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On the Story

9/11 Panel Faults Bush, Clinton; White House, GOP Move to Counter Clarke's Charges; 25th Anniversary of Three Mile Island Accident Marked; Did Politics Keep Us From Learning the True Cost of the Medicare Bill?

Aired March 27, 2004 - 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.


CATHERINE CALLAWAY, CNN ANCHOR: Hello, everyone. I'm Catherine Callaway in Atlanta. ON THE STORY is coming up, but first the headlines for you.
More violence in Iraq this morning, as five Iraqis are injured in a roadside explosion in Baghdad. Powerful blasts blew out windows in a nearby building. And in Mosul, the U.S. military says the city hall came under small-arms and rocket fire.

And CNN has learned that at least two dozen were wounded by a blast outside a hotel in southern Thailand. Authorities say it was caused by a bomb that was attached to a motorcycle.

In the West Bank, a seven-year-old boy is killed in a gunfight between Israeli troops and Palestinians. Palestinian witnesses and city officials say that he was shot by Israeli soldiers. But an IDF commander says that a stray bullet from a Palestinian gunman struck the boy.

Taiwan's president says that he will accept a recount of the ballots cast in last weekend's presidential election. Thousands of protesters have crowded in the streets of Taipei demanding such a move. The opposition's also demanding an independent investigation into a shooting that slightly wounded the incumbent just hours before the balloting.

Those are the top stories. ON THE STORY begins right now.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Kelly Wallace, ON THE STORY of high drama here in Washington this week, as the September 11 panel puts both Bush and Clinton officials in the hot seat.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: I'm Dana Bash in Crawford, Texas, ON THE STORY of how the president and his team fought hard to combat charges that he did not do enough to prevent September 11 attacks.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: I'm Maria Hinojosa ON THE STORY of 25 years since the Three Mile Island nuclear accident and how some local residents are still on edge. ELAINE QUIJANO, CNN CORRESPONDENT: I'm Elaine Quijano, ON THE STORY of claims that politics kept us from learning the real cost of the new Medicare law.

Also coming up, CNN's Paula Hancocks about new terrorism fears in Israel after the assassination of the Hamas leader. We'll talk about how the presidential race gets off the slopes and back on the campaign trail, and we'll talk about how the search for weapons of mass destruction went from a call to war to a comedy routine by President Bush.

E-mail us at onthestory@cnn.com.

Now, straight to Kelly and the September 11 investigation.

(BEGIN VIDEO CLIP)

RICHARD CLARKE, FMR. COUNTERTERRORISM CHIEF: Your government failed you. Those entrusted with protecting you failed you. And I failed you.

(END VIDEO CLIP)

WALLACE: That may have been one of the most dramatic moments of this week's September 11 hearings. Former counterterrorism chief Richard Clarke and the Bush White House apologizing to the victims of September 11, the families of those victims.

I can tell you, talking to the families -- I talked to one family member, Henry Hughes of Long Island. His son was killed in the South Tower on September 11. The day before that he said, You know what? There has never been an official to come forward and say, We screwed up, I'm sorry. That happened, and after that happened, an extraordinary scene. All these family members coming around Richard Clarke to say thank you for that apology.

BASH: And Kelly, what about during the hearings itself? We've talking about the controversy, of course, around the hearings. But inside the room, give us a sense of the atmospherics.

WALLACE: Dana, the word I keep using is there was a heaviness inside that room.

I will tell you, I was somewhat surprised. I thought there would be a huge line to get inside this hearing. I thought it would be standing room only. Wasn't exactly that way. But there was such a heaviness, a seriousness. You saw the family members in the front rows, many holding pictures of their loved ones close to their chests. You had a who's who in the Bush and Clinton administration coming forward. And they were talking about the most dramatic things.

What could have been done? Could both administrations have done more before September 11? It was just weighty, really weighty inside that room.

QUIJANO: And these family members obviously are seeking to connect the dots. What did we really learn? What, of substance, came of it?

WALLACE: There's a lot of blame to go around, that's what we learned -- on both parts, on both the Clinton administration and the Bush administration.

A couple of new things we learned -- that there were three times during the Clinton administration in 1988 (sic), 1999, where they had intelligence, they knew where Osama bin Laden was, and they didn't act. The reason being, the Clinton administration saying it didn't believe it had actionable intelligence and also there were risks to these actions and those risks had to be taken into account.

We also learned about just lack of coordination between agencies. Both the Clinton and Bush officials felt that the FBI had more information about two of the September 11 hijackers who were in the United States.

And we learned that the CIA didn't believe it had the authority to go and kill Osama bin Laden. It thought it had to act in self- defense. So a lot we learned about a lack of coordination on the parts of all these agencies.

HINOJOSA: You know what's interesting, though, Kelly, is that when people think about it, it' almost, like, what could we have done? Was there anything that could have been done? And I think that that one of the things that seemed interesting, was when Richard Clarke said, We knew that two of these bombers were in the United States. We didn't get the information. If we had known that, we could have put their photographs on the front page of every newspaper and maybe, maybe, that would have -- that would have helped. So there was actually something that someone said that actually could have been done.

WALLACE: Exactly, Maria. I mean, he even said, Look, we could have gone to "America's Most Wanted." We could have put that out there and someone might have said, Gee I know who that guy is.

There was something else that was brought up, which before -- we all remember before the millennium, and concerns about a terrorist attack, January 2000. Before that, there was discussion that Clinton administration officials, top level official, including President Clinton, meeting every day, to talk about it. What are you doing, what do you know, what are your agencies doing?

Richard Clarke, who we know is a big critic now of the Bush White House, saying there was the same level of fear the summer of threat, they're calling it, the summer of 2001. And he is saying that was not this sense of bringing all these officials together to talk about it.

Of course, as you know, Dana, Bush administration officials saying they were talking, there were doing what they can. But there was the sense if you brought all the people in the room, and said, "What do you know? What do you know?," perhaps, perhaps, they could have, you know, found out a little bit out -- more our and put that to the public. BASH: And the other thing, Kelly, that seemed interesting, is, you know, when you talk to members of the commission, they talk about how important it is to say bipartisan, even nonpartisan. But you definitely didn't get that feeling at some parts of these hearings. The partisanship seemed to come out from the questioning.

WALLACE: Especially, Dana, as you know, when Richard Clarke took the stand. Obviously, the much-anticipated testimony of Richard Clarke. He served in the Clinton White House, served in the Bush White House. He has written this book, we know, very critical of the Bush administration.

And you have Democratic and Republican members of this panel. And the Republican members appeared to be grilling him a lot more. They were calling attention to a background briefing that he had given to reporters in August of 2002, saying there's a disconnect between what he said then and what he's saying now in this book.

I will tell you this: the family members of some of the 9/11 victims were very concerned after that, because they said, Hey, this cannot start becoming partisan politics here. They did not like watching Republicans grilling Clarke more and Democrats maybe easier on him. They said they've got to focus on the facts. And there was a lot of concern at the end of that day that perhaps politics would overtake any effort to try and get answered about what could have been done or what can be done to prevent another September 11.

QUIJANO: Going back to the atmosphere and the mood there, I know some of the family members were not too happy when -- there looked to be some lighter moments, perhaps in breaks. Talk to us about that. They weren't very pleased.

WALLACE: There did. They felt a couple of times that there was some laughter and a couple of jokes being told. And family members didn't appreciate that.

Although when you were in the room, it was so intense and there was -- there was such -- you know, everyone was treating this with the absolute respect that it needs to be treated with. And so, you know, you got the sense that these were just a couple of moments to sot of, you know, lighten the atmosphere as they were going to try and answer these tough questions.

But overall, I think the sense from September 11 families -- they were pushing for these hearings. They wanted them. They were glad they got them. They wanted those officials there, and Dana will talk more about this -- they were absolutely outraged that Condoleezza Rice, the president's national security adviser -- could do all these interviews, and do everything else, but that she would not be there.

So they were pleased to have these hearings, but say there are still so many more questions and they just don't have those answers yet.

HINOJOSA: You know what's interesting, Kelly, is, you know, I did a lot of coverage with the family members of September 11 here in New York. And I spoke to a couple family members who said while they thought that these hearings were so important, they just couldn't watch. It was too absolutely painful for them to sit there and watch all of this stuff and people saying what might have been done what could have been done. I mean, while we were all tuned in and watching this, there were some people who just said, You know what? What does this all do but just feel and deepen our pain?

WALLACE: Maria, that is such a fascinating point you're making, because maybe that is why -- I have to say, I was surprised. I really did expect when we got there early Tuesday morning there to be a huge line outside the Senate Hart Building on Capitol Hill.

We all remember, you know, the Anita Hill hearings and Oliver North, Iran-Contra. And I just sensed that it would be the same case, that there would be lines and people waiting hours to get inside. Also, expected e a tons of family members to be there. But, perhaps, you know, some could watch it from afar, and that it is just so painful to hear about this discussion about clues they might have had, things they might have done.

And an overall sense -- and this is when you really saw the families get so upset -- that maybe it took something like September 11. Richard Clarke used the words "it took body bags." And that was such a dramatic moment looking at these family members, to get the country, to get the government to maybe have a wake-up call and try and so something to prevent this from ever happening again.

QUIJANO: Yes, some emotionally-wrenching moments. Kelly, thank you for that.

We'll talking more about the September 11 Commission and the hearings later in the hour.

Coming up next, terrorism in Israel and the impact of the assassination of the man Israel called "the godfather of suicide bombers."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We had to do it because Ahmed Yassin was the godfather of suicide bombers.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: What this action has done is escalate the violence, take the policy of assassination and lawlessness to new levels.

