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On the Story
U.S. Tries to Get International Community to Help in Iraq; Bush Switches Direction on Steel Tariffs; Is Economic Recovery at Hand?
Aired December 06, 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.
ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we've covered this week. How are you doing? I'm Andrea Koppel, in Washington, on the story of the latest push to get some help for the U.S. in Iraq.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: And I'm Suzanne Malveaux, in Washington, on the story of President Bush switching direction on steel tariffs. Political costs still being tallied.
KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, in New York, on the story of an economy that seems to be signaling that recovery at long last has arrived. Also coming up, we'll talk to CNN's Jakarta bureau chief, Maria Ressa, about her new book, "Seeds of Terror," about al Qaeda's operations in Southeast Asia.
We'll talk about new terror warnings for Americans overseas. And we'll listen to the president's weekly radio address at the end of the hour.
Now straight ahead to economic recovery, and are we there yet?
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Productivity is high. Business investment is rising. Housing construction is strong. The economic stimulus package that we passed out of the United States Congress is working.
(END VIDEO CLIP)
HAYS: Is that applause for the president or for a bustling economy? That was President Bush on Tuesday at a fund-raiser in Pittsburgh, making the point that the numbers look good. And I'll tell you, it's hard to argue with the president on this one.
Productivity, growing at its strongest rate in the third quarter since 1983. A very strong survey on manufacturing this weekend. And finally, the jobs report at the end of the week are not quite as strong as Wall Street had expected. But job creation for four months in a row, most economists say, yes, we have turned the corner.
MALVEAUX: Kathleen, you know, one of the indications that things are going well is you see President Bush out there more and more. He's traveling the country, talking about his economic message. His strategists really think that this is working for him.
It was just yesterday he was at a Home Depot in Baltimore. But what does this really mean? And if you take a look at the weather outside, the Bush administration is really hoping that people are going to go out, they're going to do their Christmas shopping, their holiday shopping here. But are we really seeing this growth continue?
HAYS: In terms of the holiday shopping, you know, the jury's still out on that. The numbers so far may be a little disappointing compared what people had hoped for. And you know a snowstorm in the Northeast, blizzard conditions in New York City today, are not going to help this weekend at all.
But when you look at the jobs picture -- and that's what people say counts most -- we had an increase of about 57,000 jobs in November. Wall Street was hoping for something at least three times that big. Now of course there were some strikers out west. The Labor Department said you could have added back in about 30,000 people. But within that report there was some hopeful things.
The unemployment rate edged down a little bit. There's a survey the Labor Department does of people at home. It showed a little more strength. In fact, quite a bit more in jobs than you would have gotten from the survey of businesses.
And, you know, businesses are actually extending hours worked a bit, too. So maybe they're a little bit cautious still about hiring, but it would suggest there's enough demand, enough orders coming in, that the job front is improving. And if we keep seeing the orders coming in for a lot of manufactures, and even our services companies, then people say the jobs numbers will get bigger. Maybe not big enough to bring the unemployment rate down a lot yet, which of course is very important to the president., because that's headline unemployment number that a lot of Americans focus on.
KOPPEL: Well, it's one thing, Kathleen, to talk about more people getting jobs, but what about wages, not just for the new employees but for existing ones?
HAYS: That's one of the weak spots in this economy right now, Andrea. In fact, in November, average hourly earnings, which is basically a number of wages and salaries, was up just a tenth of a percent year over year, up only 2.1 percent. That's the weakest growth since 1987.
And again, this gets back to that whole story about productivity, competition from overseas. A lot of people happy to hold on to their job, happy just to get one. If they finally do get one, not pushing for stronger wages. But people would say, hey, inflation is still very, very low, so maybe you shouldn't focus so much on the wages again. Maybe more focus on the benefits, which of course is another issue for the president as we look to next year.
MALVEAUX: But Kathleen, about the productivity rate, I mean, I guess it's kind of a double-edged sword here, because, on the one hand, if it increases, they're getting more, and they're squeezing more out of us as workers. But it doesn't necessarily mean more jobs. Is that right?
HAYS: Well, the whole point -- you're absolutely right, because, again, we're so efficient, things are so lean and mean, that companies can -- and there's a lot of slack in the economy, too. A lot of excess capacity in industries like steel, a lot of the manufacturing industries. But, again, that's why people are hoping that this growth rate will continue to ramp up to get the jobs going.
Now, I think one -- an issue from now until the end of the year for the Congress to look at is the number of long-term unemployed is at a 20-year high of being more than eight million people unemployed. Something like a fourth of them have been out of work for four months or more. That's a pretty high figure.
So this question of whether or not to extend the federal program to give more unemployment benefits to people when their state benefits run out may get to be a little more of a political hot potato, again, as we get into the end of this year and early next year. Unless people decide, hey, the politic thing to do at this point for Democrats and Republicans is just to say, let's pay a little more money, and keep people going until they can get a job.
KOPPEL: Something that was looking pretty hot this week was the Dow. They came perilously close, or maybe hopefully close, to cracking the 10,000 mark. Do you think it will soon, Kathleen?
HAYS: Well, you know, it's so funny, because we do focus so much on Dow 10,000. Apparently actually getting above 9,900 from a technical level the traders say was really important. And Dow 10,000, again, maybe something that we folks in the media focus on more.
This week, people just maybe took the opportunity to take profits when the employment report, the payrolls numbers smaller than expected. The giant chipmaker, Intel, raised its guidance for next year, but not as much as people had hoped for. Said its wireless business not doing as well as they thought.
But people said basically excuses to take profits. Ten thousand is probably just around the corner. And again, right now it looks like the momentum in the economy is there enough to justify where the stock market has gotten to and where it keeps going.
And remember, election years are very good for the stock market. Some -- even some of those bullish people I speak to about the stock market say maybe after the election next year they're going to get a little more cautious. But for now, people say it looks pretty good, just a lot of caution at the end of the year.
MALVEAUX: And Kathleen, of course this holiday season you don't think that a toy store would be in trouble, but there's news about FAO Schwarz. Can you tell us about that?
HAYS: Well, you know, poor old FAO Schwarz, you know, an icon of the toy business, this is the second time it said it's going into bankruptcy. It declared bankruptcy early last year and was supposed to take that opportunity restructure and get back on its feet. This time around, it looks like they're going to get the FAO Schwarz ready for sales, they're liquidating their Zainy Brainy line.
You know, bottom line, Wal-Mart is the toy giant now. They can buy toys in huge bulk. They buy a lot from China. They can sell it at the cheapest prices.
Americans are trained to look for a country. It's very tough, even for a big specialty retailer like FAO Schwarz. Think how much tougher for the mom and pop toy store to compete with something like Wal-Mart.
KOPPEL: Yes, but you've got to love that FAO Schwarz store. I -- I mean, I know there are a lot of adults who love hanging out in there.
HAYS: Well, remember "Big," when Tom Hanks was on the piano with his feet and doing the little dance, you know.
MALVEAUX: That was classic.
KOPPEL: Oh, it was a great scene.
Listen, the Bush administration may wish its diplomatic scorecard matched some of those economic numbers, but there is no such luck. I am back ON THE STORY out of this break, and the U.S. still trying...
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ADAM ERELI, STATE DEPARTMENT SPOKESMAN: The Seder Village (ph) housing compound in Riyadh has been under active surveillance by terrorist elements, and that other Western compounds within the kingdom may also be targeted.
(END VIDEO CLIP)
KOPPEL: That's Adam Ereli, State Department spokesman, on Tuesday, talking about new warnings of possible terrorism dangers in Saudi Arabia. Welcome back. We are ON THE STORY.
It wasn't just the warnings in Riyadh, in the capital of Saudi Arabia, but also the ones in Nairobi. In that case, in particular, they were uncorroborated. It came in an anonymous e-mail. But nevertheless, the State Department decided to take it seriously and put out those warnings.
HAYS: Andrea, there's great specifics in this warning, right?
KOPPEL: That's exactly right. Usually, you know, they put out these warnings and talk about threats to Western interests and very vague kind of terms like that. But this time, they mentioned two hotels in Nairobi by name. They're in downtown Nairobi. They said they actually had their photographs up on the Web site.
And they also mentioned, as you heard Adam say there, that specific, the Seder (ph) housing complex in Riyadh. And there's a couple of reasons for that. The main one being that this was an anonymous e-mail. They weren't burning sources and methods to put that out there. And also, the FBI really made the decision.
They're usually the ones that restrain the State Department, but they made the decision in this case to put the information out there. And so the State Department felt that it had to then go forward with issuing the terror warning to Americans.
MALVEAUX: And, of course, Secretary Powell as well, invested in trying to get more support from Iraq from NATO members. How successful has he been?
