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On the Story

Fed Raises Key Interest Rate; Saddam Defiant in Court Appearance; Remembering Brando

Aired July 03, 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.


BETTY NGUYEN, CNN ANCHOR: Here's a look at stories making news at this hour:
In Kansas, investigators are still on the scene of a fatal shooting spree at a meat packing plant. They're trying to determine why an employee opened fire at the ConAgra plant yesterday, killing four people before turning the gun on himself. Three others were wounded.

A blast at an oil storage facility south of Baghdad leaves six Iraqi National Guard members dead and five others wounded. Iraqi police say it was an improvised explosive device that went off during a shift change among the guards.

A Democratic source says John Kerry may reveal a choice for a running mate as early as this coming week. Meanwhile, Kerry is highlighting his agriculture policies during a three-day bus tour to rural areas of Minnesota, Wisconsin and Iowa this holiday weekend. Today he meets farmers and ranchers at Independence, Wisconsin.

And someone is carrying around a very expensive piece of paper. Officials say a single ticket sold in Lowell, Massachusetts, matched all the numbers in Friday's Mega-Millions drawing. Tickets sales in the 11 states that play the game drove the jackpot to a record $290 million.

Those are the headlines at this hour. I'm Betty Nguyen at CNN global headquarters. Now it's back to ON THE STORY.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: And welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.

I'm Jeanne Meserve, ON THE STORY of Fourth of July terrorism jitters and new rules this week to check ships and cargo arriving in the United States.

ROSE ARCE, CNN PRODUCER: I'm Rose Arce ON THE STORY of a high- profile child killer in New York, Joel Steinberg, out of prison, back in the spotlight.

KATHLEEN HAYS, CNNfn CORRESPONDENT: And I'm Kathleen Hays ON THE STORY of how job growth cooled off last month.

We'll also talk about the death of a man some say was the greatest actor ever, Marlon Brando. And we'll talk about how New York is bracing for the Republican convention at the end of the summer.

Also, Jane Arraf has the latest from Iraq.

So e-mail us at ONTHESTORY@CNN.com.

Now, straight to the economy.

(BEGIN VIDEO CLIP)

ALAN BLINDER, FORMER VICE CHAIRMAN, U.S. FEDERAL RESERVE: I think the era of cheap money, it's on its way out. But it's still here for a while.

(END VIDEO CLIP)

HAYS: Cheap money, low interest rates, here for awhile says former vice chairman of the Federal Reserve Alan Blinder. But this week, after four years of falling interest rates, rates turned back and began climbing. And the impact, of course, ripples across the country, investors, consumers, politicians -- this was the interest rate hike heard around the world.

ARCE: The country -- well, what about me? When does this affect me? Like, can I go out and buy a home? Buy -- is this, like, a bad time?

HAYS: This is a baby step, and the Federal Reserve intentionally took a real baby step on interest rates. Because remember, they have been cutting rates dramatically to get the economy going. We remember the recession, we remember September 11 and how that devastated the airlines, and how they took rates from 6.5 percent to 1 percent. That was a 45-year low.

But what they have made clear, in their statement after this rate hike, in all the speeches they've given, is this is a first step in what could be a series of steps. And it's that series of steps, I think, that consumers really have to be focused on.

MESERVE: How do the jobs numbers that came out yesterday interface with the interest-rate story (ph)?

HAYS: Well, you know what's interesting, Jeanne is, people on Wall Street, all of the economists are betting that the Fed is going to take this key short-term rate from 1 percent to 2 percent by the end of year. They don't want to slow the economy down, but it's like if you have a patient that's really sick, and you're giving them steroids, patient gets better, you say, Don't give them the steroids anymore, they don't need them.

We don't need the low interest rates; that's the argument. The interest rate could be at 2.5 percent or 3 percent by next year, and that's why, Rose, I really want to underscore these low rates now. See, on an adjustable-rate mortgage, adjustable rate mortgage is key off of these low Fed-type rates. So consumers have to be aware if they have any kind of variable rate mortgage, next week it could be -- next year, excuse me, it could be pricing higher. As the Fed raises rates and the market rates move up, those rates are going up.

And I think what's interesting about the jobs report, Jeanne, is that we were bracing for another really healthy, you know, it's all working, all moving ahead -- and it didn't fall apart, but the jobs report in many respects was weaker than expected.

ARCE: So far all of these years people keep looking at the interest rates falling and thinking, Wow, things are great. I can go buy this, I can go buy that.

Are we going to have this period now, in the next year, where are people are going to be sort of more doom and gloom and saying, Interest rates are going up, things are getting bad. And is that going to affect George Bush maybe as a presidential candidate?

HAYS: That's a very good question, because you've got two things you're asking about. We're talking about jobs and we're talking about rates.

If rates are rising because the economy's getting stronger and jobs are growing, we're all going to feel good. And if a 30-year fixed-rate mortgage, right now around 6.2 percent next year is up around, say, 7 percent, you're still going to say, "That is a pretty good deal."

But this question about jobs is interesting, because we had very strong jobs growth in March, up way over 300,000. Little bit weaker in April, then down to 2,000 in May. Now just 112,000 jobs. You kind of wonder about the trend.

MESERVE: What does it say about the strength of the recovery?

HAYS: Well, it could be a one-month lift. It could be that the high oil prices that we've been suffering this year made consumers cut back a little bit, made everybody a little more cautious.

But what was also very important this week was the fact that auto sales suddenly pulled back in the month of May pretty sharply. The monthly selling rate was back to about the lowest since its been December of 2000, that's before the recession, before the September 11 attacks.

We saw Target and Wal-Mart -- Wal-Mart's the biggest retailer in the country, if not the world. They said that their June sales -- we'll get numbers this coming Thursday -- not 46 percent growth, 2 to 4 percent. Now they're blaming Father's Day, they're bad weather. But you put a lot of these different things: the jobs not quite as strong, the retailers not looking quite so great and then you kind of say, Well, maybe the economy just isn't quite at oomphy (ph) as it was, and so maybe the recovery isn't -- is not going away, but it's just -- it's as zoomy (ph) it was, and some people would say that the president needs to have, not just to the have an OK economy -- he needs to have a bright, shiny economy to help him push over the edge in November. ARCE: And are there some areas where it's worse? Are there -- with the jobs reports for instance, are there some sectors that are hurting more?

You know, I think the key one for George Bush is the fact manufacturing jobs dropped. They were up for four months in a row. Twenty thousand or so. Not big increases, but remember, manufacturing jobs -- people forget -- they fell for 40 straight months in this country. The factory sector in a business-cycle sense and in a long- term competitive sense -- you know, outsourcing, competition from overseas -- has really, really suffered. So many of those jobs have disappeared. In fact, those were the biggest job losses that we've seen.

So you get a little but of recovery, but then in June, all of a sudden the factory jobs fall again. Now, we know that Ohio, Pennsylvania, West Virginia, these are really important states for Bush. These are where he'd like to see jobs stronger.

ARCE: And that's where the union workers are? The manufacturing jobs.

(CROSSTALK)

HAYS: Absolutely. Absolutely. So this is not a good thing.

MESERVE: Oil prices have definitely been a factor on the markets the last couple of months. Whither (ph) oil prices at this point?

HAYS: I think most interesting thing this week, Jeanne, about oil prices, was they kind of started up again. We had some relief. People are concerned about the summer driving season, what are supplies doing? But the Saudis now, after having protested a month ago -- they were protesting the move above $30 and $40 a barrel -- now this week they are signaling, maybe $35 an oil -- dollars for a barrel for oil is fine. The old range was $22 to $28. So it seems the biggest producer in the world is also endorsing this higher level. It seems that we are going to, you know, forever be paying somewhat higher prices.

I think that's one reason why it was interesting to see the auto sales and the SUVs so strong in May, pulling back in June. You can't help but wonder if maybe Americans are starting to think that these oil prices are not a blip, that this is a world where oil is in limited supply and this is something else that the automakers have to worry about, and certainly something that airlines have to worry about.

We saw United Airlines getting turned down again for the billion- dollar loan, and these energy prices have a big impact on the economy. It's probably one of the wild cards everybody's watching this year.

MESERVE: And from the U.S. economy, we're going to check on Iraq, with Baghdad bureau chief Jane Arraf.

We're back ON THE STORY right after this. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SADDAM HUSSEIN, FMR. PRESIDENT OF IRAQ (through translator): Saddam Hussein, the president of the republic of Iraq.

(END VIDEO CLIP)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: That was, obviously, the ex-President of the republic of Iraq Saddam Hussein, refusing to accept this new Iraq, this new reality, where he is, indeed, on trial in an Iraqi court. Just one of several things in this astounding week here in Baghdad.

I'm Jane Arraf ON THE STORY. Welcome back.

MESERERVE: Jane, well I'm sure I have lots of questions about Saddam Hussein, but first I want to ask you where you are and who are those guys behind you?

ARRAF: Well, I'm glad you asked.

I'm actually at the Baghdad International Airport, close to camp victory, and we're here for the Fourth of July celebrations. These guys behind me, they're pilots, and crew chiefs, for Black Hawk helicopters. And the reason they're looking happy is they're posing for their own photograph because they're going home soon. They've been here for 15 months, longer than any other division, and they finally get to go home, and they're just taking some last-minute photos to commemorate this.

MESERVE: OK. Back to Saddam Hussein, then. Certainly people in this country have very strong reactions watching him on television.

What about the Iraqi people? What was their take on what was happening in that courtroom?

ARRAF: Well, first, you have to understand, which I think people do, just seeing these pictures. But maybe to outsiders, to non- Iraqis, it's not quite so amazing seeing pictures of a man who for more than three decades ruled every part of their lives. He was really not even -- he was beyond an ordinary mortal. He could do anything he wanted in this country.