(END VIDEO CLIP)

HINOJOSA: Israeli and Palestinian voices, bitterly opposed on the assassination of Sheik Ahmed Yassin, the founder and spiritual leader of Hamas. The wheelchair-bound founder of Hamas was killed in an Israeli missile attack Monday.

Joining us now from Jerusalem is CNN correspondent Paula Hancocks.

Paula, six days after the killing, what is the mood now there?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, the mood on the streets of Israel, Maria, are one -- a very tense mood. Certainly, people waiting for another terrorist attack, after Hamas and some of the other militant groups have promised to avenge the death of Sheik Ahmed Yassin.

So there really is a sense of fear on the streets. There's a huge amount of security as well. You can't walk round the corner of a street at the moment without bumping into a soldier. Just a couple of days ago, I went to the central bus station just to get lunch, and no word of a lie, there was at least one soldier for every five people that were in the bus station.

But people do seem to be getting on with their lives as best they can. They're used to this. We've had three and a half years of this intefadeh. A couple of people I spoke to just the day after Yassin's association -assassination, one girl I spoke to say, "Why would I be afraid? I've been afraid for three and a half years years. Why would today be any different?" And then one gentleman I spoke to, I said, "How do you feel," the day after Yassin's assassination. And he said, Well, here, everything is a day after. It's always the day after something -- the day after a suicide bombing, the day after an incursion into Gaza.

So people are trying to get on with their lives as best as possible.

WALLACE: Paula, one thing that definitely caught the attention of the U.S. administration and Americans, some comments coming from Hamas leaders, Palestinians on the street, wanting to take this fight outside, beyond Israel, the West Bank, and Gaza, and go after American interests. What have you heard about that? It seemed like Hamas was backing away from that.

HANCOCKS: Well, it does seem like they are at the moment. But a leaflet that Hamas actually passed out on the streets of Gaza City on the day of Sheik Yassin's assassination said that they didn't think that -- quote -- "the Zionists could have done it without the cooperation and approval of the U.S. administration." So they were suggesting that there could be reprisals against United States as well, or against United States interests, within Israel.

They have backed away from that now, the new Hamas leader, Abdel Aziz Rantissi, have backed away from it, saying that they are going to focus on the state of Israel, on Jewish settlements within Gaza and the West Bank, the occupied territories. So they have backed down from pushing this argument further aboard.

BASH: And Paula, one thing that struck me was a letter written in a Palestinian newspaper by leadership members, by intellectuals, essentially saying, This is not working for us. The military -- or really, terrorists attacks aren't working, aren't helping our cause. How real is that? Is that a public relation kind of thing? How real is that in terms of working down into the streets of whether or not there is maybe any kind of sense that the terrorism is not working for their cause?

HANCOCKS: Well, it is fairly significant. I mean, it's quite an unusual step. There was about 70 fairly prominent Palestinians putting this advertisement in a prominent newspaper.

I spoke to a couple of them, just yesterday. I was up in Ramallah, in the West Bank, and I was talking to them about how they saw this coming into being, that they were very positive about it, and saying that they do feel that a majority of the moderate Palestinians, and certainly some I've spoken to, do believe that they are harming their cause with violence. They want to go back to a nonviolent intefadeh, the likes of which we saw back in 1987 at the start of the first intefadeh. They think that violence and guns are detrimental to the Palestinian cause, i.e., creating a Palestinian state.

But, then, just about an hour later, just three streets away, we went and covered a mourning service for Sheik Ahmed Yassin -- 5,000 Hamas supporters were there and there was a great deal of anger on streets. There was a lot of chanting "death to Ariel Sharon," the Israeli prime minister.

So it's very difficult to see how you can marry these two extremes within the Palestinians' psyche themselves, which was just three streets away, in the same city.

QUIJANO: Paula, another extraordinary story I wanted to ask about -- the reaction to that remarkable image of the 16-year-old boy, would-be bomber trying to cut off explosives on a vest that he was wearing.

What's been the reaction to that?

HANCOCKS: That's right, yes. These were -- really were heartbreaking pictures. And ironically, it does seem to have brought the two sides together in some way, the moderate Palestinians, the moderate Israelis, by saying this is outrageous, this cannot be allowed to happen.

The 16-year-old boy, his family, saying that he had the mental age of 12, and he is very short for his age as well so he'd been bullied at school, been called a dwarf by kids at school. And whoever was behind these attacks and persuaded him to try and carry out this attack actually said to him, If you do this, you'll be a hero. You won't be bullied at school. You'll go to heaven.

And so -- but when he was asked at the checkpoint to lift his shirt, they saw the explosives, the first thing he said to the soldiers was "I don't want to die. I don't want to blow up." So it really is a heart-breaking story, and it has both side very concerned that children and young men and women are being dragged into this. The -- actually, Sheik Yassin, the former spiritual leader before he was assassinated, issued a religious edict saying "we should not use children in the carrying out of terror attacks." But it does seem more and more as though children are being dragged into it.

HINOJOSA: You know, what's interesting, Paula, is that kind of from our perspective over here, you hear about the suicide bombers and you think that everybody who is doing this is doing this willingly, consciously planning this out. And then you see this child and you say, My God, how many other people were forced into doing this, and then ended up killing so many along the way?

HANCOCKS: Exactly. When you look at the pictures, and you see his eyes, his eyes are so wide,. e is clearly terrified. And just fact that he said, "I don't want to die."

And then just a week and a half ago, at exactly the same checkpoint up in the West Bank, there was an 11-year-old boy who as stopped. He was working as a porter at this particular checkpoint, carrying bags across for people. Someone had paid him five scheckles, which is around about 1 U.S. dollar, to carry a bag, and it was full of explosives. Luckily, the Israeli forces, the Israeli security guards stopped him and found it to stop him blowing himself up, because they thought they were going to blow this bag up -- unbeknown to the boy that he was carrying this bag -- by remote control.

So it really is degenerating at the moment. The amount of times that children are caught with these explosions. And also, children caught in the crossfire. A 7-year-old dying just earlier today in Nablus, as well, being caught in the cross fire.

HINOJOSA: So Paula, thanks so much for joining us. And briefly, just tell us what are you going to do today? What's ON THE STORY for you in the coming days?

HANCOCKS: Well, we have the Arab League summit coming up next week, next Monday and Tuesday. They were expected to talk about Arab reform, but I think the assassination of Sheik Ahmed Yassin is certainly going to be very much in focus, some of the Arab countries wanting the United States to condemn Israel's move. They haven't as yet, so that's certainly going to be what we're looking at next week.

HINOJOSA: Thank you, Paula. Stay safe there.

Now next, a quarter century since an event that helped shape, some would say distort, the image of nuclear power. I'm back ON THE STORY of Three Mile Island 25 years later after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NILS DIAZ, CHAIRMAN, NUCLEAR REGULATORY COMMISSION: Three Mile Island was not really a disaster in radiological terms. There was no significant amount of radiation released.

(END VIDEO CLIP)

HINOJOSA: Nuclear Regulatory Commission Chairman Nils Diaz reminding all of us that 25 years after Three Mile Island, nobody was hurt. But the anxiety about what happened, and what might have happened, continues to hang over that plant and the nuclear industry.

Welcome back. We're ON THE STORY.

QUIJANO: Maria, you were on the ground there, talking to folks this week. What kind of sense did you have about how concerned they were 25 years later?

HINOJOSA: You know, it's kind of strange, Elaine, because there are people who feel so close to this.

One of them, for example, Debra Baker (ph). She gave birth to a son 25 years later that was born with Downs syndrome. So for her, the questions of -- you know, did my baby suffer as a result of this -- there you see her. She now monitors radiation around Three Mile Island 24 hours a day out of her house, just because she's not over it. And she says that this is the thing that give hearse security.

On the other hand, you have somebody like Catherine Mayberry (ph) who literally was a stone's throw from the nuclear reactor, who left -- there you see her leaving, evacuating, with -- get this -- a baby blanket over her child's face as if this was going to protect her from any kind of radiation. And she's much more settled about it. Her daughter just gave birth to a healthy baby boy. So she's fine.

So it really depends on how close you were, almost to say how much you're still affected by it.

WALLACE: Maria, it is so hard to believe it's been 25 years. I mean, it's incredible.

Remind us again what happened, because I don't know if everyone remembers exactly what the problem was. And then of course, what is being done to prevent it ever from happening again?

HINOJOSA: Well, what happened essentially was human error. When there were complications with one of the reactors, human error -- they started pressing the wrong buttons. And I am certainly not a nuclear scientist to tell you what they were doing.

But then 24 hours later, they ended up evacuating the area, saying at first saying mothers, pregnant women and small children needed to be evacuated. But of course, people were saying, Well, why are you only evacuating them? What about the rest of us?

One of the nuclear reactors did a partial meltdown. That nuclear waste is still there. People think that maybe this place is gone. Three Mile Island is still there. Two of the two reactors are operational. One of them is, you know, in partial meltdown.

But, you know there are some people who just say, Gosh, it's a blip in history. People forget. It was 25 years ago. And some people want to forget.

BASH: Maria, you talked about one woman you met whose son has Downs Syndrome. Now that it's been 25 years, what have people learned about the effects, the health effects, on those who were around that area during this crisis?

HINOJOSA: Well, you have a lot of studies that come out that say that there is no increase of cancer in the area, no increase of birth defects. But on the ground, you get a kind of different sense.

Catherine Mayberry, the woman who was evacuating with the baby covered, said she's never been contacted for any kind of health or mental health study ever. So if she hasn't been contacted, it kind of raises the question, Well, how many other people haven't been talked to?