KOPPEL: Well, you know he went to Brussels this week and made very clear that this was not a specific request, but it was more than just a trial balloon, a leak from an anonymous official. He sat down, met with officials, and then came out with the soon to be 26 full- fledged members of NATO, and said, look guys, we could really use more help from you. And he came out afterwards and said, nobody opposed it, which is a positive sign.
But in practical terms, this is going to be more symbolic than anything else. Unless -- this the is big caveat -- unless the two big cheeses of NATO, France and Germany, who opposed the war, unless they say they'll put in troops. And most people don't think that is very likely.
HAYS: Yes, I guess you could say the big cheese and the big weiner schnitzel are something, if you're using those kinds of analogies, Andrea. But again, what are the chances? I mean, update us on the relation right now with France and Germany.
KOPPEL: Right now, you know that President Bush has met with both the German chancellor, Gerhard Schroeder, and with French president, Jacques Chirac, in recent months. They are -- and, in fact, some analysts view this, if France and Germany do support this, and not just with troops, but if they support it in the sense that they don't veto an action at NATO headquarters, this could be viewed as a reaching across the -- across the Atlantic to try to further heal the rifts of the war, the opposition that led up to that.
But, I mean, again, getting back to what this means tangibly on the ground in Iraq, you already have 16 out of those 26, again, existing and soon to be members of NATO who have troops on the ground. But really, only four of them -- you've got Italy, Spain, Poland, and the U.K. that are carrying the lion's share of this burden. So kind of going back to it, unless France and Germany ante up, which no body really expects they will, what does this mean on the ground? Not very much. It's much more symbolic than anything else.
MALVEAUX: And of course, intricately linked is this whole idea of bringing the Israelis and the Palestinians back together, back to this road map. I mean, many of the European allies, as well as Arab allies, say that that is really the key to getting a lot more support inside of Iraq. Andrea, what has been the situation? You have Secretary Powell now involved with players who we never even heard of before. KOPPEL: Right. Well, certainly haven't been in the news in a little while. These are former Israeli, Palestinian officials.
The guy you see on your right there is Yossi Beilin. He's the former Israeli justice minister. And the man on your left, who you can just make out there, is Yasser Abed Rabbo. He's the former Palestinian Authority information minister. He is also still very close and very plugged in to -- with Yasser Arafat, the Palestinian leader.
Both of them, just this week, after two and a half years of secret negotiations, signed what's known as the Geneva Accord or the Geneva Initiative. This is a deal that hammers out in specifics what would a democratic Palestinian state look like, how would it work? They would share Jerusalem.
How would Palestinian refugees return? What would a Palestinian state look like? The violence would have to end. All the most difficult, nitty-gritty issues that have kept the two sides apart all these years.
Powell was very controversial, did sit down with them this week, a long with a senior White House official, Elliot Abrams. This was something Israel opposed, but the administration made the decision. They have to listen to these ideas, even if, as one State Department official told me, unless you have the two governments -- these are former officials -- two governments that sign off on this, it really doesn't amount to a whole lot.
HAYS: But Andrea, this does seem to be touching the heart of a lot of people. There's a significant number of people in Israel support it. I think when people see any sign that two sides could agree on some very, very tough issues, issues that have kept Israel and Palestine apart, you kind of almost wonder if the leaders of these countries are rejecting it because they don't want their thunder stolen, they don't want their power taken away. And if momentum would start building for this, it seems like it could kind of shift the rug under, for example, Ariel Sharon's feet a little bit.
KOPPEL: Well, that's certainly what Yasser Abed Rabbo and Yossi Beilin are hoping. I should point out, Yossi Beilin is a member of the labor party in Israel, an opposition party to Ariel Sharon's Likud.
That is what they're hoping. They're hoping that if they inspire the peoples on both sides to say, here is -- here is a deal that's -- you know, that's on the table that we've signed -- OK, we're not in government -- that they can get that momentum from the grassroots up. But again, it remains to be seen whether or not the two leaders of either side are going to support this. Right now, Ariel Sharon is strongly opposed.
MALVEAUX: And from the diplomatic world to a crime that has law enforcement up in arms, the killing of an assistant U.S. attorney. We're back on that story after this.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
THOMAS DIBIAGIO, MARYLAND U.S. ATTORNEY: At this time, the evidence indicates that he was murdered. Jonathan served as a federal prosecutor in Maryland for four years. He served this office. He served the community and in the interest of justice with great dedication and commitment.
(END VIDEO CLIP)
KOPPEL: That was U.S. attorney in Maryland, Tom DiBiagio, announcing the death of assistant U.S. Attorney Jonathan Luna. Welcome back. We're ON THE STORY here in Washington. The Washington bureau, Elaine Quijano, has been following the case and join us now.
Elaine, do they think that it is any way linked to the case that Luna was working on, the case of Dion Lionel Smith (ph)? And he had just worked out this plea agreement just hours before.
ELAINE QUIJANO, CNN CORRESPONDENT: That's right, Andrea. Well, what I can tell you that -- just going on the background of this -- Dion Lionel Smith (ph) was one of two men on trial for drug conspiracy charges. There had been a plea agreement that had been put on the table a couple of weeks before this -- before Wednesday.
And Wednesday evening, those agreements were finalized, these plea agreements were. And the lawyers for both these men say, because of that, it doesn't make any sense. Why would their clients -- it would not be in their best interest. Why would their clients want to see any harm come to Jonathan Luna?
Now, sources close to the investigation say that they are -- they appear to be shying away from any focus on these two men. Of course that was the initial suspicion among the reporters out there. Of course, all the questions being directed in that way about whether or not these two men had anything to do with it. But these lawyers do bring up a good point, the timing of it just doesn't seem to make sense. These lawyers say, if anything, it would have been -- it would have made more sense for something to happen before these plea agreements were in the process of being finalized.
HAYS: Elaine, so then let's look at the -- I imagine since this was a man who was a prosecutor, there are many cases, many motives, many people that are being examined now. In terms of the brutality of the crime, stabbed three dozen times, signs of torture, left in a creek apparently while he was actually still alive, is there any sense from the nature of the crime the kind of perpetrators they might be focusing on now?
QUIJANO: Well, right. Obviously, that's what investigators are looking very closely at. As a federal prosecutor, he has come up against some very violent offenders.
The kinds of crimes that he has prosecuted included a crack cocaine distribution network, included things like child pornography case, an Internet sex sting. So they're going to be looking very closely at all of that. And at this point, they're really not ruling anything out.
MALVEAUX: And it was so brutal, the way he was killed. Is there any indication of motive, that this was perhaps personal or there was a vendetta against him? Do they have any sense of just why it was that he was so brutally murdered?
QUIJANO: Well, that's exactly what they're trying to get at, the heart of that right now. Obviously, 36 times, 36 stab wounds, to be exact, those are the kinds of things that they're going to be looking very closely at in terms of, was this personal, was this random?
There was money that was found in the vehicle. His vehicle was found some 70 miles away from Baltimore, in Lancaster County, Pennsylvania. His cell phone was there as well.
You know, that certainly raises the question if this was a robbery, a random act of violence, why was there money left in the car? So those are the kinds of things that investigators right now are exploring.
KOPPEL: As you listed, Elaine, U.S. attorneys -- for that matter, many prosecutors -- are involved in a lot of really gruesome, sort of underworld type of cases. How rare is it for a U.S. attorney, for a federal prosecutor, to be murdered?
QUIJANO: Well, it's extremely rare. And I should tell you, yesterday, I went to the U.S. attorney's office in Baltimore and I talked to an official there. And she said obviously everyone there is very shaken up. So much so, they have taken precaution.
They are, they're taking steps to make sure that their assistant U.S. attorneys there are protected. She didn't want to go into any details, obviously for security reasons, but they are taking it very seriously. Until investigators have sort of narrowed their focus, they don't want to take any chances.
HAYS: And I would assume that since clearly one of the good guys was killed, a man who went after some of the most heinous crime we face in our society, that the state government -- the federal government, actually -- would be putting tremendous resource now into capturing whoever did this.
QUIJANO: Yes. Well, when word of the story broke, I can tell you there was a holiday party going on at the U.S. Justice Department here in Washington. And it was really obviously the talk of that party. And they are very determined. The attorney general, John Ashcroft, came out with a statement basically saying, we are going to put all our resources into finding out who is responsible.
MALVEAUX: Such a sad story. I know he has a wife and several young children as well. Elaine Quijano, thank you very much. We'll be watching your updates on this story.
And now on the snowstorm, here's a riddle for you: the Bush administration found itself in a steel box this week, involving trade, tariffs and politics. I'm on that story. But up next a check of the top hour stories, and then live to New York Central Park. A major winter storm is heading up the East Coast.
