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2004 Presidential Election Kicks into High Gear with Bus Tours by Both Tickets

Aired July 31, 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.


DREW GRIFFIN, CNN ANCHOR: President Bush's re-election campaign rolls on, as does his bus tour. In about 20 minutes, he's due in Canton, Ohio, where he'll tout recent improvements in the economy and the work that remains to be done there. Then on to Pennsylvania, which is the second battleground state that could decide this year's election.
The Democrats' newly nominated ticket of John Kerry and John Edwards will cross paths with the president in those two very states. They'll also visit West Virginia on this, the second day of their bus tour, visiting 21 states in two weeks.

And more than 300 army reservists waking up today in their own beds after more than a year and half in Iraq. They are members of the 434th Military Police Company, and the 439th Quarter Master Company. They had been originally deployed for six months. But their return to New York's Fort Drum kept getting delayed.

In Washington state, winds have pushed wildfire across some 300 acres. Homes have been evacuated. The fire has churned across the eastern cascade foothills. I'm Drew Griffin at CNN headquarters in Atlanta. "ON THE STORY" Begins right now.

KATHLEEN HAYS, CNN CORRESPONDENT: Welcome to ON THE STORY where our journalists have the inside word on the stories we cover this week. I'm Kathleen Hays, on the story of record oil prices and whether there's any release in sight at the gas pump.

KELLY WALLACE, NATIONAL CNN CORRESPONDENT: I'm Kelly Wallace in New York ON THE STORY of Democratic presidential nominee John Kerry's big night and how he plans to follow it up on the campaign trail.

ZAIN VERJEE, CNN CORRESPONDENT: I'm Zain Verjee ON THE STORY of the story of the growing crisis in Sudan and what some are calling genocide.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: I'm Barbara Starr, ON THE STORY of the former top commander of the war in Iraq, speaking out about what went right and wrong.

We'll also check in with Kathleen Koch ON THE STORY of President Bush hitting the campaign trail again after ceding the spotlight to the Democrats. And we'll talk about a projected record budget deficit from Uncle Sam and what it could mean for your wallet. E-mail us at onthestory@cnn.com. Now straight to Kelly Wallace and the Kerry campaign.

(BEGIN VIDEO CLIP)

SEN JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: For all those who believe that our best days are ahead of us with great faith in the American people, I accept your nomination for president of the United States!

(END VIDEO CLIP)

WALLACE: And those are words many predicted John Kerry, back in December, would not be saying, at the Democratic National Convention. But now he is the official Democratic presidential nominee. And he and the vice presidential nominee, John Edwards, are now on a 3,500- mile, 22-state cross country swing, hoping -- hoping, to keep up some momentum from the convention.

We are back ON THE STORY. Welcome back.

VERJEE: Kelly, did John Kerry accomplish what he wanted to at the convention?

WALLACE: It's a little hard, Zain, I'm sorry to tell you that, for me to hear you. I think you asked did he accomplish what he wanted to do, and it seems he did. There were a couple of goals for him, according to his advisers. Number one, he wanted to look and appear presidential. He wanted to convey to the American people, people who might be concerned, and some of those undecided voters who might think it might be time for a new direction, that he would be a leader, a strong leader, someone who could keep America safe. They think he accomplished that.

He also, aides say wanted to show more of his personal side. He talk about his background. He talked about his parent. He talked his he talked about his service in Vietnam. So, his advisers believe, you know, they say speaking in sports analogies, that he hit a home run. Of course, the key question those, undecide voters who will decide this election, did he change any mind, did he get initial support?

We won't know any of that until some of the first polls come out. And CNN will have its first survey coming out on Sunday.

STARR: Of course Senator Kerry and Senator Edwards, as of today are now moving out into the country on the campaign trail for several days.

What are they try to accomplish with this initial swing?

WALLACE: Well, the initial swing, Barbara, no surprise, they are going to the key battleground states. They were in Pennsylvania. They're heading to West Virginia today. And also to Ohio, which, coincidentally, or no coincidence there, President Bush is in Ohio as well. They are trying to go to the states that are going to decide this election. And the real goal, Barbara, is to go to those voters, those undecided voters. Many polls show about 40 to 45 percent backing President Bush, 40 to 45 percent backing John Kerry.

So you're talking maybe 15 -- maybe 15 percent or lower -- fewer, who could decide this election. So they are trying to go out. And they are talking about issues that really, many believe have always been the strengths of Republicans. They are talking about security, they're talking about values. They're trying to hit President Bush on some of his own strengths and they trying to take message to states that are going to really matter.

HAYS: Well, Kelly, it's so interesting to me, I really -- it seems to me the economy even though it ranks high in polls, has not been hit hard yet at the convention, and I'm wondering about a study this week from New Hampshire Institute of politic where they look at some of the battleground state, among them, Pennsylvania, which they say is likely to go for John Kerry for two reasons. One, because they've lost a lot of manufacturing jobs, and wage growth is very sluggish. They also point out that more than a third of Pennsylvania's reservists have been activated. And so that's also going to be an issue in the election.

WALLACE: Well, it's interesting, because, you know, we talked -- we all -- each of the floor reporters for CNN, we had different battleground states where we would spend some time. I was spending a lot of time in Ohio and Michigan, both key battleground states. And there was a lot of discussion on the part of CNN and other political analysts about issues such as Iraq, which clearly, the delegate, 95 percent of the delegates, are very much against the war in Iraq. But you weren't hearing that really coming from the podium.

You hear criticism of the post-Iraq plan, but not really going to war or not. What you were hearing from these delegates. So the key message that John Kerry and John Edwards were trying to get out, in particular John Edwards was -- You know with John Kerry and John Edwards, they're going to it a care of the middle class. You have these delegates saying they're hurting in Ohio, they're hurting in Michigan. So, that is the big message they're trying to get out there. A big applause line for Kerry's speech is when he talked about ending what he called sort of the backyard draft for the national guard and other reservist families, saying they're bearing the brunt of this and that would not be the way it would be under a Kerry administration.

That was a big applause line in the hall, the question is, did it strike a chord with undecided voters out there as well?

VERJEE: Perhaps, also strike a chord with all voters, Kelly. Is there a feeling that John Kerry managed to make a personal connection with the American people that this is a guy they would feel comfortable with on their TV set, in their living rooms, for four years?

WALLACE: That's the key, a very, very good point, Zain, because this is what it comes down to. Many voters were watching him on television. Are they going to feel comfortable with Kerry as president over the next four years? I can tell you, he connected in the hall, but maybe that's no surprise. He was preaching to the choir there and these delegates loved what they heard. Many though, expressed some relief because he's not known to be a great speaker, not known to deliver very powerful speeches. They say he exceeded expectations.

The sense I got watching him -- and I covered him, starting early in January, in Iowa, when no one expected that he would be the ultimate Democratic presidential nominee. You did seem to feel like he was connecting, especially in those small groups, small hometown meetings, where he was taking all these questions. And watching him at that podium there, he seemed to have some of that fight, some of that push he had back in early January when everybody was thinking he would be the loser here.

So, some of that fight seemed to be there. And, you know, the key question is, does he connect to the voters at home? We'll have to watch over the next few days to see if he succeeded.

STARR: Kelly, going back to the issue you were discussing about these key battleground states, as we move into the fall campaign what are you going to keep your eye on?

Which states look to be the most contention, where the race is, maybe, the closest?

WALLACE: Well, it's some of the main -- always the same battlegrounds year after year, the Michigans, the Pennsylvanias. But I think the two states most of might be watching closely, Florida, of course, because of what happened in Florida, and how it ultimately decided the election. But Ohio, perhaps, might be the new Florida of campaign 2004 because -- and we talked about this day after day, all week, no Republican has ever won the White House without winning Ohio. So, that is such an important state for President Bush.

But you are watching the Democrats, they're trying to be very aggression thrive, aggressive with advertising, spending time in Ohio. And I think, the part of the reason where the Democrats feel they might have an edge, is because of the economy. Because as we see, other parts of the country doing better on the economic front. People in Ohio in polls say they're just not feeling it. So the economy is something that the Democrats have a strength there for. But the Republicans, it's parts of Ohio, very conservative, very solidly Republican. So it seems to be a real battleground that we should watch and see what's happening there, could lead to what might happen in November.

HAYS: You know, Kelly, many people view politicians an people who just frequently -- it's all scripted and someone puts a speech in front of them and they practice it and deliver it. Some of the stories this week were about how John Kerry worked, agonized, wiped the sweat off his brow, writing his own speech pretty much.

Is that true he did that himself, mostly, then just got it tweaked by people?