But the Nuclear Regulatory Commission says you can stop your worries. Twenty-five years later, there is no proof -- no increase. But other people just say, you know, we feel like we haven't gotten the answers. We know people are appearing with cancer who worked inside that reactor. So they still have questions. And I think that for a lot of people, they just feel like they're never -- they're going to get those answers.

QUIJANO: Maria, I kind of covered this story but more looking at sort of the state of the nuclear power industry in 2004, 25 years after Three Mile Island. And one of the things I thought was interesting is that the industry officials that you talk to say, Look in 1979, there was about 3 percent of U.S. electricity was being generated by nuclear power. Now in 2004, that's up to 20 percent.

And, yes, there was such strong opposition in the wake of Three Mile Island.

I'm wondering, when you were out there, did you see -- did you encounter opposition, anybody who said, you know, adamantly, We are going to use this anniversary as an opportunity to revisit the concerns that existed in the days after Three Mile Island?

HINOJOSA: No, you really don't have a protest movement out there. In fact, I asked Catherine Mayberry, you now, would you go to a no-nukes rally now? And she said, Well, there aren't any no-nukes rallies to go to. So you don't have that sense there.

Now, you know, from the Nuclear Regulatory Commission, they say, Look, we learned a lot from Three Mile Island. We are much better prepared. We have evacuation plans in place.

But the fact is, is that what happened in Three Mile Island 25 years ago was human error and there's no way that you can protect against that. And even though you have a woman who's monitoring radiation 24 hours a day in that area, she says,. If it happens, we all know there's no place to go. There's just no place to get away from this.

So a story that's -- certainly for the people there, will continue to be relived for many of them.

BASH: Well, Maria, we're going to turn now from nuclear energy to political energy and the energy that the White House put into trying to combat charges the president didn't do enough to prevent the September 11 attacks. We'll be back on that story soon.

But first, we're going to check the top stories at this hour.

RENAY SAN MIGUEL, CNN ANCHOR: And in the headlines at this hour, attacks across parts of Iraq have claimed numerous casualty. A roadside bomb in Baghdad wounded five Iraqis. Also this morning, two Iraqis were killed in an attack on Mosul's city hall. And an Iraqi police officer was shot to death last night at his home in Kirkuk.

April will be busy for the Bush administration and its Mid East peace effort. Egyptian President Mubarak is scheduled to visit President Bush's Texas ranch on April 12. The Israeli Prime Minister Sharon is expected in Washington two days later. And Jordan's King Abdullah will visit the White House on April 21.

Mother Nature has some explaining to do. For the first time that anyone can remember, there was a hurricane deep in the South Atlantic. In nearly 40 years of satellite tracking, no hurricane has ever been observed off the Brazilian coast.

You want fast, how about seven times the speed of sound? If all goes as planned, NASA's unmanned X-43-A will drop from a B-52 today over the Pacific Ocean and hit hypersonic speed for several seconds. It's a test of scram0jet technology, a form of propulsion that uses no moving parts.

Those are the top stories at this hour. ON THE STORY will be right back with the politics of the 9/11 hearings.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Had my administration had any information that terrorists were going to attack New York City on September the 11th, we would have acted.

(END VIDEO CLIP)

BASH: President Bush, speaking on Tuesday, trying to stamp out any suggestion that anyone on his team, or even he, ignored any threats leading up to September 11, part of a massive effort at the White House to do that and also to try to discredit their former counterterrorism aide Richard Clarke.

WALLACE: Dana, take us behind the scenes, because this really was an extraordinary week of attack and counterattack. How much is the White House sort of concerned about this, focused on this and having this orchestrated response to Richard Clarke?

BASH: It's really been amazing, Kelly. Just -- one example is how the week started. At 6:47 p.m., 13 minutes before "60 Minutes" started last Sunday -- of course, that was Richard Clarke's first interview, I got an e-mail -- we all got e- mails, from the White House, and it was entitled "Setting the Record Straight." It was a list of what they called myths and then what they called realities, fact of what the administration did and did not know, leading up to September 11.

It was extraordinary. Kelly, you know from covering the Bush White House, that kind of thing doesn't happen. They generally tend to ignore their critics as much as possible. But that was the beginning of a week where they just absolutely went after Richard Clarke on what he had said while he was in the administration, versus what he is saying now in his book and on the hearings, really try to discredit him on a really broad basis with administration officials out talking constantly about this all week.

QUIJANI: Dana, what other kind of tactics did they use? I mean, I heard about meetings -- and rare meetings in West Wing offices and that sort of thing.

BASH: Well, Dr. Condoleezza Rice, the national security adviser, a couple of times talked to reporters this week. Once, after Richard Clarke testified, essentially, really hitting her specifically. She invited reporters into her office and she was extraordinarily angry. I mean, really trying to combat any of the suggestions that, for example, she didn't have enough meetings and that that was perhaps why September 11 could have happened.

But it wasn't just that. They released an e-mail -- she actually released an e-mail that Richard Clarke sent to her, talking about how they could pump up what the administration actually had done leading up to September 11. They also released the identity of Richard Clarke as somebody who was an unidentified source with reporters in August of 2002, also talking about the benefits and the pluses of what the Bush administration had done leading up to 9/11.

So really, the efforts was on a broad, massive scale to use him, his own words, to contradict what he is saying now.

HINOJOSA: But interestingly, Dana, I'm wondering, Could this all backfire? Because it's so rare where you're suddenly seeing Condoleezza Rice making the rounds and talking about this, the press secretary holding these, you know, press conferences that go on forever.

Is there a sense that they may be kind of overreacting, or it's like they're try to cover themselves up because there was something wrong? Could it backfire?

BASH: Well, certainly, there is a sense from some Republicans outside the administration that perhaps the more -- the fact that they're giving it such attention is keeping the story alive, if you will.

But they feel that this is -- this is the president's No. 1 issue on -- in his re-election. If you look at his tag line in his first ad, "steady leadership in times of change." He is running as the guy who is going to keep you safe. So if there's any question, particularly from somebody who used to work for him, that is really getting out there, penetrating that is something they feel like they have to combat.

You know, you look at -- there was a poll that came out this week that was extraordinary -- a Pew research poll that said 9 out of 10 Americans have heard at least a little of Richard Clarke's criticisms of the president. I mean, for anybody to hear that much about what's going on in Washington is extraordinary. I don't even think that many people know anything about Ben Affleck or Jennifer Lopez, things that people really tend to pay attention to.

So that is why they are doing this. And certainly, Democrats, are saying that they are involved in character assassination.

WALLACE: And Dana, the other thing, of course, certainly the families of the September 11 victims, but Democrats are saying it privately -- they really can't believe Condoleezza Rice is not going to go up there and publicly testify. I have had a couple Democrats say to me privately, they believe ultimately the public pressure will be so enormous that Dr. Rice will eventually go before this panel.

What is the sense -- how concerned are they that politically they might be paying a heavy price by Dr. Rice saying she cannot go before the panel, but can go out and do a "60 Minutes" interview tomorrow night?

BASH: "60 Minutes" interview tomorrow night, a lot of interviews this week. And of course, I was saying, you know, talking to reporters in her office.

But, you know, to answer that question, you can probably just look at what they did on Thursday night, which is send a letter, very publicly, release it to the press at the White House, to the commission, saying that she actually did want to come meet with them, but do so in private. She wanted to get the chance to discuss the issues that Richard Clarke talked about; she wanted to answer more of their questions.

Now that wasn't what the commission was asking for, as you know. They want her to testify in public. But they're sticking by the fact that they think this is an executive privilege. She is an aide to the president. She was not confirmed by the Senate like Secretary Powell and Rumsfeld and others who testified were. So they're sticking by it.

But apparently, according to her aides, she really is saying that she would like to do it, but the White House for legal reasons say -- they say that it's not a good idea.

QUIJANO: Dana, thank you for those fascinating, behind-the- scenes looks at this really heated political fight now. Dana, thank you.

Another political dispute is on the simmer here in Washington. Did the administration try to hide the real cost of the new Medicare law? I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARD FOSTER, CHIEF MEDICARE ACTUARY: I had a difficult choice, sir, you can imagine. I could ignore the orders; I knew I would get fired. I was not afraid of that. I didn't especially want to be fired. But I wasn't afraid of it. I could comply with the orders and I could resign in protest.

(END VIDEO CLIP)

QUIJANO: Richard Foster, chief Medicare actuary, testifying on Capitol Hill about how he felt pressured to keep certain information from members of Congress, information some Democrats say could have given a more complete picture of how much the new Medicare law could really cost. Now this longtime public servant finds himself in the middle of a bitter partisan fight.

Welcome back. We are ON THE STORY. And....

HINOJOSA: And Elaine, it's pretty strange -- no? -- to have a scientist, of this guy -- he's kind of obscure...

QUIJANO: Yes.

HINOJOSA: And suddenly he's out there talking about the fact that he was told...

QUIJANO: Right.

HINOJOSA: ...to keep these numbers quiet?

QUIJANO: Right.

HINOJOSA: I mean, this is -- it's not really -- I mean, it is a story about Medicare but it's really about the politics behind the scenes.

QUIJANO: Right. Well, that's exactly right.

I mean, if you're watching him and you go, Who is that?, You're not alone, because a lot of people don't know. He's one of those sort of faceless bureaucrats, if you will, that is sort of toiling away in obscurity, but an integral part of the system, and as chief Medicare actuary, he's much more accustomed to dealing with algorithms and formulas and crunching numbers and that sort of thing.