(COMMERCIAL BREAK)
MALVEAUX: We're ON THE STORY this week of bad weather here on the East Coast. Joining us now from Central Park is CNN's Jane King.
I do not envy your job, Jane. You've covered one too many snowstorms, but you're doing a great job out there. Tell us what it's like.
JANE KING, CNN CORRESPONDENT: Thank you so much, Suzanne. Actually, it's starting to get a little fun. People are walking around. A lot of gutsy tourists I've met.
In the past 10 minutes, someone from Texas, Arizona, a couple of people from England, Scotland, Virginia. So they're all over, and they say they're planning to do exactly what they had planned to do otherwise. They're going to go shopping, see shows, and they're just going to try to make the best of this situation.
Now, we officially in New York City are under a blizzard warning right now. That started at 10:00 a.m. Eastern Time. That will continue until 10:00 p.m. tonight.
We expect another five inches of snow or so. In fact, we have eight inches in Central Park during the first phase of the storm, which was last night. And the winds are expected to pick up as well. Forty to 45 mile per hour winds are predicted. So that's why we had the blizzard warning -- Suzanne.
HAYS: Well Jane, you know, it's interesting that -- thank goodness I guess that this didn't happen last weekend, when people were trying to get back from their Thanksgiving holidays. But another thing that's interesting to me, we New Yorkers have been very well prepared for this because the weather forecasts have been spot on.
KING: It has been. In fact, we first started hearing talk of the NorEaster on Wednesday. And a lot of people didn't take it quite seriously. They were going to wait a couple of days and see exactly what happened. But it seems like as we approached yesterday and today, it started to become even more of a serious storm.
And when I got home last night from work, I found out we had a blizzard warning today. So it became more serious of a storm as it got closer.
KOPPEL: Jane, my first question is, how many snow angels have you made so far? No, seriously, my real question is, in terms of -- obviously, it's much better that it happened on a weekend, but how good is the city right now? How is it going in terms of keeping the roads clear, the main thoroughfares, the bridges, the tunnels?
KING: Well, the roads, right now, it's slow going. But there is movement. I'm looking at taxis, the carriage rides are still going, several buses have gone by. The subway systems are working very well.
Now, I knew this morning that a couple of the levels of the George Washington Bridge, as well as another bridge, were shut down because of ice. But you could still go on the other level.
But the city's still moving. It's a little slower than normal last night, very slow going getting home. But I was really struck by how patient New Yorkers are.
It seems like we've been hit by several catastrophes over the past few years, and it still strikes me how well New Yorkers take this. The big blackout, we had a big snowstorm over President's Day. But it is good news that it hit on the weekend in terms of jobs and commuting people to and from work.
Now, the retailers might have a different story. A lot of them were looking at this weekend as the big weekend for Christmas shopping. But a lot of people here say they're still going to go out and shop.
MALVEAUX: And Jane, my old stomping ground in Boston, how are they faring? I understand there's quite a bit of snow up in that area. There are pictures of Boston as well. And if I could also ask you about some of the travel arrangements. How is this affecting flights?
KING: (UNINTELLIGIBLE) yesterday from the three major New York City airports. And if this storm develops as it is expected to do, we're not going to see much travel in and out of the airports today as well.
They do plan to make up those flights. In fact, the couple that I talked to from Scotland, they say that their flight has not been canceled; it is scheduled to go out tonight. But it will be delayed.
So we'll see. As we get a little closer, they might be spending another day in New York. That's what I told them. And they were OK with that. But yes, they were fine with that.
But in terms of just moving around, a lot of people are getting out. They're bundled up and trying to make the best of it.
HAYS: Jane, I want to know if this is going to last. Because for people who live in the Northeast, if you want to go skiing, it really helps if you get early snow, if it's a cold winter. And just when you get your hopes up, by Monday it's sunny and is raining or something and all the snow is gone.
What's the outlook once we get past the worst of this blizzard warning?
KING: Well, in fact, it looks like we'll have temperatures, highs in the 40s next week. In fact, Wednesday, almost near 50 degrees. We're going to see quite a change in the weather forecast over the next few days. So some of this is going to melt. But they'll probably -- we're going to get enough snow, it sounds like, perhaps even 15 inches in New York. So some of it might be sticking around.
MALVEAUX: Well, Jane, keep warm. You look great out there. All the best to you. We're glad you're doing this one for us this time around. But from...
KING: OK. Enjoy the warm studio.
MALVEAUX: We're spoiled, what can I say?
From winter storms to political fallout this week over a controversial switch on trade. We're back on that story in a moment.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: America's consumers, the American economy is better off with a world that trades freely and a world that trades fairly.
(END VIDEO CLIP)
MALVEAUX: President Bush this week talking up the benefits of free trade, as he reversed himself and lifted the tariffs he had put on imported steel 21 months ago. This was a very irritating story to the White House.
First of all, "The Washington Post" broke it earlier in the week. We were quickly able to confirm this through our own sources and really got much more ahead of the Bush administration, their announcement, than they would have liked.
The president ended up in Pittsburgh; he was at a fund-raiser. The story came out. One of the co-hosts of this fund-raiser was no less than the CEO and chairman of U.S. Steel, who was actually getting some of those -- raising some of those dollars for the president. But ultimately, the bottom line was is that the Bush administration, administration sources saying they really had very little choice in the matter.
They faced $2.2 billion in sanctions from the EU, from other countries. And there were two things that were happening, the economic calculus and the political calculus. One, we can't afford this, and the political calculus was, we really can't afford this, if you look at some of those sanctions that they were going to slap on goods.
HAYS: Well, you know, Suzanne, I think it's so funny that the White House was irritated the press got out ahead of them, because I think everybody expected these tariffs would be dropped. They had kind of been signaling they were going to do something. It was just a question of to what extent and how quickly.
Obviously, the steel industry wanted this done more slowly. But when you talk about winners and losers, it seems like each side can really still claim that they got something out of this.
MALVEAUX: Well, sure, and that's exactly what the Bush administration wanted to do, and it's what they claimed actually, was that, yes, will this accomplish what they set out to do, protecting American steel industry, within that 21-month period? Of course, they want to extend it for three years. But the potential losers here, of course, those steel-producing states, West Virginia, Ohio, Pennsylvania, as well as union members, who were very angry with the president, some of those labor leaders coming out and saying, we feel betrayed by this administration.
The possible winners on the other side, of course, those steel -- those manufacturers, small manufacturers, those steel-using states, like Michigan, the conservatives who are free-trade purists, who believe that this was the right thing for the administration to do. The bottom line is that the White House is hoping that they can generate enough support for the manufacturing industry, that they can really get the economy going, so that this doesn't overall affect any of the players and it won't really have too much political cost when you look at potential reelection bids.
KOPPEL: Well, talking about politics, I thought that when the administration made the decision to move forward with the tariffs 21 months ago, they were doing it because the president wanted to win Pennsylvania. Now you've got the Florida orange growers, and, as you just alluded to there, the Michigan car industry, which was very concerned about keeping these tariffs in place. In terms of the states that the president hopes to pick up, how is this going to affect the balance sheet?
MALVEAUX: Oh, well certainly, because that was a big part of the political calculations to all of this. Because they looked at it and they said, wait a minute, some of the states that they're targeting, very deliberate, very smart by the European Union and Japan, all these other countries who said, look, we're going to go after the Florida oranges, we're going to go after those Harley Davidson motorcycles out of Pennsylvania, we're going to go after the farm equipment in Ohio.
These are key, critical states that the president needs for a reelection bid. They have to take a look at that and go, wait a minute, you know, politically and economically, this is not a good thing. But the administration insisting they are going to try to build up the economy as much as they can to make sure that this is not only good for the American people but also for the administration.
HAYS: Well, you know, interesting, the administration also keeping a big eye on Iraq, and trying to make progress on that front as well, because that's clearly the other big issue in this coming election. Interesting that President George W. Bush now reaching back to the past once again to the administration of his father to get a once heavy-hitter to help him with the really important issue in Iraq, right, Suzanne?
MALVEAUX: Well, certainly. There are two things here because -- there are two things here that are happening. First of all, one of the economies that is so important is the economy at home. The other one of course is the economy inside of Iraq.
And an announcement was made just yesterday. This is when Bush had actually announced that he was appointing former secretary of state, James A. Baker, III, a huge heavy-hitter, a close friend of the Bush family itself. The Bush administration saying, yes, this is a troubleshooter that we've brought on board to try to get those countries to forgive and restructure Iraq's debt.
You're talking about $125 billion that Iraq is saddled with in debt. They believe that if you get someone as powerful as this, that has those type of diplomatic connections, those relationships with world leaders, that he is going to be convincing enough to get them to either forgive those debts or at least reduce them by a bit.