WALLACE: Yes, and good get this, he writes in long hand. Can you imagine what that's like for his aids. He doesn't write on a computer. So he would write in long, give it to an assistant who would type it up. He did solicit help from other advisers, to people like Ted Sorenson (ph), a former adviser to President Kennedy. But ultimately, we're told this was his speech, these were his words and that's why he was comfortable delivering it Thursday night.

HAYS: Comfortable he did seem, indeed. Something he might be less comfortable about. We're talk about the other big news from the convention later. One issue certain to be a factor in this year's presidential campaign, the economy. This week, some pretty mixed indicators. I'm back on that story after this.

ANNOUNCER: Kathleen Hays is a CNNfn anchor and economics correspondent. She also writes an online column called "Hayswire" about what's happening with job, interest rates, energy price, Wall Street whatever catches her eye. Kathleen Hays, ON THE STORY and hayswire.money.cnn.com/commentary.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN KILDUFF, FIMAT USA: In September, if we get through a quiet period in terms of any kind of a terrorist attacks, that price could easily be trading back down towards $32 a barrel and be poised to head quite a bit lower from there.

(END VIDEO CLIP)

HAYS: An optimistic forecast from John Kilduff of the energy risk management company Fimat USA, saying a costly summer driving season won't most necessarily mean higher gas prices this fall. Still, crude oil prices are the highest they've been in 21 years.

Welcome back. We're ON THE STORY.

STARR: Kathleen, that's really part of the point. I opened my newspaper this morning. The first story I saw "economic growth comes to a halt" and "oil prices and consumer spending is now being possibly curbed by these rising energy price."

HAYS: It seems like it had to happen, because we had to have this big run-up in oil prices. And you can adjust for inflation. And anybody who knows this will say, come on, adjustment for inflation in oil prices are nowhere near their peaks from say the '70s, but they are high. And they push gas prices higher. And remember in May, the average price of gasoline was well over 2 dollars a barrel, in many big cities across the country it still is.

What we saw in the second quarter, growth domestic product the economy's growth rate, 3 percent. That's not a bad economy. That's not an economy going into recession. But it had been growing at 4 percent-plus rates for the two three previous quarters. Three percent is considered below trading. Consumer spending slowed down to 1 percent. Put that into perspective, modest would 3 percent, moderate. Healthy would be 4 to 5 percent, 1 percent is very, very weak, and people are blaming the run-up in gasoline prices, so it's definitely taking a bite.

VERJEE: What if there were another terror attack in Saudi Arabia or elsewhere?

What would that do to oil prices.

HAYS: Well, right now, people figure with this price again closing this week at $43.80 cents, they estimate a terror premium of $6 to $8 a barrel, maybe more than 10 dollars a barrel. So obvious, that could have an impact.

The story right now is Russia. Because Russia is the world's second big biggest oil pro producer. And its big oil producing giant Yukos is in this legal battle with the government over taxes. It's founder in jail. Many people think he is being punished for opposing President Putin politically. Meanwhile this has really gotten oil traders worried about supply. We're in the summer driving season. Saudi Arabia is pumping at full capacity.

But we have the ongoing threat of terror attack. And a time when the world's second biggest producer -- which by the way, has been more than meeting the increased demand from China, which is also a big deal in the markets. So, you put all this together, you have a very, very nervous market. And again there is this idea that maybe by the end of the summer, by the end of the year, prices could come down a lot. But everybody says there's some big, big ifs going on in that forecast.

Kathleen, no surprise, of course, John Kerry and John Edwards were seizing on the economic news, slower growth than we had thought in the second quarter.

WALLACE: What are the economists saying, though, though, is this sort of an be aberration, are they expecting third quarter strength to continue?

Because of course, this is going to play a key role in how voters feel and what happens in November.

It sure is Kelly, and I would say right now the signals are mixed. And you're certainly are seeing that kind of reaction in the stock market, which had a lousy month in July. This week, it closed higher, but this month of July, down 3 percent on Dow, 8 percent on the Nasdaq basically. There's an couple things we could look at, consumer confidence, early in the week, shooting up to a nice, high level. People claiming unemployment benefits remaining at a level that suggests jobs are still growing.

But there's some leading indicators, like orders for big ticket items, durable goods, car, fridges, computers, those have slowed down. And that was a sector people were counting on to hold up. And again, with gas prices remain, people thinking that the stimulus from the tax cuts maybe has waned a bit. There's a question if some of these indicators like a brighter consumer and jobs maybe looking OK, will hold up and we'll see a stronger third quarter and the summer ending on a strong note or if this is a soft patch that will stay soft. Silver lining in the cloud is that people have been worried about the federal reserve really you know, putting pedal to the metal and now there's the hope it could slow interest rate hikes down and that would actually end up be a plus. Ironic, every cloud does has a silver lining.

STARR: Talk about indicators what about the budget deficit, that's not looking good.

HAYS: Well, the budget deficit it is one of those things, Barbara, that I like to say, it's when your doctor tells you have a heart condition and that you could have a heart attack, and maybe you do, maybe you don't. We know that budget deficits cap make interest rates higher. We know this budget deficit resulted in part from tax cut. But those same cuts really did helped stimulate the economy. I think most economists agree on that. There was an interesting study out, in fact this week. IRS released numbers which showed a drop in American's incomes for two years in a row.

It's unprecedented bascily since World War II. But the reason incomes fell was because of the stock market bubble bursting. Wealthy people lost money. And that's why incomes fell, and that actually deprived the government of a lot of tax revenues in those years. That also contributed to the deficit. Republicans are going to say, get the economy growing, elect us, the budget deficit will decrease. Democrats are going to say it's too big, it's going to be burden for our children, and it's a problem we can't leave them.

STARR: Is this a problem in the campaign?

HAYS: You know, it's hard to get people fired up about the budget deficit, But not hard so to get them fired up about health care cost, social security, that sort of thing, and jobs. Absolutely.

VERJEE: From the economy here to a humanitarian tragedy unfolding in Sudan's western Darfur region and the debate over how to respond. I'm on that story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The tragedy of Darfur is not going to be permitted to fall off of the table, as far as international attention is concerned. This will continue to be a matter that is before the security council and before the world.

(END VIDEO CLIP)

VERJEE: The U.N. Security Council passed a resolution on Friday, effectively threatening sanctions against the government of Sudan, if it doesn't rein in militias committing atrocities in the Western Darfur region. Sudan says it's unhappy about the resolution, but it's misguided. But, it says it will comply. Report from Darfur say the killing continues and the humanitarian situation will get much worse.

Welcome back to ON THE STORY.

WALLACE: Zain, sad to say, I don't know how much the American people are paying attention or how much they know about what's going on in Sudan right now.

First, what is the conflict all about?

VERJEE: Kelly, old-fashioned reasons, really -- money and power. What you have is a small group of Arabs in the capital, Khartoum. They've been ruling the place for about 15 years. In Darfur, you have non-Arabs that feel they've been neglected, that they've been marginalized, they've not had the share of the political power in the country or of the wealth in the country. Sudan has a lot of oil in the south of the country. So what they did back in February of 2003, two rebel groups, the SLA and Gem, took up arms against the government in Khartoum, and there was a struggle for power and a share of the country's worth.

And Khartoum responded in a very vicious, brutal way that essentially pursued civilians, killed civilian, kicked civilians out of their homes, so they wouldn't give support to rebels. One expert put it as draining the water to catch the fish. And what Khartoum, did was sort of sub contracted the fighting to a group called the Janjaweed in Darfur. Now, these guys are an Arab group, and they have a dog in the fight as well. Because they have been fighting the non- Arabs over water and over land rights for years. So there's a real marriage of convenience here between what the Sudanese government wants to accomplish in Darfur, which has put down the rebellion, and this Janjaweed, which is dealing with a local group, which they have had a problem with for years.

HAYS: And these kind of ethnic and tribal conflicts are such a problem in many parts of Africa. But going there could take us down a very difficult road. Tell us about the eyewitness accounts, because it must be a very dangerous area now for anyone to travel into to find out what's really going on. But it sounds like atrocities are being committed that people maybe wouldn't even have imagined.

VERJEE: It's amazing. I mean, the stories that are few and far between coming out, but they're very, very impactful and they paint a picture. The latest U.N. estimates say up to 50,000 people have been killed, that's in direct fighting. And more could be killed with starvation and the onset of disease.

The eyewitnesses, specifically, journalists like Bruno Stevens who you're looking at some of his pictures that went into Darfur, have been having a difficult time getting in there. These are some of images that we get from there. Two expert Samantha Power, and John Prendergast were most recently in northern Darfur. This is what they saw. They saw burned villages. They saw evidence of life interrupted, things strewn all over the place. People in mid village having to flee.