Certainly this is not his deal. He doesn't come out publicly. And so for him to actually feel that strongly about the situation that he says he was placed in, where he got an e-mail basically from an aide to his boss, saying, Look, do not give out this information, otherwise there will be some extremely severe consequences. He felt like he had his hands tied, and says actually -- the latter part of that soundbyte that we heard him talk about was says, you know, I did decide to resign in protest, but then my staff talked me out of it.

WALLACE: But let's talk about -- I mean, this is outrageous, the significance. We're talking about a $1 billion -- more than 100 billion of taxpayer dollars.

QUIJANO: Absolutely.

WALLACE: What's going to happen with Medicare prescription drugs, the future from here. Question I'm sure viewers want to know -- who is going to take the fall for this? Someone should be held responsible.

QUIJANO: Well, you know, in fact, he was asked to name names, and he named some folks in the White House.

And, you know, the thing is, what the Republicans -- some republicans are saying, is that, Look, we went with the Repub -- with the Congressional Budget Office's numbers -- $395 billion is the number that was sort of bandied about, that that's how much this Medicare law was going to cost, and those are the figures that we went with.

But what came out during his testimony was that back in June, he knew that it was going actually to be something more like $500 billion to $600 billion, and in fact, the final sort of figure -- although it's not exactly the final figure -- but their final estimate was $534 billion.

So you're right. A tremendous amount of money, a tremendous amount of people really affected by this. And, in fact, you know, it's not just Democrats who are upset about this. Conservative Republicans as well, saying, you know, that could have changed our vote, changed our minds on really what was a tough fight to get it passed in the first place.

BASH: And Elaine, that's what's so extraordinary politically, because we all remember covering the story, and how hard it was for the administration to get this passed, even because of those conservative Republicans. They didn't want to spend all that money, and it was the question of how much it's going to cost.

You remember a the time, everybody was asking that question. So the fact that the White House -- or the question about whether the White House really actively tried to suppress that information, even for their fellow Republicans, raises all kinds of political questions as well.

But my question for you is -- during that hearing, did he make it sound like he was ready to name names, in terms of who at the White House -- or even give evidence who at the White House actually tried to get him to stop, to not give this information up?

QUIJANO: Well, it's interesting. It's interesting.

You know what? He didn't go into detail. You know, he was pressed for sort of details, and he did name a couple of people. But I think ultimately what he was really trying to get at was that -- and I should also tell you this, that Republicans will say -- some of the Republicans on the subcommittee said, you know, they were following the letter of the law. His bosses did not -- they were purely within their legal rights to tell him not to share that information.

And his point was -- Foster's point was, you know what? The letter of the law is one thing, but the spirit of your responsibility as a public servant is quite another and it did not seem ethical and it did not seem appropriate for that e-mail to come down, for those kinds of threats to be made. Certainly a human drama behind this very political battle.

WALLACE: Right, legally is one issue, but the impact on public policy and the whole impact of whether seniors will get their prescription drugs and at what cost is -- well, we'll be following that, Elaine. Thank you.

Well, Medicare certainly one bump along the campaign trail this week. We will talk presidential politics and presidential humor when we're back ON THE STORY.

Stay with us.

(BEGIN VIDEOTAPE)

ANNOUNCER: Kelly Wallace is a CNN national correspondent in New York. She was born and raised in Brooklyn. She studied economics at the University of Pennsylvania's Wharton School, and she was a CNN White House correspondent during the Clinton and Bush administrations and later reported extensively from the Mid East.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Those weapons of mass destruction gotta be somewhere.

(LAUGHTER)

BUSH: Nope, no weapons over there.

(END VIDEO CLIP)

BASH: President Bush, cracking jokes this past week at the Radio and Television Correspondents Dinner in Washington. Some of those jokes, and accompanied photos, were of the president pretending to look for weapons of mass destruction in the Oval Office.

Welcome back. We're ON THE STORY.

WALLACE: OK, Dana, question for you, because the Kerry campaign, other Democrats seized on this and they said this is an example of how President Bush is out of touch. There are things you joke about and the whole kind of rationale for going to war with Iraq is not something you joke about.

Behind the scenes, are people saying this went too far?

BASH: Well, you know, what they say is this dinner is supposed to be about making fun of yourself, making fun of situations that you probably shouldn't be in.

And that they point out that -- you just heard the laughter, that nobody booed, nobody hissed, and people did laugh at the time.

They also say that at the end of the president's little rift there, he did take a couple of minutes to show a picture of some soldiers fighting in Iraq, say that he used that -- he keeps that photo in his study, off the Oval Office, and that he sort of paid tribute to them so there was some serious time in addition to the poking fun.

QUIJANO: Yes, and Dana, I was there at the correspondents dinner and I can tell you, the people around me were laughing. Of course, there were some faces very obvious that they did not find it funny at all.

But, I mean, overall -- you're right, nobody was booing at the moment. And as you pointed out, the thing that people didn't see is that there was that picture at the very end. So it did end on that somber, sort of very serious note.

WALLACE: The other thing we saw, of course, is John Kerry had been in Idaho, snowboarding and skiing and taking some time away.

But he came back to the campaign trail and it's interesting -- and Dana and Maria, I want to get your points of view here -- because he came in on Friday and unveiled his -- part of his economic plan. He is being painted by Republicans as a taxer and spender. But here he is calling for cuts in corporate tax, breaks for corporations that will not outsource. Many believe this will sort of put the pressure on Republicans to say, you now, he's portraying himself as a moderate, pro-business Democrat and that's going to be a problem for the Bush administration.

HINOJOSA: Well, I'll tell you one thing, Kelly, because the story I was working on this week was about the Latino outreach in both campaigns. And if President Bush was having a rough week in terms of the 9/11 hearings and even about the White House correspondents dinner and Kerry seemed to be kind of up, I'll tell you, when you talk about the Latino vote, it's absolutely reversed.

The Bush-Cheney 2004 campaign, they are going after this Latino vote. I spoke to one of their chief strategists who says, Listen, not a day goes by that we don't talk about getting that Latino vote and making sure that that's the one that guarantees that we're going to win this election.

On the other hand, the Kerry campaign, in something of a disarray -- no chief Latino strategist paid on staff. Just a group of advisers. A lot of internal mumblings that they are just missing the boat right now on a key electorate, the Latino vote, and perhaps even on the African-American vote.

So Bush-Cheney, lots of energy on this, spending on these ads. Kerry, maybe -- I don't know, he's going to have to do -- work quick.

BASH: Well, Maria, the president, of course, yesterday was in New Mexico, where, you know, 40 percent of the vote in that state, which is so important to the president in trying to get that state -- 40 percent is Hispanic. So certainly, he is focusing on that, even in his travels.

But, you know, Kelly, you were talking about sort of the week that was. And what's interesting to hear from the Bush campaign this week is they say even though, clearly it wasn't the best week for them in terms of the Richard Clarke testimony and all of the controversial around that, they've been up on the air, in -- advertising around the country, 17 key states, for a couple of weeks now. And they are look at the polls and they say that their effort to define John Kerry, to sort of take him down a couple of notches, seems to be working in the polls, even though, you know, the sort of free media, if you will, we are all talking about other things. They feel like the ads that they are running, and paying for, are beginning to work.

WALLACE: Well, you know, Dana, it's interesting, because they do seem to say that -- well, they won't admit it, of course, even privately -- that they think these efforts to define John Kerry have been working.

But no question, having him come out of the gate and having this very orchestrated plan to try and define himself -- these are such important months right now because we've seen polls, the majority of Americans saying that they don't know a lot about John Kerry. So the Kerry campaign definitely trying to take the offensive to define him in a way they obviously want to define him.

HINOJOSA: OK, So, Kelly, take us to that unity dinner, OK? Because I wasn't there. I know people who were.

But here's what got me. You have that photograph at the end...

WALLACE: What a photo-op.

HINOJOSA: And Edwards is in the middle with John Kerry. What's up with that?

WALLACE: All right, I'm privately going to say...

BASH: And so is Al Gore.

WALLACE: Yes, I will privately say -- I won't even say where this came from. But I said to someone, So what did you think of that photo op, former presidents, vice presidents, the presidential candidates. And someone said, all I saw is John Edwards getting in between President Clinton and John Kerry. You got a sense that the Kerry people didn't like it so much.

But here's what I heard from Joe Klein, who we know very well. He looked at this and he said -- he's a political observer. He said, Democrats are notorious for subdividing, OK? The question is, Can they keep this unity. Are they so angry with the Bush administration -- can they sort of quash their differences to try and be united and present a united front?

We don't know the answer to that. It remains to be seen.

QUIJANO: Moving moment in many ways. All right.

WALLACE: Incredible.

QUIJANO: Thanks so much.

We're back ON THE STORY after this.

(BEGIN VIDEOTAPE)

ANNOUCNER: Civil rights activist Dorothy Height made headlines this week. What's her story? More when we return.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Dorothy Height -- what's her story? The 92-year-old civil rights activist was honored Wednesday with Congress' top honor, the Congressional Medal. President bush praised her dedication to racial and gender equality.

DOROTHY HEIGHT, CIVIL RIGHTS ACTIVISIT: African-American women seldom do just what they want to do, but always do what they have to do.

ANNOUNCER: Height adds this latest honor to a collection of other important awards, including the Presidential Medal of Freedom, which she received in 1994 from President Bill Clinton.

(END VIDEOTAPE)

WALLACE: And thanks to my fabulous colleagues, and thank you for watching ON THE STORY. We will be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Janet Jackson and Kobe Bryant.

At 12 noon Eastern, 9 a.m. Pacific, "CNN LIVE SATURDAY."