KOPPEL: Another story, Suzanne, space the final frontier. The Bush administration deciding that they want to put -- you know, ramp up the space program, perhaps have a permanent presence on the moon. But interestingly, they don't want to give it more money.
MALVEAUX: Well, I mean, that -- you're absolutely right. I mean, that's the problem with all of this, of course, is that this is something that was kept very quiet, it's something that Vice President Dick Cheney had been talking about with members of Congress, with the head of NASA.
You know, let's go ahead and revamp the space program. Let's revitalize it. And what can we do? Hey, let's go ahead and announce that perhaps we will go back to the moon in 15 years.
Maybe we'll even have a permanent presence on the moon. Let's send people to Mars. All of these big, big plans, but of course there are two caveats here.
The president saying, first of all, he didn't want to spend any more major federal dollars open the space program. And secondly, he wanted to see something that could be done in a reasonable amount of time. As we know, you know, the space program just doesn't operate that way.
We have been told that the president has not decided on any major initiatives regarding space. If he does make these kinds of decisions, then that will come next year.
HAYS: Well, we'll see if this one gets launched, if he can keep it in orbit, and all the bad puns I can think of.
From presidential politics to the continuing challenge of the war on terrorism, just ahead, we're ON THE STORY with CNN's Jakarta bureau chief, Maria Ressa, talking about her new book, "Seeds of Terror."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: The war on terror continues. The enemies of freedom are not idle, and neither are we. (END VIDEO CLIP)
MARIA RESSA, CNN JAKARTA BUREAU CHIEF: Bush in Pittsburgh this week, pledging again that the United States will not stop its war against terrorism. Welcome back. We're ON THE STORY.
Despite the arrests of more than 3,000 al Qaeda operatives around the world, 200 of them in Southeast Asia, the war on terror, I argue in the book, in my book, is not going well at all.
KOPPEL: Well, first of all, Maria, I hope you have a future best seller out there. Everybody's got to buy this book. You've put a tremendous amount of work and incredible reporting into it.
One of the things I thought was so interesting that you point out is that you are hopping around Southeast Asia, talking to all of these investigators, and they themselves are not sharing this information. Including, sometimes, with the United States. Why is that?
RESSA: Well, we've had this conversation before, Andrea. I mean, part of it is really that there's that -- within agencies, kind of like within the FBI and the CIA, there's the distrust in terms of how much do they share, how much do they not share. And then when you talk about multiplying that among nations, just talking about the Philippines and Indonesia, the operatives themselves, the agents, don't even have cell phones, where they can actually make an international call.
So, for example, if a Philippine agent wants to try to double- check a story, he can't go above the chain of command to talk to his counteragent. It's really difficult for the people who are doing the work on the ground. And in many ways, because CNN has allowed me to travel so often from these countries, and we've been there for a long time, it's helped us get a clearer story.
MALVEAUX: You know, Maria, one thing that I thought was so interesting is there is this idea that terrorism a mechanism, it's process, it's not a state. And always the Bush administration talking about this war on terror, this idea that perhaps it can be won.
What have you found in your research? How extensive is this when you talk about that terrorist network?
RESSA: Extremely extensive. Far more extensive than the United States or any nation thought. Certainly, we know, before 9/11.
The world underestimated the scope of al Qaeda. The plot for 9/11 was discovered in the Philippines in Southeast Asia in 1995, and it was just shunted aside effectively. And part of the reason I got so hooked up into this was because I remembered it and I underestimated it.
I think in terms of the scope of the network in Southeast Asia alone, what they're finding is that there are more than half a dozen armed rebel Muslim groups. And those groups -- the genius of Osama bin Laden is that he's been able to link the Muslim grievances, not just of the groups in Southeast Asia, but all around the world. And what we know is that there have been five key nodes of al Qaeda that have been set up around the world.
Andrea talked about Kenya and Africa. The Horn of Africa is another major problem.
What I do in the book is I take apart -- I give you the anatomy of what Southeast Asia looks like, which really became the most active node of Southeast Asia right after 9/11. And by looking at that, you can see how it works around the world, Turkey being the most recent examples.
HAYS: Maria, I think one of the reasons people have not taken it more seriously more quickly is they view terrorists as angry, frustrated cells of people, sort of striking here, striking there. But in your book, you are also arguing that, in fact, there is a movement afoot that we must pay attention to that has a very, very grandiose view of where they want to get in the world.
RESSA: Kathleen, yes, absolutely. I mean, part of it is -- I think part of the reason we're not doing so well in the war on terror is because we're not thinking about it in the right way.
One of the key things is the United States often thinks about it as the U.S. against al Qaeda. But truly, the grandiose plans of al Qaeda is to set up an Islamic caliphate, to reset this up again. And the way they plan to do it is through these five nodes in Southeast Asia.
They want to set up a giant Islamic state stemming from Thailand all the way to northern Australia. How are they going to do this? Well, it is -- the front lines of the war on terror is within Islam. It's between a moderate majority and a radical minority. And if the moderates do not act, that radical minority has an agenda, and they will aim to topple the moderate majority.
HAYS: Well, Maria, Ressa, what a book. "Seeds of Terror," a very interesting book. And it strikes me also, I think many of us, as a very important book as well. Congratulations. And thank you so much for joining us today.
RESSA: Thank you.
HAYS: Next, coming up, President Bush gets his say about the economy. That's coming up when we're back ON THE STORY.
(COMMERCIAL BREAK)
HAYS: Thanks so much to my colleagues. It's always great spending the hour with you on Saturday morning. And thank you for watching ON THE STORY. We'll look forward to seeing you back here again next week.
Still ahead, "PEOPLE IN THE NEWS," focusing this week on movie superstars Tom Cruise and Halle Berry. At 12:00 noon Eastern, 9:00 a.m. Pacific, "CNN SATURDAY." And at 1:00 a.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."
Coming up at the top of the hour, a check of the top stories. But first, the president's weekly radio address.
(BEGIN AUDIOTAPE)
BUSH: Good morning.
This week, we received additional reports that America's economy is gaining strength. In November, our nation added 57,000 new jobs, and the unemployment rate fell to 5.9 percent. In the past four months, 328,000 Americans started work at new jobs.
In the third quarter of 2003, worker productivity rose at a 9.4 percent annual rate, the fastest pace since 1983. Rising productivity means rising wages. And productivity gains helped companies keep prices low, which allows American families to stretch their paychecks further.
Other economic signs are positive. Surveys show manufacturing activity to be at its strongest level in 20 years. Automobile sales rose in November. Home construction continues to expand.
During this season, America's families are planning for the year ahead, and they have reason to be optimistic. The American economy continues on a solid path of recovery. With strong sales and improving profits, companies will continue to hire new worker in the coming year. And because of tax relief, all workers will get to keep more of what they earn, and small businesses will be able to create more jobs.
Since 2001, we've cut taxes for every one who pays income taxes. We've reduced the marriage penalty in our tax code. We've raised the child credit to $1,000 per child, and we have reduced taxes on dividends and capital gains. This tax relief is critical, because it keeps more money in the hands of workers and small business owners and others who move this economy forward.
Here in Washington, our responsibility is to make sure this economy keeps its momentum. And I will not be satisfied until every person who wants to work can find a job.
I proposed a six-point plan to strengthen this recovery and bring prosperity to every corner of America. In the coming months, I will continue to work with Congress to achieve these important measures.
First, businesses are more likely to hire people if health care for workers is affordable. We need to allow small business owners to join together in association health plans, giving them the purchasing power of large companies when they shop for health insurance. And we must reform the medical liability system so that health care dollars serve the interests of patients, not the interests of trial lawyers.
Second, we need broad legal reform so frivolous lawsuits don't put good companies out of business and good people out of work. The Congress has started by enacting a class action reform. Third, reduce unnecessary government regulation and red tape so businesses can focus on consumers and customers, and not paperwork.
Fourth, Congress should enact a national energy policy so that businesses and farms and homeowners can count on a reliable and affordable supply of energy, and our nation is less dependent on foreign sources of energy.
Fifth, my administration is pursuing free and fair trade agreements so that our products and services can reach new markets and new customers overseas.
Sixth, we should make all of the tax relief we have passed permanent. The tax relief is scheduled to phase out in coming years if Congress does not take action. Tax relief set out economy on the right track, and permanent tax relief will keep it on the right track.
By moving forward on this agenda, we can build on the great progress our economy is making. With the confidence and hard work of the American people, and with the right policies in Washington, there are even brighter days ahead for the American economy.
Thank you for listening.
