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On the Story

Hurricane Jeanne is Following Frances' Path; President Bush Welecomed Iraqi Interim Prime Minister to Washington

Aired September 25, 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: Here's the latest.
By midnight tonight, Florida's east coast will likely be in the throws of Hurricane Jeanne. By then it should be stronger. Right now a Category 2 and tearing through the Bahamas, as you can see. Jeanne following an almost identical track laid down three weeks ago by Hurricane Frances.

In Iraq, sources say seven Iraqis died in Fallujah, possibly from a U.S. air strike on a suspected terrorist hideout. Meanwhile, the U.S. death toll has grown by five. The latest casualties, four U.S. Marines in the western Al Anbar province and a U.S. soldier in Baghdad.

In suburban Atlanta, a memorial service starts hours from now for murdered hostage Jack Hensley. He and another American civilian worker killed this week in Iraq after they and a Briton were abducted from their Baghdad home.

And in Chicago, arson investigators are on the scene of a house fire that killed four young people. A fire official says the blaze suspicious and no parents appeared to be at home.

Those are the headlines. I'm Drew Griffin at CNN global headquarters in Atlanta. Now to our Washington studios and ON THE STORY.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Barbara Starr, ON THE STORY of new talk about more troops for Iraq and new questions of when the Iraqis can fight on their own.

SASHA JOHNSON, CNN CORRESPONDENT: I'm Sasha Johnson on the story of the John Kerry campaign, firing up the candidate and hoping voters will like what they see and hear.

ELAINE QUIJANO, CNN CORRESPONDENT: I'm Elaine Quijano, in Crawford, Texas, ON THE STORY of how President Bush welcomed the interim Iraqi prime minister to Washington and how the president vowed no retreat.

CHRISTINE ROMANS, CNN CORRESPONDENT: And I'm Christine Romans, ON THE STORY of how the Fed pushes up interest rates and the market pushes back.

Also coming up, we'll go to Iraq and talk to Baghdad bureau chief Jane Araff.

E-mail us at ONTHESTORY@CNN.com. We'll be turning to politics and the war in Iraq just a moment. But first, the other big story, Hurricane Jeanne.

National correspondent Susan Candiotti is in West Palm Beach -- Susan.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hello, Christine.

And we're outside of a home improvement store that closed its doors just not long ago after being open for only three hours this morning. And now you can see they themselves are shuttered up. And in front of those, fence posts, pete moss and everything else to buck up their doors.

Mandatory evacuation orders are already in effect now for at least eight counties up and down Florida's east coast. In particular, that applies to people who live in areas that are prone to flooding and, of course, mobile homes. Here in Palm Beach County, that extends to people who live just about a block or two west of the Intracoastal Waterway.

The concern about these evacuation orders, according to Florida Governor Jeb Bush now, is that people, weather people will pay attention to them. Of course, Florida residents are very weary of having to go through now four storms in just about five or six weeks. And now, this. So there is concern that they will pay attention to these evacuation orders.

They have more than a dozen of them ready to receive people here. And when Frances hit a few weeks ago, 19,000 people took advantage of them.

We do know that it was only a week ago here in Palm Beach County that everyone had their power restored from Hurricane Frances. Ninety percent of the people here at this time lost their power.

And so, remember, we are talking about something that is historic here. Since hurricanes were recorded in Florida, there have not been four recorded in all of that time in a single season in Florida.

It did happen in Texas back in 1986. And kind of to sum things up here, this was the headline in the "Palm Beach Post" yesterday: "Not Again."

And today -- whoops -- closing in. People here are worried. They are concerned. They are tense.

But many do feel as though they are better prepared than they were the last time. They know what lies ahead or what could lie ahead -- Christine.

ROMANS: Certainly several dress rehearsals already. Susan Candiotti, in West Palm Beach, thank you so much.

And now to Elaine Quijano in Crawford, Texas, with the president -- Elaine.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The future of Afghanistan and Iraq is a future of liberty. The proper response to difficulty is not to retreat. It is to prevail.

(END VIDEO CLIP)

QUIJANO: President Bush at the United Nations making a point he made over and over both on and off the campaign trail, vowing no retreat. Yesterday, I followed the president as he ended a busy campaign week.

He made stops in Janesville, Wisconsin, as well as Racine, Wisconsin. The president ending up here at his Texas ranch to prepare for the presidential debate. His Texas ranch not too far from where we are here in Crawford, Texas.

STARR: Now, Elaine, the busy week that you've just had, but it's going to be a very interesting week ahead. We are just days away from that debate now. How is President Bush getting ready for it?

QUIJANO: Well, he is getting some help from a person that has actually helped him before in this respect. And that is a New Hampshire senator by the name of Judd Gregg, a Republican that the campaign actually used back in 2000 to help him prepare at that time.

They liked the job that he did back then so much. They thought he was well prepared and that he was tough. And they thought that would be a good choice for them this time around.

Now, it's interesting to note, they think, according to a senior administration official, anyway, that perhaps this time around might be even better because Senator Gregg is from the same area, the New England area, and he's familiar with Senator Kerry. So they've had already, we are told, multiple sessions, these back and forth. And has been at times, we are told, lively.

They don't go into too much detail, but they say there has been -- there have been at least a few hard glares over the senator's way. But understanding, the president knows the stakes are really high and he has to perform. And the president very much wanting to do his homework and be tested.

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT: One of the things I noticed here in New York was the attention that President Bush was paying in particular to the interim prime minister, Ayad Allawi. Not just here at the U.N., but also in Washington. Why the focus right now?

QUIJANO: Well, obviously, he has so much invested in what happens in Iraq. And some powerful imagery, also. When you look at the event that happened in the Rose Garden, it is -- obviously, you have two world leaders -- it is a powerful image to have the interim prime minister of Iraq appearing side by side with the president of the United States, fielding question. And essentially, as we know, both men were reading from the same page, if you will, talking about the fact that they believe progress is being made. Despite what might be dominating the headline, continued violence insurgents, they maintain that, in fact, the processes are moving forward there, and both men really, as I said, on the same page as far as where they see the country headed and maintaining that they must stay on that same course in order for things in Iraq to succeed.

ROMANS: Allawi essentially saying, Elaine, thank you to the United States, saying that, you know, the lives lost will not be lost in vain. The president saying we will not waiver, we will not retreat. He is really hammering this home that he has chosen a course, he's going to stick to it, unlike how they try to portray his opponent, John Kerry.

QUIJANO: Absolutely. That is, in fact, the strategy and continues to be the strategy. They feel they have been quite effective in that.

And in peoples minds now, Iraq, they see -- you know, obviously with the difficulties that lie ahead there, they still see the president as being quite divisive. And that's something this campaign really wants to reinforce in peoples' minds. That, in fact, President Bush has taken steps that he believes are the right steps but will continue to stay on that course no matter what the polls show, no matter what the political winds may bring.

That is a message that they want to try and drive home, really hammer away at John Kerry for the idea of being a flip-flopper. We continue to hear that strategy out of the Bush campaign. And so, yes, you will continue to hear the president in the days, weeks ahead, saying that Iraq is a place where the U.S. needs to stay the course.

JOHNSON: Well, Elaine, of course every move on the Bush-Cheney campaign is mirrored by the competition. I'm back ON THE STORY of the Kerry campaign after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Incredibly this week, my opponent said he would prefer the dictatorship of Saddam Hussein to the situation in Iraq today.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: What I have always said is that the world is better off without Saddam Hussein. The question is how you do it. And what the president needs to begin to do is address the realities of Iraq. (END VIDEO CLIP)

JOHNSON: And, of course, the voters have six weeks left to consider the realities of this presidential race. After a week of back-and-forth accusations from different ends of the campaign trail, we get to see the candidates together on Thursday for the first debate.

Welcome back. We're ON THE STORY.

QUIJANO: You know, Sasha, I was with the president yesterday, as I mentioned. And, you know, he came out so hard against Senator Kerry yesterday, both when he was in Janesville and then ending the day in Racine.

The president was really jumping on him for those comments that he made about Prime Minister Allawi, when he said that basically he felt the prime minister, as well as President Bush, were painting too rosy a picture of Iraq. A lot of back and forth going on.

JOHNSON: No, there definitely is. And what the Kerry campaign says about what Senator Kerry said about Prime Minister Allawi is simply that he was being honest, that Prime Minister Allawi painted, as you said, too rosy of a picture, and that's not really what's not going on over there.

If you look at the week with the Kerry campaign, he started in New York with a speech laying out what he would do in Iraq, and also laying out sort of the poor judgment that President Bush's exercised with it comes to Iraq. And then he bookended it with a speech on the war on terror yesterday in Philadelphia.