And for the first time now, since they saw those images of his capture eight months ago, here they were seeing someone who clearly was not just humbled, but was being made to answer for crimes of all of those years.

Now, absolute fascination with the pictures, of course, but a wide variety of opinions as to what should happen to him. Most Iraqis want to dispense with the trial. They just think he should just be killed immediately. But there are some who believe that it should be the west on trial, the U.S. on trial. And certainly that debate is going to continue as this goes on. HAYS: Well, certainly, Jane, that's what Saddam Hussein is arguing. First of all, he's saying Bush is the evil one, not him. And his defense team apparently trying to argue that this was an illegal invasion of a country that overthrew an elected leader. And therefore, the government, or this body that is trying him, has no legal standing.

Is that going to get anywhere and how do you think the defense is going to go?

ARRAF: I'm not sure if we're having audio problems.

HAYS: Jane, I'm going to try -- can you hear me now? I'm going to try and just basically say --I'm curious how the defense...

ARRAF: I sure can. Hi there.

HAYS: ...is going to be handled. If the defense is going to be saying that there is really no legal standing of this really not- elected body to try Saddam Hussein?

ARRAF: It's going to be certainly an interesting defense, and we've seen little bits of it.

He has a group of lawyers, most of them appointed by his eldest daughters and his wife, who have left Iraq. They're in Qatar and Jordan. One of the lawyers that they first appointed, a Jordanian, has said, his defense is going to be that this trial is illegal, that they cannot try him in the first place. Presumably, there will be more to the defense than that.

But what we're likely to hear, when Saddam himself starts to talk -- and he obviously does have a lot that he wants to say -- is that he wasn't responsible for any of this That the U.S. and the west armed him, provided him with intelligence. They were friends all those years. And it's going to be a very interesting drama unfolding in the next few months.

Clearly this is a work in progress getting his defense together.

ARCE: And Jane, what are conditions like for him now? Have things changed? Is he in better condition now than he was before? Is he worse off? And is there -- do the Iraqi people want to see him in a bad place? Do they have this yearning to see him in jail, in secure custody?

ARRAF: We've got to be honest here. There's an incredible thirst for revenge, and some people want to see him in jail and in custody, but most really want to see him torn limb to limb. Most would be really happy if he were paraded through the streets and he could just be tortured and die slowly, to be perfectly honest.

And we have to be honest about this: this is the kind of climate that we are in. These people have suffered very deep wounds and they want vengeance. They do not want some polite court proceeding where at the end of the day he's read his rights and given whatever punishment is deemed fit by the court. They want to extract their own vengeance. That is the feeling of most Iraqis that we talked to.

MESERVE: Jane, looking at the situation right now and the current government, the new government -- Sadr today call for resistance. How serious a challenge is that to the new government in Iraq?

ARRAF: It's certainly a challenge, and it's one of the fascinating things about creating a country, obviously. Not just a fascinating thing, but something that really points to the problems that we've got going on here.

Now, we've got a country that really is less than a week old, a sovereign Iraq. We've got a government that has been hand-picked in some senses by U.S. authorities, and by other political powers here. And it's supposed to be a caretaker government. It's not really supposed to do very much.

The feeling is that it is actually going to do a lot. It's going to crack down on security, things like that. But it's still not seen by many people as a legitimate government, because they haven't been elected.

Now they're looking at elections here at the end of the year. That may slip a bit. But really, until they get elections, we're going to see calls like this for resistance. From the south, where there had been one ever the fiercest battles waged, one of the fiercest insurgencies since the end of the war, that is particularly worrying, because Muqtada al Sadr, the Shia cleric, still commands support among a lot of angry young men, and it is a continuing challenge here.

HAYS: Jane, the handover. Two days early. A big surprise. You know, Wall Street had actually a positive opening, rallied very quickly on (UNINTELLIGIBLE). In fact, you could probably say it was such a success that it decided it didn't have to worry about it now.

How about inside Iraq? How did the Iraqi people react? How did the troops react?

ARRAF: There wasn't really a whole lot of reaction from the Iraqi people. Primarily, because it was done so quickly. It was done essentially in secret, and they learned about it after the fact. For them, the main thing was that it was done, not necessarily when it was done.

Some people would have liked to have seen more ceremony, but in this situation, and these are desperate times, it became somewhat impossible. And, indeed military authorities here are saying that that's the reason that we haven't seen these huge attacks everyone has been expecting. that the insurgents perhaps were thrown off guard. And they say today, by the way -- you've probably seen this -- that they have actually raided weapons factories, where there were car bombs in the making, that they've managed to thwart those.

But still, clearly, there is a danger that this is going to continue. HAYS: And, of course, that danger is just one of the things you're going to be dealing with, Jane, as you continue to be covering this story. So many facets.

What is on your radar screen for the coming week?

ARRAF: Well, certainly tomorrow we're looking at the Fourth of July and how soldiers here are celebrating, how Iraqis are handling their own very new independence. We're going to be looking at this continuing saga of Saddam's defense, the legal implications and all sorts of other things that pop up every day and surprise us., like this call for resistance from Muqtada al-Sadr.

Certainly there are going to be a lot of surprises over the next few weeks.

HAYS: OK. Well, Jane, thanks for reminding us that it is a holiday weekend for many people around the world. Certainly those troops there as well. We hope you find some time to enjoy it too.

Thanks, Jane Arraf.

Well, we're going to switch our focus now to a different direction.: Hollywood, the death of a legend, Marlon Brando. That's coming up next ON THE STORY.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(SINGING)

MARLON BRANDO, ACTOR: Darling, good-bye.

LARRY KING, CNN HOST: Good-bye. Marlon Brando.

(END VIDEO CLIP)

HAYS: That from "LARRY KING LIVE," October 1994. Word came yesterday that Hollywood superstar Marlon Brando had died.

Think of the movies: "On the Waterfront," "Mutiny on the Bounty," "The Godfather." Two Academy Awards and a personal life of great drama as well.

Welcome back. We're ON THE STORY.

Joining us now in Los Angeles, CNN entertainment store is Sibila Vargas.

Sibila, the actor's actor. Put this man's career, his life in perspective for us.

SIBILA VARGAS, CNN ENTERTAINMENT CORRESPONDENT: Well, I mean, like you said, he was the actor's actor. He really revolutionized acting. And a lot of actors today have a lot to pay -- I mean, a lot of debt to pay this man, because he really took it to the next limit.

If you really -- if you really think about the actors before his time, they were just -- there were movie stars. They were Hollywood productions. Marlon Brando was not that. He really broke the mold. And it started way back in his youth, actually. I mean, he was a rebellious kid. He got into a lot of trouble. And I think he really never wanted to conform, and I think that's really -- that's really what he changed in the industry, the conformity of the industry. He changed it. He really changed the landscape and he -- he was incredible.

ARCE: And Sibila, his personal life, his family life, was in the spotlight quite a bit as well in recent years, wasn't it?

VARGAS: It certainly was. I mean, it was -- actually, he had a lot of tragedy in his life. And, you know, as full as his life was as an actor, he had these -- a lot of moments. You know, a lot of tragedy that most people never really have.

For instance, his son Christian Brando back in the late '80s, early '90s, he was -- he had to serve time in prison for the shooting death of his sister's boyfriend. And after -- if that's not bad enough for Brando, your son having to, you know, serve 10 years in prison, his sister -- I mean, well, Christian's sister, and Brando's daughter, ended up committing suicide as a result of this whole debacle.

So it was really sad. I mean, that was something that really -- friends of Brando said that he never -- it never left him. And I think, you know, when you lose a child, it's something that you have to deal with for the rest of your life. Nobody expects it. And it because it was so tragic in the way it happened, the fact that she committed suicide, it was something that lingered with him, and probably to the end of his life.

MESERVE: Sibila, I've heard people the last couple of days talking about this extraordinary arc his career took, that here is guy who burst on to the stage and on to the screen. Tremendous success, then had these down years, back a little bit, and then because, essentially, a recluse in his later years.

What's the explanation for all that? What are people saying about -- about this man and how he handled his fame?

VARGAS: Well you know what? Like we've -- like I was saying, when he was young -- I think it started when he was very young. The fact that his parents -- they were both alcoholics. I think he had a really tough childhood. So, again, he never really wanted to conform. And he was so rebellious, and I think that throughout his life, that was -- that was the theme. He was always rebelling.

And, like you said, he started in theater. And that's what some people don't know. And his mother got him in theater. In fact, his mother actually taught Henry Fonda a few acting lessons. But, you know, he was famous for his roles as Stanley Kowalski in "Streetcar Named Desire" and Terry Malloy on "On the Waterfront." They were great -- they were great roles, but at some point it kind of stopped for him.

And then he was known for being a very difficult actor. A lot of people didn't want to work with him. He had to -- he demanded on doing a lot of re-shoots, and it was really tough. So then he to revive his career. A lot of people kind of -- after he got his award, a lot of people kind of just said, You know what? That's the end of Brando.

But when "The Godfather" came out, Francis Ford Coppola wanted -- wanted Marlon Brando to play Don Vito Corleone. And that's when things started to change for him, because -- I have a really interesting story about Francis Ford Coppola. He wanted -- he wanted Marlon Brando to play the part, but Paramount, the studio behind this, did not want limb to play the part because they had known about his complicated history and the fact that he was just a very ornery actor. So they didn't want him at all.

So Francis Ford Coppola kept on pushing; he wanted this guy to be on -- in the film. So they said, OK, we will -- we will agree to have him on the film, but he has to take a screen test. And at that time, that was -- screen test were only for newcomers. And of course, Marlon Brando had already won an Oscar. So for him it would be an insult. So what Francis Ford Coppola did was he just created a little white lie. He went to -- I mean, he went to Marlon Brando and he said, Marlon, I need to do a makeup test with you. And so that's how they got -- they got him to actually get on the screen and do a screen test.

