Secretary Powell was out there. Then they sent Wolf. Now they sent Condi. It's a step-by-step process.

And it really came together because you have talk of the Palestinian cease-fire; the Israelis are really not going to pull out of the areas unless they have a pretty good idea that maybe these terrorism attacks could stop. And the Egyptians were also instrumental in kind of getting this all together. Getting the Palestinian groups to say, OK, we'll give this a chance and see what happens.

STARR: But Elise, on the streets of Gaza, on the streets of the West Bank, what do they do about the radical groups on the streets; the al Aqsa Martyrs Brigade. What about Yasser Arafat? How do you change the behavior on the street?

LABOTT: Well, I think what the U.S. is hoping is that the Israelis will follow through on some of their commitments. They have released already some of these tax revenues. They also want to release -- they want the Israelis to release some prisoners that you know, haven't really been charged with anything. Just being held. They want the Israelis to ease up on some of those checkpoints.

And if they give them some breathing room, if they give the Palestinians a better climate, they can see that there's a better way of life, this will make the extremists ideology such as Hamas and these other groups less popular. And the Palestinians are going to see, yes, we can get our state. It's a better way of life, we're going to support Prime Minister Abbas and really go for it this time.

HAYS: Well, it's certainly, a story that everyone likes to see, making progress. And of course, politicians and the rest of us certainly have one eye on the Middle East. But we're paying close attention to the bottom line in the paycheck and interest rates back home. Check out this cartoon from Daryl Kagle of slate.com, showing Federal Reserve Chairman Alan Greenspan pruning interest rates down to the stump, maybe thinking he's cut as far as he can without killing the whole tree. I'm back in two minutes ON THE STORY of low rates and high hopes.

UNIDENTIFIED MALE: Kathleen Hays is a business correspondent for CNN. She hosts on "THE FLIP SIDE" on CNN FM, 11:00 a.m. to 12:30 p.m. She has a bachelor's and master's degree in economics from Stamford University.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DIANE SWONK, BANK ONE: This is a consumer-dominated economy not a saver-dominated economy. So clearly, lower interests rates do on not stimulate the economy.

(END VIDEO CLIP)

HAYS: Stimulate the economy, that's the Federal Reserve's hope. And that's Diane Swonk, Bank One with a fairly upbeat response to the cut in the interest rates.

Welcome back, we're ON THE STORY.

The Federal Reserve did cut its key short-term rate to 1 percent. That's the lowest level since 1958, that's back when kids doing rock n roll and Dwight D. Eisenhower was in the White House. Another thing back then, inflation very low as it is now. The Federal Reserve worried that the low inflation rate is a reflection of a weak economy.

They want to make sure that the economy, which is shown signs of growing and getting back on track continues to do so. Little disappointment on Wall Street that they didn't make an even bigger cut, but the stock market didn't perform too badly. And now all eyes are on the future. The optimists saying it's going to help, the economy is going to start growing again.

BASH: You know, Kathleen, older Americans got some good news this week because Congress seems to be closer to giving them a prescription drug benefit for Medicare. But this is not good news in terms of the interest rate, right? It's not something that they actually would welcome.

HAYS: Oh, and the howls really coming from a lot of people. I have to tell you on CNNFM, we take calls on a lot of our programs. A lot of people called in to say, hey, what is the Fed doing?

Think about it. If you're retired person and maybe one of the things, a nice, safe conservative investment would be a bank certificate of deposit, a bank CD. You might have had some paying you an interest rate of 5 percent. Now, they're going to expire and you're going to have to buy some new bank CDs, maybe they're only paying you 2 percent.

Some people think that the reason that the Federal Reserve may not have cut its key rate actually to 0.75, a full half percentage point cut, something more dramatic, is because of money market funds. Some of them only yielding maybe a half percent right now; by the time you take out expenses, people said that if the Fed cut too much, those money market fund returns could go to zero and that's the kind of thing that could really rattle a lot of investors.

SNOW: Kathleen, here's the flip side, though. All of my friends and my family are refinancing their houses again because the rates dropped keem to seep drop -- keem to -- seem to keep -- excuse me, dropping. Is that still going to keep happening? Are the mortgage rates going to keep going down because of this?

HAYS: Now, see this is the irony and something that's very, tricky about watching the financial markets. The Federal Reserve controls really short term rates. But longer term rates in the bond market, which determines those mortgage rates, well, that's determined by the market.

And the irony of the Fed's move and why to a certain extent it wasn't maybe quite the success they hoped for, is that after they cut their short term rate, the bond market said, gee, I guess the Fed's signaling they're not going to cut anymore. And we actually saw bond yields rising. So, we're going to see mortgage rise a bit now.

The good news for you and your friends Kate, and for everybody really is that people don't expect mortgage rates to rise that much. You know, if they go to 5.5, even 6 percent, they're still a bargain. But again, in the world of, you know, assessing what the Fed did, some people say if they had done the more aggressive move, they might have gotten that better response. And we might have seen mortgage rates a bit lower.

LABOTT: Kathleen, what is this going do to the dollar overseas? I was abroad recently and the dollar is so weak. You can't afford a thing.

HAYS: Well, you know if you're a tourist, that's a great question. It's tough to go to Italy and then you can't afford the great leather bag, may be you could have, or that great leather jacket.

But the point is we're trying to help U.S. manufacturers. And they feel that the dollar is not weak. They just feel like it's getting back to a point where it's level where they can compete. Where we can sell our goods overseas. So that's always a two-edged sword.

But actually the Fed is probably hoping to see that dollar weak, maybe even weaker at least below where it was, and very happy to see stocks rising. They're hoping the stock market will say that this, you know, this latest rate cut along with the tax cuts is really going to have the economy back in the rate second half where it's growing and really creating jobs again. STARR: OK, Kathleen. No insider trading tips from on Wall Street. We don't want you to do that. But just amongst us, what in all of this looks now like a good investment? If you're interested in income.

HAYS: If you're interested in income, take a look at REIT, which are real estate investment trusts, they're holding up fairly well. Dividend paying stocks, remember we got tax relief on dividends. A lot of people are saying it's not a double-digit return but it might be a pretty, good bet for a lot of people on those blue chip stocks.

STARR: Well, thanks to Kathleen. Thanks to all of my colleagues, and thank you for watching ON THE STORY. We'll be back next week.

Still ahead, a CNN special, remembering former Atlanta mayor Maynard Jackson. At 11:30 Eastern, 8:30 Pacific, CNN's "PEOPLE IN THE NEWS" focuses this week on Arnold Schwarzenegger and his possible run for governor. And at 12:30 p.m. Eastern, 9:30 a.m. Pacific, "CNN LIVE SATURDAY. "

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

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Remembering Strom Thurmond>