And, you know, there are a lot of different strategies at play here. But basically, what they're hoping to do is, you know, lay out enough questions and ask enough questions about whether President Bush has done the right thing in Iraq, so that when they get to the debit debate next week, perhaps the questions aren't so much, "Senator Kerry, why did you vote for the -- for the authorization to go to war? Now you're against it. Why did you say this and now you say this?"

And it's more putting the onus on President Bush to, you know, explain what the U.S. is doing over there. And one thing you did mention, you mentioned the Rose Garden backdrop with the president.

John Kerry appeared in front of American flags all week when he made these statements about Iraq. It was a very serious tone. It was not sort of the typical campaign week that we have seen. No -- only a couple major rallies.

STARR: But following up on that, Sasha, different optics, if you will, on the Kerry campaign this week. Even though he lost his voice, as we saw at one point, he was out there and he was very rapidly out there every time.

JOHNSON: Absolutely. They started the week -- the Kerry campaign, by the way, thinks that they won the week in the media. That the president was out there responding to them, the Bush campaign was responding to them. I know that the Bush campaign would disagree with that.

But he started in New York Tuesday. They -- you know, with the president at the U.N. They knew that they had to come out and get into the conversation. They could not let the president control the conversation, so he had a news conference, which he hadn't had since August 2. So that was one thing that was definitely rapidly out there.

Thursday, he lost his voice, canceled events in Iowa. But still, you know, found -- somehow found the energy to get in front of the cameras.

And Prime Minister Allawi's speech to the joint session of Congress was finished, and there was John Kerry on television saying, no, this is a reality in Iraq, it's a mess over there, they're not giving you an accurate picture, they're not telling you the truth. But I will do that.

ROMANS: Sasha, I'm curious about how they're saying the Florida situation is going to play out. Now four hurricanes. We heard Susan Candiotti say that's never happened before. And it's an election year, and Florida is up for grabs.

Is it -- yes -- is it good in a weird, crass way, you know, the way -- you think about these sorts of things? I mean, is it -- is it good for the Kerry campaign? Is it bad? Does it take the heat off some of the -- some of the pre-election campaigning?

JOHNSON: Well, it's actually put both campaigns, I think, in a weird spot. CNN released a poll this week out of Florida. It's one of the first polls we have actually seen out of Florida. John Kerry was there in August, but this is the first week that we've gone back.

So both campaigns say, you know, we don't really know what the state of play actually is in Florida because we haven't been able to poll there, people aren't home, they're not watching TV, they don't have...

ROMANS: Well, and perspectives have changed so much.

JOHNSON: Right. And frankly, are they paying attention?

So when John Kerry hit Florida this week, and in Jacksonville, at the start of that news conference, he said, I haven't been -- I'm sorry, Tuesday. He said, I haven't been here. I just want to express my condolences to the people, the victims of the hurricane. And, you know, I'm here. So...

ROMANS: Right.

KOPPEL: Sasha going back to what you were saying about how the Kerry campaign feels as of this week that they have kind of seized back the news cycle, but as far as the focus on Iraq is concerned, clearly, the Bush team believes that focusing on Iraq is a plus for them. We saw him out with Prime Minister Ayad Allawi a couple of times this week. But what are the pitfalls for Senator Kerry focusing on Iraq all the time?

JOHNSON: Well, obviously, the strategy sort of hinges on the fact that things continue to go poorly in Iraq and that Iraq remains in the headlines. So that's one thing. You know, Kerry doesn't want to be seen as sort of taking advantage of things going bad.

But also this week, you've seen John Kerry talk about his protester days in Vietnam and how he is now standing up as he did when he came back from Vietnam, descanting, you know, talking out against the war and against the people in power. So that resurrects those images of Vietnam, which obviously the Kerry campaign -- it's proven to be problematic for them in the past. So that's something they're also very wary of -- or aware of.

STARR: Well, now the our thanks to both Elaine and Sasha. And I know you both need to get back ON THE STORY.

I'm back on the Iraq story right here in a moment on whether talk of more troops means Americans or Iraqis or both.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: If our commanders on the ground feel it's in the interest of the Iraqi citizens to provide more troops, we'll talk about it.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: If we do the things I said, I believe you can start getting troops home next year. That's what I believe. That's what I want to do.

(END VIDEO CLIP)

STARR: The commander in chief and the man campaigning for his job, and the talk this week about possibly, just possibly more troops for Iraq. And like so much about Iraq, it was deeply entangled this week in the presidential race.

Welcome back. We're ON THE STORY.

ROMANS: More troops for Iraq. More troops possibly, when? How many?

STARR: Who knows? General John Abizaid had a very interesting comment this week. He said that he thought there would be a need for more troops. But who would they be? Where would they come from?

His priority, of course, under the strategy, is to get more Iraqi troops on the streets, get them there in time for the January elections to protect the election process. But very late this week, we start hearing the little murmurs in the Pentagon that more troops could, in fact, mean they simply would leave some of the rotating U.S. troops in position longer, possibly.

Sometime in the January time frame, don't rotate the troops as fast. That would give them more troops on the ground.

They have about 135,000 now. A cushion may be of 10,000, 12,000, if they just don't rotate people out and bring them home on time. Nobody knows yet what the decision will be.

KOPPEL: Barbara, what about the training of these Iraqi troops? How is the Pentagon handling that?

STARR: Well, that's all happening in Iraq, of course. And what they say is they're moving ahead with that, they're trying to get that done as quickly as they possibly can. But, you know, Christine, as we're seeing, that's going to be very, very tough business. So far, only about 100,000 of 220,000 are trained and equipped, so they're about halfway there.

ROMANS: Halfway there. So what has to be done -- I mean, what has to be done, and how quickly is it happening?

STARR: They're just trying to move ahead as fast as they can. But with this election coming up, and with the insurgency apparently at full tilt this week, there's -- you know, the difference this week is you saw no one out there saying things are getting better.

Even Don Rumsfeld says we have to remember there's places in Iraq that are relatively peaceful. But he's out there, the president is out there, everyone is out there. All of our sources in the Pentagon are very weary right now. They say the insurgency, the violence is very bad, and that they're really trying to get a handle on it.

KOPPEL: What about Abu Musab Zarqawi, obviously the Jordanian militant who is believed to be leading the -- one of the strongest cells of this insurgency? Do they believe, Barbara, within the Pentagon that if they could just get their hands on Zarqawi that that would deal a fatal blow or at least a serious blow to the insurgency?

STARR: Yes, public enemy number one, where's he hiding out? Why can't they find him?

Military people are very skeptical. They've been down this road so many times, hunting -- you know, if we just got Saddam, things will be better.

KOPPEL: Right.

STARR: If we just got Osama bin Laden, things will be better.

KOPPEL: Right.

STARR: No. They want him. They want him bad. They know he's responsible for much of the violence. But that's the violence that's being generated by the foreign fighters inside Iraq. The insurgency now much broader, much deeper, perhaps hundreds if not thousands of Iraqis participating in the insurgency. They know if they get him, it's just not going to stop automatically.

ROMANS: He's just one of the problems. When you look at some of the -- you know, some of the elements of the insurgency, there are groups ideologically who are even against each other, except they're together in their common dislike for the American military. Right?

STARR: Right. I mean, you know, there are still Sunni against Shia to some extent. There's various ideological groups.

One of the most disturbing thing that is sort of beginning to emerge is some sense that some of these kidnappings of the contractors are from many different nations, maybe being organized by criminal elements within the country. These criminals snatch these people and then sell them, if you will, or transfer them to these various insurgent ideological groups.

That would be very disturbing. And we're not seeing yet what the real reaction is from these private contractor groups. You know, will they keep sending the personnel to Iraq to be at risk?

KOPPEL: As we look ahead to the -- to the plans and establish right now Iraqi elections in January, Barbara, as you know, security is very much on the minds of both the American military and the Iraqis there. But what are you hearing in terms of what percentage of the country -- do even we have a handle on that -- that the insurgents actually have control of?

STARR: What the military says is the -- there's a great deal of Iraq -- and I'm sure we'll hear more about this -- that is relatively safe.

ROMANS: Are we there? That's the question. I mean...

STARR: Northern Iraq, southern Iraq. The areas of concern remain these so-called no-go zones, where the U.S. just isn't really able to completely assist the Iraqis in gaining control.

Baghdad, the Sadr City suburb of Baghdad, Fallujah, absolutely a sanctuary for the insurgency. Ramadi, some of these other cities. Getting a handle on that and ensuring that Iraqis can get out to vote in these contested areas is going to really be key, many people think, to making sure it's viewed as an internationally legitimate election.

KOPPEL: So, I mean, in a nutshell, the Iraqi interim prime minister said this week that 14 to 15 of Iraq's 18 provinces could hold elections as soon as tomorrow. Does the Pentagon buy that?