They talked to a number of people there who said their mothers, their father had been killed, their sisters, daughters, raped in front of them by Janjaweed militia. They also came across a mass grave where 14 men had been shot at the back of the head by a bullet and they were lying in a ditch. They said it was impossible to verify if the government of Khartoum was responsible for that.

They also came across wells, where bodies were stuffed in there, animals were stuffed in there, and then sand tossed over it to sort of hide the evidence. But that's essentially done to poison the water. So people in Darfur have been displaced, can't get food, they can't get water. And people in government-controlled areas in Darfur are in camps where there is the threat of disease, where they will die of starvation, and thirst, and not by the bullet.

STARR: Zain with saw the statement by the U.S. Ambassador to the United States, John Danforth. But, you know, beside the statements in front of TV cameras, is there any consensus, any view at the United Nations or in the international community about how to move ahead, deal with this?

VERJEEE: There's not a lot consensus. That's what, experts say, the Kharton is banking on. I mean, this resolution that was passed -- well, Danforth says it has teeth, but, it didn't even use the word "sanction" in it. And experts say they are not even going to put the word sanctions in the resolutions. Are they really going to do anything about it. And Khartoum is looking at this discord, an that I spoken to say, in the international community, and says, we can play off the U.S., the E.U., the African Union, Russia, France, China, off against each other because they're not really serious about doing anything.

And that one view is one view of how Khartoum is calculating it. Khartoum for its part says that these sanctions are unjustified, that it's going complicate things. This isn't something that was planned in an agreed to with Kofi Annan in an a communique they signed back in -- on July the 3rd of this year. So, They Are unhappy with it, but they said they'll comply. What experts that I've talked have said, here's what's really need to be done. If you're serious about squeezing Khartoum, and you want to see action on the ground, you impose targeted sanctions tomorrow. Get a list of officials in the Sudanese government that are -- have -- there is evidence that there is -- that they are directly responsible for the killing, and get a list of the companies they do business overseas with, and impose sanctions on them immediately.

WALLACE: Well, Zain, from the very troubling situation in sudden, we move back to a focus on the United States and presidential politics. And some of the other Democrats who were on center stage last week. I am on that story.

But first, a check of some of the headlines now in the news.

(NEWS BREAK)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STATE SEN. BARACK OBAMA (D), ILLINOIS: There are those who are preparing to divide us. The spin masters, the negative ad peddlers, who embrace the politics of anything goes. Well, I say to them tonight -- there is not a liberal America and a conservative America. There is the United States of America.

(END VIDEO CLIP)

WALLACE: Definitely one of the big stories to come out of the Democratic convention in Boston. The U.S. Senate candidate from Illinois, Barack Obama, giving a rousing keynote speech and clearly establishing himself as one of the Democratic party's brightest stars.

Welcome back to ON THE STORY.

HAYS: I think, kelly, what's so interesting about Obama, beside the fact he's so, so bright, the first person of African descent to head the Harvard Law Review. You know, a very, very bright guy. And also, kind of, embodying sort of unity and diversity he talks about. A father from Kenya, a white mother. He's really a unique and -- not rising just because he can speak but his background, his mind. This is quite a guy.

WALLACE: It is quite a guy. Definitely, his background. Also, what he did in Illinois in the Democrat being primary earlier this year. He had several other competitors he was going up against. He won with over 50 percent of the vote. And people were saying he didn't just win in Chicago or with liberal Democratic voters, he won with moderate Democrats throughout the state of Illinois. So his story, his message, his background, seems to have an appeal not just to liberal Democrats but to moderate Democrats. So don't be surprised the Democrats were hoping that message, obviously, got out to some moderate Democrats or undecided voters listening or watching on their television screens on Tuesday night.

STARR: This was supposed to be a convention floor that was scripted. Everything was going to be run smoothly, the plan was all laid out, and then of course there was Al Sharpton. Who pretty much seemed to go to the beat of his own drummer. But is it -- what was the mood on the convention floor when he spoke? It seemed, as you watched on television, he got a really great reception.

WALLACE: He got a great reception, Barbara. The crowd loved it. It was building and building. Towards the end of his speech being people were on their feet. It was so interesting, our senior political correspondent Candy Crowley was watching from the podium and she zapped out an e-mail during Al Sharpton's speech saying "this guy is not following teleprompter." The teleprompter is moving quickly to try to find out where he is.

Well, clearly, he was ad-libbing, he was not going to go just according to that six-minute speech that he presented to the Democratic Party. You didn't hear any real complaints, though, coming from any Kerry campaign advisers. Again, everybody was trying to be all one big, happy family. But the speech went over and was received quite well. And it gave some of the Democratic delegates a little more of that red meat bashing of President Bush that many of them were hungry for, and they weren't getting a lot of from the podium speakers.

VERJEE: What about Kerry's daughters, Kelly, how did they build him up?

WALLACE: Zain, I would say that was a highlight. Because their job there was to humanize John Kerry. John Kerry's criticized as being stiff and aloof and reserved. And you just don't know -- people say you don't know what he's about, what he's made of. And they came out there, Vanessa, who is younger, was first, and then Alexandra was second. Alexandra, telling an story people just loved, about her father trying to rescue and save a hamster that went overboard.

And the crowd was laughing. But what they were trying to do was show John Kerry as their father, John Kerry as a man who takes care of his family, takes care of his daughters. It seemed they succeeded. And I covered them a bit in Iowa and New Hampshire, and covered them a little before the speech, asked them how nervous were they, and they said they were freaking out. Alexandra, said she felt like they were in the eighth grade again, writing down words and saying oh God, that sounds terrible.

HAYS: I thought the Edwards' 22-year-old daughter -- stepping up in front of that convention, introducing her mother the way she did, amazing. You really relate to it. But I want to ask about Teresa Heinz Kerry. Because I think she has been such a question mark in the campaign. I talk to many people the next day who thought her speech was very powerful, and surprisingly good. And yet there were some conservative commentators who really blasted her.

What do the delegates think?

WALLACE: Well, the delegates loved it, Kathleen, no surprise there. And some said everything from, you know, she shows how smart she is. That line about when she said "I long for the day whom women who express their opinions aren't called opinionated, they're viewed as strong and smart." So it seemed to go over well. You know, she's going to be a figure that just seems somewhat polarizing. You either love her, or you don't like her. Conservatives definitely seem to like to focus their attention on Teresa and think she is an issue where they can get some momentum or ammunition against John Kerry.

One thing, though, did I hear even from Democratic delegates, they felt she had a failed -- or a missed opportunity to really humanize John Kerry. You heard about Teresa Heinz Kerry's background, a lot about what she believe, a lot about the issues she thinks her husband will work on, but you didn't really hear about him as a husband, as a partner, a man she sees day in, day out. Even some Democratic delegates felt that she could have maybe could have done more of that.

HAYS: Well, speaking from people who might have been bashing Teresa Heinz Kerry after her speech, we're going from the Democrats to President Bush. Back on the campaign trail.

Kathleen Koch is on the story just ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When it comes to fighting the threats of our world, and making America safer, and promoting the peace, we're turning the corner and we're not turning back.

(END VIDEO CLIP)

WALLACE: President Bush, taking the gloves off and making his case for four more years. After a week off, he is back on stump, courting voters hard and heavy in key battleground states.

And our correspondent Kathleen Koch is traveling with the Bush/Cheney campaign. She's joining us by phone from Canton, Ohio.

Kathleen, good to have you with us. My question is, so are White House advisers worried?

Do they think that John Kerry did better than expected at the Democratic Convention?

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Kelly, they did say that he did a decent, seems to get a good reception. But behind the scenes, when you talk with the Bush/Cheney campaign, they do say, they expect a large bounce. "They're playing right now as if we're behind," is the precise quote. And they say they know this will be a difficult contest. When you're out here on the road right now with President Bush today -- we just pulled into the city of Canton, you -- Canton, Ohio. You really do sense this new sense of urgency.

He understand he's got to get out there recapture the lime light. He's got to convince voters -- and he's making the point in his speech, that he made yesterday and then today, that he's got a proven record, a record of success. And that the country's headed into the right direction and now is not the time to turn back. That's a phrase we're hearing a lot. We've turned the corner and we're not turning back.

WALLACE: Showing pictures of him campaigning. You can see just how much he eats it up. He is so much in his element. The crowds that he is speaking to, absolutely loving him. There's no doubt about that. Tell us about the name of the tour, as We can kind of hear the country western music in the back. Heart and Soul of America.