HAYS: Hard to imagine Marlon Brando taking a screen test.

But I think it's so interesting how you point out he really changed the role of the Hollywood male star. You think of Cary Grant, you think of, you know, Gregory Peck, and then you think of this really rebellious guy, as you say, who, you know, "Stella!" from the street.

What was his legacy, then, for the actors that came after him? For the Al Pacinos, the Dustin Hoffmans, the Robert De Niros, and even younger actors today?

VARGAS: Well, I mean, think about it. The actors that you're talking about -- Jack Nicholson. If you think about Jack Nicholson in some of the movies he so imitated. That movie be where he's -- you can't handle -- "You want the truth? You can't handle the truth!"

I mean, that's -- and then you talk about Dustin Hoffman, who in one -- in one of the movies he kind of pats a taxicab and he says -- he says, "I'm walkin' here!"

When you think about all of these movies -- and Al Pacino, in another movie, where he says, "I'm out of order. You're out of order. The world -- this whole court is out of order"

Marlon Brando -- you know, this is an actor not of this generation, but you can think of so many movies where he left an indelible mark. I mean, he's so imitated.

In "A Streetcar Named Desire," you know, "Stella!" and "On the Waterfront" when he's like, "I could have been somebody. I could have been a contender."

And with even with Don Vito Corleone, how many times has that character been imitated? What was that famous line he said that he said -- he said, "I'm gonna make him an offer I (sic) can't refuse."

And forgive me for trying to do Brando, because I don't think I can. But a lot of actors have tried to do that. And I think that that's what he -- that's the legacy he leaves behind.

ARCE: Thank you, Sibila.

From California, we're going to turn back to the East Coast, where New Yorkers found themselves confronting a child killer case from 17 years ago. I'm back on that story in a moment.

But first, we go to Atlanta for what's making news at this hour.

NGUYEN: Good morning. I'm Betty Nguyen. In the headlines at this hour:

President Bush's weekly radio address made special mention of the men and women serving in the U.S. military this Independence Day. He noted they're engaged in an ongoing struggle to preserve democracy and freedom.

(BEGIN AUDIO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: In Afghanistan, Iraq and elsewhere, they are fighting terrorists that threaten America and helping to build hopeful, democratic societies where the ideology of terrorism has no place.

(END AUDIO CLIP)

NGUYEN: Mr. Bush's chief political rival, Democratic presidential candidate John Kerry, he continues his campaign swing through the Upper Midwest this July 4th holiday. Still no word on who his running mate might be, but that could soon change. Kerry is expected to reveal his choice in a mass e-mailing to supporters. Sources that announcement could come within just a few days.

In Kansas City, the deputy police chief says a disgruntled employee was behind a workplace shooting spree that killed five, including the shooter, and wounded three. None of the victims has been publicly identified. Police say the gunman opened fire on co-workers at the ConAgra meat packing plant during an afternoon break. Then he killed himself.

Well, just moments ago, 17-year-old tennis star Maria Sharapova swept Wimbledon in straight sets against Serena Williams, 6-1, 6-4.

And we also want to tell you more about sports. Cyclist Lance Armstrong is back to try for a record six Tour De France title. The grueling three-week race gets under way today in Belgium. And we'll have much more on that. The first of the long-distance stages, that begins tomorrow. There's much more coming up at the top of the hour. I'm Betty Nguyen. Now it's back to ON THE STORY.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(SHOUTING)

(END VIDEO CLIP)

ARCE: That was the rough-and-tumble and not-too-friendly reception for child killer Joel Steinberg as he arrived at temporary residence for ex-prisoners. The former lawyer was convicted of beating to death a 6-year-old girl in his care and the case, his trial and the conviction and now his release have grabbed huge attention.

Welcome back. We're ON THE STORY.

MESERVE: Rose, take us back 17 years ago, for those that don't remember the details. What was it about this case that so grabbed the country?

ARCE: Well, one thing you have to remember about Joel Steinberg is that his case was one of the first televised trials. It was beginning of cameras in the courtroom.

And we were in the middle of this national crack epidemic. Terrible, terrible stories in big cities, small cities, of people who would basically just lose it on crack, and would do terrible -- unspeakable things to their families, to their neighbors. There were, you know, drive-by shootings and beatings.

But they were mostly in urban neighborhoods and they were mostly in minority urban neighborhoods, or at least that's the way was media reporting it. Out of this comes this guy, a lawyer who lives in Greenwich Village, who's living with a children's book editor, you know, storybook apartment, beautiful children. And suddenly, the guy next door in a pretty nice community, is beating his child to death. And in fact, that day -- he had beaten his child that evening, gone to bed, slept for a couple of hours, leaving her essentially in a coma. Wakes up in the morning, and tells Hedda Nussbaum, his live-in lover, that she should maybe call 911 because the kid wasn't breathing.

HAYS: But, you know, I remember also -- I think certainly, in the beginning of the trial, and there's Hedda on the screen -- one of -- I think, part of the reason this grabbed our attention, really hit us in the gut is people said, How did Hedda Nussbaum -- if he was a monster smoking crack, how did she sit by and let this happen? And then of course, her defense, the battered woman, bringing a whole other aspect in.

ARCE: I remember, because I was a young reporter in New York. This was the -- you know, one of the first big stories I'd been on. I was working at The New York Daily News, and we were all dispatched into the streets to keep asking that question over and over again of the neighbors, of the people that worked with her, of the people in the school: Why? Why if this little girl had bruises, why if Hedda Nussbaum was coming to work with a broken nose, you know, and gashes on her forehead and, you know, welts on her face -- nobody called the police. Nobody said something to her.

But this was an era when people didn't really get into other people's business, you know? And this kind of made everybody go...

HAYS: And maybe -- the whole thing of domestic violence. people not realizing how widespread it was. Again, it wasn't just poor people out in the sticks or in the inner city. It was very well-to-do, even, you know, upper-crusty people?

ARCE: Yes. Smoking crack. A lawyer smoking crack.

MESERVE: There was a boy, also, in that household. Whatever happened to him? Where is he now?

ARCE: Little Travis Smiegiel I think is what his name is now. Sixteen months old, he was found tied to his playpen, which doubled as his bed, because none of these kids had beds, urine soaked, terrible conditions. His mother, his biological mother, who had thought she'd put him up for adoption through a legitimate lawyer, took him back and raised him. And in fact, I believe he's in college.

His family spoke out the day Joel was released and just basically said, you know, Time has (UNINTELLIGIBLE).

HAYS: Is Joel -- is he really such a monster? Is this guy a homicidal psychopath? Hedda Nussbaum apparently is afraid to run into him again. The neighbors are afraid to have him in their neighborhood. They fear for their children.

Is this an overreaction? What is this guy?

ARCE: You know, there have been several interviews with Joel Steinberg while he was in prison, and the thing I think that's most striking, particularly to New Yorkers who followed the story -- really, literally followed this story for 16 years -- is that this guy doesn't say he's sorry. He doesn't show remorse. He doesn't even give you, you know, the basic answer to the question of why? What were you thinking? Why a small child? He continues to cling to these, you know, ridiculous explanations for what he did. You know, the kid choked on food.

MESERVE: Given all of that, why is he out now and what's the reaction to the fact that he is?

ARCE: I think there's a little bit of outrage because he served his time under sentencing guidelines in New York. He's been up for parole several times. He's never paroled. They had no choice but to let him out.

But he has served, you know, the minimum sentence that he could serve as long as he behaved well. And he behaved fairly well in prison, and so he's now back on the streets. And it's not a prerequisite for being released on the streets that you be sorry about your crime or that you be rehabilitated. You just have to serve the time.

So here is in this halfway house in a -- you know, in a nice Manhattan neighborhood. And the neighbors are walking by and casting dispersions upon him, you know, as we speak. There's an editorial on the front cover of The New York Daily News saying, you know, "Let your eyes burn through this guy's soul." And, you know, there's a lot of hatred out there for him.

MESERVE: From law and order in New York to law enforcement around the country, on guard this holiday weekend. I'm back on the homeland security story right after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: Jeanne Meserve is a correspondent in CNN's Washington bureau. She joined CNN in 1993 and covers homeland security for the network. She's a former correspondent for ABC.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TOM RIDGE, HOMELAND SECURITY SECRETARY: If they do not comply, we will -- we can conceivably exercise the right to ban them from the United States.

(END VIDEO CLIP)

MESERVE: Homeland Security Secretary Tom Ridge warning that if international ships don't play by new anti-terrorism rules, they could find a "do not enter" sign the next time they arrive at a U.S. port.

Welcome back. We're ON THE STORY.

ARCE: So, Jeanne, once again, holiday weekend. Scared, scared, scared? Should people be scared? Is there anything that we really should be doing, or is it kind of like people are going to say, "Leave me alone."

MESERVE: People should not be quaking in their boots, but the federal government and local law enforcement would like you to have your eyes open, to be looking around, report anything if you see anything unusual.

There's no specific intelligence that indicates that anything is planned by al Qaeda for this weekend. But we know there is great concern over this entire summer holiday period, and the run-up to the U.S. elections because of what happened in Madrid.

And we also know that there's a timing issue here. Al Qaeda has launched attacks, usually a couple years apart. We're well past that window now. Although they know that the war disrupted al Qaeda to a certain degree, most of the experts are saying, we're overdue for something to happen. It could come any time.

HAYS: OK, so seriously, now what do I do? Because I think over the Fourth of July weekend we are going to be in maybe sporting events, in sports stadiums. We may be at rock concerts. We may be at malls shopping. These are all very soft targets, if you ask me.