And at 1 p.m. Eastern, 10 a.m. Pacific, CNN's "IN THE MONEY."

We hope you have a great Saturday.

Coming up right now, a check on what's making headlines at this hour.

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Aired March 27, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: Hello, everyone. I'm Catherine Callaway in Atlanta. ON THE STORY is coming up, but first the headlines for you.
More violence in Iraq this morning, as five Iraqis are injured in a roadside explosion in Baghdad. Powerful blasts blew out windows in a nearby building. And in Mosul, the U.S. military says the city hall came under small-arms and rocket fire.

And CNN has learned that at least two dozen were wounded by a blast outside a hotel in southern Thailand. Authorities say it was caused by a bomb that was attached to a motorcycle.

In the West Bank, a seven-year-old boy is killed in a gunfight between Israeli troops and Palestinians. Palestinian witnesses and city officials say that he was shot by Israeli soldiers. But an IDF commander says that a stray bullet from a Palestinian gunman struck the boy.

Taiwan's president says that he will accept a recount of the ballots cast in last weekend's presidential election. Thousands of protesters have crowded in the streets of Taipei demanding such a move. The opposition's also demanding an independent investigation into a shooting that slightly wounded the incumbent just hours before the balloting.

Those are the top stories. ON THE STORY begins right now.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Kelly Wallace, ON THE STORY of high drama here in Washington this week, as the September 11 panel puts both Bush and Clinton officials in the hot seat.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: I'm Dana Bash in Crawford, Texas, ON THE STORY of how the president and his team fought hard to combat charges that he did not do enough to prevent September 11 attacks.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: I'm Maria Hinojosa ON THE STORY of 25 years since the Three Mile Island nuclear accident and how some local residents are still on edge. ELAINE QUIJANO, CNN CORRESPONDENT: I'm Elaine Quijano, ON THE STORY of claims that politics kept us from learning the real cost of the new Medicare law.

Also coming up, CNN's Paula Hancocks about new terrorism fears in Israel after the assassination of the Hamas leader. We'll talk about how the presidential race gets off the slopes and back on the campaign trail, and we'll talk about how the search for weapons of mass destruction went from a call to war to a comedy routine by President Bush.

E-mail us at onthestory@cnn.com.

Now, straight to Kelly and the September 11 investigation.

(BEGIN VIDEO CLIP)

RICHARD CLARKE, FMR. COUNTERTERRORISM CHIEF: Your government failed you. Those entrusted with protecting you failed you. And I failed you.

(END VIDEO CLIP)

WALLACE: That may have been one of the most dramatic moments of this week's September 11 hearings. Former counterterrorism chief Richard Clarke and the Bush White House apologizing to the victims of September 11, the families of those victims.

I can tell you, talking to the families -- I talked to one family member, Henry Hughes of Long Island. His son was killed in the South Tower on September 11. The day before that he said, You know what? There has never been an official to come forward and say, We screwed up, I'm sorry. That happened, and after that happened, an extraordinary scene. All these family members coming around Richard Clarke to say thank you for that apology.

BASH: And Kelly, what about during the hearings itself? We've talking about the controversy, of course, around the hearings. But inside the room, give us a sense of the atmospherics.

WALLACE: Dana, the word I keep using is there was a heaviness inside that room.

I will tell you, I was somewhat surprised. I thought there would be a huge line to get inside this hearing. I thought it would be standing room only. Wasn't exactly that way. But there was such a heaviness, a seriousness. You saw the family members in the front rows, many holding pictures of their loved ones close to their chests. You had a who's who in the Bush and Clinton administration coming forward. And they were talking about the most dramatic things.

What could have been done? Could both administrations have done more before September 11? It was just weighty, really weighty inside that room.

QUIJANO: And these family members obviously are seeking to connect the dots. What did we really learn? What, of substance, came of it?

WALLACE: There's a lot of blame to go around, that's what we learned -- on both parts, on both the Clinton administration and the Bush administration.

A couple of new things we learned -- that there were three times during the Clinton administration in 1988 (sic), 1999, where they had intelligence, they knew where Osama bin Laden was, and they didn't act. The reason being, the Clinton administration saying it didn't believe it had actionable intelligence and also there were risks to these actions and those risks had to be taken into account.

We also learned about just lack of coordination between agencies. Both the Clinton and Bush officials felt that the FBI had more information about two of the September 11 hijackers who were in the United States.

And we learned that the CIA didn't believe it had the authority to go and kill Osama bin Laden. It thought it had to act in self- defense. So a lot we learned about a lack of coordination on the parts of all these agencies.

HINOJOSA: You know what's interesting, though, Kelly, is that when people think about it, it' almost, like, what could we have done? Was there anything that could have been done? And I think that that one of the things that seemed interesting, was when Richard Clarke said, We knew that two of these bombers were in the United States. We didn't get the information. If we had known that, we could have put their photographs on the front page of every newspaper and maybe, maybe, that would have -- that would have helped. So there was actually something that someone said that actually could have been done.

WALLACE: Exactly, Maria. I mean, he even said, Look, we could have gone to "America's Most Wanted." We could have put that out there and someone might have said, Gee I know who that guy is.

There was something else that was brought up, which before -- we all remember before the millennium, and concerns about a terrorist attack, January 2000. Before that, there was discussion that Clinton administration officials, top level official, including President Clinton, meeting every day, to talk about it. What are you doing, what do you know, what are your agencies doing?

Richard Clarke, who we know is a big critic now of the Bush White House, saying there was the same level of fear the summer of threat, they're calling it, the summer of 2001. And he is saying that was not this sense of bringing all these officials together to talk about it.

Of course, as you know, Dana, Bush administration officials saying they were talking, there were doing what they can. But there was the sense if you brought all the people in the room, and said, "What do you know? What do you know?," perhaps, perhaps, they could have, you know, found out a little bit out -- more our and put that to the public. BASH: And the other thing, Kelly, that seemed interesting, is, you know, when you talk to members of the commission, they talk about how important it is to say bipartisan, even nonpartisan. But you definitely didn't get that feeling at some parts of these hearings. The partisanship seemed to come out from the questioning.

WALLACE: Especially, Dana, as you know, when Richard Clarke took the stand. Obviously, the much-anticipated testimony of Richard Clarke. He served in the Clinton White House, served in the Bush White House. He has written this book, we know, very critical of the Bush administration.

And you have Democratic and Republican members of this panel. And the Republican members appeared to be grilling him a lot more. They were calling attention to a background briefing that he had given to reporters in August of 2002, saying there's a disconnect between what he said then and what he's saying now in this book.

I will tell you this: the family members of some of the 9/11 victims were very concerned after that, because they said, Hey, this cannot start becoming partisan politics here. They did not like watching Republicans grilling Clarke more and Democrats maybe easier on him. They said they've got to focus on the facts. And there was a lot of concern at the end of that day that perhaps politics would overtake any effort to try and get answered about what could have been done or what can be done to prevent another September 11.

QUIJANO: Going back to the atmosphere and the mood there, I know some of the family members were not too happy when -- there looked to be some lighter moments, perhaps in breaks. Talk to us about that. They weren't very pleased.

WALLACE: There did. They felt a couple of times that there was some laughter and a couple of jokes being told. And family members didn't appreciate that.

Although when you were in the room, it was so intense and there was -- there was such -- you know, everyone was treating this with the absolute respect that it needs to be treated with. And so, you know, you got the sense that these were just a couple of moments to sot of, you know, lighten the atmosphere as they were going to try and answer these tough questions.

But overall, I think the sense from September 11 families -- they were pushing for these hearings. They wanted them. They were glad they got them. They wanted those officials there, and Dana will talk more about this -- they were absolutely outraged that Condoleezza Rice, the president's national security adviser -- could do all these interviews, and do everything else, but that she would not be there.

So they were pleased to have these hearings, but say there are still so many more questions and they just don't have those answers yet.

HINOJOSA: You know what's interesting, Kelly, is, you know, I did a lot of coverage with the family members of September 11 here in New York. And I spoke to a couple family members who said while they thought that these hearings were so important, they just couldn't watch. It was too absolutely painful for them to sit there and watch all of this stuff and people saying what might have been done what could have been done. I mean, while we were all tuned in and watching this, there were some people who just said, You know what? What does this all do but just feel and deepen our pain?

WALLACE: Maria, that is such a fascinating point you're making, because maybe that is why -- I have to say, I was surprised. I really did expect when we got there early Tuesday morning there to be a huge line outside the Senate Hart Building on Capitol Hill.

We all remember, you know, the Anita Hill hearings and Oliver North, Iran-Contra. And I just sensed that it would be the same case, that there would be lines and people waiting hours to get inside. Also, expected e a tons of family members to be there. But, perhaps, you know, some could watch it from afar, and that it is just so painful to hear about this discussion about clues they might have had, things they might have done.

And an overall sense -- and this is when you really saw the families get so upset -- that maybe it took something like September 11. Richard Clarke used the words "it took body bags." And that was such a dramatic moment looking at these family members, to get the country, to get the government to maybe have a wake-up call and try and so something to prevent this from ever happening again.

QUIJANO: Yes, some emotionally-wrenching moments. Kelly, thank you for that.

We'll talking more about the September 11 Commission and the hearings later in the hour.

Coming up next, terrorism in Israel and the impact of the assassination of the man Israel called "the godfather of suicide bombers."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We had to do it because Ahmed Yassin was the godfather of suicide bombers.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: What this action has done is escalate the violence, take the policy of assassination and lawlessness to new levels.