KOCH: That's it, the Heart and Soul of America Tour. And folks who watched the fundraiser, that they're Senator John Kerry held in New York City earlier in the month may recognize that phrase. The Bush/Cheney campaign borrowed it directly from that event in which Senator Kerry called the entertainers on stage, you know, an example of the heart and soul of America. So, what the Bush/Cheney campaign has done is really taken that phrase, made it their slogan. And at each stop yesterday, and we expected the president to do it again today the president has said, my opponent thinks the Heart and Soul of America is in Hollywood. Well, I believe it's right here in Springfield, Missouri, and Grand Rapids, Michigan, and it's a big applause-getter.

STARR: Now, Kathleen, as the president moves through this campaign swing, there's one issue, I'm just curious, whether we're going to hear very much about from him, and that of course is the war in Iraq.

Will he be talk about that?

KOCH: He does talk about it. And this is something, though, that he has been talking about in speeches since the war began. But -- and it's in places like this, in the midwestern state, these battleground states, that the president believes that can help push him over the top. Even though things are going -- it's rough going right now as we can all see in Iraq, the president believes that guns can trump butter in these states. These are states that are hurting.

In the two states where the president is today, Ohio, and Pennsylvania, each state has lost somewhere in the range of 160,000 manufacturing jobs since the president has taken office. So he's really trying to appeal to their patriotism, to their family values, to his conservative base, hoping that will push him over the top. Because one state, yes, he did take very narrowly that was Ohio in 2000. By just 3 percentage points. Pennsylvania, he lost by 5 percent points. Right now in both states, polls show John Kerry in the lead.

VERJEE: Kathleen, the 9/11 commission recommendations in John Kerry's speech -- he talked about reforming intelligence, homeland security policy. How is the Bush camp addressing that? What's their counterstrategy to that 9/11 commission recommendations and security?

KOCH: Well, the president in his speech is on the road, is saying you know, we've come a long ways in the war on terror. The country is safer, but still not safe enough. And he mentions the 9/11 commission's recommendations and phrases.

And it was just yesterday that the task force he appointed to look into these recommendations and come up with some proposals for him, they met for two hours at the White House.

And a White House senior official told us that they are making good progress. They think they'll have some recommendations for the president to sign very soon.

But at the same time, the White House is saying they don't want to come out with a knee jerk response. Implying that perhaps what Senator Kerry did, coming right out and immediately endorsing each and every proposal put out by the 9/11 commission. They say they want to be careful in their analysis.

And they say they've been having spirited and lively debate. What they come out with, they say, they may go further than the recommendations made by the 9/11 commission itself.

HAYS: Kathleen, if we were to have the Bush folks sitting in front of us, if we said what do you think is your greatest strength right now as you try to go after John Kerry? What do you think is your greatest weakness? What do you think they'd say?

KOCH: Oh, that's a tough one. Well, what we're hearing from the president on this road trip in particular, are these slogans that results matter, that we are turning the corner, that the country's going in the right direction. They would argue that even the economy, they believe, is a measure of their success, saying that they've created 1.5 million new jobs since August.

And they are going to point to Senator Kerry, in particular, as his not having a record of success. In his speeches the last few days, the president is pointing to his record in Congress, saying basically Kerry's running away from it, and saying that Senator Kerry has what the president calls, quote, a few signature accomplishments.

So, that's what they're going to try to do, is say stay the course with us, we have a proven track record. You just don't know what you'll get with Senator Kerry.

And really going back to that slogan, we've turned the corner and we're not turning back, implying that Kerry's ways -- what the president says, his love of big government and higher taxes, is not the way to go.

STARR: Kathleen Koch, thank you for joining us from the campaign trail. This campaign, there's no escaping the issue of Iraq. I'm ON THE STORY, continuing the insurgency there. And word on life in prison for Saddam Hussein, when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BAKHTIAR AMIN, IRAQI HUMAN RIGHTS MINISTER: He is suffered from chronic prostate infection. He was put on antibiotics for that. And he seems to be OK.

(END VIDEO CLIP)

STARR: Iraq's humans rights minister, Bakhtiar Amin talking about how Saddam Hussein is doing in an interview that he had with CNN. He recently visited the former dictator who is now in prison, and awaiting trial. Welcome back. We're ON THE STORY.

VERJEE: Barbara, when the Pentagon looks at the situation today, on the ground, in Iraq, what's its strategy with troop, with security, with dealing with the interim government and the hostage situation?

STARR: Well, you know, they're sticking with the plan that they currently have now, as you say, Zain. The hostage situation is something that is very interesting, because over the last couple of weeks, of course, since that Philippine hostage was released aft the government agreed to pull their small number of troops out there seems to be an uptick, an upturn, if you will, in hostage-taking. That's a grave concern to the security situation.

The feeling the Philippine government may have simply emboldened the hostage-takers and the security situations on the roads. A lot of these hostages are truck driver, trying to bring in goods to Iraq. That a lot of that is now deteriorating.

A great deal of concern there. But the plan, by all accounts is to stick with turning security over, gradually and increasingly, to the Iraqi security forces, having them take over the great share of that burden.

HAYS: I just have to ask about Saddam Hussein. I mean, his health, obviously he -- apparently is in decent health. Although he has, as you've said in the past, some health problems other older men have. But what role if any -- is he just going to be now a story -- like in the United States, we have a tabloid story that catches everyone's attention, but really doesn't affect the course of events, or is he still sitting there, waiting at some point to go to trial?

I'm just curious what role this plays in Iraq. Is it a psychological issue? Is it really going to make a difference? Is it just going to be part of history at some point?

STARR: Probably it will eventually become a page in history as time goes on. The trial now probably not taking place for several months. So he's certainly a psychological overhang in Iraq, because he's in prison and no one knows exactly what's going to happen to him. Though probably he's going to get convicted of whatever he's charged with.

(CROSSTALK)

HAYS: ...pretty strong.

STARR: But it's a question, I think, of insurgency. Is there still a feeling out there that there are insurgents and part of them are people who are loyal to him, to the old regime, and is that also an overhang in the security situation in Iraq? Is that something the interim government still has to deal with?

WALLACE: Barbara, I want to ask you about a man you know very well, retired army general Tommy Franks, who has been speaking out a little bit about war. Interestingly, he says that the war went as he had expected, but not as he had hoped. What does he mean by that?

STARR: You know, as you talk to some of the top leaders, now months after major combat, there's definitely an undercurrent that they didn't expect the insurgency as it has emerged. They didn't expect for this to go on this way for so long.

A lot people say the turning point for the insurgency was as that looting emerged in Baghdad, as society began to crumble around the edges in those initial weeks after the capital fell, that that's when insurgents got their foothold and nobody's been able to deal with that since.

Tommy Franks also says a couple other things, you know, maybe there's some things he might have done a bit differently. And he also, apparently says, in this interview with "Parade" magazine about his book that is coming out, that he believes there was a stockpile of weapons of mass destruction in Iraq that all the intelligence indicated it was there and of course so far that hasn't been found. A lot of people maybe wondering if the next book to come might be Donald Rumsfeld and what he has to say about how the war went.

VERJEE: And on the issue of that, a critical one, is intelligence, Barbara. When you look at the suicide bombings still going on, the kidnappings that are happening in Iraq, and the assassinations of Iraqi officials, is the intelligence getting any better on the ground?

STARR: It's a day to day issue, Zain. It's a top priority if they can get better intelligence, what they hope, then, is they can begin to deal with the insurgents. That even today, all this week, more attacks in Iraq. So a very difficult situation.

HAYS: Difficult situation, indeed. Well, we're back ON THE STORY right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Ilana Wexler, what's her story? The 12- year-old is the founder of Kids for Kerry.

ILANA WEXLER, KIDS FOR KERRY: Kids for Kerry is a grass roots organization for kids that support John Kerry, who want to help their futures and get active in politics.

UNIDENTIFIED FEMALE: As she took the Democratic Convention stage, her friends at home proudly watched.

UNIDENTIFIED FEMALE: I'm really glad she's using her voice and speaking to the whole world.

UNIDENTIFIED FEMALE: Her Web site says it doesn't matter which candidate or party kids support, they should get involved to make a difference.

(END VIDEOTAPE)

HAYS: Thanks to my colleagues for another fun and stimulating Saturday morning news chat. And thank you for watching ON THE STORY. We'll be back next week, of course.

Still ahead, "PEOPLE IN THE NEWS" focusing this week on 6 time Tour de France champion Lance Armstrong and actor Christopher Reeves.