What am I actually looking for as an alert citizen?

MESERVE: You're looking for pack of as that are sitting around that shouldn't be there, a knapsack that has been discarded. I mean, look, remember, that's what happened in the Olympic Park bombing a couple years ago. That's the kind of thing you should look for.

They also would like it if you see unusual surveillance, if you report that in. They are worried about critical infrastructure. The FBI sent out a bulletin just the other day saying -- advising law enforcement that infrastructure is a potential target: things like subways, things like nuclear power plants, things like gas stations.

HAYS: Jeanne...

MESERVE: All of those things -- and they warned them, look out for surveillance activities.

HAYS: But at times like this I just can't help but wonder, if I'm, like, of Middle Eastern descent, or if I'm a Pakistani....

(CROSSTALK)

ARCE: I mean, don't people just come and say, I want to go to Madrid through Labor Day and skip the whole thing? I mean...

HAYS: I mean, but I just wonder if people are -- if they are more instances of that, too, like poor -- like normal Americans, getting kind of automatically targeted.

MESERVE: Yes, they do. I mean, I called Homeland Security this week about something that had been brought to my attention about somebody with a camera photographing something that could be a potential target. And when I spoke to them, they said, Do you know how many cases of this we get every day? Yes, we try and check each and every one out, but a lot of them are absolutely innocent. It really is just tourists taking pictures.

ARCE: But you know, we may be complacent as the public, or we may have gotten to the point where it's like, Don't even tell me about this, I want to get out of town.

But how about law enforcement? Are they still on that level of alert that they were on a year ago? Are they really ready?

MESERVE: You know, there's probably a different quality to the sort of awareness that they have.

I remember at Christmas time when we moved the threat level up, and I talked to people around the government then, and they were really saying, "This time's different. We really have to be on our toes."

I'm not sensing that kind of urgency around this summer, but they've heard it over and over again, and now they've done it over and over again. This is one holiday in a series of holidays where they've had to ramp security about big events. I mean, right here in Washington, we just had the World War II dedication,. we had the Reagan funeral. It's become more routine. This is the new normal for them.

ARCE: After these September 11 hearings, when people saw all of these sort of, you know, (UNINTELLIGIBLE) we warned you (UNINTELLIGIBLE).

Do you think people take these warnings seriously? Do they -- do you think they look maybe a little more skeptically and say, "The government's saying this, but they don't really know what's going to happen?"

MESERVE: I don't know how the American public is perceiving it anymore than you do. My guess is, it's the new normal for all of us to, too, and we aren't as excited about it as we once were. That's my guess.

HAYS: I'm excited about these port regulations, and (UNINTELLIGIBLE), I know it seems -- I don't know -- it's maybe not going far enough, but we all know, we spend all this time going through security at airports, thinking: What about trains? What about ships?

So what do you think, Jeanne? How far do they go? Do they go far enough?

MESERVE: Everybody says this is a really important first step. There were new regulations put in place both in the United States that ports here had to submit vulnerability assessments and take steps to correct those vulnerabilities. And ports overseas had to do it too.

And now vessel coming in from overseas are inspected. Each and every one under a foreign flag is being inspected by the coast guard to make sure they have a certificate saying that their security's up to snuff.

But, is it a perfect system?

(CROSSTALK)

MESERVE: Yes. But is it a perfect system? Absolutely not. Some people say that there's too much self-certification involved for the U.S. ports and port facilities. Some people say that some countries overseas sort of put out certificates to their ships that may not really have met the standards, and some say are saying a lot of ports overseas are saying: We're up to snuff, we have addressed security, when they really haven't.

You bring up the poverty question. That is a huge issue. There are a lot of ports in the world where they simply do not have the resources to do the assessments of what they're vulnerabilities are, much less take the steps to correct them. What is the potential impact there, if the U.S. starts turning away their ships, or ships that have visited there? Potentially, it's devastating to some for those countries, where the ports are absolutely key to getting their product out, and getting supplies in.

Some people are saying, perhaps long term it's counterproductive to U.S. policy, because perhaps in those countries, you may even see governments destabilized, and conditions rise that perhaps are attractive to terrorism.

HAYS: Exactly. I think people forget how much the vast majority of the world's output is going around in ships. It's not by planes. So it's such an important aspect.

ARCE: Big impact.

HAYS: Indeed it is.

Terrorism, of course, is on the minds of the host cities for the political conventions this summer. We'll be back on how and what New Yorkers are thinking after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Give me the opportunity to lead this nation, and I will lead.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

HAYS: President Bush, then candidate Bush, at the 2002 (sic) Republican convention.

Welcome back. We're ON THE STORY.

Republicans, of course, are bound for New York this time, late summer.

And, Rose, it's just interesting to see how they are presenting the big Republicans: Rudy Giuliani, George Pataki, Arnold Schwarzenegger.

This is no longer Pat Robertson coming out to rally the far right.

ARCE: No, and I think that, you know, between these three men and also several others who are speaking there, you're going to get this picture of this very different Republican party. Pro-choice, somewhat sympathetic to gay rights.

I mean, George Bush got on a boat for goodness sakes and went to the Puerto Rican island of... (CROSSTALK)

ARCE: George Pataki to get -- you know, to ask for liberation for the island from navy bombing. These are not your bread and butter, rank and file republicans. And I think that's what the images that the Republican Party wants to project.

I spoke to George Pataki, in fact, last week. And he said to me that he wants to go after the broader audience: Democrats, centrists, people who aren't votes that they counts on to say that the Republican message is the message for everybody.

MESERVE: We know there's a huge concern about the chance for terrorism at the convention. Also concern about demonstrators and about disruptions that could cause to Manhattan.

ARCE: Yes. Yes. Yes. Yes. They have protesters, protesters, protesters, north, south, east, west around Madison Square Garden. They just released the first list of protest permits this week, and they don't even include the largest permit of all, which is to have a quarter of a million people march right in front of the convention center the Sunday before. And you're going to have an array of protesters that reflects every walk of life. It's not even just the traditional anti-Republicans.

MESERVE: And what's it going to do to the city?

(CROSSTALK)

ARCE: Yes, and I think there is a potential here -- and this is what the protesters want -- that the protests itself overshadow the convention. that the anti-war message -- because it's mostly anti-war -- is louder than the message of Bush's inclusivity and, you know, his upbeat proclamations on the economy and September 11 and whatever else that they want people to be thinking.

MESERVE: Elaine Quijano is over at the White House today.

Hey, Elaine. I know that the White House is going to mark the anniversary of the Civil Rights Act. How's it going to be doing that? What message is it trying to get across?

ELAINE QUIJANO, CNN CORRESPONDENT: Well it was on Thursday that President Bush -- actually, it was interesting who was in the audience. Not just Bush administration officials, but also Democrats. And it was the daughter of Lyndon Baines Johnson, actually, Luci Baines Johnson Turpin, who was in the audience at this East Room event on Thursday, where the president basically talked about the progress that has been made, citing her father's work.

Also in the audience as well was the son of Thurgood Marshall, of course, the first African-American Supreme Court Justice.

And so it was an interesting mix of people. The president using the occasion to talk about the achievements and how far the country had come. Now, notably, who was not there, Congressman Elijah Cummings, a Democrat from Maryland, very prominent, obviously, in the African- American community. But we are told by the congressman's office that was simply a scheduling conflict, that the congressman was not there. But he was, of course, invited.

But the Bush administration marking the occasion, 40 years after the signing of that with an event in the East Room that -- by the way, the original signing took place in. A historic moments that the president marked.

ARCE: Elaine, I know that the Bush campaign has made some incredible roads with Latinos, particularly in the last couple of years. They have an office dedicated to that, not just, you know, in their central headquarters, but in battleground states.

Is he making those kinds of inroads in other communities as well? Is he being successful?

QUIJANO: Well, certainly he's trying. In fact, this administration would very much like to see the African American at 10 percent this time around. It was 8 percent back in 2000.

But you're right. The Bush administration very much carrying out what the campaign, Bush-Cheney campaign, calls an unprecedented minority outreach effort, because they are starting a lot more early. They are doing things in a very more -- very much more aggressive fashion this time around. They've got the grass-roots volunteers. They've got thousands of them across the country who are making calls, who are calling in to talk-radio shows, writing letters to the editors, trying to get the message out there that they think has not necessarily...

HAYS: Elaine...

QUIJANO: ...reached voters that they are, in fact, a group that would like to include everyone.

HAYS: How about John Kerry? What kind of job is he doing with minorities?

QUIJANO: Well, it's difficult to say at this point. The Kerry campaign, in fact, announcing today that -- or announcing that they are going to be bringing in another high-ranking African-American into John Kerry's inner circle. But certainly they are aware of the situation, that there is a perception that perhaps he needs to work on his minority-outreach efforts.

MESERVE: And we'll be back ON THE STORY right after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: A member of the bin Ladin family is making headlines this week: Carmen bin Ladin. What's her story? More when we come back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Carmen bin Ladin is in the news this week. What's her story? She was born in Switzerland. In 1974, she married one of Osama's 24 brothers, Yeslam. Her new book, "Inside the Kingdom: My Life in Saudi Arabia," describes how she was lost inside what she calls "a vast and powerful clan," and describes her encounters with Osama bin Ladin. She and her three daughters eventually left for Switzerland. Her book hits stores July 14.

(END VIDEOTAPE)

HAYS: Well, thanks to my colleague for getting together on this holiday weekend and thank you for watching ON THE STORY. We'll be back next week, of course.

Still ahead, "PEOPLE IN THE NEWS," focusing on the Williams sisters, Venus and Serena, and on Lance Armstrong.