(END VIDEO CLIP)

HINOJOSA: Israeli and Palestinian voices, bitterly opposed on the assassination of Sheik Ahmed Yassin, the founder and spiritual leader of Hamas. The wheelchair-bound founder of Hamas was killed in an Israeli missile attack Monday.

Joining us now from Jerusalem is CNN correspondent Paula Hancocks.

Paula, six days after the killing, what is the mood now there?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, the mood on the streets of Israel, Maria, are one -- a very tense mood. Certainly, people waiting for another terrorist attack, after Hamas and some of the other militant groups have promised to avenge the death of Sheik Ahmed Yassin.

So there really is a sense of fear on the streets. There's a huge amount of security as well. You can't walk round the corner of a street at the moment without bumping into a soldier. Just a couple of days ago, I went to the central bus station just to get lunch, and no word of a lie, there was at least one soldier for every five people that were in the bus station.

But people do seem to be getting on with their lives as best they can. They're used to this. We've had three and a half years of this intefadeh. A couple of people I spoke to just the day after Yassin's association -assassination, one girl I spoke to say, "Why would I be afraid? I've been afraid for three and a half years years. Why would today be any different?" And then one gentleman I spoke to, I said, "How do you feel," the day after Yassin's assassination. And he said, Well, here, everything is a day after. It's always the day after something -- the day after a suicide bombing, the day after an incursion into Gaza.

So people are trying to get on with their lives as best as possible.

WALLACE: Paula, one thing that definitely caught the attention of the U.S. administration and Americans, some comments coming from Hamas leaders, Palestinians on the street, wanting to take this fight outside, beyond Israel, the West Bank, and Gaza, and go after American interests. What have you heard about that? It seemed like Hamas was backing away from that.

HANCOCKS: Well, it does seem like they are at the moment. But a leaflet that Hamas actually passed out on the streets of Gaza City on the day of Sheik Yassin's assassination said that they didn't think that -- quote -- "the Zionists could have done it without the cooperation and approval of the U.S. administration." So they were suggesting that there could be reprisals against United States as well, or against United States interests, within Israel.

They have backed away from that now, the new Hamas leader, Abdel Aziz Rantissi, have backed away from it, saying that they are going to focus on the state of Israel, on Jewish settlements within Gaza and the West Bank, the occupied territories. So they have backed down from pushing this argument further aboard.

BASH: And Paula, one thing that struck me was a letter written in a Palestinian newspaper by leadership members, by intellectuals, essentially saying, This is not working for us. The military -- or really, terrorists attacks aren't working, aren't helping our cause. How real is that? Is that a public relation kind of thing? How real is that in terms of working down into the streets of whether or not there is maybe any kind of sense that the terrorism is not working for their cause?

HANCOCKS: Well, it is fairly significant. I mean, it's quite an unusual step. There was about 70 fairly prominent Palestinians putting this advertisement in a prominent newspaper.

I spoke to a couple of them, just yesterday. I was up in Ramallah, in the West Bank, and I was talking to them about how they saw this coming into being, that they were very positive about it, and saying that they do feel that a majority of the moderate Palestinians, and certainly some I've spoken to, do believe that they are harming their cause with violence. They want to go back to a nonviolent intefadeh, the likes of which we saw back in 1987 at the start of the first intefadeh. They think that violence and guns are detrimental to the Palestinian cause, i.e., creating a Palestinian state.

But, then, just about an hour later, just three streets away, we went and covered a mourning service for Sheik Ahmed Yassin -- 5,000 Hamas supporters were there and there was a great deal of anger on streets. There was a lot of chanting "death to Ariel Sharon," the Israeli prime minister.

So it's very difficult to see how you can marry these two extremes within the Palestinians' psyche themselves, which was just three streets away, in the same city.

QUIJANO: Paula, another extraordinary story I wanted to ask about -- the reaction to that remarkable image of the 16-year-old boy, would-be bomber trying to cut off explosives on a vest that he was wearing.

What's been the reaction to that?

HANCOCKS: That's right, yes. These were -- really were heartbreaking pictures. And ironically, it does seem to have brought the two sides together in some way, the moderate Palestinians, the moderate Israelis, by saying this is outrageous, this cannot be allowed to happen.

The 16-year-old boy, his family, saying that he had the mental age of 12, and he is very short for his age as well so he'd been bullied at school, been called a dwarf by kids at school. And whoever was behind these attacks and persuaded him to try and carry out this attack actually said to him, If you do this, you'll be a hero. You won't be bullied at school. You'll go to heaven.

And so -- but when he was asked at the checkpoint to lift his shirt, they saw the explosives, the first thing he said to the soldiers was "I don't want to die. I don't want to blow up." So it really is a heart-breaking story, and it has both side very concerned that children and young men and women are being dragged into this. The -- actually, Sheik Yassin, the former spiritual leader before he was assassinated, issued a religious edict saying "we should not use children in the carrying out of terror attacks." But it does seem more and more as though children are being dragged into it.

HINOJOSA: You know, what's interesting, Paula, is that kind of from our perspective over here, you hear about the suicide bombers and you think that everybody who is doing this is doing this willingly, consciously planning this out. And then you see this child and you say, My God, how many other people were forced into doing this, and then ended up killing so many along the way?

HANCOCKS: Exactly. When you look at the pictures, and you see his eyes, his eyes are so wide,. e is clearly terrified. And just fact that he said, "I don't want to die."

And then just a week and a half ago, at exactly the same checkpoint up in the West Bank, there was an 11-year-old boy who as stopped. He was working as a porter at this particular checkpoint, carrying bags across for people. Someone had paid him five scheckles, which is around about 1 U.S. dollar, to carry a bag, and it was full of explosives. Luckily, the Israeli forces, the Israeli security guards stopped him and found it to stop him blowing himself up, because they thought they were going to blow this bag up -- unbeknown to the boy that he was carrying this bag -- by remote control.

So it really is degenerating at the moment. The amount of times that children are caught with these explosions. And also, children caught in the crossfire. A 7-year-old dying just earlier today in Nablus, as well, being caught in the cross fire.

HINOJOSA: So Paula, thanks so much for joining us. And briefly, just tell us what are you going to do today? What's ON THE STORY for you in the coming days?

HANCOCKS: Well, we have the Arab League summit coming up next week, next Monday and Tuesday. They were expected to talk about Arab reform, but I think the assassination of Sheik Ahmed Yassin is certainly going to be very much in focus, some of the Arab countries wanting the United States to condemn Israel's move. They haven't as yet, so that's certainly going to be what we're looking at next week.

HINOJOSA: Thank you, Paula. Stay safe there.

Now next, a quarter century since an event that helped shape, some would say distort, the image of nuclear power. I'm back ON THE STORY of Three Mile Island 25 years later after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NILS DIAZ, CHAIRMAN, NUCLEAR REGULATORY COMMISSION: Three Mile Island was not really a disaster in radiological terms. There was no significant amount of radiation released.

(END VIDEO CLIP)

HINOJOSA: Nuclear Regulatory Commission Chairman Nils Diaz reminding all of us that 25 years after Three Mile Island, nobody was hurt. But the anxiety about what happened, and what might have happened, continues to hang over that plant and the nuclear industry.

Welcome back. We're ON THE STORY.

QUIJANO: Maria, you were on the ground there, talking to folks this week. What kind of sense did you have about how concerned they were 25 years later?

HINOJOSA: You know, it's kind of strange, Elaine, because there are people who feel so close to this.

One of them, for example, Debra Baker (ph). She gave birth to a son 25 years later that was born with Downs syndrome. So for her, the questions of -- you know, did my baby suffer as a result of this -- there you see her. She now monitors radiation around Three Mile Island 24 hours a day out of her house, just because she's not over it. And she says that this is the thing that give hearse security.

On the other hand, you have somebody like Catherine Mayberry (ph) who literally was a stone's throw from the nuclear reactor, who left -- there you see her leaving, evacuating, with -- get this -- a baby blanket over her child's face as if this was going to protect her from any kind of radiation. And she's much more settled about it. Her daughter just gave birth to a healthy baby boy. So she's fine.

So it really depends on how close you were, almost to say how much you're still affected by it.

WALLACE: Maria, it is so hard to believe it's been 25 years. I mean, it's incredible.

Remind us again what happened, because I don't know if everyone remembers exactly what the problem was. And then of course, what is being done to prevent it ever from happening again?

HINOJOSA: Well, what happened essentially was human error. When there were complications with one of the reactors, human error -- they started pressing the wrong buttons. And I am certainly not a nuclear scientist to tell you what they were doing.

But then 24 hours later, they ended up evacuating the area, saying at first saying mothers, pregnant women and small children needed to be evacuated. But of course, people were saying, Well, why are you only evacuating them? What about the rest of us?

One of the nuclear reactors did a partial meltdown. That nuclear waste is still there. People think that maybe this place is gone. Three Mile Island is still there. Two of the two reactors are operational. One of them is, you know, in partial meltdown.

But, you know there are some people who just say, Gosh, it's a blip in history. People forget. It was 25 years ago. And some people want to forget.

BASH: Maria, you talked about one woman you met whose son has Downs Syndrome. Now that it's been 25 years, what have people learned about the effects, the health effects, on those who were around that area during this crisis?

HINOJOSA: Well, you have a lot of studies that come out that say that there is no increase of cancer in the area, no increase of birth defects. But on the ground, you get a kind of different sense.

Catherine Mayberry, the woman who was evacuating with the baby covered, said she's never been contacted for any kind of health or mental health study ever. So if she hasn't been contacted, it kind of raises the question, Well, how many other people haven't been talked to?