But up next, a check on what's making news now.

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Aired July 31, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DREW GRIFFIN, CNN ANCHOR: President Bush's re-election campaign rolls on, as does his bus tour. In about 20 minutes, he's due in Canton, Ohio, where he'll tout recent improvements in the economy and the work that remains to be done there. Then on to Pennsylvania, which is the second battleground state that could decide this year's election.
The Democrats' newly nominated ticket of John Kerry and John Edwards will cross paths with the president in those two very states. They'll also visit West Virginia on this, the second day of their bus tour, visiting 21 states in two weeks.

And more than 300 army reservists waking up today in their own beds after more than a year and half in Iraq. They are members of the 434th Military Police Company, and the 439th Quarter Master Company. They had been originally deployed for six months. But their return to New York's Fort Drum kept getting delayed.

In Washington state, winds have pushed wildfire across some 300 acres. Homes have been evacuated. The fire has churned across the eastern cascade foothills. I'm Drew Griffin at CNN headquarters in Atlanta. "ON THE STORY" Begins right now.

KATHLEEN HAYS, CNN CORRESPONDENT: Welcome to ON THE STORY where our journalists have the inside word on the stories we cover this week. I'm Kathleen Hays, on the story of record oil prices and whether there's any release in sight at the gas pump.

KELLY WALLACE, NATIONAL CNN CORRESPONDENT: I'm Kelly Wallace in New York ON THE STORY of Democratic presidential nominee John Kerry's big night and how he plans to follow it up on the campaign trail.

ZAIN VERJEE, CNN CORRESPONDENT: I'm Zain Verjee ON THE STORY of the story of the growing crisis in Sudan and what some are calling genocide.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: I'm Barbara Starr, ON THE STORY of the former top commander of the war in Iraq, speaking out about what went right and wrong.

We'll also check in with Kathleen Koch ON THE STORY of President Bush hitting the campaign trail again after ceding the spotlight to the Democrats. And we'll talk about a projected record budget deficit from Uncle Sam and what it could mean for your wallet. E-mail us at onthestory@cnn.com. Now straight to Kelly Wallace and the Kerry campaign.

(BEGIN VIDEO CLIP)

SEN JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: For all those who believe that our best days are ahead of us with great faith in the American people, I accept your nomination for president of the United States!

(END VIDEO CLIP)

WALLACE: And those are words many predicted John Kerry, back in December, would not be saying, at the Democratic National Convention. But now he is the official Democratic presidential nominee. And he and the vice presidential nominee, John Edwards, are now on a 3,500- mile, 22-state cross country swing, hoping -- hoping, to keep up some momentum from the convention.

We are back ON THE STORY. Welcome back.

VERJEE: Kelly, did John Kerry accomplish what he wanted to at the convention?

WALLACE: It's a little hard, Zain, I'm sorry to tell you that, for me to hear you. I think you asked did he accomplish what he wanted to do, and it seems he did. There were a couple of goals for him, according to his advisers. Number one, he wanted to look and appear presidential. He wanted to convey to the American people, people who might be concerned, and some of those undecided voters who might think it might be time for a new direction, that he would be a leader, a strong leader, someone who could keep America safe. They think he accomplished that.

He also, aides say wanted to show more of his personal side. He talk about his background. He talked about his parent. He talked his he talked about his service in Vietnam. So, his advisers believe, you know, they say speaking in sports analogies, that he hit a home run. Of course, the key question those, undecide voters who will decide this election, did he change any mind, did he get initial support?

We won't know any of that until some of the first polls come out. And CNN will have its first survey coming out on Sunday.

STARR: Of course Senator Kerry and Senator Edwards, as of today are now moving out into the country on the campaign trail for several days.

What are they try to accomplish with this initial swing?

WALLACE: Well, the initial swing, Barbara, no surprise, they are going to the key battleground states. They were in Pennsylvania. They're heading to West Virginia today. And also to Ohio, which, coincidentally, or no coincidence there, President Bush is in Ohio as well. They are trying to go to the states that are going to decide this election. And the real goal, Barbara, is to go to those voters, those undecided voters. Many polls show about 40 to 45 percent backing President Bush, 40 to 45 percent backing John Kerry.

So you're talking maybe 15 -- maybe 15 percent or lower -- fewer, who could decide this election. So they are trying to go out. And they are talking about issues that really, many believe have always been the strengths of Republicans. They are talking about security, they're talking about values. They're trying to hit President Bush on some of his own strengths and they trying to take message to states that are going to really matter.

HAYS: Well, Kelly, it's so interesting to me, I really -- it seems to me the economy even though it ranks high in polls, has not been hit hard yet at the convention, and I'm wondering about a study this week from New Hampshire Institute of politic where they look at some of the battleground state, among them, Pennsylvania, which they say is likely to go for John Kerry for two reasons. One, because they've lost a lot of manufacturing jobs, and wage growth is very sluggish. They also point out that more than a third of Pennsylvania's reservists have been activated. And so that's also going to be an issue in the election.

WALLACE: Well, it's interesting, because, you know, we talked -- we all -- each of the floor reporters for CNN, we had different battleground states where we would spend some time. I was spending a lot of time in Ohio and Michigan, both key battleground states. And there was a lot of discussion on the part of CNN and other political analysts about issues such as Iraq, which clearly, the delegate, 95 percent of the delegates, are very much against the war in Iraq. But you weren't hearing that really coming from the podium.

You hear criticism of the post-Iraq plan, but not really going to war or not. What you were hearing from these delegates. So the key message that John Kerry and John Edwards were trying to get out, in particular John Edwards was -- You know with John Kerry and John Edwards, they're going to it a care of the middle class. You have these delegates saying they're hurting in Ohio, they're hurting in Michigan. So, that is the big message they're trying to get out there. A big applause line for Kerry's speech is when he talked about ending what he called sort of the backyard draft for the national guard and other reservist families, saying they're bearing the brunt of this and that would not be the way it would be under a Kerry administration.

That was a big applause line in the hall, the question is, did it strike a chord with undecided voters out there as well?

VERJEE: Perhaps, also strike a chord with all voters, Kelly. Is there a feeling that John Kerry managed to make a personal connection with the American people that this is a guy they would feel comfortable with on their TV set, in their living rooms, for four years?

WALLACE: That's the key, a very, very good point, Zain, because this is what it comes down to. Many voters were watching him on television. Are they going to feel comfortable with Kerry as president over the next four years? I can tell you, he connected in the hall, but maybe that's no surprise. He was preaching to the choir there and these delegates loved what they heard. Many though, expressed some relief because he's not known to be a great speaker, not known to deliver very powerful speeches. They say he exceeded expectations.

The sense I got watching him -- and I covered him, starting early in January, in Iowa, when no one expected that he would be the ultimate Democratic presidential nominee. You did seem to feel like he was connecting, especially in those small groups, small hometown meetings, where he was taking all these questions. And watching him at that podium there, he seemed to have some of that fight, some of that push he had back in early January when everybody was thinking he would be the loser here.

So, some of that fight seemed to be there. And, you know, the key question is, does he connect to the voters at home? We'll have to watch over the next few days to see if he succeeded.

STARR: Kelly, going back to the issue you were discussing about these key battleground states, as we move into the fall campaign what are you going to keep your eye on?

Which states look to be the most contention, where the race is, maybe, the closest?

WALLACE: Well, it's some of the main -- always the same battlegrounds year after year, the Michigans, the Pennsylvanias. But I think the two states most of might be watching closely, Florida, of course, because of what happened in Florida, and how it ultimately decided the election. But Ohio, perhaps, might be the new Florida of campaign 2004 because -- and we talked about this day after day, all week, no Republican has ever won the White House without winning Ohio. So, that is such an important state for President Bush.

But you are watching the Democrats, they're trying to be very aggression thrive, aggressive with advertising, spending time in Ohio. And I think, the part of the reason where the Democrats feel they might have an edge, is because of the economy. Because as we see, other parts of the country doing better on the economic front. People in Ohio in polls say they're just not feeling it. So the economy is something that the Democrats have a strength there for. But the Republicans, it's parts of Ohio, very conservative, very solidly Republican. So it seems to be a real battleground that we should watch and see what's happening there, could lead to what might happen in November.

HAYS: You know, Kelly, many people view politicians an people who just frequently -- it's all scripted and someone puts a speech in front of them and they practice it and deliver it. Some of the stories this week were about how John Kerry worked, agonized, wiped the sweat off his brow, writing his own speech pretty much.

Is that true he did that himself, mostly, then just got it tweaked by people?