Coming up right now, a check of the top stories.

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


Aired July 3, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: Here's a look at stories making news at this hour:
In Kansas, investigators are still on the scene of a fatal shooting spree at a meat packing plant. They're trying to determine why an employee opened fire at the ConAgra plant yesterday, killing four people before turning the gun on himself. Three others were wounded.

A blast at an oil storage facility south of Baghdad leaves six Iraqi National Guard members dead and five others wounded. Iraqi police say it was an improvised explosive device that went off during a shift change among the guards.

A Democratic source says John Kerry may reveal a choice for a running mate as early as this coming week. Meanwhile, Kerry is highlighting his agriculture policies during a three-day bus tour to rural areas of Minnesota, Wisconsin and Iowa this holiday weekend. Today he meets farmers and ranchers at Independence, Wisconsin.

And someone is carrying around a very expensive piece of paper. Officials say a single ticket sold in Lowell, Massachusetts, matched all the numbers in Friday's Mega-Millions drawing. Tickets sales in the 11 states that play the game drove the jackpot to a record $290 million.

Those are the headlines at this hour. I'm Betty Nguyen at CNN global headquarters. Now it's back to ON THE STORY.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: And welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week.

I'm Jeanne Meserve, ON THE STORY of Fourth of July terrorism jitters and new rules this week to check ships and cargo arriving in the United States.

ROSE ARCE, CNN PRODUCER: I'm Rose Arce ON THE STORY of a high- profile child killer in New York, Joel Steinberg, out of prison, back in the spotlight.

KATHLEEN HAYS, CNNfn CORRESPONDENT: And I'm Kathleen Hays ON THE STORY of how job growth cooled off last month.

We'll also talk about the death of a man some say was the greatest actor ever, Marlon Brando. And we'll talk about how New York is bracing for the Republican convention at the end of the summer.

Also, Jane Arraf has the latest from Iraq.

So e-mail us at ONTHESTORY@CNN.com.

Now, straight to the economy.

(BEGIN VIDEO CLIP)

ALAN BLINDER, FORMER VICE CHAIRMAN, U.S. FEDERAL RESERVE: I think the era of cheap money, it's on its way out. But it's still here for a while.

(END VIDEO CLIP)

HAYS: Cheap money, low interest rates, here for awhile says former vice chairman of the Federal Reserve Alan Blinder. But this week, after four years of falling interest rates, rates turned back and began climbing. And the impact, of course, ripples across the country, investors, consumers, politicians -- this was the interest rate hike heard around the world.

ARCE: The country -- well, what about me? When does this affect me? Like, can I go out and buy a home? Buy -- is this, like, a bad time?

HAYS: This is a baby step, and the Federal Reserve intentionally took a real baby step on interest rates. Because remember, they have been cutting rates dramatically to get the economy going. We remember the recession, we remember September 11 and how that devastated the airlines, and how they took rates from 6.5 percent to 1 percent. That was a 45-year low.

But what they have made clear, in their statement after this rate hike, in all the speeches they've given, is this is a first step in what could be a series of steps. And it's that series of steps, I think, that consumers really have to be focused on.

MESERVE: How do the jobs numbers that came out yesterday interface with the interest-rate story (ph)?

HAYS: Well, you know what's interesting, Jeanne is, people on Wall Street, all of the economists are betting that the Fed is going to take this key short-term rate from 1 percent to 2 percent by the end of year. They don't want to slow the economy down, but it's like if you have a patient that's really sick, and you're giving them steroids, patient gets better, you say, Don't give them the steroids anymore, they don't need them.

We don't need the low interest rates; that's the argument. The interest rate could be at 2.5 percent or 3 percent by next year, and that's why, Rose, I really want to underscore these low rates now. See, on an adjustable-rate mortgage, adjustable rate mortgage is key off of these low Fed-type rates. So consumers have to be aware if they have any kind of variable rate mortgage, next week it could be -- next year, excuse me, it could be pricing higher. As the Fed raises rates and the market rates move up, those rates are going up.

And I think what's interesting about the jobs report, Jeanne, is that we were bracing for another really healthy, you know, it's all working, all moving ahead -- and it didn't fall apart, but the jobs report in many respects was weaker than expected.

ARCE: So far all of these years people keep looking at the interest rates falling and thinking, Wow, things are great. I can go buy this, I can go buy that.

Are we going to have this period now, in the next year, where are people are going to be sort of more doom and gloom and saying, Interest rates are going up, things are getting bad. And is that going to affect George Bush maybe as a presidential candidate?

HAYS: That's a very good question, because you've got two things you're asking about. We're talking about jobs and we're talking about rates.

If rates are rising because the economy's getting stronger and jobs are growing, we're all going to feel good. And if a 30-year fixed-rate mortgage, right now around 6.2 percent next year is up around, say, 7 percent, you're still going to say, "That is a pretty good deal."

But this question about jobs is interesting, because we had very strong jobs growth in March, up way over 300,000. Little bit weaker in April, then down to 2,000 in May. Now just 112,000 jobs. You kind of wonder about the trend.

MESERVE: What does it say about the strength of the recovery?

HAYS: Well, it could be a one-month lift. It could be that the high oil prices that we've been suffering this year made consumers cut back a little bit, made everybody a little more cautious.

But what was also very important this week was the fact that auto sales suddenly pulled back in the month of May pretty sharply. The monthly selling rate was back to about the lowest since its been December of 2000, that's before the recession, before the September 11 attacks.

We saw Target and Wal-Mart -- Wal-Mart's the biggest retailer in the country, if not the world. They said that their June sales -- we'll get numbers this coming Thursday -- not 46 percent growth, 2 to 4 percent. Now they're blaming Father's Day, they're bad weather. But you put a lot of these different things: the jobs not quite as strong, the retailers not looking quite so great and then you kind of say, Well, maybe the economy just isn't quite at oomphy (ph) as it was, and so maybe the recovery isn't -- is not going away, but it's just -- it's as zoomy (ph) it was, and some people would say that the president needs to have, not just to the have an OK economy -- he needs to have a bright, shiny economy to help him push over the edge in November. ARCE: And are there some areas where it's worse? Are there -- with the jobs reports for instance, are there some sectors that are hurting more?

You know, I think the key one for George Bush is the fact manufacturing jobs dropped. They were up for four months in a row. Twenty thousand or so. Not big increases, but remember, manufacturing jobs -- people forget -- they fell for 40 straight months in this country. The factory sector in a business-cycle sense and in a long- term competitive sense -- you know, outsourcing, competition from overseas -- has really, really suffered. So many of those jobs have disappeared. In fact, those were the biggest job losses that we've seen.

So you get a little but of recovery, but then in June, all of a sudden the factory jobs fall again. Now, we know that Ohio, Pennsylvania, West Virginia, these are really important states for Bush. These are where he'd like to see jobs stronger.

ARCE: And that's where the union workers are? The manufacturing jobs.

(CROSSTALK)

HAYS: Absolutely. Absolutely. So this is not a good thing.

MESERVE: Oil prices have definitely been a factor on the markets the last couple of months. Whither (ph) oil prices at this point?

HAYS: I think most interesting thing this week, Jeanne, about oil prices, was they kind of started up again. We had some relief. People are concerned about the summer driving season, what are supplies doing? But the Saudis now, after having protested a month ago -- they were protesting the move above $30 and $40 a barrel -- now this week they are signaling, maybe $35 an oil -- dollars for a barrel for oil is fine. The old range was $22 to $28. So it seems the biggest producer in the world is also endorsing this higher level. It seems that we are going to, you know, forever be paying somewhat higher prices.

I think that's one reason why it was interesting to see the auto sales and the SUVs so strong in May, pulling back in June. You can't help but wonder if maybe Americans are starting to think that these oil prices are not a blip, that this is a world where oil is in limited supply and this is something else that the automakers have to worry about, and certainly something that airlines have to worry about.

We saw United Airlines getting turned down again for the billion- dollar loan, and these energy prices have a big impact on the economy. It's probably one of the wild cards everybody's watching this year.

MESERVE: And from the U.S. economy, we're going to check on Iraq, with Baghdad bureau chief Jane Arraf.

We're back ON THE STORY right after this. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SADDAM HUSSEIN, FMR. PRESIDENT OF IRAQ (through translator): Saddam Hussein, the president of the republic of Iraq.

(END VIDEO CLIP)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: That was, obviously, the ex-President of the republic of Iraq Saddam Hussein, refusing to accept this new Iraq, this new reality, where he is, indeed, on trial in an Iraqi court. Just one of several things in this astounding week here in Baghdad.

I'm Jane Arraf ON THE STORY. Welcome back.

MESERERVE: Jane, well I'm sure I have lots of questions about Saddam Hussein, but first I want to ask you where you are and who are those guys behind you?

ARRAF: Well, I'm glad you asked.

I'm actually at the Baghdad International Airport, close to camp victory, and we're here for the Fourth of July celebrations. These guys behind me, they're pilots, and crew chiefs, for Black Hawk helicopters. And the reason they're looking happy is they're posing for their own photograph because they're going home soon. They've been here for 15 months, longer than any other division, and they finally get to go home, and they're just taking some last-minute photos to commemorate this.

MESERVE: OK. Back to Saddam Hussein, then. Certainly people in this country have very strong reactions watching him on television.

What about the Iraqi people? What was their take on what was happening in that courtroom?

ARRAF: Well, first, you have to understand, which I think people do, just seeing these pictures. But maybe to outsiders, to non- Iraqis, it's not quite so amazing seeing pictures of a man who for more than three decades ruled every part of their lives. He was really not even -- he was beyond an ordinary mortal. He could do anything he wanted in this country.