STARR: Well, you know, there's that old saying in the military, Andrea, everything is safe unless a bullet is coming your way. And then maybe it's not so safe. They have violence pop up everywhere. So they're just going to keep working away at it, they say, and rally hope that they can pull off these elections.

ROMANS: All right. We're going to be talking more with Jane Araff in northern Iraq when we come back ON THE STORY right after this.

(COMMERCIAL BREAK)

GRIFFIN: I'm Drew Griffin at CNN Center in Atlanta.

It's getting bigger and stronger. That's what Florida Governor Jeb Bush said just a couple of hours ago now about Hurricane Jeanne. Millions of people along Florida's east coast being urged to get out while they still can. Jeanne expected to make landfall as a Category 3 hurricane sometime after midnight tonight.

In Chicago, arson investigators on the scene of house fire that killed four children. The fire bloke out overnight on the city's west side. A fire department spokesman said there may be something suspicious about this particular fire.

Despite a surge in violence and kidnappings, President Bush giving a mostly upbeat assessment of the war in Iraq in his weekly radio address a few moments ago. Mr. Bush said the U.S. will not be intimidated by insurgents.

(BEGIN AUDIO CLIP)

BUSH: The war for Iraq's freedom is a fight against some of the most ruthless and brutal men on earth. In such a struggle, there will be good days and there will be difficult days. But every day our resolve must remain the same: Iraq, America and our coalition will stand firm and Iraq will be free. The world will be more peaceful, and America will be more secure.

(END AUDIO CLIP)

GRIFFIN: Those are the headlines. I'm Drew Griffin at CNN's global headquarters.

Now back to ON THE STORY.

(BEGIN VIDEO CLIP)

KERRY: George Bush promised he was going to create 5.6 million jobs. He lost 1.6 million.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: We've created jobs for the last 12 consecutive months, a total of about 1.7 million new jobs over the last year, including 144,000 new jobs last month.

(END VIDEO CLIP)

ROMANS: Just stick around long enough on the campaign trail. The candidates are bound to serve up some upbeat and often contradictory claims about the economy in general, and jobs in particular. You hear the word "jobs" about every day these days.

Welcome back. We're ON THE STORY.

KOPPEL: So Christine, who is right, the Kerry camp or the Bush camp?

ROMANS: They're both right. They're both right, because a lot of jobs have been lost. The president will be the first president since Herbert Hoover to preside over net jobs losses. That is true.

Also, there have been jobs that have been created, more than a million of them over the past year. That's true, as well.

What the economists, the middle-of-the-road economists say, is that it's not as bad as the Kerry campaign makes it out to be, and it's certainly not as good as the Bush campaign makes it out to be, either. So you have to kind of pick through the statistics and try to see what -- what you believe.

There's a lot of talk about wages. The Bush supporting -- the Bush-leaning economists say slow wage growth is not as bad as the Kerry administration says. But there are numbers, of course, that show that you've got unemployment insurance, more people losing their unemployment insurance now than any time since 1941. That's a true statistics. That wages are pretty slow. That's a true statistic.

But you can also cook the numbers another way. And they don't look all so bad. So I personally will be quite pleased when we are passed November 2 and I don't have to get all these e-mails in my inbox from both sides of the economic fence telling me how great or how terrible things are.

STARR: And speaking of numbers and statistics, then there's that little other matter, gasoline prices, oil prices.

ROMANS: They're going to probably keep going up. You know, these hurricanes, Hurricane Ivan in particular, are a real problem for the refiners.

They've asked the government to let them borrow some oil from the nation's emergency stockpiles because they want to be refining this into gasoline. We're probably going to see gas prices go up, home heating oil prices, the government told us last week, are likely go up some, you know, 12 to 20 percent, depending on where you live this winter.

So, you know, if you're -- if you're doing the kitchen table economics, be prepared this winter. Things are going to cost more on the energy front. KOPPEL: But one statistic or one percentage out there that we're all interested in, that's actually going down, is interest rates.

ROMANS: This is so amazing. And I'm so glad you brought it up, Andrea, because the Fed has raised interest rates.

This week, the Fed said the economy is so strong, it can raise interest rates. Inflation is so low, it's not a problem. But the bond market it's telling us something completely different.

Interest rates are going down. A fixed-rate mortgage, 30-year loan, 5.33 percent. OK. That means it's cheap again, and we thought that the refinancing window was over.

A lot of people are going to start to refinance their mortgages again. It's good for the consumer, but the bond market is telling us it doesn't exactly right now see eye to eye with what the Fed is telling us about the economy.

STARR: Yes, I'm thinking I need to call my mortgage company when the show is over.

ROMANS: If you can get through. It might be busy.

STARR: Exactly. But then there's the other thing, which again is the deficit. And that's tied to interest rates. And for some reason, it appears the deficit is not such an overhang in the market right now.

ROMANS: It appears that way because politicians think on four- year -- four-year short-term horizons. People keep talking about the deficit long term is a very big problem. (UNINTELLIGIBLE), who used to be in the Fed, several other very important economists have said, listen, whoever is the next president, first and foremost, has to figure out how to get rid of this red ink.

The current account deficit, which is the broadest measure of trade, without getting too geeky -- you know, I apologize for that -- but it is almost six percent of our gross domestic product. Every time that has happened in an industrialized nation, there have been very serious painful policy changes that have had to happen: a big decline in the dollar, spiking interest rates.

It is always caused a problem. For some reason right now, the United States, you know, maybe we're in a different kind of -- maybe these big rules don't apply right now for us.

STARR: The market's essentially loaning the government low-rate money.

ROMANS: Absolutely. Absolutely.

KOPPEL: All right.

ROMANS: It's just really an interesting place to be in. But some people say no reason to worry about it in the short term. KOPPEL: I want to move off the serious stuff and get to the really fun stuff. What is up again with Martha Stewart? Her stock has risen since she made her announcement about wanting to go in to serve her time early?

ROMANS: Martha Stewart wants to serve her time early. She wants to get this nightmare behind her.

Since she said she wanted to put the nightmare behind her, her stock has risen some 60 percent. She, of course, is the largest shareholder, so she has made a ton of money over the past couple of weeks.

She has to report to federal prison by October 8. And she's also inked a deal with Mark Burnett of "Survivor" fame, you know, reality show. Don't you love pop culture?

A reality show for Martha Stewart. We don't know very many details about that, but her stockholders are certainly very pleased that after we get through the holidays, Martha Stewart will be able to be back at her company for the spring planting, to plant the garden.

She also signed a new employment contract. I guess it pays to be a convicted felon.

She is signing an employment contract for $900,000 a year. She won't be paid while she's in prison, unlike other CEOs who actually do get paid while they're in prison. There are several cases of that. And she is eligible for annual bonuses of up to $1.3 million.

STARR: It's going to be an interesting autumn season for a lot of people out there.

ROMANS: It certainly will.

STARR: Well, stay with us. We'll be right back.

(COMMERCIAL BREAK)

STARR: Welcome back.

We are joined now by CNN correspondent Jane Araff, who is with military forces in the field near Baquba in Iraq in the Sunni Triangle. I think we do have Jane on the phone now.

And what we want to ask you, Jane, is sort of the mood of what you are seeing where you are there out in the field. I understand in Baquba, Sunni Triangle, tough going there. But there's some talk now of some forgiveness or amnesty, if you will, for the insurgents in that area?

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Absolutely, Barbara. It's really interesting here. We -- this -- actually, in one of the centers, has been one of the centers of the insurgency. And what we've seen is a steady decline in attacks here. Now, it's not over by any means, but one of the ways they've been able to do this is by reaching out to insurgents. And there's really an acknowledgment from U.S. officials for the first time that we have seen in a long time that people shooting at them are not necessarily people they cannot rehabilitate.

So what they said essentially is, if you're an insurgent and you haven't killed an American and you haven't killed an Iraqi, then come to us and we may forgive you. And, in fact, they're offering some of them jobs.

ROMANS: Wow. Jane, I think we can see you now on the videophone.

I want to ask you about the readiness of the Iraqi troops, especially where you are. I mean, if the insurgency is sort of at least tapering off there, are the Iraqi troops getting ready, are they starting to take more of a control of the area?

ARRAF: They absolutely are. First of all, we are going to let our viewers in on one of the sort of behind-the-scenes secrets of television, and I'm going to drop this phone and see if this actually works.

Probably more than our viewers needed to see. Iraqis forces are (UNINTELLIGIBLE) with insurgents, senior Iraqi commanders who have been replaced with a pretty high turnover. But what we have seen in this part of the Sunni Triangle is really very interesting.

It is Iraqi National Guards increasingly taking positions of control and power. And it's really what they're trying to do across the country so the U.S. actually can withdraw its forces, or at least make them less visible, give power to the Iraqis. To some extent, it appears to be working.