(END AUDIOTAPE)
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Bush Switches Direction on Steel Tariffs; Is Economic Recovery at Hand?>
Aired December 6, 2003 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we've covered this week. How are you doing? I'm Andrea Koppel, in Washington, on the story of the latest push to get some help for the U.S. in Iraq.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: And I'm Suzanne Malveaux, in Washington, on the story of President Bush switching direction on steel tariffs. Political costs still being tallied.
KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, in New York, on the story of an economy that seems to be signaling that recovery at long last has arrived. Also coming up, we'll talk to CNN's Jakarta bureau chief, Maria Ressa, about her new book, "Seeds of Terror," about al Qaeda's operations in Southeast Asia.
We'll talk about new terror warnings for Americans overseas. And we'll listen to the president's weekly radio address at the end of the hour.
Now straight ahead to economic recovery, and are we there yet?
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Productivity is high. Business investment is rising. Housing construction is strong. The economic stimulus package that we passed out of the United States Congress is working.
(END VIDEO CLIP)
HAYS: Is that applause for the president or for a bustling economy? That was President Bush on Tuesday at a fund-raiser in Pittsburgh, making the point that the numbers look good. And I'll tell you, it's hard to argue with the president on this one.
Productivity, growing at its strongest rate in the third quarter since 1983. A very strong survey on manufacturing this weekend. And finally, the jobs report at the end of the week are not quite as strong as Wall Street had expected. But job creation for four months in a row, most economists say, yes, we have turned the corner.
MALVEAUX: Kathleen, you know, one of the indications that things are going well is you see President Bush out there more and more. He's traveling the country, talking about his economic message. His strategists really think that this is working for him.
It was just yesterday he was at a Home Depot in Baltimore. But what does this really mean? And if you take a look at the weather outside, the Bush administration is really hoping that people are going to go out, they're going to do their Christmas shopping, their holiday shopping here. But are we really seeing this growth continue?
HAYS: In terms of the holiday shopping, you know, the jury's still out on that. The numbers so far may be a little disappointing compared what people had hoped for. And you know a snowstorm in the Northeast, blizzard conditions in New York City today, are not going to help this weekend at all.
But when you look at the jobs picture -- and that's what people say counts most -- we had an increase of about 57,000 jobs in November. Wall Street was hoping for something at least three times that big. Now of course there were some strikers out west. The Labor Department said you could have added back in about 30,000 people. But within that report there was some hopeful things.
The unemployment rate edged down a little bit. There's a survey the Labor Department does of people at home. It showed a little more strength. In fact, quite a bit more in jobs than you would have gotten from the survey of businesses.
And, you know, businesses are actually extending hours worked a bit, too. So maybe they're a little bit cautious still about hiring, but it would suggest there's enough demand, enough orders coming in, that the job front is improving. And if we keep seeing the orders coming in for a lot of manufactures, and even our services companies, then people say the jobs numbers will get bigger. Maybe not big enough to bring the unemployment rate down a lot yet, which of course is very important to the president., because that's headline unemployment number that a lot of Americans focus on.
KOPPEL: Well, it's one thing, Kathleen, to talk about more people getting jobs, but what about wages, not just for the new employees but for existing ones?
HAYS: That's one of the weak spots in this economy right now, Andrea. In fact, in November, average hourly earnings, which is basically a number of wages and salaries, was up just a tenth of a percent year over year, up only 2.1 percent. That's the weakest growth since 1987.
And again, this gets back to that whole story about productivity, competition from overseas. A lot of people happy to hold on to their job, happy just to get one. If they finally do get one, not pushing for stronger wages. But people would say, hey, inflation is still very, very low, so maybe you shouldn't focus so much on the wages again. Maybe more focus on the benefits, which of course is another issue for the president as we look to next year.
MALVEAUX: But Kathleen, about the productivity rate, I mean, I guess it's kind of a double-edged sword here, because, on the one hand, if it increases, they're getting more, and they're squeezing more out of us as workers. But it doesn't necessarily mean more jobs. Is that right?
HAYS: Well, the whole point -- you're absolutely right, because, again, we're so efficient, things are so lean and mean, that companies can -- and there's a lot of slack in the economy, too. A lot of excess capacity in industries like steel, a lot of the manufacturing industries. But, again, that's why people are hoping that this growth rate will continue to ramp up to get the jobs going.
Now, I think one -- an issue from now until the end of the year for the Congress to look at is the number of long-term unemployed is at a 20-year high of being more than eight million people unemployed. Something like a fourth of them have been out of work for four months or more. That's a pretty high figure.
So this question of whether or not to extend the federal program to give more unemployment benefits to people when their state benefits run out may get to be a little more of a political hot potato, again, as we get into the end of this year and early next year. Unless people decide, hey, the politic thing to do at this point for Democrats and Republicans is just to say, let's pay a little more money, and keep people going until they can get a job.
KOPPEL: Something that was looking pretty hot this week was the Dow. They came perilously close, or maybe hopefully close, to cracking the 10,000 mark. Do you think it will soon, Kathleen?
HAYS: Well, you know, it's so funny, because we do focus so much on Dow 10,000. Apparently actually getting above 9,900 from a technical level the traders say was really important. And Dow 10,000, again, maybe something that we folks in the media focus on more.
This week, people just maybe took the opportunity to take profits when the employment report, the payrolls numbers smaller than expected. The giant chipmaker, Intel, raised its guidance for next year, but not as much as people had hoped for. Said its wireless business not doing as well as they thought.
But people said basically excuses to take profits. Ten thousand is probably just around the corner. And again, right now it looks like the momentum in the economy is there enough to justify where the stock market has gotten to and where it keeps going.
And remember, election years are very good for the stock market. Some -- even some of those bullish people I speak to about the stock market say maybe after the election next year they're going to get a little more cautious. But for now, people say it looks pretty good, just a lot of caution at the end of the year.
MALVEAUX: And Kathleen, of course this holiday season you don't think that a toy store would be in trouble, but there's news about FAO Schwarz. Can you tell us about that?
HAYS: Well, you know, poor old FAO Schwarz, you know, an icon of the toy business, this is the second time it said it's going into bankruptcy. It declared bankruptcy early last year and was supposed to take that opportunity restructure and get back on its feet. This time around, it looks like they're going to get the FAO Schwarz ready for sales, they're liquidating their Zainy Brainy line.
You know, bottom line, Wal-Mart is the toy giant now. They can buy toys in huge bulk. They buy a lot from China. They can sell it at the cheapest prices.
Americans are trained to look for a country. It's very tough, even for a big specialty retailer like FAO Schwarz. Think how much tougher for the mom and pop toy store to compete with something like Wal-Mart.
KOPPEL: Yes, but you've got to love that FAO Schwarz store. I -- I mean, I know there are a lot of adults who love hanging out in there.
HAYS: Well, remember "Big," when Tom Hanks was on the piano with his feet and doing the little dance, you know.
MALVEAUX: That was classic.
KOPPEL: Oh, it was a great scene.
Listen, the Bush administration may wish its diplomatic scorecard matched some of those economic numbers, but there is no such luck. I am back ON THE STORY out of this break, and the U.S. still trying...
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ADAM ERELI, STATE DEPARTMENT SPOKESMAN: The Seder Village (ph) housing compound in Riyadh has been under active surveillance by terrorist elements, and that other Western compounds within the kingdom may also be targeted.
(END VIDEO CLIP)
KOPPEL: That's Adam Ereli, State Department spokesman, on Tuesday, talking about new warnings of possible terrorism dangers in Saudi Arabia. Welcome back. We are ON THE STORY.
It wasn't just the warnings in Riyadh, in the capital of Saudi Arabia, but also the ones in Nairobi. In that case, in particular, they were uncorroborated. It came in an anonymous e-mail. But nevertheless, the State Department decided to take it seriously and put out those warnings.
HAYS: Andrea, there's great specifics in this warning, right?
KOPPEL: That's exactly right. Usually, you know, they put out these warnings and talk about threats to Western interests and very vague kind of terms like that. But this time, they mentioned two hotels in Nairobi by name. They're in downtown Nairobi. They said they actually had their photographs up on the Web site.
And they also mentioned, as you heard Adam say there, that specific, the Seder (ph) housing complex in Riyadh. And there's a couple of reasons for that. The main one being that this was an anonymous e-mail. They weren't burning sources and methods to put that out there. And also, the FBI really made the decision.
They're usually the ones that restrain the State Department, but they made the decision in this case to put the information out there. And so the State Department felt that it had to then go forward with issuing the terror warning to Americans.
MALVEAUX: And, of course, Secretary Powell as well, invested in trying to get more support from Iraq from NATO members. How successful has he been?