But the Nuclear Regulatory Commission says you can stop your worries. Twenty-five years later, there is no proof -- no increase. But other people just say, you know, we feel like we haven't gotten the answers. We know people are appearing with cancer who worked inside that reactor. So they still have questions. And I think that for a lot of people, they just feel like they're never -- they're going to get those answers.

QUIJANO: Maria, I kind of covered this story but more looking at sort of the state of the nuclear power industry in 2004, 25 years after Three Mile Island. And one of the things I thought was interesting is that the industry officials that you talk to say, Look in 1979, there was about 3 percent of U.S. electricity was being generated by nuclear power. Now in 2004, that's up to 20 percent.

And, yes, there was such strong opposition in the wake of Three Mile Island.

I'm wondering, when you were out there, did you see -- did you encounter opposition, anybody who said, you know, adamantly, We are going to use this anniversary as an opportunity to revisit the concerns that existed in the days after Three Mile Island?

HINOJOSA: No, you really don't have a protest movement out there. In fact, I asked Catherine Mayberry, you now, would you go to a no-nukes rally now? And she said, Well, there aren't any no-nukes rallies to go to. So you don't have that sense there.

Now, you know, from the Nuclear Regulatory Commission, they say, Look, we learned a lot from Three Mile Island. We are much better prepared. We have evacuation plans in place.

But the fact is, is that what happened in Three Mile Island 25 years ago was human error and there's no way that you can protect against that. And even though you have a woman who's monitoring radiation 24 hours a day in that area, she says,. If it happens, we all know there's no place to go. There's just no place to get away from this.

So a story that's -- certainly for the people there, will continue to be relived for many of them.

BASH: Well, Maria, we're going to turn now from nuclear energy to political energy and the energy that the White House put into trying to combat charges the president didn't do enough to prevent the September 11 attacks. We'll be back on that story soon.

But first, we're going to check the top stories at this hour.

RENAY SAN MIGUEL, CNN ANCHOR: And in the headlines at this hour, attacks across parts of Iraq have claimed numerous casualty. A roadside bomb in Baghdad wounded five Iraqis. Also this morning, two Iraqis were killed in an attack on Mosul's city hall. And an Iraqi police officer was shot to death last night at his home in Kirkuk.

April will be busy for the Bush administration and its Mid East peace effort. Egyptian President Mubarak is scheduled to visit President Bush's Texas ranch on April 12. The Israeli Prime Minister Sharon is expected in Washington two days later. And Jordan's King Abdullah will visit the White House on April 21.

Mother Nature has some explaining to do. For the first time that anyone can remember, there was a hurricane deep in the South Atlantic. In nearly 40 years of satellite tracking, no hurricane has ever been observed off the Brazilian coast.

You want fast, how about seven times the speed of sound? If all goes as planned, NASA's unmanned X-43-A will drop from a B-52 today over the Pacific Ocean and hit hypersonic speed for several seconds. It's a test of scram0jet technology, a form of propulsion that uses no moving parts.

Those are the top stories at this hour. ON THE STORY will be right back with the politics of the 9/11 hearings.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Had my administration had any information that terrorists were going to attack New York City on September the 11th, we would have acted.

(END VIDEO CLIP)

BASH: President Bush, speaking on Tuesday, trying to stamp out any suggestion that anyone on his team, or even he, ignored any threats leading up to September 11, part of a massive effort at the White House to do that and also to try to discredit their former counterterrorism aide Richard Clarke.

WALLACE: Dana, take us behind the scenes, because this really was an extraordinary week of attack and counterattack. How much is the White House sort of concerned about this, focused on this and having this orchestrated response to Richard Clarke?

BASH: It's really been amazing, Kelly. Just -- one example is how the week started. At 6:47 p.m., 13 minutes before "60 Minutes" started last Sunday -- of course, that was Richard Clarke's first interview, I got an e-mail -- we all got e- mails, from the White House, and it was entitled "Setting the Record Straight." It was a list of what they called myths and then what they called realities, fact of what the administration did and did not know, leading up to September 11.

It was extraordinary. Kelly, you know from covering the Bush White House, that kind of thing doesn't happen. They generally tend to ignore their critics as much as possible. But that was the beginning of a week where they just absolutely went after Richard Clarke on what he had said while he was in the administration, versus what he is saying now in his book and on the hearings, really try to discredit him on a really broad basis with administration officials out talking constantly about this all week.

QUIJANI: Dana, what other kind of tactics did they use? I mean, I heard about meetings -- and rare meetings in West Wing offices and that sort of thing.

BASH: Well, Dr. Condoleezza Rice, the national security adviser, a couple of times talked to reporters this week. Once, after Richard Clarke testified, essentially, really hitting her specifically. She invited reporters into her office and she was extraordinarily angry. I mean, really trying to combat any of the suggestions that, for example, she didn't have enough meetings and that that was perhaps why September 11 could have happened.

But it wasn't just that. They released an e-mail -- she actually released an e-mail that Richard Clarke sent to her, talking about how they could pump up what the administration actually had done leading up to September 11. They also released the identity of Richard Clarke as somebody who was an unidentified source with reporters in August of 2002, also talking about the benefits and the pluses of what the Bush administration had done leading up to 9/11.

So really, the efforts was on a broad, massive scale to use him, his own words, to contradict what he is saying now.

HINOJOSA: But interestingly, Dana, I'm wondering, Could this all backfire? Because it's so rare where you're suddenly seeing Condoleezza Rice making the rounds and talking about this, the press secretary holding these, you know, press conferences that go on forever.

Is there a sense that they may be kind of overreacting, or it's like they're try to cover themselves up because there was something wrong? Could it backfire?

BASH: Well, certainly, there is a sense from some Republicans outside the administration that perhaps the more -- the fact that they're giving it such attention is keeping the story alive, if you will.

But they feel that this is -- this is the president's No. 1 issue on -- in his re-election. If you look at his tag line in his first ad, "steady leadership in times of change." He is running as the guy who is going to keep you safe. So if there's any question, particularly from somebody who used to work for him, that is really getting out there, penetrating that is something they feel like they have to combat.

You know, you look at -- there was a poll that came out this week that was extraordinary -- a Pew research poll that said 9 out of 10 Americans have heard at least a little of Richard Clarke's criticisms of the president. I mean, for anybody to hear that much about what's going on in Washington is extraordinary. I don't even think that many people know anything about Ben Affleck or Jennifer Lopez, things that people really tend to pay attention to.

So that is why they are doing this. And certainly, Democrats, are saying that they are involved in character assassination.

WALLACE: And Dana, the other thing, of course, certainly the families of the September 11 victims, but Democrats are saying it privately -- they really can't believe Condoleezza Rice is not going to go up there and publicly testify. I have had a couple Democrats say to me privately, they believe ultimately the public pressure will be so enormous that Dr. Rice will eventually go before this panel.

What is the sense -- how concerned are they that politically they might be paying a heavy price by Dr. Rice saying she cannot go before the panel, but can go out and do a "60 Minutes" interview tomorrow night?

BASH: "60 Minutes" interview tomorrow night, a lot of interviews this week. And of course, I was saying, you know, talking to reporters in her office.

But, you know, to answer that question, you can probably just look at what they did on Thursday night, which is send a letter, very publicly, release it to the press at the White House, to the commission, saying that she actually did want to come meet with them, but do so in private. She wanted to get the chance to discuss the issues that Richard Clarke talked about; she wanted to answer more of their questions.

Now that wasn't what the commission was asking for, as you know. They want her to testify in public. But they're sticking by the fact that they think this is an executive privilege. She is an aide to the president. She was not confirmed by the Senate like Secretary Powell and Rumsfeld and others who testified were. So they're sticking by it.

But apparently, according to her aides, she really is saying that she would like to do it, but the White House for legal reasons say -- they say that it's not a good idea.

QUIJANO: Dana, thank you for those fascinating, behind-the- scenes looks at this really heated political fight now. Dana, thank you.

Another political dispute is on the simmer here in Washington. Did the administration try to hide the real cost of the new Medicare law? I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARD FOSTER, CHIEF MEDICARE ACTUARY: I had a difficult choice, sir, you can imagine. I could ignore the orders; I knew I would get fired. I was not afraid of that. I didn't especially want to be fired. But I wasn't afraid of it. I could comply with the orders and I could resign in protest.

(END VIDEO CLIP)

QUIJANO: Richard Foster, chief Medicare actuary, testifying on Capitol Hill about how he felt pressured to keep certain information from members of Congress, information some Democrats say could have given a more complete picture of how much the new Medicare law could really cost. Now this longtime public servant finds himself in the middle of a bitter partisan fight.

Welcome back. We are ON THE STORY. And....

HINOJOSA: And Elaine, it's pretty strange -- no? -- to have a scientist, of this guy -- he's kind of obscure...

QUIJANO: Yes.

HINOJOSA: And suddenly he's out there talking about the fact that he was told...

QUIJANO: Right.

HINOJOSA: ...to keep these numbers quiet?

QUIJANO: Right.

HINOJOSA: I mean, this is -- it's not really -- I mean, it is a story about Medicare but it's really about the politics behind the scenes.

QUIJANO: Right. Well, that's exactly right.

I mean, if you're watching him and you go, Who is that?, You're not alone, because a lot of people don't know. He's one of those sort of faceless bureaucrats, if you will, that is sort of toiling away in obscurity, but an integral part of the system, and as chief Medicare actuary, he's much more accustomed to dealing with algorithms and formulas and crunching numbers and that sort of thing.

Certainly this is not his deal. He doesn't come out publicly. And so for him to actually feel that strongly about the situation that he says he was placed in, where he got an e-mail basically from an aide to his boss, saying, Look, do not give out this information, otherwise there will be some extremely severe consequences. He felt like he had his hands tied, and says actually -- the latter part of that soundbyte that we heard him talk about was says, you know, I did decide to resign in protest, but then my staff talked me out of it.