KOPPEL: Jane, I think it's probably better if you pick up that phone again. Some of us are having difficulty hearing you. And I wanted to pick up on your earlier point.

You said that U.S. military are telling Iraqi insurgents, as long as they don't have so-called blood on their hands, that they can turn themselves in and might even be able to get jobs. But how do U.S. troops know? And how can they prove it if these Iraqi troops -- or excuse me, the Iraqi insurgents haven't killed anyone?

ARRAF: Well, they would know. Actually, they say that they have a pretty good handle on who has been responsible for the attacks in terms of the insurgents in these communities.

And one of the real interesting things is that, here on the ground, if we're talking about that safe level of insurgents, we are talking about Iraqis. We are not talking about the people thought to be responsible for the most dramatic and deadly of attacks and suicide bombs, for instance. And the Iraqis, many of them are known in their communities. These are people, to some extent, who are taking up arms because they have to see their families. Others, U.S. officials even say, believe really that they're patriots, that they're fighting against occupying forces. So they say that they're able to weed out those who are responsible for what they believe are serious crimes and those who simply are perhaps insurgents of opportunity.

STARR: Jane, let me ask you two questions about two different elections. Iraqi elections coming up by the end of January. Are you hearing from Iraqis about that? Do they feel those will be legitimate elections that they want to vote in?

And what about the U.S. troops on the ground and the U.S. presidential election? Are the U.S. soldiers talking about that one?

ARRAF: Well, let me start with the last one first, because that really is fascinating. I've been talking to a lot of soldiers out here and they -- a lot of them won't talk on camera.

They say, "You know, I'd get into real trouble if I told you what I really thought." But they will talk off camera.

And one of the interesting things, one of the stories we are working on, is how many soldiers have actually registered to vote. In one unit, we are going to be visiting out of 700 eligible soldiers 150 have registered.

And when I have gone to these guys and said, "Are you voting? Why aren't you voting?" They say, "You know, we're really busy out here. I don't have time to follow the issues. I don't know who I'd vote for."

There is both an apathy and a feeling that their vote wouldn't make any difference. And it is -- it is prevalent among all sorts of levels, all sorts of soldiers that I have spoken with.

I think we're doing a little shifting (ph) here, as you can see.

In terms of Iraqis and the elections, here they say, yes, there should be elections, there's no other way to do it. But this is a Sunni -- this is part of the Sunni Triangle. And there are different views and different places.

But here they say, yes, let's go for it, even if Fallujah can't vote, even if Samarra can't vote. They believe they have to have that vote.

ROMANS: Jane, let me switch gears a little bit and ask you about a lovely event that you attended. For people who watch this program, ON THE STORY, they know that Rym Brahimi is a former colleague of ours who has appeared on this program many times. She's now a princess, a princess. Tell us a bit about this.

ARRAF: Yes, she is. She is officially known as her royal highness, Princess Rym Ali Bin Hussein (ph). She is, however, you'll all be happy to know, still our Rym. And the wedding was, as one would expect, almost like a fairytale celebration.

It was overlooking the shores and the Dead Sea. Rym did look as though she stepped from a fairytale.

I don't think we'll seeing the last of her. Even though she has married into the royal family, she certainly is going to continue working in some form. But she certainly -- she says, and I believe she's telling the truth, misses us all. And I know we all wish her the best.

KOPPEL: Well, it looks like it was a beautiful ceremony there. Jane Arraf, thank you so much for rolling with the punches there from Baquba. We wish you the best and we look forward to seeing your reports.

Coming up, from Iraq to diplomacy about Iraq, as President Bush and Secretary of State Colin Powell worked the United Nations. I'm back on that story right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: The U.N. and its member nations must respond to Prime Minister Allawi's request and do more to help build an Iraq that is secure, democratic, federal and free.

(END VIDEO CLIP)

KOPPEL: President Bush there asking the United Nations this week to do more to helping Iraq.

Welcome back. We're ON THE STORY.

ROMANS: So, Andrea, what is the role now of the U.N. in Iraq? And I guess what does -- what does President Bush want from them?

KOPPEL: Great question. Well, the role right now -- I should say the presence, obviously, has been tremendously reduced since the attack last August on U.N. headquarters in Baghdad. And there are only -- there are fewer than 10 election workers who are actually in the Green Zone in Baghdad right now.

And if the security situation improves, we're really only talking about getting up to perhaps three dozen election workers there. And their role is only supposed to be really to train Iraqis.

We are talking about 130,000 election observers that would be spread out across the country. Obviously, security permitting. They also need to set up 30,000 polling stations.

Remember, Iraq for over 30 years was ruled by a dictator. The outcome of those elections was always preordained. Saddam Hussein was the only candidate on the ballot, and surprise, surprise, he always won. So there's a tremendous amount of logistics and just sort of ground work that needs to get laid out between now and sometime in January, when the elections are scheduled to happen.

STARR: And, of course, while this was -- you know, this is interesting. The Iraqi elections were such a subject of conversation at the U.N. this week. But what else was really tops on the agenda? What was the general atmosphere of this session?

KOPPEL: This -- I covered six of these since I came back from Asia, and I have to say that the atmosphere for the last three of them was really charged, electric.

2001, of course, was right after 9/11. Then you had the last two, which were completely focused on Iraq, the buildup to the war, and then immediately after the war.

And Secretary of State Powell in particular, every second, every minute of his day was planned. And he would be on the phone, either doing telephone diplomacy or working the crowd here. Obviously, with world leaders from everywhere within -- within arm's reach.

But this year, you could just sense there was a shift in the atmosphere. Secretary Powell was waiting for the president to arrive on Monday afternoon, and he actually went out shopping on Madison Avenue here. He was apparently looking to buy a pair of shoes, which he did, and was seen on the streets eating a hot dog.

He was also later in the week on the program, "The View," the ABC program with Barbara Walters. He's an old friend of Barbara Walters.

And so it was much less intense, I have to say. There were obviously a lot of things on the agenda from Iran to North Korea to Afghanistan. Elections set there for next month. But there wasn't the same intensity of years past.

ROMANS: Before I ask you the next question, Andrea, I want to point out that Hurricane Jeanne, which we've been watching this morning, you know, with great interest, of course, has upgraded to a Category 3 hurricane now, making it a bit more dangerous than it was before. Those are live pictures you're watching here right now, waiting for this to make landfall.

Hurricane Jeanne, of course, the fourth hurricane. I mean, it's just -- it's just sadly a sad replay of what we have seen three times already in the region already. So watching those live pictures, Category 3.

I want to ask you more about the intensity of what was going on at the U.N., because I'm curious, you mentioned all of these reasons why there are so many things happening. And an election year here as well. Why -- why do you think that intensity was lacking?

KOPPEL: Well, I think because the war -- at least the war -- the diplomacy that was needed in the buildup to the war is no longer the case. And right now, the United States wants the United Nations to send in more workers. But they're not really to help train the Iraqis.

But they're not going to be the ones to actually run the elections. So diplomacy isn't really front and center right now.

And just kind of looking forward to what needs to happen before these elections in Iraq take place in January, you heard -- and I know Barbara can speak to this -- a number of different -- a number of different buzz words coming out of the administration this week. One quote in particular stood out, that "Imperfect elections are better than no elections at all."

And we heard Secretary Rumsfeld say that. And we also heard basically Prime Minister Allawi, the Iraqi interim prime minister, say that he feels that if elections were to go forward as soon as tomorrow, that 14 or 15 of Iraq's 18 provinces could hold those elections. So the bar is definitely being lowered there.

STARR: A real reality check, indeed, Andrea, by Secretary Rumsfeld. He, indeed, you know, indicated, if elections couldn't be held across the country, well, you know, so be it. That was -- that was his words.

A lot of people wondered if he was actually setting the stage for partial elections now. His aides say absolutely not. But clearly, part of a reality check.

One of the things that struck me, though, is, you know, what a difference 18 months makes. I'm not sure we heard anybody at the U.N. say the words "weapons of mass destruction." Did we?

KOPPEL: No, we did not. Absolutely.

That pretty much is a closed case as far as most diplomats and most international leaders are concerned. Even here in the United States an acknowledgment that WMD has as yet to be found and may not have existed. But I'll tell you what, there is a lot of focus getting these elections on track in January.

STARR: Well, we're back with more ON THE STORY after this.

(COMMERCIAL BREAK)

ROMANS: Thanks now to my colleagues. And thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Cirque du Soliel and Donald Trump. Coming up right now, though, a check on Hurricane Jeanne.

GRIFFIN: I'm Drew Griffin at the CNN Center in Atlanta. "PEOPLE IN THE NEWS" will begin in a moment. But first, we want to check on Hurricane Jeanne.