WALLACE: Yes, and good get this, he writes in long hand. Can you imagine what that's like for his aids. He doesn't write on a computer. So he would write in long, give it to an assistant who would type it up. He did solicit help from other advisers, to people like Ted Sorenson (ph), a former adviser to President Kennedy. But ultimately, we're told this was his speech, these were his words and that's why he was comfortable delivering it Thursday night.

HAYS: Comfortable he did seem, indeed. Something he might be less comfortable about. We're talk about the other big news from the convention later. One issue certain to be a factor in this year's presidential campaign, the economy. This week, some pretty mixed indicators. I'm back on that story after this.

ANNOUNCER: Kathleen Hays is a CNNfn anchor and economics correspondent. She also writes an online column called "Hayswire" about what's happening with job, interest rates, energy price, Wall Street whatever catches her eye. Kathleen Hays, ON THE STORY and hayswire.money.cnn.com/commentary.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN KILDUFF, FIMAT USA: In September, if we get through a quiet period in terms of any kind of a terrorist attacks, that price could easily be trading back down towards $32 a barrel and be poised to head quite a bit lower from there.

(END VIDEO CLIP)

HAYS: An optimistic forecast from John Kilduff of the energy risk management company Fimat USA, saying a costly summer driving season won't most necessarily mean higher gas prices this fall. Still, crude oil prices are the highest they've been in 21 years.

Welcome back. We're ON THE STORY.

STARR: Kathleen, that's really part of the point. I opened my newspaper this morning. The first story I saw "economic growth comes to a halt" and "oil prices and consumer spending is now being possibly curbed by these rising energy price."

HAYS: It seems like it had to happen, because we had to have this big run-up in oil prices. And you can adjust for inflation. And anybody who knows this will say, come on, adjustment for inflation in oil prices are nowhere near their peaks from say the '70s, but they are high. And they push gas prices higher. And remember in May, the average price of gasoline was well over 2 dollars a barrel, in many big cities across the country it still is.

What we saw in the second quarter, growth domestic product the economy's growth rate, 3 percent. That's not a bad economy. That's not an economy going into recession. But it had been growing at 4 percent-plus rates for the two three previous quarters. Three percent is considered below trading. Consumer spending slowed down to 1 percent. Put that into perspective, modest would 3 percent, moderate. Healthy would be 4 to 5 percent, 1 percent is very, very weak, and people are blaming the run-up in gasoline prices, so it's definitely taking a bite.

VERJEE: What if there were another terror attack in Saudi Arabia or elsewhere?

What would that do to oil prices.

HAYS: Well, right now, people figure with this price again closing this week at $43.80 cents, they estimate a terror premium of $6 to $8 a barrel, maybe more than 10 dollars a barrel. So obvious, that could have an impact.

The story right now is Russia. Because Russia is the world's second big biggest oil pro producer. And its big oil producing giant Yukos is in this legal battle with the government over taxes. It's founder in jail. Many people think he is being punished for opposing President Putin politically. Meanwhile this has really gotten oil traders worried about supply. We're in the summer driving season. Saudi Arabia is pumping at full capacity.

But we have the ongoing threat of terror attack. And a time when the world's second biggest producer -- which by the way, has been more than meeting the increased demand from China, which is also a big deal in the markets. So, you put all this together, you have a very, very nervous market. And again there is this idea that maybe by the end of the summer, by the end of the year, prices could come down a lot. But everybody says there's some big, big ifs going on in that forecast.

Kathleen, no surprise, of course, John Kerry and John Edwards were seizing on the economic news, slower growth than we had thought in the second quarter.

WALLACE: What are the economists saying, though, though, is this sort of an be aberration, are they expecting third quarter strength to continue?

Because of course, this is going to play a key role in how voters feel and what happens in November.

It sure is Kelly, and I would say right now the signals are mixed. And you're certainly are seeing that kind of reaction in the stock market, which had a lousy month in July. This week, it closed higher, but this month of July, down 3 percent on Dow, 8 percent on the Nasdaq basically. There's an couple things we could look at, consumer confidence, early in the week, shooting up to a nice, high level. People claiming unemployment benefits remaining at a level that suggests jobs are still growing.

But there's some leading indicators, like orders for big ticket items, durable goods, car, fridges, computers, those have slowed down. And that was a sector people were counting on to hold up. And again, with gas prices remain, people thinking that the stimulus from the tax cuts maybe has waned a bit. There's a question if some of these indicators like a brighter consumer and jobs maybe looking OK, will hold up and we'll see a stronger third quarter and the summer ending on a strong note or if this is a soft patch that will stay soft. Silver lining in the cloud is that people have been worried about the federal reserve really you know, putting pedal to the metal and now there's the hope it could slow interest rate hikes down and that would actually end up be a plus. Ironic, every cloud does has a silver lining.

STARR: Talk about indicators what about the budget deficit, that's not looking good.

HAYS: Well, the budget deficit it is one of those things, Barbara, that I like to say, it's when your doctor tells you have a heart condition and that you could have a heart attack, and maybe you do, maybe you don't. We know that budget deficits cap make interest rates higher. We know this budget deficit resulted in part from tax cut. But those same cuts really did helped stimulate the economy. I think most economists agree on that. There was an interesting study out, in fact this week. IRS released numbers which showed a drop in American's incomes for two years in a row.

It's unprecedented bascily since World War II. But the reason incomes fell was because of the stock market bubble bursting. Wealthy people lost money. And that's why incomes fell, and that actually deprived the government of a lot of tax revenues in those years. That also contributed to the deficit. Republicans are going to say, get the economy growing, elect us, the budget deficit will decrease. Democrats are going to say it's too big, it's going to be burden for our children, and it's a problem we can't leave them.

STARR: Is this a problem in the campaign?

HAYS: You know, it's hard to get people fired up about the budget deficit, But not hard so to get them fired up about health care cost, social security, that sort of thing, and jobs. Absolutely.

VERJEE: From the economy here to a humanitarian tragedy unfolding in Sudan's western Darfur region and the debate over how to respond. I'm on that story when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The tragedy of Darfur is not going to be permitted to fall off of the table, as far as international attention is concerned. This will continue to be a matter that is before the security council and before the world.

(END VIDEO CLIP)

VERJEE: The U.N. Security Council passed a resolution on Friday, effectively threatening sanctions against the government of Sudan, if it doesn't rein in militias committing atrocities in the Western Darfur region. Sudan says it's unhappy about the resolution, but it's misguided. But, it says it will comply. Report from Darfur say the killing continues and the humanitarian situation will get much worse.

Welcome back to ON THE STORY.

WALLACE: Zain, sad to say, I don't know how much the American people are paying attention or how much they know about what's going on in Sudan right now.

First, what is the conflict all about?

VERJEE: Kelly, old-fashioned reasons, really -- money and power. What you have is a small group of Arabs in the capital, Khartoum. They've been ruling the place for about 15 years. In Darfur, you have non-Arabs that feel they've been neglected, that they've been marginalized, they've not had the share of the political power in the country or of the wealth in the country. Sudan has a lot of oil in the south of the country. So what they did back in February of 2003, two rebel groups, the SLA and Gem, took up arms against the government in Khartoum, and there was a struggle for power and a share of the country's worth.

And Khartoum responded in a very vicious, brutal way that essentially pursued civilians, killed civilian, kicked civilians out of their homes, so they wouldn't give support to rebels. One expert put it as draining the water to catch the fish. And what Khartoum, did was sort of sub contracted the fighting to a group called the Janjaweed in Darfur. Now, these guys are an Arab group, and they have a dog in the fight as well. Because they have been fighting the non- Arabs over water and over land rights for years. So there's a real marriage of convenience here between what the Sudanese government wants to accomplish in Darfur, which has put down the rebellion, and this Janjaweed, which is dealing with a local group, which they have had a problem with for years.

HAYS: And these kind of ethnic and tribal conflicts are such a problem in many parts of Africa. But going there could take us down a very difficult road. Tell us about the eyewitness accounts, because it must be a very dangerous area now for anyone to travel into to find out what's really going on. But it sounds like atrocities are being committed that people maybe wouldn't even have imagined.

VERJEE: It's amazing. I mean, the stories that are few and far between coming out, but they're very, very impactful and they paint a picture. The latest U.N. estimates say up to 50,000 people have been killed, that's in direct fighting. And more could be killed with starvation and the onset of disease.

The eyewitnesses, specifically, journalists like Bruno Stevens who you're looking at some of his pictures that went into Darfur, have been having a difficult time getting in there. These are some of images that we get from there. Two expert Samantha Power, and John Prendergast were most recently in northern Darfur. This is what they saw. They saw burned villages. They saw evidence of life interrupted, things strewn all over the place. People in mid village having to flee.