And for the first time now, since they saw those images of his capture eight months ago, here they were seeing someone who clearly was not just humbled, but was being made to answer for crimes of all of those years.

Now, absolute fascination with the pictures, of course, but a wide variety of opinions as to what should happen to him. Most Iraqis want to dispense with the trial. They just think he should just be killed immediately. But there are some who believe that it should be the west on trial, the U.S. on trial. And certainly that debate is going to continue as this goes on. HAYS: Well, certainly, Jane, that's what Saddam Hussein is arguing. First of all, he's saying Bush is the evil one, not him. And his defense team apparently trying to argue that this was an illegal invasion of a country that overthrew an elected leader. And therefore, the government, or this body that is trying him, has no legal standing.

Is that going to get anywhere and how do you think the defense is going to go?

ARRAF: I'm not sure if we're having audio problems.

HAYS: Jane, I'm going to try -- can you hear me now? I'm going to try and just basically say --I'm curious how the defense...

ARRAF: I sure can. Hi there.

HAYS: ...is going to be handled. If the defense is going to be saying that there is really no legal standing of this really not- elected body to try Saddam Hussein?

ARRAF: It's going to be certainly an interesting defense, and we've seen little bits of it.

He has a group of lawyers, most of them appointed by his eldest daughters and his wife, who have left Iraq. They're in Qatar and Jordan. One of the lawyers that they first appointed, a Jordanian, has said, his defense is going to be that this trial is illegal, that they cannot try him in the first place. Presumably, there will be more to the defense than that.

But what we're likely to hear, when Saddam himself starts to talk -- and he obviously does have a lot that he wants to say -- is that he wasn't responsible for any of this That the U.S. and the west armed him, provided him with intelligence. They were friends all those years. And it's going to be a very interesting drama unfolding in the next few months.

Clearly this is a work in progress getting his defense together.

ARCE: And Jane, what are conditions like for him now? Have things changed? Is he in better condition now than he was before? Is he worse off? And is there -- do the Iraqi people want to see him in a bad place? Do they have this yearning to see him in jail, in secure custody?

ARRAF: We've got to be honest here. There's an incredible thirst for revenge, and some people want to see him in jail and in custody, but most really want to see him torn limb to limb. Most would be really happy if he were paraded through the streets and he could just be tortured and die slowly, to be perfectly honest.

And we have to be honest about this: this is the kind of climate that we are in. These people have suffered very deep wounds and they want vengeance. They do not want some polite court proceeding where at the end of the day he's read his rights and given whatever punishment is deemed fit by the court. They want to extract their own vengeance. That is the feeling of most Iraqis that we talked to.

MESERVE: Jane, looking at the situation right now and the current government, the new government -- Sadr today call for resistance. How serious a challenge is that to the new government in Iraq?

ARRAF: It's certainly a challenge, and it's one of the fascinating things about creating a country, obviously. Not just a fascinating thing, but something that really points to the problems that we've got going on here.

Now, we've got a country that really is less than a week old, a sovereign Iraq. We've got a government that has been hand-picked in some senses by U.S. authorities, and by other political powers here. And it's supposed to be a caretaker government. It's not really supposed to do very much.

The feeling is that it is actually going to do a lot. It's going to crack down on security, things like that. But it's still not seen by many people as a legitimate government, because they haven't been elected.

Now they're looking at elections here at the end of the year. That may slip a bit. But really, until they get elections, we're going to see calls like this for resistance. From the south, where there had been one ever the fiercest battles waged, one of the fiercest insurgencies since the end of the war, that is particularly worrying, because Muqtada al Sadr, the Shia cleric, still commands support among a lot of angry young men, and it is a continuing challenge here.

HAYS: Jane, the handover. Two days early. A big surprise. You know, Wall Street had actually a positive opening, rallied very quickly on (UNINTELLIGIBLE). In fact, you could probably say it was such a success that it decided it didn't have to worry about it now.

How about inside Iraq? How did the Iraqi people react? How did the troops react?

ARRAF: There wasn't really a whole lot of reaction from the Iraqi people. Primarily, because it was done so quickly. It was done essentially in secret, and they learned about it after the fact. For them, the main thing was that it was done, not necessarily when it was done.

Some people would have liked to have seen more ceremony, but in this situation, and these are desperate times, it became somewhat impossible. And, indeed military authorities here are saying that that's the reason that we haven't seen these huge attacks everyone has been expecting. that the insurgents perhaps were thrown off guard. And they say today, by the way -- you've probably seen this -- that they have actually raided weapons factories, where there were car bombs in the making, that they've managed to thwart those.

But still, clearly, there is a danger that this is going to continue. HAYS: And, of course, that danger is just one of the things you're going to be dealing with, Jane, as you continue to be covering this story. So many facets.

What is on your radar screen for the coming week?

ARRAF: Well, certainly tomorrow we're looking at the Fourth of July and how soldiers here are celebrating, how Iraqis are handling their own very new independence. We're going to be looking at this continuing saga of Saddam's defense, the legal implications and all sorts of other things that pop up every day and surprise us., like this call for resistance from Muqtada al-Sadr.

Certainly there are going to be a lot of surprises over the next few weeks.

HAYS: OK. Well, Jane, thanks for reminding us that it is a holiday weekend for many people around the world. Certainly those troops there as well. We hope you find some time to enjoy it too.

Thanks, Jane Arraf.

Well, we're going to switch our focus now to a different direction.: Hollywood, the death of a legend, Marlon Brando. That's coming up next ON THE STORY.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(SINGING)

MARLON BRANDO, ACTOR: Darling, good-bye.

LARRY KING, CNN HOST: Good-bye. Marlon Brando.

(END VIDEO CLIP)

HAYS: That from "LARRY KING LIVE," October 1994. Word came yesterday that Hollywood superstar Marlon Brando had died.

Think of the movies: "On the Waterfront," "Mutiny on the Bounty," "The Godfather." Two Academy Awards and a personal life of great drama as well.

Welcome back. We're ON THE STORY.

Joining us now in Los Angeles, CNN entertainment store is Sibila Vargas.

Sibila, the actor's actor. Put this man's career, his life in perspective for us.

SIBILA VARGAS, CNN ENTERTAINMENT CORRESPONDENT: Well, I mean, like you said, he was the actor's actor. He really revolutionized acting. And a lot of actors today have a lot to pay -- I mean, a lot of debt to pay this man, because he really took it to the next limit.

If you really -- if you really think about the actors before his time, they were just -- there were movie stars. They were Hollywood productions. Marlon Brando was not that. He really broke the mold. And it started way back in his youth, actually. I mean, he was a rebellious kid. He got into a lot of trouble. And I think he really never wanted to conform, and I think that's really -- that's really what he changed in the industry, the conformity of the industry. He changed it. He really changed the landscape and he -- he was incredible.

ARCE: And Sibila, his personal life, his family life, was in the spotlight quite a bit as well in recent years, wasn't it?

VARGAS: It certainly was. I mean, it was -- actually, he had a lot of tragedy in his life. And, you know, as full as his life was as an actor, he had these -- a lot of moments. You know, a lot of tragedy that most people never really have.

For instance, his son Christian Brando back in the late '80s, early '90s, he was -- he had to serve time in prison for the shooting death of his sister's boyfriend. And after -- if that's not bad enough for Brando, your son having to, you know, serve 10 years in prison, his sister -- I mean, well, Christian's sister, and Brando's daughter, ended up committing suicide as a result of this whole debacle.

So it was really sad. I mean, that was something that really -- friends of Brando said that he never -- it never left him. And I think, you know, when you lose a child, it's something that you have to deal with for the rest of your life. Nobody expects it. And it because it was so tragic in the way it happened, the fact that she committed suicide, it was something that lingered with him, and probably to the end of his life.

MESERVE: Sibila, I've heard people the last couple of days talking about this extraordinary arc his career took, that here is guy who burst on to the stage and on to the screen. Tremendous success, then had these down years, back a little bit, and then because, essentially, a recluse in his later years.

What's the explanation for all that? What are people saying about -- about this man and how he handled his fame?

VARGAS: Well you know what? Like we've -- like I was saying, when he was young -- I think it started when he was very young. The fact that his parents -- they were both alcoholics. I think he had a really tough childhood. So, again, he never really wanted to conform. And he was so rebellious, and I think that throughout his life, that was -- that was the theme. He was always rebelling.

And, like you said, he started in theater. And that's what some people don't know. And his mother got him in theater. In fact, his mother actually taught Henry Fonda a few acting lessons. But, you know, he was famous for his roles as Stanley Kowalski in "Streetcar Named Desire" and Terry Malloy on "On the Waterfront." They were great -- they were great roles, but at some point it kind of stopped for him.

And then he was known for being a very difficult actor. A lot of people didn't want to work with him. He had to -- he demanded on doing a lot of re-shoots, and it was really tough. So then he to revive his career. A lot of people kind of -- after he got his award, a lot of people kind of just said, You know what? That's the end of Brando.

But when "The Godfather" came out, Francis Ford Coppola wanted -- wanted Marlon Brando to play Don Vito Corleone. And that's when things started to change for him, because -- I have a really interesting story about Francis Ford Coppola. He wanted -- he wanted Marlon Brando to play the part, but Paramount, the studio behind this, did not want limb to play the part because they had known about his complicated history and the fact that he was just a very ornery actor. So they didn't want him at all.

So Francis Ford Coppola kept on pushing; he wanted this guy to be on -- in the film. So they said, OK, we will -- we will agree to have him on the film, but he has to take a screen test. And at that time, that was -- screen test were only for newcomers. And of course, Marlon Brando had already won an Oscar. So for him it would be an insult. So what Francis Ford Coppola did was he just created a little white lie. He went to -- I mean, he went to Marlon Brando and he said, Marlon, I need to do a makeup test with you. And so that's how they got -- they got him to actually get on the screen and do a screen test.