Florida residents preparing for what Hurricane Jeanne might bring their way. The storm just upgraded now to Category 3, spinning east of the state. Many people picking up and moving out. 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 September 25, 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: Here's the latest.
By midnight tonight, Florida's east coast will likely be in the throws of Hurricane Jeanne. By then it should be stronger. Right now a Category 2 and tearing through the Bahamas, as you can see. Jeanne following an almost identical track laid down three weeks ago by Hurricane Frances.

In Iraq, sources say seven Iraqis died in Fallujah, possibly from a U.S. air strike on a suspected terrorist hideout. Meanwhile, the U.S. death toll has grown by five. The latest casualties, four U.S. Marines in the western Al Anbar province and a U.S. soldier in Baghdad.

In suburban Atlanta, a memorial service starts hours from now for murdered hostage Jack Hensley. He and another American civilian worker killed this week in Iraq after they and a Briton were abducted from their Baghdad home.

And in Chicago, arson investigators are on the scene of a house fire that killed four young people. A fire official says the blaze suspicious and no parents appeared to be at home.

Those are the headlines. I'm Drew Griffin at CNN global headquarters in Atlanta. Now to our Washington studios and ON THE STORY.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Barbara Starr, ON THE STORY of new talk about more troops for Iraq and new questions of when the Iraqis can fight on their own.

SASHA JOHNSON, CNN CORRESPONDENT: I'm Sasha Johnson on the story of the John Kerry campaign, firing up the candidate and hoping voters will like what they see and hear.

ELAINE QUIJANO, CNN CORRESPONDENT: I'm Elaine Quijano, in Crawford, Texas, ON THE STORY of how President Bush welcomed the interim Iraqi prime minister to Washington and how the president vowed no retreat.

CHRISTINE ROMANS, CNN CORRESPONDENT: And I'm Christine Romans, ON THE STORY of how the Fed pushes up interest rates and the market pushes back.

Also coming up, we'll go to Iraq and talk to Baghdad bureau chief Jane Araff.

E-mail us at ONTHESTORY@CNN.com. We'll be turning to politics and the war in Iraq just a moment. But first, the other big story, Hurricane Jeanne.

National correspondent Susan Candiotti is in West Palm Beach -- Susan.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hello, Christine.

And we're outside of a home improvement store that closed its doors just not long ago after being open for only three hours this morning. And now you can see they themselves are shuttered up. And in front of those, fence posts, pete moss and everything else to buck up their doors.

Mandatory evacuation orders are already in effect now for at least eight counties up and down Florida's east coast. In particular, that applies to people who live in areas that are prone to flooding and, of course, mobile homes. Here in Palm Beach County, that extends to people who live just about a block or two west of the Intracoastal Waterway.

The concern about these evacuation orders, according to Florida Governor Jeb Bush now, is that people, weather people will pay attention to them. Of course, Florida residents are very weary of having to go through now four storms in just about five or six weeks. And now, this. So there is concern that they will pay attention to these evacuation orders.

They have more than a dozen of them ready to receive people here. And when Frances hit a few weeks ago, 19,000 people took advantage of them.

We do know that it was only a week ago here in Palm Beach County that everyone had their power restored from Hurricane Frances. Ninety percent of the people here at this time lost their power.

And so, remember, we are talking about something that is historic here. Since hurricanes were recorded in Florida, there have not been four recorded in all of that time in a single season in Florida.

It did happen in Texas back in 1986. And kind of to sum things up here, this was the headline in the "Palm Beach Post" yesterday: "Not Again."

And today -- whoops -- closing in. People here are worried. They are concerned. They are tense.

But many do feel as though they are better prepared than they were the last time. They know what lies ahead or what could lie ahead -- Christine.

ROMANS: Certainly several dress rehearsals already. Susan Candiotti, in West Palm Beach, thank you so much.

And now to Elaine Quijano in Crawford, Texas, with the president -- Elaine.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The future of Afghanistan and Iraq is a future of liberty. The proper response to difficulty is not to retreat. It is to prevail.

(END VIDEO CLIP)

QUIJANO: President Bush at the United Nations making a point he made over and over both on and off the campaign trail, vowing no retreat. Yesterday, I followed the president as he ended a busy campaign week.

He made stops in Janesville, Wisconsin, as well as Racine, Wisconsin. The president ending up here at his Texas ranch to prepare for the presidential debate. His Texas ranch not too far from where we are here in Crawford, Texas.

STARR: Now, Elaine, the busy week that you've just had, but it's going to be a very interesting week ahead. We are just days away from that debate now. How is President Bush getting ready for it?

QUIJANO: Well, he is getting some help from a person that has actually helped him before in this respect. And that is a New Hampshire senator by the name of Judd Gregg, a Republican that the campaign actually used back in 2000 to help him prepare at that time.

They liked the job that he did back then so much. They thought he was well prepared and that he was tough. And they thought that would be a good choice for them this time around.

Now, it's interesting to note, they think, according to a senior administration official, anyway, that perhaps this time around might be even better because Senator Gregg is from the same area, the New England area, and he's familiar with Senator Kerry. So they've had already, we are told, multiple sessions, these back and forth. And has been at times, we are told, lively.

They don't go into too much detail, but they say there has been -- there have been at least a few hard glares over the senator's way. But understanding, the president knows the stakes are really high and he has to perform. And the president very much wanting to do his homework and be tested.

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT: One of the things I noticed here in New York was the attention that President Bush was paying in particular to the interim prime minister, Ayad Allawi. Not just here at the U.N., but also in Washington. Why the focus right now?

QUIJANO: Well, obviously, he has so much invested in what happens in Iraq. And some powerful imagery, also. When you look at the event that happened in the Rose Garden, it is -- obviously, you have two world leaders -- it is a powerful image to have the interim prime minister of Iraq appearing side by side with the president of the United States, fielding question. And essentially, as we know, both men were reading from the same page, if you will, talking about the fact that they believe progress is being made. Despite what might be dominating the headline, continued violence insurgents, they maintain that, in fact, the processes are moving forward there, and both men really, as I said, on the same page as far as where they see the country headed and maintaining that they must stay on that same course in order for things in Iraq to succeed.

ROMANS: Allawi essentially saying, Elaine, thank you to the United States, saying that, you know, the lives lost will not be lost in vain. The president saying we will not waiver, we will not retreat. He is really hammering this home that he has chosen a course, he's going to stick to it, unlike how they try to portray his opponent, John Kerry.

QUIJANO: Absolutely. That is, in fact, the strategy and continues to be the strategy. They feel they have been quite effective in that.

And in peoples minds now, Iraq, they see -- you know, obviously with the difficulties that lie ahead there, they still see the president as being quite divisive. And that's something this campaign really wants to reinforce in peoples' minds. That, in fact, President Bush has taken steps that he believes are the right steps but will continue to stay on that course no matter what the polls show, no matter what the political winds may bring.

That is a message that they want to try and drive home, really hammer away at John Kerry for the idea of being a flip-flopper. We continue to hear that strategy out of the Bush campaign. And so, yes, you will continue to hear the president in the days, weeks ahead, saying that Iraq is a place where the U.S. needs to stay the course.

JOHNSON: Well, Elaine, of course every move on the Bush-Cheney campaign is mirrored by the competition. I'm back ON THE STORY of the Kerry campaign after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Incredibly this week, my opponent said he would prefer the dictatorship of Saddam Hussein to the situation in Iraq today.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: What I have always said is that the world is better off without Saddam Hussein. The question is how you do it. And what the president needs to begin to do is address the realities of Iraq. (END VIDEO CLIP)

JOHNSON: And, of course, the voters have six weeks left to consider the realities of this presidential race. After a week of back-and-forth accusations from different ends of the campaign trail, we get to see the candidates together on Thursday for the first debate.

Welcome back. We're ON THE STORY.

QUIJANO: You know, Sasha, I was with the president yesterday, as I mentioned. And, you know, he came out so hard against Senator Kerry yesterday, both when he was in Janesville and then ending the day in Racine.

The president was really jumping on him for those comments that he made about Prime Minister Allawi, when he said that basically he felt the prime minister, as well as President Bush, were painting too rosy a picture of Iraq. A lot of back and forth going on.

JOHNSON: No, there definitely is. And what the Kerry campaign says about what Senator Kerry said about Prime Minister Allawi is simply that he was being honest, that Prime Minister Allawi painted, as you said, too rosy of a picture, and that's not really what's not going on over there.

If you look at the week with the Kerry campaign, he started in New York with a speech laying out what he would do in Iraq, and also laying out sort of the poor judgment that President Bush's exercised with it comes to Iraq. And then he bookended it with a speech on the war on terror yesterday in Philadelphia.