They talked to a number of people there who said their mothers, their father had been killed, their sisters, daughters, raped in front of them by Janjaweed militia. They also came across a mass grave where 14 men had been shot at the back of the head by a bullet and they were lying in a ditch. They said it was impossible to verify if the government of Khartoum was responsible for that.

They also came across wells, where bodies were stuffed in there, animals were stuffed in there, and then sand tossed over it to sort of hide the evidence. But that's essentially done to poison the water. So people in Darfur have been displaced, can't get food, they can't get water. And people in government-controlled areas in Darfur are in camps where there is the threat of disease, where they will die of starvation, and thirst, and not by the bullet.

STARR: Zain with saw the statement by the U.S. Ambassador to the United States, John Danforth. But, you know, beside the statements in front of TV cameras, is there any consensus, any view at the United Nations or in the international community about how to move ahead, deal with this?

VERJEEE: There's not a lot consensus. That's what, experts say, the Kharton is banking on. I mean, this resolution that was passed -- well, Danforth says it has teeth, but, it didn't even use the word "sanction" in it. And experts say they are not even going to put the word sanctions in the resolutions. Are they really going to do anything about it. And Khartoum is looking at this discord, an that I spoken to say, in the international community, and says, we can play off the U.S., the E.U., the African Union, Russia, France, China, off against each other because they're not really serious about doing anything.

And that one view is one view of how Khartoum is calculating it. Khartoum for its part says that these sanctions are unjustified, that it's going complicate things. This isn't something that was planned in an agreed to with Kofi Annan in an a communique they signed back in -- on July the 3rd of this year. So, They Are unhappy with it, but they said they'll comply. What experts that I've talked have said, here's what's really need to be done. If you're serious about squeezing Khartoum, and you want to see action on the ground, you impose targeted sanctions tomorrow. Get a list of officials in the Sudanese government that are -- have -- there is evidence that there is -- that they are directly responsible for the killing, and get a list of the companies they do business overseas with, and impose sanctions on them immediately.

WALLACE: Well, Zain, from the very troubling situation in sudden, we move back to a focus on the United States and presidential politics. And some of the other Democrats who were on center stage last week. I am on that story.

But first, a check of some of the headlines now in the news.

(NEWS BREAK)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STATE SEN. BARACK OBAMA (D), ILLINOIS: There are those who are preparing to divide us. The spin masters, the negative ad peddlers, who embrace the politics of anything goes. Well, I say to them tonight -- there is not a liberal America and a conservative America. There is the United States of America.

(END VIDEO CLIP)

WALLACE: Definitely one of the big stories to come out of the Democratic convention in Boston. The U.S. Senate candidate from Illinois, Barack Obama, giving a rousing keynote speech and clearly establishing himself as one of the Democratic party's brightest stars.

Welcome back to ON THE STORY.

HAYS: I think, kelly, what's so interesting about Obama, beside the fact he's so, so bright, the first person of African descent to head the Harvard Law Review. You know, a very, very bright guy. And also, kind of, embodying sort of unity and diversity he talks about. A father from Kenya, a white mother. He's really a unique and -- not rising just because he can speak but his background, his mind. This is quite a guy.

WALLACE: It is quite a guy. Definitely, his background. Also, what he did in Illinois in the Democrat being primary earlier this year. He had several other competitors he was going up against. He won with over 50 percent of the vote. And people were saying he didn't just win in Chicago or with liberal Democratic voters, he won with moderate Democrats throughout the state of Illinois. So his story, his message, his background, seems to have an appeal not just to liberal Democrats but to moderate Democrats. So don't be surprised the Democrats were hoping that message, obviously, got out to some moderate Democrats or undecided voters listening or watching on their television screens on Tuesday night.

STARR: This was supposed to be a convention floor that was scripted. Everything was going to be run smoothly, the plan was all laid out, and then of course there was Al Sharpton. Who pretty much seemed to go to the beat of his own drummer. But is it -- what was the mood on the convention floor when he spoke? It seemed, as you watched on television, he got a really great reception.

WALLACE: He got a great reception, Barbara. The crowd loved it. It was building and building. Towards the end of his speech being people were on their feet. It was so interesting, our senior political correspondent Candy Crowley was watching from the podium and she zapped out an e-mail during Al Sharpton's speech saying "this guy is not following teleprompter." The teleprompter is moving quickly to try to find out where he is.

Well, clearly, he was ad-libbing, he was not going to go just according to that six-minute speech that he presented to the Democratic Party. You didn't hear any real complaints, though, coming from any Kerry campaign advisers. Again, everybody was trying to be all one big, happy family. But the speech went over and was received quite well. And it gave some of the Democratic delegates a little more of that red meat bashing of President Bush that many of them were hungry for, and they weren't getting a lot of from the podium speakers.

VERJEE: What about Kerry's daughters, Kelly, how did they build him up?

WALLACE: Zain, I would say that was a highlight. Because their job there was to humanize John Kerry. John Kerry's criticized as being stiff and aloof and reserved. And you just don't know -- people say you don't know what he's about, what he's made of. And they came out there, Vanessa, who is younger, was first, and then Alexandra was second. Alexandra, telling an story people just loved, about her father trying to rescue and save a hamster that went overboard.

And the crowd was laughing. But what they were trying to do was show John Kerry as their father, John Kerry as a man who takes care of his family, takes care of his daughters. It seemed they succeeded. And I covered them a bit in Iowa and New Hampshire, and covered them a little before the speech, asked them how nervous were they, and they said they were freaking out. Alexandra, said she felt like they were in the eighth grade again, writing down words and saying oh God, that sounds terrible.

HAYS: I thought the Edwards' 22-year-old daughter -- stepping up in front of that convention, introducing her mother the way she did, amazing. You really relate to it. But I want to ask about Teresa Heinz Kerry. Because I think she has been such a question mark in the campaign. I talk to many people the next day who thought her speech was very powerful, and surprisingly good. And yet there were some conservative commentators who really blasted her.

What do the delegates think?

WALLACE: Well, the delegates loved it, Kathleen, no surprise there. And some said everything from, you know, she shows how smart she is. That line about when she said "I long for the day whom women who express their opinions aren't called opinionated, they're viewed as strong and smart." So it seemed to go over well. You know, she's going to be a figure that just seems somewhat polarizing. You either love her, or you don't like her. Conservatives definitely seem to like to focus their attention on Teresa and think she is an issue where they can get some momentum or ammunition against John Kerry.

One thing, though, did I hear even from Democratic delegates, they felt she had a failed -- or a missed opportunity to really humanize John Kerry. You heard about Teresa Heinz Kerry's background, a lot about what she believe, a lot about the issues she thinks her husband will work on, but you didn't really hear about him as a husband, as a partner, a man she sees day in, day out. Even some Democratic delegates felt that she could have maybe could have done more of that.

HAYS: Well, speaking from people who might have been bashing Teresa Heinz Kerry after her speech, we're going from the Democrats to President Bush. Back on the campaign trail.

Kathleen Koch is on the story just ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When it comes to fighting the threats of our world, and making America safer, and promoting the peace, we're turning the corner and we're not turning back.

(END VIDEO CLIP)

WALLACE: President Bush, taking the gloves off and making his case for four more years. After a week off, he is back on stump, courting voters hard and heavy in key battleground states.

And our correspondent Kathleen Koch is traveling with the Bush/Cheney campaign. She's joining us by phone from Canton, Ohio.

Kathleen, good to have you with us. My question is, so are White House advisers worried?

Do they think that John Kerry did better than expected at the Democratic Convention?

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Kelly, they did say that he did a decent, seems to get a good reception. But behind the scenes, when you talk with the Bush/Cheney campaign, they do say, they expect a large bounce. "They're playing right now as if we're behind," is the precise quote. And they say they know this will be a difficult contest. When you're out here on the road right now with President Bush today -- we just pulled into the city of Canton, you -- Canton, Ohio. You really do sense this new sense of urgency.

He understand he's got to get out there recapture the lime light. He's got to convince voters -- and he's making the point in his speech, that he made yesterday and then today, that he's got a proven record, a record of success. And that the country's headed into the right direction and now is not the time to turn back. That's a phrase we're hearing a lot. We've turned the corner and we're not turning back.

WALLACE: Showing pictures of him campaigning. You can see just how much he eats it up. He is so much in his element. The crowds that he is speaking to, absolutely loving him. There's no doubt about that. Tell us about the name of the tour, as We can kind of hear the country western music in the back. Heart and Soul of America.