HAYS: Hard to imagine Marlon Brando taking a screen test.

But I think it's so interesting how you point out he really changed the role of the Hollywood male star. You think of Cary Grant, you think of, you know, Gregory Peck, and then you think of this really rebellious guy, as you say, who, you know, "Stella!" from the street.

What was his legacy, then, for the actors that came after him? For the Al Pacinos, the Dustin Hoffmans, the Robert De Niros, and even younger actors today?

VARGAS: Well, I mean, think about it. The actors that you're talking about -- Jack Nicholson. If you think about Jack Nicholson in some of the movies he so imitated. That movie be where he's -- you can't handle -- "You want the truth? You can't handle the truth!"

I mean, that's -- and then you talk about Dustin Hoffman, who in one -- in one of the movies he kind of pats a taxicab and he says -- he says, "I'm walkin' here!"

When you think about all of these movies -- and Al Pacino, in another movie, where he says, "I'm out of order. You're out of order. The world -- this whole court is out of order"

Marlon Brando -- you know, this is an actor not of this generation, but you can think of so many movies where he left an indelible mark. I mean, he's so imitated.

In "A Streetcar Named Desire," you know, "Stella!" and "On the Waterfront" when he's like, "I could have been somebody. I could have been a contender."

And with even with Don Vito Corleone, how many times has that character been imitated? What was that famous line he said that he said -- he said, "I'm gonna make him an offer I (sic) can't refuse."

And forgive me for trying to do Brando, because I don't think I can. But a lot of actors have tried to do that. And I think that that's what he -- that's the legacy he leaves behind.

ARCE: Thank you, Sibila.

From California, we're going to turn back to the East Coast, where New Yorkers found themselves confronting a child killer case from 17 years ago. I'm back on that story in a moment.

But first, we go to Atlanta for what's making news at this hour.

NGUYEN: Good morning. I'm Betty Nguyen. In the headlines at this hour:

President Bush's weekly radio address made special mention of the men and women serving in the U.S. military this Independence Day. He noted they're engaged in an ongoing struggle to preserve democracy and freedom.

(BEGIN AUDIO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: In Afghanistan, Iraq and elsewhere, they are fighting terrorists that threaten America and helping to build hopeful, democratic societies where the ideology of terrorism has no place.

(END AUDIO CLIP)

NGUYEN: Mr. Bush's chief political rival, Democratic presidential candidate John Kerry, he continues his campaign swing through the Upper Midwest this July 4th holiday. Still no word on who his running mate might be, but that could soon change. Kerry is expected to reveal his choice in a mass e-mailing to supporters. Sources that announcement could come within just a few days.

In Kansas City, the deputy police chief says a disgruntled employee was behind a workplace shooting spree that killed five, including the shooter, and wounded three. None of the victims has been publicly identified. Police say the gunman opened fire on co-workers at the ConAgra meat packing plant during an afternoon break. Then he killed himself.

Well, just moments ago, 17-year-old tennis star Maria Sharapova swept Wimbledon in straight sets against Serena Williams, 6-1, 6-4.

And we also want to tell you more about sports. Cyclist Lance Armstrong is back to try for a record six Tour De France title. The grueling three-week race gets under way today in Belgium. And we'll have much more on that. The first of the long-distance stages, that begins tomorrow. There's much more coming up at the top of the hour. I'm Betty Nguyen. Now it's back to ON THE STORY.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(SHOUTING)

(END VIDEO CLIP)

ARCE: That was the rough-and-tumble and not-too-friendly reception for child killer Joel Steinberg as he arrived at temporary residence for ex-prisoners. The former lawyer was convicted of beating to death a 6-year-old girl in his care and the case, his trial and the conviction and now his release have grabbed huge attention.

Welcome back. We're ON THE STORY.

MESERVE: Rose, take us back 17 years ago, for those that don't remember the details. What was it about this case that so grabbed the country?

ARCE: Well, one thing you have to remember about Joel Steinberg is that his case was one of the first televised trials. It was beginning of cameras in the courtroom.

And we were in the middle of this national crack epidemic. Terrible, terrible stories in big cities, small cities, of people who would basically just lose it on crack, and would do terrible -- unspeakable things to their families, to their neighbors. There were, you know, drive-by shootings and beatings.

But they were mostly in urban neighborhoods and they were mostly in minority urban neighborhoods, or at least that's the way was media reporting it. Out of this comes this guy, a lawyer who lives in Greenwich Village, who's living with a children's book editor, you know, storybook apartment, beautiful children. And suddenly, the guy next door in a pretty nice community, is beating his child to death. And in fact, that day -- he had beaten his child that evening, gone to bed, slept for a couple of hours, leaving her essentially in a coma. Wakes up in the morning, and tells Hedda Nussbaum, his live-in lover, that she should maybe call 911 because the kid wasn't breathing.

HAYS: But, you know, I remember also -- I think certainly, in the beginning of the trial, and there's Hedda on the screen -- one of -- I think, part of the reason this grabbed our attention, really hit us in the gut is people said, How did Hedda Nussbaum -- if he was a monster smoking crack, how did she sit by and let this happen? And then of course, her defense, the battered woman, bringing a whole other aspect in.

ARCE: I remember, because I was a young reporter in New York. This was the -- you know, one of the first big stories I'd been on. I was working at The New York Daily News, and we were all dispatched into the streets to keep asking that question over and over again of the neighbors, of the people that worked with her, of the people in the school: Why? Why if this little girl had bruises, why if Hedda Nussbaum was coming to work with a broken nose, you know, and gashes on her forehead and, you know, welts on her face -- nobody called the police. Nobody said something to her.

But this was an era when people didn't really get into other people's business, you know? And this kind of made everybody go...

HAYS: And maybe -- the whole thing of domestic violence. people not realizing how widespread it was. Again, it wasn't just poor people out in the sticks or in the inner city. It was very well-to-do, even, you know, upper-crusty people?

ARCE: Yes. Smoking crack. A lawyer smoking crack.

MESERVE: There was a boy, also, in that household. Whatever happened to him? Where is he now?

ARCE: Little Travis Smiegiel I think is what his name is now. Sixteen months old, he was found tied to his playpen, which doubled as his bed, because none of these kids had beds, urine soaked, terrible conditions. His mother, his biological mother, who had thought she'd put him up for adoption through a legitimate lawyer, took him back and raised him. And in fact, I believe he's in college.

His family spoke out the day Joel was released and just basically said, you know, Time has (UNINTELLIGIBLE).

HAYS: Is Joel -- is he really such a monster? Is this guy a homicidal psychopath? Hedda Nussbaum apparently is afraid to run into him again. The neighbors are afraid to have him in their neighborhood. They fear for their children.

Is this an overreaction? What is this guy?

ARCE: You know, there have been several interviews with Joel Steinberg while he was in prison, and the thing I think that's most striking, particularly to New Yorkers who followed the story -- really, literally followed this story for 16 years -- is that this guy doesn't say he's sorry. He doesn't show remorse. He doesn't even give you, you know, the basic answer to the question of why? What were you thinking? Why a small child? He continues to cling to these, you know, ridiculous explanations for what he did. You know, the kid choked on food.

MESERVE: Given all of that, why is he out now and what's the reaction to the fact that he is?

ARCE: I think there's a little bit of outrage because he served his time under sentencing guidelines in New York. He's been up for parole several times. He's never paroled. They had no choice but to let him out.

But he has served, you know, the minimum sentence that he could serve as long as he behaved well. And he behaved fairly well in prison, and so he's now back on the streets. And it's not a prerequisite for being released on the streets that you be sorry about your crime or that you be rehabilitated. You just have to serve the time.

So here is in this halfway house in a -- you know, in a nice Manhattan neighborhood. And the neighbors are walking by and casting dispersions upon him, you know, as we speak. There's an editorial on the front cover of The New York Daily News saying, you know, "Let your eyes burn through this guy's soul." And, you know, there's a lot of hatred out there for him.

MESERVE: From law and order in New York to law enforcement around the country, on guard this holiday weekend. I'm back on the homeland security story right after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: Jeanne Meserve is a correspondent in CNN's Washington bureau. She joined CNN in 1993 and covers homeland security for the network. She's a former correspondent for ABC.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TOM RIDGE, HOMELAND SECURITY SECRETARY: If they do not comply, we will -- we can conceivably exercise the right to ban them from the United States.

(END VIDEO CLIP)

MESERVE: Homeland Security Secretary Tom Ridge warning that if international ships don't play by new anti-terrorism rules, they could find a "do not enter" sign the next time they arrive at a U.S. port.

Welcome back. We're ON THE STORY.

ARCE: So, Jeanne, once again, holiday weekend. Scared, scared, scared? Should people be scared? Is there anything that we really should be doing, or is it kind of like people are going to say, "Leave me alone."

MESERVE: People should not be quaking in their boots, but the federal government and local law enforcement would like you to have your eyes open, to be looking around, report anything if you see anything unusual.

There's no specific intelligence that indicates that anything is planned by al Qaeda for this weekend. But we know there is great concern over this entire summer holiday period, and the run-up to the U.S. elections because of what happened in Madrid.

And we also know that there's a timing issue here. Al Qaeda has launched attacks, usually a couple years apart. We're well past that window now. Although they know that the war disrupted al Qaeda to a certain degree, most of the experts are saying, we're overdue for something to happen. It could come any time.

HAYS: OK, so seriously, now what do I do? Because I think over the Fourth of July weekend we are going to be in maybe sporting events, in sports stadiums. We may be at rock concerts. We may be at malls shopping. These are all very soft targets, if you ask me.