And, you know, there are a lot of different strategies at play here. But basically, what they're hoping to do is, you know, lay out enough questions and ask enough questions about whether President Bush has done the right thing in Iraq, so that when they get to the debit debate next week, perhaps the questions aren't so much, "Senator Kerry, why did you vote for the -- for the authorization to go to war? Now you're against it. Why did you say this and now you say this?"

And it's more putting the onus on President Bush to, you know, explain what the U.S. is doing over there. And one thing you did mention, you mentioned the Rose Garden backdrop with the president.

John Kerry appeared in front of American flags all week when he made these statements about Iraq. It was a very serious tone. It was not sort of the typical campaign week that we have seen. No -- only a couple major rallies.

STARR: But following up on that, Sasha, different optics, if you will, on the Kerry campaign this week. Even though he lost his voice, as we saw at one point, he was out there and he was very rapidly out there every time.

JOHNSON: Absolutely. They started the week -- the Kerry campaign, by the way, thinks that they won the week in the media. That the president was out there responding to them, the Bush campaign was responding to them. I know that the Bush campaign would disagree with that.

But he started in New York Tuesday. They -- you know, with the president at the U.N. They knew that they had to come out and get into the conversation. They could not let the president control the conversation, so he had a news conference, which he hadn't had since August 2. So that was one thing that was definitely rapidly out there.

Thursday, he lost his voice, canceled events in Iowa. But still, you know, found -- somehow found the energy to get in front of the cameras.

And Prime Minister Allawi's speech to the joint session of Congress was finished, and there was John Kerry on television saying, no, this is a reality in Iraq, it's a mess over there, they're not giving you an accurate picture, they're not telling you the truth. But I will do that.

ROMANS: Sasha, I'm curious about how they're saying the Florida situation is going to play out. Now four hurricanes. We heard Susan Candiotti say that's never happened before. And it's an election year, and Florida is up for grabs.

Is it -- yes -- is it good in a weird, crass way, you know, the way -- you think about these sorts of things? I mean, is it -- is it good for the Kerry campaign? Is it bad? Does it take the heat off some of the -- some of the pre-election campaigning?

JOHNSON: Well, it's actually put both campaigns, I think, in a weird spot. CNN released a poll this week out of Florida. It's one of the first polls we have actually seen out of Florida. John Kerry was there in August, but this is the first week that we've gone back.

So both campaigns say, you know, we don't really know what the state of play actually is in Florida because we haven't been able to poll there, people aren't home, they're not watching TV, they don't have...

ROMANS: Well, and perspectives have changed so much.

JOHNSON: Right. And frankly, are they paying attention?

So when John Kerry hit Florida this week, and in Jacksonville, at the start of that news conference, he said, I haven't been -- I'm sorry, Tuesday. He said, I haven't been here. I just want to express my condolences to the people, the victims of the hurricane. And, you know, I'm here. So...

ROMANS: Right.

KOPPEL: Sasha going back to what you were saying about how the Kerry campaign feels as of this week that they have kind of seized back the news cycle, but as far as the focus on Iraq is concerned, clearly, the Bush team believes that focusing on Iraq is a plus for them. We saw him out with Prime Minister Ayad Allawi a couple of times this week. But what are the pitfalls for Senator Kerry focusing on Iraq all the time?

JOHNSON: Well, obviously, the strategy sort of hinges on the fact that things continue to go poorly in Iraq and that Iraq remains in the headlines. So that's one thing. You know, Kerry doesn't want to be seen as sort of taking advantage of things going bad.

But also this week, you've seen John Kerry talk about his protester days in Vietnam and how he is now standing up as he did when he came back from Vietnam, descanting, you know, talking out against the war and against the people in power. So that resurrects those images of Vietnam, which obviously the Kerry campaign -- it's proven to be problematic for them in the past. So that's something they're also very wary of -- or aware of.

STARR: Well, now the our thanks to both Elaine and Sasha. And I know you both need to get back ON THE STORY.

I'm back on the Iraq story right here in a moment on whether talk of more troops means Americans or Iraqis or both.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: If our commanders on the ground feel it's in the interest of the Iraqi citizens to provide more troops, we'll talk about it.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: If we do the things I said, I believe you can start getting troops home next year. That's what I believe. That's what I want to do.

(END VIDEO CLIP)

STARR: The commander in chief and the man campaigning for his job, and the talk this week about possibly, just possibly more troops for Iraq. And like so much about Iraq, it was deeply entangled this week in the presidential race.

Welcome back. We're ON THE STORY.

ROMANS: More troops for Iraq. More troops possibly, when? How many?

STARR: Who knows? General John Abizaid had a very interesting comment this week. He said that he thought there would be a need for more troops. But who would they be? Where would they come from?

His priority, of course, under the strategy, is to get more Iraqi troops on the streets, get them there in time for the January elections to protect the election process. But very late this week, we start hearing the little murmurs in the Pentagon that more troops could, in fact, mean they simply would leave some of the rotating U.S. troops in position longer, possibly.

Sometime in the January time frame, don't rotate the troops as fast. That would give them more troops on the ground.

They have about 135,000 now. A cushion may be of 10,000, 12,000, if they just don't rotate people out and bring them home on time. Nobody knows yet what the decision will be.

KOPPEL: Barbara, what about the training of these Iraqi troops? How is the Pentagon handling that?

STARR: Well, that's all happening in Iraq, of course. And what they say is they're moving ahead with that, they're trying to get that done as quickly as they possibly can. But, you know, Christine, as we're seeing, that's going to be very, very tough business. So far, only about 100,000 of 220,000 are trained and equipped, so they're about halfway there.

ROMANS: Halfway there. So what has to be done -- I mean, what has to be done, and how quickly is it happening?

STARR: They're just trying to move ahead as fast as they can. But with this election coming up, and with the insurgency apparently at full tilt this week, there's -- you know, the difference this week is you saw no one out there saying things are getting better.

Even Don Rumsfeld says we have to remember there's places in Iraq that are relatively peaceful. But he's out there, the president is out there, everyone is out there. All of our sources in the Pentagon are very weary right now. They say the insurgency, the violence is very bad, and that they're really trying to get a handle on it.

KOPPEL: What about Abu Musab Zarqawi, obviously the Jordanian militant who is believed to be leading the -- one of the strongest cells of this insurgency? Do they believe, Barbara, within the Pentagon that if they could just get their hands on Zarqawi that that would deal a fatal blow or at least a serious blow to the insurgency?

STARR: Yes, public enemy number one, where's he hiding out? Why can't they find him?

Military people are very skeptical. They've been down this road so many times, hunting -- you know, if we just got Saddam, things will be better.

KOPPEL: Right.

STARR: If we just got Osama bin Laden, things will be better.

KOPPEL: Right.

STARR: No. They want him. They want him bad. They know he's responsible for much of the violence. But that's the violence that's being generated by the foreign fighters inside Iraq. The insurgency now much broader, much deeper, perhaps hundreds if not thousands of Iraqis participating in the insurgency. They know if they get him, it's just not going to stop automatically.

ROMANS: He's just one of the problems. When you look at some of the -- you know, some of the elements of the insurgency, there are groups ideologically who are even against each other, except they're together in their common dislike for the American military. Right?

STARR: Right. I mean, you know, there are still Sunni against Shia to some extent. There's various ideological groups.

One of the most disturbing thing that is sort of beginning to emerge is some sense that some of these kidnappings of the contractors are from many different nations, maybe being organized by criminal elements within the country. These criminals snatch these people and then sell them, if you will, or transfer them to these various insurgent ideological groups.

That would be very disturbing. And we're not seeing yet what the real reaction is from these private contractor groups. You know, will they keep sending the personnel to Iraq to be at risk?

KOPPEL: As we look ahead to the -- to the plans and establish right now Iraqi elections in January, Barbara, as you know, security is very much on the minds of both the American military and the Iraqis there. But what are you hearing in terms of what percentage of the country -- do even we have a handle on that -- that the insurgents actually have control of?

STARR: What the military says is the -- there's a great deal of Iraq -- and I'm sure we'll hear more about this -- that is relatively safe.

ROMANS: Are we there? That's the question. I mean...

STARR: Northern Iraq, southern Iraq. The areas of concern remain these so-called no-go zones, where the U.S. just isn't really able to completely assist the Iraqis in gaining control.

Baghdad, the Sadr City suburb of Baghdad, Fallujah, absolutely a sanctuary for the insurgency. Ramadi, some of these other cities. Getting a handle on that and ensuring that Iraqis can get out to vote in these contested areas is going to really be key, many people think, to making sure it's viewed as an internationally legitimate election.

KOPPEL: So, I mean, in a nutshell, the Iraqi interim prime minister said this week that 14 to 15 of Iraq's 18 provinces could hold elections as soon as tomorrow. Does the Pentagon buy that?