KOPPEL: Well, you know he went to Brussels this week and made very clear that this was not a specific request, but it was more than just a trial balloon, a leak from an anonymous official. He sat down, met with officials, and then came out with the soon to be 26 full- fledged members of NATO, and said, look guys, we could really use more help from you. And he came out afterwards and said, nobody opposed it, which is a positive sign.
But in practical terms, this is going to be more symbolic than anything else. Unless -- this the is big caveat -- unless the two big cheeses of NATO, France and Germany, who opposed the war, unless they say they'll put in troops. And most people don't think that is very likely.
HAYS: Yes, I guess you could say the big cheese and the big weiner schnitzel are something, if you're using those kinds of analogies, Andrea. But again, what are the chances? I mean, update us on the relation right now with France and Germany.
KOPPEL: Right now, you know that President Bush has met with both the German chancellor, Gerhard Schroeder, and with French president, Jacques Chirac, in recent months. They are -- and, in fact, some analysts view this, if France and Germany do support this, and not just with troops, but if they support it in the sense that they don't veto an action at NATO headquarters, this could be viewed as a reaching across the -- across the Atlantic to try to further heal the rifts of the war, the opposition that led up to that.
But, I mean, again, getting back to what this means tangibly on the ground in Iraq, you already have 16 out of those 26, again, existing and soon to be members of NATO who have troops on the ground. But really, only four of them -- you've got Italy, Spain, Poland, and the U.K. that are carrying the lion's share of this burden. So kind of going back to it, unless France and Germany ante up, which no body really expects they will, what does this mean on the ground? Not very much. It's much more symbolic than anything else.
MALVEAUX: And of course, intricately linked is this whole idea of bringing the Israelis and the Palestinians back together, back to this road map. I mean, many of the European allies, as well as Arab allies, say that that is really the key to getting a lot more support inside of Iraq. Andrea, what has been the situation? You have Secretary Powell now involved with players who we never even heard of before. KOPPEL: Right. Well, certainly haven't been in the news in a little while. These are former Israeli, Palestinian officials.
The guy you see on your right there is Yossi Beilin. He's the former Israeli justice minister. And the man on your left, who you can just make out there, is Yasser Abed Rabbo. He's the former Palestinian Authority information minister. He is also still very close and very plugged in to -- with Yasser Arafat, the Palestinian leader.
Both of them, just this week, after two and a half years of secret negotiations, signed what's known as the Geneva Accord or the Geneva Initiative. This is a deal that hammers out in specifics what would a democratic Palestinian state look like, how would it work? They would share Jerusalem.
How would Palestinian refugees return? What would a Palestinian state look like? The violence would have to end. All the most difficult, nitty-gritty issues that have kept the two sides apart all these years.
Powell was very controversial, did sit down with them this week, a long with a senior White House official, Elliot Abrams. This was something Israel opposed, but the administration made the decision. They have to listen to these ideas, even if, as one State Department official told me, unless you have the two governments -- these are former officials -- two governments that sign off on this, it really doesn't amount to a whole lot.
HAYS: But Andrea, this does seem to be touching the heart of a lot of people. There's a significant number of people in Israel support it. I think when people see any sign that two sides could agree on some very, very tough issues, issues that have kept Israel and Palestine apart, you kind of almost wonder if the leaders of these countries are rejecting it because they don't want their thunder stolen, they don't want their power taken away. And if momentum would start building for this, it seems like it could kind of shift the rug under, for example, Ariel Sharon's feet a little bit.
KOPPEL: Well, that's certainly what Yasser Abed Rabbo and Yossi Beilin are hoping. I should point out, Yossi Beilin is a member of the labor party in Israel, an opposition party to Ariel Sharon's Likud.
That is what they're hoping. They're hoping that if they inspire the peoples on both sides to say, here is -- here is a deal that's -- you know, that's on the table that we've signed -- OK, we're not in government -- that they can get that momentum from the grassroots up. But again, it remains to be seen whether or not the two leaders of either side are going to support this. Right now, Ariel Sharon is strongly opposed.
MALVEAUX: And from the diplomatic world to a crime that has law enforcement up in arms, the killing of an assistant U.S. attorney. We're back on that story after this.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
THOMAS DIBIAGIO, MARYLAND U.S. ATTORNEY: At this time, the evidence indicates that he was murdered. Jonathan served as a federal prosecutor in Maryland for four years. He served this office. He served the community and in the interest of justice with great dedication and commitment.
(END VIDEO CLIP)
KOPPEL: That was U.S. attorney in Maryland, Tom DiBiagio, announcing the death of assistant U.S. Attorney Jonathan Luna. Welcome back. We're ON THE STORY here in Washington. The Washington bureau, Elaine Quijano, has been following the case and join us now.
Elaine, do they think that it is any way linked to the case that Luna was working on, the case of Dion Lionel Smith (ph)? And he had just worked out this plea agreement just hours before.
ELAINE QUIJANO, CNN CORRESPONDENT: That's right, Andrea. Well, what I can tell you that -- just going on the background of this -- Dion Lionel Smith (ph) was one of two men on trial for drug conspiracy charges. There had been a plea agreement that had been put on the table a couple of weeks before this -- before Wednesday.
And Wednesday evening, those agreements were finalized, these plea agreements were. And the lawyers for both these men say, because of that, it doesn't make any sense. Why would their clients -- it would not be in their best interest. Why would their clients want to see any harm come to Jonathan Luna?
Now, sources close to the investigation say that they are -- they appear to be shying away from any focus on these two men. Of course that was the initial suspicion among the reporters out there. Of course, all the questions being directed in that way about whether or not these two men had anything to do with it. But these lawyers do bring up a good point, the timing of it just doesn't seem to make sense. These lawyers say, if anything, it would have been -- it would have made more sense for something to happen before these plea agreements were in the process of being finalized.
HAYS: Elaine, so then let's look at the -- I imagine since this was a man who was a prosecutor, there are many cases, many motives, many people that are being examined now. In terms of the brutality of the crime, stabbed three dozen times, signs of torture, left in a creek apparently while he was actually still alive, is there any sense from the nature of the crime the kind of perpetrators they might be focusing on now?
QUIJANO: Well, right. Obviously, that's what investigators are looking very closely at. As a federal prosecutor, he has come up against some very violent offenders.
The kinds of crimes that he has prosecuted included a crack cocaine distribution network, included things like child pornography case, an Internet sex sting. So they're going to be looking very closely at all of that. And at this point, they're really not ruling anything out.
MALVEAUX: And it was so brutal, the way he was killed. Is there any indication of motive, that this was perhaps personal or there was a vendetta against him? Do they have any sense of just why it was that he was so brutally murdered?
QUIJANO: Well, that's exactly what they're trying to get at, the heart of that right now. Obviously, 36 times, 36 stab wounds, to be exact, those are the kinds of things that they're going to be looking very closely at in terms of, was this personal, was this random?
There was money that was found in the vehicle. His vehicle was found some 70 miles away from Baltimore, in Lancaster County, Pennsylvania. His cell phone was there as well.
You know, that certainly raises the question if this was a robbery, a random act of violence, why was there money left in the car? So those are the kinds of things that investigators right now are exploring.
KOPPEL: As you listed, Elaine, U.S. attorneys -- for that matter, many prosecutors -- are involved in a lot of really gruesome, sort of underworld type of cases. How rare is it for a U.S. attorney, for a federal prosecutor, to be murdered?
QUIJANO: Well, it's extremely rare. And I should tell you, yesterday, I went to the U.S. attorney's office in Baltimore and I talked to an official there. And she said obviously everyone there is very shaken up. So much so, they have taken precaution.
They are, they're taking steps to make sure that their assistant U.S. attorneys there are protected. She didn't want to go into any details, obviously for security reasons, but they are taking it very seriously. Until investigators have sort of narrowed their focus, they don't want to take any chances.
HAYS: And I would assume that since clearly one of the good guys was killed, a man who went after some of the most heinous crime we face in our society, that the state government -- the federal government, actually -- would be putting tremendous resource now into capturing whoever did this.
QUIJANO: Yes. Well, when word of the story broke, I can tell you there was a holiday party going on at the U.S. Justice Department here in Washington. And it was really obviously the talk of that party. And they are very determined. The attorney general, John Ashcroft, came out with a statement basically saying, we are going to put all our resources into finding out who is responsible.
MALVEAUX: Such a sad story. I know he has a wife and several young children as well. Elaine Quijano, thank you very much. We'll be watching your updates on this story.
And now on the snowstorm, here's a riddle for you: the Bush administration found itself in a steel box this week, involving trade, tariffs and politics. I'm on that story. But up next a check of the top hour stories, and then live to New York Central Park. A major winter storm is heading up the East Coast.