WALLACE: But let's talk about -- I mean, this is outrageous, the significance. We're talking about a $1 billion -- more than 100 billion of taxpayer dollars.

QUIJANO: Absolutely.

WALLACE: What's going to happen with Medicare prescription drugs, the future from here. Question I'm sure viewers want to know -- who is going to take the fall for this? Someone should be held responsible.

QUIJANO: Well, you know, in fact, he was asked to name names, and he named some folks in the White House.

And, you know, the thing is, what the Republicans -- some republicans are saying, is that, Look, we went with the Repub -- with the Congressional Budget Office's numbers -- $395 billion is the number that was sort of bandied about, that that's how much this Medicare law was going to cost, and those are the figures that we went with.

But what came out during his testimony was that back in June, he knew that it was going actually to be something more like $500 billion to $600 billion, and in fact, the final sort of figure -- although it's not exactly the final figure -- but their final estimate was $534 billion.

So you're right. A tremendous amount of money, a tremendous amount of people really affected by this. And, in fact, you know, it's not just Democrats who are upset about this. Conservative Republicans as well, saying, you know, that could have changed our vote, changed our minds on really what was a tough fight to get it passed in the first place.

BASH: And Elaine, that's what's so extraordinary politically, because we all remember covering the story, and how hard it was for the administration to get this passed, even because of those conservative Republicans. They didn't want to spend all that money, and it was the question of how much it's going to cost.

You remember a the time, everybody was asking that question. So the fact that the White House -- or the question about whether the White House really actively tried to suppress that information, even for their fellow Republicans, raises all kinds of political questions as well.

But my question for you is -- during that hearing, did he make it sound like he was ready to name names, in terms of who at the White House -- or even give evidence who at the White House actually tried to get him to stop, to not give this information up?

QUIJANO: Well, it's interesting. It's interesting.

You know what? He didn't go into detail. You know, he was pressed for sort of details, and he did name a couple of people. But I think ultimately what he was really trying to get at was that -- and I should also tell you this, that Republicans will say -- some of the Republicans on the subcommittee said, you know, they were following the letter of the law. His bosses did not -- they were purely within their legal rights to tell him not to share that information.

And his point was -- Foster's point was, you know what? The letter of the law is one thing, but the spirit of your responsibility as a public servant is quite another and it did not seem ethical and it did not seem appropriate for that e-mail to come down, for those kinds of threats to be made. Certainly a human drama behind this very political battle.

WALLACE: Right, legally is one issue, but the impact on public policy and the whole impact of whether seniors will get their prescription drugs and at what cost is -- well, we'll be following that, Elaine. Thank you.

Well, Medicare certainly one bump along the campaign trail this week. We will talk presidential politics and presidential humor when we're back ON THE STORY.

Stay with us.

(BEGIN VIDEOTAPE)

ANNOUNCER: Kelly Wallace is a CNN national correspondent in New York. She was born and raised in Brooklyn. She studied economics at the University of Pennsylvania's Wharton School, and she was a CNN White House correspondent during the Clinton and Bush administrations and later reported extensively from the Mid East.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Those weapons of mass destruction gotta be somewhere.

(LAUGHTER)

BUSH: Nope, no weapons over there.

(END VIDEO CLIP)

BASH: President Bush, cracking jokes this past week at the Radio and Television Correspondents Dinner in Washington. Some of those jokes, and accompanied photos, were of the president pretending to look for weapons of mass destruction in the Oval Office.

Welcome back. We're ON THE STORY.

WALLACE: OK, Dana, question for you, because the Kerry campaign, other Democrats seized on this and they said this is an example of how President Bush is out of touch. There are things you joke about and the whole kind of rationale for going to war with Iraq is not something you joke about.

Behind the scenes, are people saying this went too far?

BASH: Well, you know, what they say is this dinner is supposed to be about making fun of yourself, making fun of situations that you probably shouldn't be in.

And that they point out that -- you just heard the laughter, that nobody booed, nobody hissed, and people did laugh at the time.

They also say that at the end of the president's little rift there, he did take a couple of minutes to show a picture of some soldiers fighting in Iraq, say that he used that -- he keeps that photo in his study, off the Oval Office, and that he sort of paid tribute to them so there was some serious time in addition to the poking fun.

QUIJANO: Yes, and Dana, I was there at the correspondents dinner and I can tell you, the people around me were laughing. Of course, there were some faces very obvious that they did not find it funny at all.

But, I mean, overall -- you're right, nobody was booing at the moment. And as you pointed out, the thing that people didn't see is that there was that picture at the very end. So it did end on that somber, sort of very serious note.

WALLACE: The other thing we saw, of course, is John Kerry had been in Idaho, snowboarding and skiing and taking some time away.

But he came back to the campaign trail and it's interesting -- and Dana and Maria, I want to get your points of view here -- because he came in on Friday and unveiled his -- part of his economic plan. He is being painted by Republicans as a taxer and spender. But here he is calling for cuts in corporate tax, breaks for corporations that will not outsource. Many believe this will sort of put the pressure on Republicans to say, you now, he's portraying himself as a moderate, pro-business Democrat and that's going to be a problem for the Bush administration.

HINOJOSA: Well, I'll tell you one thing, Kelly, because the story I was working on this week was about the Latino outreach in both campaigns. And if President Bush was having a rough week in terms of the 9/11 hearings and even about the White House correspondents dinner and Kerry seemed to be kind of up, I'll tell you, when you talk about the Latino vote, it's absolutely reversed.

The Bush-Cheney 2004 campaign, they are going after this Latino vote. I spoke to one of their chief strategists who says, Listen, not a day goes by that we don't talk about getting that Latino vote and making sure that that's the one that guarantees that we're going to win this election.

On the other hand, the Kerry campaign, in something of a disarray -- no chief Latino strategist paid on staff. Just a group of advisers. A lot of internal mumblings that they are just missing the boat right now on a key electorate, the Latino vote, and perhaps even on the African-American vote.

So Bush-Cheney, lots of energy on this, spending on these ads. Kerry, maybe -- I don't know, he's going to have to do -- work quick.

BASH: Well, Maria, the president, of course, yesterday was in New Mexico, where, you know, 40 percent of the vote in that state, which is so important to the president in trying to get that state -- 40 percent is Hispanic. So certainly, he is focusing on that, even in his travels.

But, you know, Kelly, you were talking about sort of the week that was. And what's interesting to hear from the Bush campaign this week is they say even though, clearly it wasn't the best week for them in terms of the Richard Clarke testimony and all of the controversial around that, they've been up on the air, in -- advertising around the country, 17 key states, for a couple of weeks now. And they are look at the polls and they say that their effort to define John Kerry, to sort of take him down a couple of notches, seems to be working in the polls, even though, you know, the sort of free media, if you will, we are all talking about other things. They feel like the ads that they are running, and paying for, are beginning to work.

WALLACE: Well, you know, Dana, it's interesting, because they do seem to say that -- well, they won't admit it, of course, even privately -- that they think these efforts to define John Kerry have been working.

But no question, having him come out of the gate and having this very orchestrated plan to try and define himself -- these are such important months right now because we've seen polls, the majority of Americans saying that they don't know a lot about John Kerry. So the Kerry campaign definitely trying to take the offensive to define him in a way they obviously want to define him.

HINOJOSA: OK, So, Kelly, take us to that unity dinner, OK? Because I wasn't there. I know people who were.

But here's what got me. You have that photograph at the end...

WALLACE: What a photo-op.

HINOJOSA: And Edwards is in the middle with John Kerry. What's up with that?

WALLACE: All right, I'm privately going to say...

BASH: And so is Al Gore.

WALLACE: Yes, I will privately say -- I won't even say where this came from. But I said to someone, So what did you think of that photo op, former presidents, vice presidents, the presidential candidates. And someone said, all I saw is John Edwards getting in between President Clinton and John Kerry. You got a sense that the Kerry people didn't like it so much.

But here's what I heard from Joe Klein, who we know very well. He looked at this and he said -- he's a political observer. He said, Democrats are notorious for subdividing, OK? The question is, Can they keep this unity. Are they so angry with the Bush administration -- can they sort of quash their differences to try and be united and present a united front?

We don't know the answer to that. It remains to be seen.

QUIJANO: Moving moment in many ways. All right.

WALLACE: Incredible.

QUIJANO: Thanks so much.

We're back ON THE STORY after this.

(BEGIN VIDEOTAPE)

ANNOUCNER: Civil rights activist Dorothy Height made headlines this week. What's her story? More when we return.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Dorothy Height -- what's her story? The 92-year-old civil rights activist was honored Wednesday with Congress' top honor, the Congressional Medal. President bush praised her dedication to racial and gender equality.

DOROTHY HEIGHT, CIVIL RIGHTS ACTIVISIT: African-American women seldom do just what they want to do, but always do what they have to do.

ANNOUNCER: Height adds this latest honor to a collection of other important awards, including the Presidential Medal of Freedom, which she received in 1994 from President Bill Clinton.

(END VIDEOTAPE)

WALLACE: And thanks to my fabulous colleagues, and thank you for watching ON THE STORY. We will be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Janet Jackson and Kobe Bryant.

At 12 noon Eastern, 9 a.m. Pacific, "CNN LIVE SATURDAY."

And at 1 p.m. Eastern, 10 a.m. Pacific, CNN's "IN THE MONEY."

We hope you have a great Saturday.

Coming up right now, a check on what's making headlines at this hour.

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