STARR: Well, you know, there's that old saying in the military, Andrea, everything is safe unless a bullet is coming your way. And then maybe it's not so safe. They have violence pop up everywhere. So they're just going to keep working away at it, they say, and rally hope that they can pull off these elections.

ROMANS: All right. We're going to be talking more with Jane Araff in northern Iraq when we come back ON THE STORY right after this.

(COMMERCIAL BREAK)

GRIFFIN: I'm Drew Griffin at CNN Center in Atlanta.

It's getting bigger and stronger. That's what Florida Governor Jeb Bush said just a couple of hours ago now about Hurricane Jeanne. Millions of people along Florida's east coast being urged to get out while they still can. Jeanne expected to make landfall as a Category 3 hurricane sometime after midnight tonight.

In Chicago, arson investigators on the scene of house fire that killed four children. The fire bloke out overnight on the city's west side. A fire department spokesman said there may be something suspicious about this particular fire.

Despite a surge in violence and kidnappings, President Bush giving a mostly upbeat assessment of the war in Iraq in his weekly radio address a few moments ago. Mr. Bush said the U.S. will not be intimidated by insurgents.

(BEGIN AUDIO CLIP)

BUSH: The war for Iraq's freedom is a fight against some of the most ruthless and brutal men on earth. In such a struggle, there will be good days and there will be difficult days. But every day our resolve must remain the same: Iraq, America and our coalition will stand firm and Iraq will be free. The world will be more peaceful, and America will be more secure.

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GRIFFIN: Those are the headlines. I'm Drew Griffin at CNN's global headquarters.

Now back to ON THE STORY.

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KERRY: George Bush promised he was going to create 5.6 million jobs. He lost 1.6 million.

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RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: We've created jobs for the last 12 consecutive months, a total of about 1.7 million new jobs over the last year, including 144,000 new jobs last month.

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ROMANS: Just stick around long enough on the campaign trail. The candidates are bound to serve up some upbeat and often contradictory claims about the economy in general, and jobs in particular. You hear the word "jobs" about every day these days.

Welcome back. We're ON THE STORY.

KOPPEL: So Christine, who is right, the Kerry camp or the Bush camp?

ROMANS: They're both right. They're both right, because a lot of jobs have been lost. The president will be the first president since Herbert Hoover to preside over net jobs losses. That is true.

Also, there have been jobs that have been created, more than a million of them over the past year. That's true, as well.

What the economists, the middle-of-the-road economists say, is that it's not as bad as the Kerry campaign makes it out to be, and it's certainly not as good as the Bush campaign makes it out to be, either. So you have to kind of pick through the statistics and try to see what -- what you believe.

There's a lot of talk about wages. The Bush supporting -- the Bush-leaning economists say slow wage growth is not as bad as the Kerry administration says. But there are numbers, of course, that show that you've got unemployment insurance, more people losing their unemployment insurance now than any time since 1941. That's a true statistics. That wages are pretty slow. That's a true statistic.

But you can also cook the numbers another way. And they don't look all so bad. So I personally will be quite pleased when we are passed November 2 and I don't have to get all these e-mails in my inbox from both sides of the economic fence telling me how great or how terrible things are.

STARR: And speaking of numbers and statistics, then there's that little other matter, gasoline prices, oil prices.

ROMANS: They're going to probably keep going up. You know, these hurricanes, Hurricane Ivan in particular, are a real problem for the refiners.

They've asked the government to let them borrow some oil from the nation's emergency stockpiles because they want to be refining this into gasoline. We're probably going to see gas prices go up, home heating oil prices, the government told us last week, are likely go up some, you know, 12 to 20 percent, depending on where you live this winter.

So, you know, if you're -- if you're doing the kitchen table economics, be prepared this winter. Things are going to cost more on the energy front. KOPPEL: But one statistic or one percentage out there that we're all interested in, that's actually going down, is interest rates.

ROMANS: This is so amazing. And I'm so glad you brought it up, Andrea, because the Fed has raised interest rates.

This week, the Fed said the economy is so strong, it can raise interest rates. Inflation is so low, it's not a problem. But the bond market it's telling us something completely different.

Interest rates are going down. A fixed-rate mortgage, 30-year loan, 5.33 percent. OK. That means it's cheap again, and we thought that the refinancing window was over.

A lot of people are going to start to refinance their mortgages again. It's good for the consumer, but the bond market is telling us it doesn't exactly right now see eye to eye with what the Fed is telling us about the economy.

STARR: Yes, I'm thinking I need to call my mortgage company when the show is over.

ROMANS: If you can get through. It might be busy.

STARR: Exactly. But then there's the other thing, which again is the deficit. And that's tied to interest rates. And for some reason, it appears the deficit is not such an overhang in the market right now.

ROMANS: It appears that way because politicians think on four- year -- four-year short-term horizons. People keep talking about the deficit long term is a very big problem. (UNINTELLIGIBLE), who used to be in the Fed, several other very important economists have said, listen, whoever is the next president, first and foremost, has to figure out how to get rid of this red ink.

The current account deficit, which is the broadest measure of trade, without getting too geeky -- you know, I apologize for that -- but it is almost six percent of our gross domestic product. Every time that has happened in an industrialized nation, there have been very serious painful policy changes that have had to happen: a big decline in the dollar, spiking interest rates.

It is always caused a problem. For some reason right now, the United States, you know, maybe we're in a different kind of -- maybe these big rules don't apply right now for us.

STARR: The market's essentially loaning the government low-rate money.

ROMANS: Absolutely. Absolutely.

KOPPEL: All right.

ROMANS: It's just really an interesting place to be in. But some people say no reason to worry about it in the short term. KOPPEL: I want to move off the serious stuff and get to the really fun stuff. What is up again with Martha Stewart? Her stock has risen since she made her announcement about wanting to go in to serve her time early?

ROMANS: Martha Stewart wants to serve her time early. She wants to get this nightmare behind her.

Since she said she wanted to put the nightmare behind her, her stock has risen some 60 percent. She, of course, is the largest shareholder, so she has made a ton of money over the past couple of weeks.

She has to report to federal prison by October 8. And she's also inked a deal with Mark Burnett of "Survivor" fame, you know, reality show. Don't you love pop culture?

A reality show for Martha Stewart. We don't know very many details about that, but her stockholders are certainly very pleased that after we get through the holidays, Martha Stewart will be able to be back at her company for the spring planting, to plant the garden.

She also signed a new employment contract. I guess it pays to be a convicted felon.

She is signing an employment contract for $900,000 a year. She won't be paid while she's in prison, unlike other CEOs who actually do get paid while they're in prison. There are several cases of that. And she is eligible for annual bonuses of up to $1.3 million.

STARR: It's going to be an interesting autumn season for a lot of people out there.

ROMANS: It certainly will.

STARR: Well, stay with us. We'll be right back.

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STARR: Welcome back.

We are joined now by CNN correspondent Jane Araff, who is with military forces in the field near Baquba in Iraq in the Sunni Triangle. I think we do have Jane on the phone now.

And what we want to ask you, Jane, is sort of the mood of what you are seeing where you are there out in the field. I understand in Baquba, Sunni Triangle, tough going there. But there's some talk now of some forgiveness or amnesty, if you will, for the insurgents in that area?

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Absolutely, Barbara. It's really interesting here. We -- this -- actually, in one of the centers, has been one of the centers of the insurgency. And what we've seen is a steady decline in attacks here. Now, it's not over by any means, but one of the ways they've been able to do this is by reaching out to insurgents. And there's really an acknowledgment from U.S. officials for the first time that we have seen in a long time that people shooting at them are not necessarily people they cannot rehabilitate.

So what they said essentially is, if you're an insurgent and you haven't killed an American and you haven't killed an Iraqi, then come to us and we may forgive you. And, in fact, they're offering some of them jobs.

ROMANS: Wow. Jane, I think we can see you now on the videophone.

I want to ask you about the readiness of the Iraqi troops, especially where you are. I mean, if the insurgency is sort of at least tapering off there, are the Iraqi troops getting ready, are they starting to take more of a control of the area?

ARRAF: They absolutely are. First of all, we are going to let our viewers in on one of the sort of behind-the-scenes secrets of television, and I'm going to drop this phone and see if this actually works.

Probably more than our viewers needed to see. Iraqis forces are (UNINTELLIGIBLE) with insurgents, senior Iraqi commanders who have been replaced with a pretty high turnover. But what we have seen in this part of the Sunni Triangle is really very interesting.

It is Iraqi National Guards increasingly taking positions of control and power. And it's really what they're trying to do across the country so the U.S. actually can withdraw its forces, or at least make them less visible, give power to the Iraqis. To some extent, it appears to be working.

KOPPEL: Jane, I think it's probably better if you pick up that phone again. Some of us are having difficulty hearing you. And I wanted to pick up on your earlier point.