(COMMERCIAL BREAK)
MALVEAUX: We're ON THE STORY this week of bad weather here on the East Coast. Joining us now from Central Park is CNN's Jane King.
I do not envy your job, Jane. You've covered one too many snowstorms, but you're doing a great job out there. Tell us what it's like.
JANE KING, CNN CORRESPONDENT: Thank you so much, Suzanne. Actually, it's starting to get a little fun. People are walking around. A lot of gutsy tourists I've met.
In the past 10 minutes, someone from Texas, Arizona, a couple of people from England, Scotland, Virginia. So they're all over, and they say they're planning to do exactly what they had planned to do otherwise. They're going to go shopping, see shows, and they're just going to try to make the best of this situation.
Now, we officially in New York City are under a blizzard warning right now. That started at 10:00 a.m. Eastern Time. That will continue until 10:00 p.m. tonight.
We expect another five inches of snow or so. In fact, we have eight inches in Central Park during the first phase of the storm, which was last night. And the winds are expected to pick up as well. Forty to 45 mile per hour winds are predicted. So that's why we had the blizzard warning -- Suzanne.
HAYS: Well Jane, you know, it's interesting that -- thank goodness I guess that this didn't happen last weekend, when people were trying to get back from their Thanksgiving holidays. But another thing that's interesting to me, we New Yorkers have been very well prepared for this because the weather forecasts have been spot on.
KING: It has been. In fact, we first started hearing talk of the NorEaster on Wednesday. And a lot of people didn't take it quite seriously. They were going to wait a couple of days and see exactly what happened. But it seems like as we approached yesterday and today, it started to become even more of a serious storm.
And when I got home last night from work, I found out we had a blizzard warning today. So it became more serious of a storm as it got closer.
KOPPEL: Jane, my first question is, how many snow angels have you made so far? No, seriously, my real question is, in terms of -- obviously, it's much better that it happened on a weekend, but how good is the city right now? How is it going in terms of keeping the roads clear, the main thoroughfares, the bridges, the tunnels?
KING: Well, the roads, right now, it's slow going. But there is movement. I'm looking at taxis, the carriage rides are still going, several buses have gone by. The subway systems are working very well.
Now, I knew this morning that a couple of the levels of the George Washington Bridge, as well as another bridge, were shut down because of ice. But you could still go on the other level.
But the city's still moving. It's a little slower than normal last night, very slow going getting home. But I was really struck by how patient New Yorkers are.
It seems like we've been hit by several catastrophes over the past few years, and it still strikes me how well New Yorkers take this. The big blackout, we had a big snowstorm over President's Day. But it is good news that it hit on the weekend in terms of jobs and commuting people to and from work.
Now, the retailers might have a different story. A lot of them were looking at this weekend as the big weekend for Christmas shopping. But a lot of people here say they're still going to go out and shop.
MALVEAUX: And Jane, my old stomping ground in Boston, how are they faring? I understand there's quite a bit of snow up in that area. There are pictures of Boston as well. And if I could also ask you about some of the travel arrangements. How is this affecting flights?
KING: (UNINTELLIGIBLE) yesterday from the three major New York City airports. And if this storm develops as it is expected to do, we're not going to see much travel in and out of the airports today as well.
They do plan to make up those flights. In fact, the couple that I talked to from Scotland, they say that their flight has not been canceled; it is scheduled to go out tonight. But it will be delayed.
So we'll see. As we get a little closer, they might be spending another day in New York. That's what I told them. And they were OK with that. But yes, they were fine with that.
But in terms of just moving around, a lot of people are getting out. They're bundled up and trying to make the best of it.
HAYS: Jane, I want to know if this is going to last. Because for people who live in the Northeast, if you want to go skiing, it really helps if you get early snow, if it's a cold winter. And just when you get your hopes up, by Monday it's sunny and is raining or something and all the snow is gone.
What's the outlook once we get past the worst of this blizzard warning?
KING: Well, in fact, it looks like we'll have temperatures, highs in the 40s next week. In fact, Wednesday, almost near 50 degrees. We're going to see quite a change in the weather forecast over the next few days. So some of this is going to melt. But they'll probably -- we're going to get enough snow, it sounds like, perhaps even 15 inches in New York. So some of it might be sticking around.
MALVEAUX: Well, Jane, keep warm. You look great out there. All the best to you. We're glad you're doing this one for us this time around. But from...
KING: OK. Enjoy the warm studio.
MALVEAUX: We're spoiled, what can I say?
From winter storms to political fallout this week over a controversial switch on trade. We're back on that story in a moment.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: America's consumers, the American economy is better off with a world that trades freely and a world that trades fairly.
(END VIDEO CLIP)
MALVEAUX: President Bush this week talking up the benefits of free trade, as he reversed himself and lifted the tariffs he had put on imported steel 21 months ago. This was a very irritating story to the White House.
First of all, "The Washington Post" broke it earlier in the week. We were quickly able to confirm this through our own sources and really got much more ahead of the Bush administration, their announcement, than they would have liked.
The president ended up in Pittsburgh; he was at a fund-raiser. The story came out. One of the co-hosts of this fund-raiser was no less than the CEO and chairman of U.S. Steel, who was actually getting some of those -- raising some of those dollars for the president. But ultimately, the bottom line was is that the Bush administration, administration sources saying they really had very little choice in the matter.
They faced $2.2 billion in sanctions from the EU, from other countries. And there were two things that were happening, the economic calculus and the political calculus. One, we can't afford this, and the political calculus was, we really can't afford this, if you look at some of those sanctions that they were going to slap on goods.
HAYS: Well, you know, Suzanne, I think it's so funny that the White House was irritated the press got out ahead of them, because I think everybody expected these tariffs would be dropped. They had kind of been signaling they were going to do something. It was just a question of to what extent and how quickly.
Obviously, the steel industry wanted this done more slowly. But when you talk about winners and losers, it seems like each side can really still claim that they got something out of this.
MALVEAUX: Well, sure, and that's exactly what the Bush administration wanted to do, and it's what they claimed actually, was that, yes, will this accomplish what they set out to do, protecting American steel industry, within that 21-month period? Of course, they want to extend it for three years. But the potential losers here, of course, those steel-producing states, West Virginia, Ohio, Pennsylvania, as well as union members, who were very angry with the president, some of those labor leaders coming out and saying, we feel betrayed by this administration.
The possible winners on the other side, of course, those steel -- those manufacturers, small manufacturers, those steel-using states, like Michigan, the conservatives who are free-trade purists, who believe that this was the right thing for the administration to do. The bottom line is that the White House is hoping that they can generate enough support for the manufacturing industry, that they can really get the economy going, so that this doesn't overall affect any of the players and it won't really have too much political cost when you look at potential reelection bids.
KOPPEL: Well, talking about politics, I thought that when the administration made the decision to move forward with the tariffs 21 months ago, they were doing it because the president wanted to win Pennsylvania. Now you've got the Florida orange growers, and, as you just alluded to there, the Michigan car industry, which was very concerned about keeping these tariffs in place. In terms of the states that the president hopes to pick up, how is this going to affect the balance sheet?
MALVEAUX: Oh, well certainly, because that was a big part of the political calculations to all of this. Because they looked at it and they said, wait a minute, some of the states that they're targeting, very deliberate, very smart by the European Union and Japan, all these other countries who said, look, we're going to go after the Florida oranges, we're going to go after those Harley Davidson motorcycles out of Pennsylvania, we're going to go after the farm equipment in Ohio.
These are key, critical states that the president needs for a reelection bid. They have to take a look at that and go, wait a minute, you know, politically and economically, this is not a good thing. But the administration insisting they are going to try to build up the economy as much as they can to make sure that this is not only good for the American people but also for the administration.
HAYS: Well, you know, interesting, the administration also keeping a big eye on Iraq, and trying to make progress on that front as well, because that's clearly the other big issue in this coming election. Interesting that President George W. Bush now reaching back to the past once again to the administration of his father to get a once heavy-hitter to help him with the really important issue in Iraq, right, Suzanne?
MALVEAUX: Well, certainly. There are two things here because -- there are two things here that are happening. First of all, one of the economies that is so important is the economy at home. The other one of course is the economy inside of Iraq.
And an announcement was made just yesterday. This is when Bush had actually announced that he was appointing former secretary of state, James A. Baker, III, a huge heavy-hitter, a close friend of the Bush family itself. The Bush administration saying, yes, this is a troubleshooter that we've brought on board to try to get those countries to forgive and restructure Iraq's debt.
You're talking about $125 billion that Iraq is saddled with in debt. They believe that if you get someone as powerful as this, that has those type of diplomatic connections, those relationships with world leaders, that he is going to be convincing enough to get them to either forgive those debts or at least reduce them by a bit.