KOCH: That's it, the Heart and Soul of America Tour. And folks who watched the fundraiser, that they're Senator John Kerry held in New York City earlier in the month may recognize that phrase. The Bush/Cheney campaign borrowed it directly from that event in which Senator Kerry called the entertainers on stage, you know, an example of the heart and soul of America. So, what the Bush/Cheney campaign has done is really taken that phrase, made it their slogan. And at each stop yesterday, and we expected the president to do it again today the president has said, my opponent thinks the Heart and Soul of America is in Hollywood. Well, I believe it's right here in Springfield, Missouri, and Grand Rapids, Michigan, and it's a big applause-getter.

STARR: Now, Kathleen, as the president moves through this campaign swing, there's one issue, I'm just curious, whether we're going to hear very much about from him, and that of course is the war in Iraq.

Will he be talk about that?

KOCH: He does talk about it. And this is something, though, that he has been talking about in speeches since the war began. But -- and it's in places like this, in the midwestern state, these battleground states, that the president believes that can help push him over the top. Even though things are going -- it's rough going right now as we can all see in Iraq, the president believes that guns can trump butter in these states. These are states that are hurting.

In the two states where the president is today, Ohio, and Pennsylvania, each state has lost somewhere in the range of 160,000 manufacturing jobs since the president has taken office. So he's really trying to appeal to their patriotism, to their family values, to his conservative base, hoping that will push him over the top. Because one state, yes, he did take very narrowly that was Ohio in 2000. By just 3 percentage points. Pennsylvania, he lost by 5 percent points. Right now in both states, polls show John Kerry in the lead.

VERJEE: Kathleen, the 9/11 commission recommendations in John Kerry's speech -- he talked about reforming intelligence, homeland security policy. How is the Bush camp addressing that? What's their counterstrategy to that 9/11 commission recommendations and security?

KOCH: Well, the president in his speech is on the road, is saying you know, we've come a long ways in the war on terror. The country is safer, but still not safe enough. And he mentions the 9/11 commission's recommendations and phrases.

And it was just yesterday that the task force he appointed to look into these recommendations and come up with some proposals for him, they met for two hours at the White House.

And a White House senior official told us that they are making good progress. They think they'll have some recommendations for the president to sign very soon.

But at the same time, the White House is saying they don't want to come out with a knee jerk response. Implying that perhaps what Senator Kerry did, coming right out and immediately endorsing each and every proposal put out by the 9/11 commission. They say they want to be careful in their analysis.

And they say they've been having spirited and lively debate. What they come out with, they say, they may go further than the recommendations made by the 9/11 commission itself.

HAYS: Kathleen, if we were to have the Bush folks sitting in front of us, if we said what do you think is your greatest strength right now as you try to go after John Kerry? What do you think is your greatest weakness? What do you think they'd say?

KOCH: Oh, that's a tough one. Well, what we're hearing from the president on this road trip in particular, are these slogans that results matter, that we are turning the corner, that the country's going in the right direction. They would argue that even the economy, they believe, is a measure of their success, saying that they've created 1.5 million new jobs since August.

And they are going to point to Senator Kerry, in particular, as his not having a record of success. In his speeches the last few days, the president is pointing to his record in Congress, saying basically Kerry's running away from it, and saying that Senator Kerry has what the president calls, quote, a few signature accomplishments.

So, that's what they're going to try to do, is say stay the course with us, we have a proven track record. You just don't know what you'll get with Senator Kerry.

And really going back to that slogan, we've turned the corner and we're not turning back, implying that Kerry's ways -- what the president says, his love of big government and higher taxes, is not the way to go.

STARR: Kathleen Koch, thank you for joining us from the campaign trail. This campaign, there's no escaping the issue of Iraq. I'm ON THE STORY, continuing the insurgency there. And word on life in prison for Saddam Hussein, when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BAKHTIAR AMIN, IRAQI HUMAN RIGHTS MINISTER: He is suffered from chronic prostate infection. He was put on antibiotics for that. And he seems to be OK.

(END VIDEO CLIP)

STARR: Iraq's humans rights minister, Bakhtiar Amin talking about how Saddam Hussein is doing in an interview that he had with CNN. He recently visited the former dictator who is now in prison, and awaiting trial. Welcome back. We're ON THE STORY.

VERJEE: Barbara, when the Pentagon looks at the situation today, on the ground, in Iraq, what's its strategy with troop, with security, with dealing with the interim government and the hostage situation?

STARR: Well, you know, they're sticking with the plan that they currently have now, as you say, Zain. The hostage situation is something that is very interesting, because over the last couple of weeks, of course, since that Philippine hostage was released aft the government agreed to pull their small number of troops out there seems to be an uptick, an upturn, if you will, in hostage-taking. That's a grave concern to the security situation.

The feeling the Philippine government may have simply emboldened the hostage-takers and the security situations on the roads. A lot of these hostages are truck driver, trying to bring in goods to Iraq. That a lot of that is now deteriorating.

A great deal of concern there. But the plan, by all accounts is to stick with turning security over, gradually and increasingly, to the Iraqi security forces, having them take over the great share of that burden.

HAYS: I just have to ask about Saddam Hussein. I mean, his health, obviously he -- apparently is in decent health. Although he has, as you've said in the past, some health problems other older men have. But what role if any -- is he just going to be now a story -- like in the United States, we have a tabloid story that catches everyone's attention, but really doesn't affect the course of events, or is he still sitting there, waiting at some point to go to trial?

I'm just curious what role this plays in Iraq. Is it a psychological issue? Is it really going to make a difference? Is it just going to be part of history at some point?

STARR: Probably it will eventually become a page in history as time goes on. The trial now probably not taking place for several months. So he's certainly a psychological overhang in Iraq, because he's in prison and no one knows exactly what's going to happen to him. Though probably he's going to get convicted of whatever he's charged with.

(CROSSTALK)

HAYS: ...pretty strong.

STARR: But it's a question, I think, of insurgency. Is there still a feeling out there that there are insurgents and part of them are people who are loyal to him, to the old regime, and is that also an overhang in the security situation in Iraq? Is that something the interim government still has to deal with?

WALLACE: Barbara, I want to ask you about a man you know very well, retired army general Tommy Franks, who has been speaking out a little bit about war. Interestingly, he says that the war went as he had expected, but not as he had hoped. What does he mean by that?

STARR: You know, as you talk to some of the top leaders, now months after major combat, there's definitely an undercurrent that they didn't expect the insurgency as it has emerged. They didn't expect for this to go on this way for so long.

A lot people say the turning point for the insurgency was as that looting emerged in Baghdad, as society began to crumble around the edges in those initial weeks after the capital fell, that that's when insurgents got their foothold and nobody's been able to deal with that since.

Tommy Franks also says a couple other things, you know, maybe there's some things he might have done a bit differently. And he also, apparently says, in this interview with "Parade" magazine about his book that is coming out, that he believes there was a stockpile of weapons of mass destruction in Iraq that all the intelligence indicated it was there and of course so far that hasn't been found. A lot of people maybe wondering if the next book to come might be Donald Rumsfeld and what he has to say about how the war went.

VERJEE: And on the issue of that, a critical one, is intelligence, Barbara. When you look at the suicide bombings still going on, the kidnappings that are happening in Iraq, and the assassinations of Iraqi officials, is the intelligence getting any better on the ground?

STARR: It's a day to day issue, Zain. It's a top priority if they can get better intelligence, what they hope, then, is they can begin to deal with the insurgents. That even today, all this week, more attacks in Iraq. So a very difficult situation.

HAYS: Difficult situation, indeed. Well, we're back ON THE STORY right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Ilana Wexler, what's her story? The 12- year-old is the founder of Kids for Kerry.

ILANA WEXLER, KIDS FOR KERRY: Kids for Kerry is a grass roots organization for kids that support John Kerry, who want to help their futures and get active in politics.

UNIDENTIFIED FEMALE: As she took the Democratic Convention stage, her friends at home proudly watched.

UNIDENTIFIED FEMALE: I'm really glad she's using her voice and speaking to the whole world.

UNIDENTIFIED FEMALE: Her Web site says it doesn't matter which candidate or party kids support, they should get involved to make a difference.

(END VIDEOTAPE)

HAYS: Thanks to my colleagues for another fun and stimulating Saturday morning news chat. And thank you for watching ON THE STORY. We'll be back next week, of course.

Still ahead, "PEOPLE IN THE NEWS" focusing this week on 6 time Tour de France champion Lance Armstrong and actor Christopher Reeves.

But up next, a check on what's making news now.

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