What am I actually looking for as an alert citizen?

MESERVE: You're looking for pack of as that are sitting around that shouldn't be there, a knapsack that has been discarded. I mean, look, remember, that's what happened in the Olympic Park bombing a couple years ago. That's the kind of thing you should look for.

They also would like it if you see unusual surveillance, if you report that in. They are worried about critical infrastructure. The FBI sent out a bulletin just the other day saying -- advising law enforcement that infrastructure is a potential target: things like subways, things like nuclear power plants, things like gas stations.

HAYS: Jeanne...

MESERVE: All of those things -- and they warned them, look out for surveillance activities.

HAYS: But at times like this I just can't help but wonder, if I'm, like, of Middle Eastern descent, or if I'm a Pakistani....

(CROSSTALK)

ARCE: I mean, don't people just come and say, I want to go to Madrid through Labor Day and skip the whole thing? I mean...

HAYS: I mean, but I just wonder if people are -- if they are more instances of that, too, like poor -- like normal Americans, getting kind of automatically targeted.

MESERVE: Yes, they do. I mean, I called Homeland Security this week about something that had been brought to my attention about somebody with a camera photographing something that could be a potential target. And when I spoke to them, they said, Do you know how many cases of this we get every day? Yes, we try and check each and every one out, but a lot of them are absolutely innocent. It really is just tourists taking pictures.

ARCE: But you know, we may be complacent as the public, or we may have gotten to the point where it's like, Don't even tell me about this, I want to get out of town.

But how about law enforcement? Are they still on that level of alert that they were on a year ago? Are they really ready?

MESERVE: You know, there's probably a different quality to the sort of awareness that they have.

I remember at Christmas time when we moved the threat level up, and I talked to people around the government then, and they were really saying, "This time's different. We really have to be on our toes."

I'm not sensing that kind of urgency around this summer, but they've heard it over and over again, and now they've done it over and over again. This is one holiday in a series of holidays where they've had to ramp security about big events. I mean, right here in Washington, we just had the World War II dedication,. we had the Reagan funeral. It's become more routine. This is the new normal for them.

ARCE: After these September 11 hearings, when people saw all of these sort of, you know, (UNINTELLIGIBLE) we warned you (UNINTELLIGIBLE).

Do you think people take these warnings seriously? Do they -- do you think they look maybe a little more skeptically and say, "The government's saying this, but they don't really know what's going to happen?"

MESERVE: I don't know how the American public is perceiving it anymore than you do. My guess is, it's the new normal for all of us to, too, and we aren't as excited about it as we once were. That's my guess.

HAYS: I'm excited about these port regulations, and (UNINTELLIGIBLE), I know it seems -- I don't know -- it's maybe not going far enough, but we all know, we spend all this time going through security at airports, thinking: What about trains? What about ships?

So what do you think, Jeanne? How far do they go? Do they go far enough?

MESERVE: Everybody says this is a really important first step. There were new regulations put in place both in the United States that ports here had to submit vulnerability assessments and take steps to correct those vulnerabilities. And ports overseas had to do it too.

And now vessel coming in from overseas are inspected. Each and every one under a foreign flag is being inspected by the coast guard to make sure they have a certificate saying that their security's up to snuff.

But, is it a perfect system?

(CROSSTALK)

MESERVE: Yes. But is it a perfect system? Absolutely not. Some people say that there's too much self-certification involved for the U.S. ports and port facilities. Some people say that some countries overseas sort of put out certificates to their ships that may not really have met the standards, and some say are saying a lot of ports overseas are saying: We're up to snuff, we have addressed security, when they really haven't.

You bring up the poverty question. That is a huge issue. There are a lot of ports in the world where they simply do not have the resources to do the assessments of what they're vulnerabilities are, much less take the steps to correct them. What is the potential impact there, if the U.S. starts turning away their ships, or ships that have visited there? Potentially, it's devastating to some for those countries, where the ports are absolutely key to getting their product out, and getting supplies in.

Some people are saying, perhaps long term it's counterproductive to U.S. policy, because perhaps in those countries, you may even see governments destabilized, and conditions rise that perhaps are attractive to terrorism.

HAYS: Exactly. I think people forget how much the vast majority of the world's output is going around in ships. It's not by planes. So it's such an important aspect.

ARCE: Big impact.

HAYS: Indeed it is.

Terrorism, of course, is on the minds of the host cities for the political conventions this summer. We'll be back on how and what New Yorkers are thinking after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Give me the opportunity to lead this nation, and I will lead.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

HAYS: President Bush, then candidate Bush, at the 2002 (sic) Republican convention.

Welcome back. We're ON THE STORY.

Republicans, of course, are bound for New York this time, late summer.

And, Rose, it's just interesting to see how they are presenting the big Republicans: Rudy Giuliani, George Pataki, Arnold Schwarzenegger.

This is no longer Pat Robertson coming out to rally the far right.

ARCE: No, and I think that, you know, between these three men and also several others who are speaking there, you're going to get this picture of this very different Republican party. Pro-choice, somewhat sympathetic to gay rights.

I mean, George Bush got on a boat for goodness sakes and went to the Puerto Rican island of... (CROSSTALK)

ARCE: George Pataki to get -- you know, to ask for liberation for the island from navy bombing. These are not your bread and butter, rank and file republicans. And I think that's what the images that the Republican Party wants to project.

I spoke to George Pataki, in fact, last week. And he said to me that he wants to go after the broader audience: Democrats, centrists, people who aren't votes that they counts on to say that the Republican message is the message for everybody.

MESERVE: We know there's a huge concern about the chance for terrorism at the convention. Also concern about demonstrators and about disruptions that could cause to Manhattan.

ARCE: Yes. Yes. Yes. Yes. They have protesters, protesters, protesters, north, south, east, west around Madison Square Garden. They just released the first list of protest permits this week, and they don't even include the largest permit of all, which is to have a quarter of a million people march right in front of the convention center the Sunday before. And you're going to have an array of protesters that reflects every walk of life. It's not even just the traditional anti-Republicans.

MESERVE: And what's it going to do to the city?

(CROSSTALK)

ARCE: Yes, and I think there is a potential here -- and this is what the protesters want -- that the protests itself overshadow the convention. that the anti-war message -- because it's mostly anti-war -- is louder than the message of Bush's inclusivity and, you know, his upbeat proclamations on the economy and September 11 and whatever else that they want people to be thinking.

MESERVE: Elaine Quijano is over at the White House today.

Hey, Elaine. I know that the White House is going to mark the anniversary of the Civil Rights Act. How's it going to be doing that? What message is it trying to get across?

ELAINE QUIJANO, CNN CORRESPONDENT: Well it was on Thursday that President Bush -- actually, it was interesting who was in the audience. Not just Bush administration officials, but also Democrats. And it was the daughter of Lyndon Baines Johnson, actually, Luci Baines Johnson Turpin, who was in the audience at this East Room event on Thursday, where the president basically talked about the progress that has been made, citing her father's work.

Also in the audience as well was the son of Thurgood Marshall, of course, the first African-American Supreme Court Justice.

And so it was an interesting mix of people. The president using the occasion to talk about the achievements and how far the country had come. Now, notably, who was not there, Congressman Elijah Cummings, a Democrat from Maryland, very prominent, obviously, in the African- American community. But we are told by the congressman's office that was simply a scheduling conflict, that the congressman was not there. But he was, of course, invited.

But the Bush administration marking the occasion, 40 years after the signing of that with an event in the East Room that -- by the way, the original signing took place in. A historic moments that the president marked.

ARCE: Elaine, I know that the Bush campaign has made some incredible roads with Latinos, particularly in the last couple of years. They have an office dedicated to that, not just, you know, in their central headquarters, but in battleground states.

Is he making those kinds of inroads in other communities as well? Is he being successful?

QUIJANO: Well, certainly he's trying. In fact, this administration would very much like to see the African American at 10 percent this time around. It was 8 percent back in 2000.

But you're right. The Bush administration very much carrying out what the campaign, Bush-Cheney campaign, calls an unprecedented minority outreach effort, because they are starting a lot more early. They are doing things in a very more -- very much more aggressive fashion this time around. They've got the grass-roots volunteers. They've got thousands of them across the country who are making calls, who are calling in to talk-radio shows, writing letters to the editors, trying to get the message out there that they think has not necessarily...

HAYS: Elaine...

QUIJANO: ...reached voters that they are, in fact, a group that would like to include everyone.

HAYS: How about John Kerry? What kind of job is he doing with minorities?

QUIJANO: Well, it's difficult to say at this point. The Kerry campaign, in fact, announcing today that -- or announcing that they are going to be bringing in another high-ranking African-American into John Kerry's inner circle. But certainly they are aware of the situation, that there is a perception that perhaps he needs to work on his minority-outreach efforts.

MESERVE: And we'll be back ON THE STORY right after this.

(BEGIN VIDEOTAPE)

ANNOUNCER: A member of the bin Ladin family is making headlines this week: Carmen bin Ladin. What's her story? More when we come back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Carmen bin Ladin is in the news this week. What's her story? She was born in Switzerland. In 1974, she married one of Osama's 24 brothers, Yeslam. Her new book, "Inside the Kingdom: My Life in Saudi Arabia," describes how she was lost inside what she calls "a vast and powerful clan," and describes her encounters with Osama bin Ladin. She and her three daughters eventually left for Switzerland. Her book hits stores July 14.

(END VIDEOTAPE)

HAYS: Well, thanks to my colleague for getting together on this holiday weekend and thank you for watching ON THE STORY. We'll be back next week, of course.

Still ahead, "PEOPLE IN THE NEWS," focusing on the Williams sisters, Venus and Serena, and on Lance Armstrong.

Coming up right now, a check of the top stories.

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