You said that U.S. military are telling Iraqi insurgents, as long as they don't have so-called blood on their hands, that they can turn themselves in and might even be able to get jobs. But how do U.S. troops know? And how can they prove it if these Iraqi troops -- or excuse me, the Iraqi insurgents haven't killed anyone?

ARRAF: Well, they would know. Actually, they say that they have a pretty good handle on who has been responsible for the attacks in terms of the insurgents in these communities.

And one of the real interesting things is that, here on the ground, if we're talking about that safe level of insurgents, we are talking about Iraqis. We are not talking about the people thought to be responsible for the most dramatic and deadly of attacks and suicide bombs, for instance. And the Iraqis, many of them are known in their communities. These are people, to some extent, who are taking up arms because they have to see their families. Others, U.S. officials even say, believe really that they're patriots, that they're fighting against occupying forces. So they say that they're able to weed out those who are responsible for what they believe are serious crimes and those who simply are perhaps insurgents of opportunity.

STARR: Jane, let me ask you two questions about two different elections. Iraqi elections coming up by the end of January. Are you hearing from Iraqis about that? Do they feel those will be legitimate elections that they want to vote in?

And what about the U.S. troops on the ground and the U.S. presidential election? Are the U.S. soldiers talking about that one?

ARRAF: Well, let me start with the last one first, because that really is fascinating. I've been talking to a lot of soldiers out here and they -- a lot of them won't talk on camera.

They say, "You know, I'd get into real trouble if I told you what I really thought." But they will talk off camera.

And one of the interesting things, one of the stories we are working on, is how many soldiers have actually registered to vote. In one unit, we are going to be visiting out of 700 eligible soldiers 150 have registered.

And when I have gone to these guys and said, "Are you voting? Why aren't you voting?" They say, "You know, we're really busy out here. I don't have time to follow the issues. I don't know who I'd vote for."

There is both an apathy and a feeling that their vote wouldn't make any difference. And it is -- it is prevalent among all sorts of levels, all sorts of soldiers that I have spoken with.

I think we're doing a little shifting (ph) here, as you can see.

In terms of Iraqis and the elections, here they say, yes, there should be elections, there's no other way to do it. But this is a Sunni -- this is part of the Sunni Triangle. And there are different views and different places.

But here they say, yes, let's go for it, even if Fallujah can't vote, even if Samarra can't vote. They believe they have to have that vote.

ROMANS: Jane, let me switch gears a little bit and ask you about a lovely event that you attended. For people who watch this program, ON THE STORY, they know that Rym Brahimi is a former colleague of ours who has appeared on this program many times. She's now a princess, a princess. Tell us a bit about this.

ARRAF: Yes, she is. She is officially known as her royal highness, Princess Rym Ali Bin Hussein (ph). She is, however, you'll all be happy to know, still our Rym. And the wedding was, as one would expect, almost like a fairytale celebration.

It was overlooking the shores and the Dead Sea. Rym did look as though she stepped from a fairytale.

I don't think we'll seeing the last of her. Even though she has married into the royal family, she certainly is going to continue working in some form. But she certainly -- she says, and I believe she's telling the truth, misses us all. And I know we all wish her the best.

KOPPEL: Well, it looks like it was a beautiful ceremony there. Jane Arraf, thank you so much for rolling with the punches there from Baquba. We wish you the best and we look forward to seeing your reports.

Coming up, from Iraq to diplomacy about Iraq, as President Bush and Secretary of State Colin Powell worked the United Nations. I'm back on that story right after this.

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BUSH: The U.N. and its member nations must respond to Prime Minister Allawi's request and do more to help build an Iraq that is secure, democratic, federal and free.

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KOPPEL: President Bush there asking the United Nations this week to do more to helping Iraq.

Welcome back. We're ON THE STORY.

ROMANS: So, Andrea, what is the role now of the U.N. in Iraq? And I guess what does -- what does President Bush want from them?

KOPPEL: Great question. Well, the role right now -- I should say the presence, obviously, has been tremendously reduced since the attack last August on U.N. headquarters in Baghdad. And there are only -- there are fewer than 10 election workers who are actually in the Green Zone in Baghdad right now.

And if the security situation improves, we're really only talking about getting up to perhaps three dozen election workers there. And their role is only supposed to be really to train Iraqis.

We are talking about 130,000 election observers that would be spread out across the country. Obviously, security permitting. They also need to set up 30,000 polling stations.

Remember, Iraq for over 30 years was ruled by a dictator. The outcome of those elections was always preordained. Saddam Hussein was the only candidate on the ballot, and surprise, surprise, he always won. So there's a tremendous amount of logistics and just sort of ground work that needs to get laid out between now and sometime in January, when the elections are scheduled to happen.

STARR: And, of course, while this was -- you know, this is interesting. The Iraqi elections were such a subject of conversation at the U.N. this week. But what else was really tops on the agenda? What was the general atmosphere of this session?

KOPPEL: This -- I covered six of these since I came back from Asia, and I have to say that the atmosphere for the last three of them was really charged, electric.

2001, of course, was right after 9/11. Then you had the last two, which were completely focused on Iraq, the buildup to the war, and then immediately after the war.

And Secretary of State Powell in particular, every second, every minute of his day was planned. And he would be on the phone, either doing telephone diplomacy or working the crowd here. Obviously, with world leaders from everywhere within -- within arm's reach.

But this year, you could just sense there was a shift in the atmosphere. Secretary Powell was waiting for the president to arrive on Monday afternoon, and he actually went out shopping on Madison Avenue here. He was apparently looking to buy a pair of shoes, which he did, and was seen on the streets eating a hot dog.

He was also later in the week on the program, "The View," the ABC program with Barbara Walters. He's an old friend of Barbara Walters.

And so it was much less intense, I have to say. There were obviously a lot of things on the agenda from Iran to North Korea to Afghanistan. Elections set there for next month. But there wasn't the same intensity of years past.

ROMANS: Before I ask you the next question, Andrea, I want to point out that Hurricane Jeanne, which we've been watching this morning, you know, with great interest, of course, has upgraded to a Category 3 hurricane now, making it a bit more dangerous than it was before. Those are live pictures you're watching here right now, waiting for this to make landfall.

Hurricane Jeanne, of course, the fourth hurricane. I mean, it's just -- it's just sadly a sad replay of what we have seen three times already in the region already. So watching those live pictures, Category 3.

I want to ask you more about the intensity of what was going on at the U.N., because I'm curious, you mentioned all of these reasons why there are so many things happening. And an election year here as well. Why -- why do you think that intensity was lacking?

KOPPEL: Well, I think because the war -- at least the war -- the diplomacy that was needed in the buildup to the war is no longer the case. And right now, the United States wants the United Nations to send in more workers. But they're not really to help train the Iraqis.

But they're not going to be the ones to actually run the elections. So diplomacy isn't really front and center right now.

And just kind of looking forward to what needs to happen before these elections in Iraq take place in January, you heard -- and I know Barbara can speak to this -- a number of different -- a number of different buzz words coming out of the administration this week. One quote in particular stood out, that "Imperfect elections are better than no elections at all."

And we heard Secretary Rumsfeld say that. And we also heard basically Prime Minister Allawi, the Iraqi interim prime minister, say that he feels that if elections were to go forward as soon as tomorrow, that 14 or 15 of Iraq's 18 provinces could hold those elections. So the bar is definitely being lowered there.

STARR: A real reality check, indeed, Andrea, by Secretary Rumsfeld. He, indeed, you know, indicated, if elections couldn't be held across the country, well, you know, so be it. That was -- that was his words.

A lot of people wondered if he was actually setting the stage for partial elections now. His aides say absolutely not. But clearly, part of a reality check.

One of the things that struck me, though, is, you know, what a difference 18 months makes. I'm not sure we heard anybody at the U.N. say the words "weapons of mass destruction." Did we?

KOPPEL: No, we did not. Absolutely.

That pretty much is a closed case as far as most diplomats and most international leaders are concerned. Even here in the United States an acknowledgment that WMD has as yet to be found and may not have existed. But I'll tell you what, there is a lot of focus getting these elections on track in January.

STARR: Well, we're back with more ON THE STORY after this.

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ROMANS: Thanks now to my colleagues. And thank you for watching ON THE STORY. We'll be back next week.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on Cirque du Soliel and Donald Trump. Coming up right now, though, a check on Hurricane Jeanne.

GRIFFIN: I'm Drew Griffin at the CNN Center in Atlanta. "PEOPLE IN THE NEWS" will begin in a moment. But first, we want to check on Hurricane Jeanne.

Florida residents preparing for what Hurricane Jeanne might bring their way. The storm just upgraded now to Category 3, spinning east of the state. Many people picking up and moving out. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com