KOPPEL: Another story, Suzanne, space the final frontier. The Bush administration deciding that they want to put -- you know, ramp up the space program, perhaps have a permanent presence on the moon. But interestingly, they don't want to give it more money.
MALVEAUX: Well, I mean, that -- you're absolutely right. I mean, that's the problem with all of this, of course, is that this is something that was kept very quiet, it's something that Vice President Dick Cheney had been talking about with members of Congress, with the head of NASA.
You know, let's go ahead and revamp the space program. Let's revitalize it. And what can we do? Hey, let's go ahead and announce that perhaps we will go back to the moon in 15 years.
Maybe we'll even have a permanent presence on the moon. Let's send people to Mars. All of these big, big plans, but of course there are two caveats here.
The president saying, first of all, he didn't want to spend any more major federal dollars open the space program. And secondly, he wanted to see something that could be done in a reasonable amount of time. As we know, you know, the space program just doesn't operate that way.
We have been told that the president has not decided on any major initiatives regarding space. If he does make these kinds of decisions, then that will come next year.
HAYS: Well, we'll see if this one gets launched, if he can keep it in orbit, and all the bad puns I can think of.
From presidential politics to the continuing challenge of the war on terrorism, just ahead, we're ON THE STORY with CNN's Jakarta bureau chief, Maria Ressa, talking about her new book, "Seeds of Terror."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: The war on terror continues. The enemies of freedom are not idle, and neither are we. (END VIDEO CLIP)
MARIA RESSA, CNN JAKARTA BUREAU CHIEF: Bush in Pittsburgh this week, pledging again that the United States will not stop its war against terrorism. Welcome back. We're ON THE STORY.
Despite the arrests of more than 3,000 al Qaeda operatives around the world, 200 of them in Southeast Asia, the war on terror, I argue in the book, in my book, is not going well at all.
KOPPEL: Well, first of all, Maria, I hope you have a future best seller out there. Everybody's got to buy this book. You've put a tremendous amount of work and incredible reporting into it.
One of the things I thought was so interesting that you point out is that you are hopping around Southeast Asia, talking to all of these investigators, and they themselves are not sharing this information. Including, sometimes, with the United States. Why is that?
RESSA: Well, we've had this conversation before, Andrea. I mean, part of it is really that there's that -- within agencies, kind of like within the FBI and the CIA, there's the distrust in terms of how much do they share, how much do they not share. And then when you talk about multiplying that among nations, just talking about the Philippines and Indonesia, the operatives themselves, the agents, don't even have cell phones, where they can actually make an international call.
So, for example, if a Philippine agent wants to try to double- check a story, he can't go above the chain of command to talk to his counteragent. It's really difficult for the people who are doing the work on the ground. And in many ways, because CNN has allowed me to travel so often from these countries, and we've been there for a long time, it's helped us get a clearer story.
MALVEAUX: You know, Maria, one thing that I thought was so interesting is there is this idea that terrorism a mechanism, it's process, it's not a state. And always the Bush administration talking about this war on terror, this idea that perhaps it can be won.
What have you found in your research? How extensive is this when you talk about that terrorist network?
RESSA: Extremely extensive. Far more extensive than the United States or any nation thought. Certainly, we know, before 9/11.
The world underestimated the scope of al Qaeda. The plot for 9/11 was discovered in the Philippines in Southeast Asia in 1995, and it was just shunted aside effectively. And part of the reason I got so hooked up into this was because I remembered it and I underestimated it.
I think in terms of the scope of the network in Southeast Asia alone, what they're finding is that there are more than half a dozen armed rebel Muslim groups. And those groups -- the genius of Osama bin Laden is that he's been able to link the Muslim grievances, not just of the groups in Southeast Asia, but all around the world. And what we know is that there have been five key nodes of al Qaeda that have been set up around the world.
Andrea talked about Kenya and Africa. The Horn of Africa is another major problem.
What I do in the book is I take apart -- I give you the anatomy of what Southeast Asia looks like, which really became the most active node of Southeast Asia right after 9/11. And by looking at that, you can see how it works around the world, Turkey being the most recent examples.
HAYS: Maria, I think one of the reasons people have not taken it more seriously more quickly is they view terrorists as angry, frustrated cells of people, sort of striking here, striking there. But in your book, you are also arguing that, in fact, there is a movement afoot that we must pay attention to that has a very, very grandiose view of where they want to get in the world.
RESSA: Kathleen, yes, absolutely. I mean, part of it is -- I think part of the reason we're not doing so well in the war on terror is because we're not thinking about it in the right way.
One of the key things is the United States often thinks about it as the U.S. against al Qaeda. But truly, the grandiose plans of al Qaeda is to set up an Islamic caliphate, to reset this up again. And the way they plan to do it is through these five nodes in Southeast Asia.
They want to set up a giant Islamic state stemming from Thailand all the way to northern Australia. How are they going to do this? Well, it is -- the front lines of the war on terror is within Islam. It's between a moderate majority and a radical minority. And if the moderates do not act, that radical minority has an agenda, and they will aim to topple the moderate majority.
HAYS: Well, Maria, Ressa, what a book. "Seeds of Terror," a very interesting book. And it strikes me also, I think many of us, as a very important book as well. Congratulations. And thank you so much for joining us today.
RESSA: Thank you.
HAYS: Next, coming up, President Bush gets his say about the economy. That's coming up when we're back ON THE STORY.
(COMMERCIAL BREAK)
HAYS: Thanks so much to my colleagues. It's always great spending the hour with you on Saturday morning. And thank you for watching ON THE STORY. We'll look forward to seeing you back here again next week.
Still ahead, "PEOPLE IN THE NEWS," focusing this week on movie superstars Tom Cruise and Halle Berry. At 12:00 noon Eastern, 9:00 a.m. Pacific, "CNN SATURDAY." And at 1:00 a.m. Eastern, 10:00 a.m. Pacific, CNN's "IN THE MONEY."
Coming up at the top of the hour, a check of the top stories. But first, the president's weekly radio address.
(BEGIN AUDIOTAPE)
BUSH: Good morning.
This week, we received additional reports that America's economy is gaining strength. In November, our nation added 57,000 new jobs, and the unemployment rate fell to 5.9 percent. In the past four months, 328,000 Americans started work at new jobs.
In the third quarter of 2003, worker productivity rose at a 9.4 percent annual rate, the fastest pace since 1983. Rising productivity means rising wages. And productivity gains helped companies keep prices low, which allows American families to stretch their paychecks further.
Other economic signs are positive. Surveys show manufacturing activity to be at its strongest level in 20 years. Automobile sales rose in November. Home construction continues to expand.
During this season, America's families are planning for the year ahead, and they have reason to be optimistic. The American economy continues on a solid path of recovery. With strong sales and improving profits, companies will continue to hire new worker in the coming year. And because of tax relief, all workers will get to keep more of what they earn, and small businesses will be able to create more jobs.
Since 2001, we've cut taxes for every one who pays income taxes. We've reduced the marriage penalty in our tax code. We've raised the child credit to $1,000 per child, and we have reduced taxes on dividends and capital gains. This tax relief is critical, because it keeps more money in the hands of workers and small business owners and others who move this economy forward.
Here in Washington, our responsibility is to make sure this economy keeps its momentum. And I will not be satisfied until every person who wants to work can find a job.
I proposed a six-point plan to strengthen this recovery and bring prosperity to every corner of America. In the coming months, I will continue to work with Congress to achieve these important measures.
First, businesses are more likely to hire people if health care for workers is affordable. We need to allow small business owners to join together in association health plans, giving them the purchasing power of large companies when they shop for health insurance. And we must reform the medical liability system so that health care dollars serve the interests of patients, not the interests of trial lawyers.
Second, we need broad legal reform so frivolous lawsuits don't put good companies out of business and good people out of work. The Congress has started by enacting a class action reform. Third, reduce unnecessary government regulation and red tape so businesses can focus on consumers and customers, and not paperwork.
Fourth, Congress should enact a national energy policy so that businesses and farms and homeowners can count on a reliable and affordable supply of energy, and our nation is less dependent on foreign sources of energy.
Fifth, my administration is pursuing free and fair trade agreements so that our products and services can reach new markets and new customers overseas.
Sixth, we should make all of the tax relief we have passed permanent. The tax relief is scheduled to phase out in coming years if Congress does not take action. Tax relief set out economy on the right track, and permanent tax relief will keep it on the right track.
By moving forward on this agenda, we can build on the great progress our economy is making. With the confidence and hard work of the American people, and with the right policies in Washington, there are even brighter days ahead for the American economy.
Thank you for listening.
(END AUDIOTAPE)
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Bush Switches Direction on Steel Tariffs; Is Economic Recovery at Hand?>
