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On the Story

Inside look at the Presidential candidates on the Campaign Trail

Aired October 16, 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.


TONY HARRIS, CNN ANCHOR: And good morning, everyone. I'm Tony Harris.
Bombers using homemade devices attacked five Christian churches this morning in four Baghdad neighborhoods. No casualties were reported but the churches were damaged, some extensively. In August, four Christian churches in Baghdad and one in Mosul were attacked.

An Iraqi government official was gunned down today in downtown Kirkuk. The education department official was driving with his two young children when three gunmen stopped his car, dragged him from it and killed him as the children looked on.

In Afghanistan, a homemade bomb explodes in a south central province, killing two American soldiers and wounding three others. The attack occurred on Thursday but was not reported until this morning.

And back here in the U.S., President Bush is heading for Florida, with rallies today in Fort Lauderdale, West Palm Beach and Melbourne. Senator John Kerry is in Ohio visiting a high school in Xenia and holding a rally in Wakefield.

Those are the headlines. I'm Tony Harris of the CNN global headquarters.

ON THE STORY starts right now.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Maria Hinojosa, ON THE STORY of my new documentary, "Immigrant Nation, Divided Country."

More undocumented immigrants are arriving here than ever before. What are their stories? And why some Americans are taking to the streets against them.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, ON THE STORY of campaign 2004 and the impact of that final presidential debate.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux, in San Francisco, ON THE STORY of President Bush and the campaign counting down the days and, of course, mapping out their strategy.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, ON THE STORY of how the stock market is watching more than politics and how oil and retail sales stir things up this week.

Also coming up, talk about supply and demand. Look at those long lines for the flu vaccine that isn't there. Medical correspondent Christy Feig is ON THE STORY.

And we'll get the latest from Jane Arraf, ON THE STORY in northern Iraq.

E-mail us at ONTHESTORY@CNN.com.

Now straight to Suzanne Malveaux on the campaign story.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Get a smile on your faces, everybody. Nineteen days left.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This is the most important election of our lifetime.

(END VIDEO CLIP)

MALVEAUX: Well, of course, from the Air Force One to on the campaign trail, no stopping them. These are new days ahead. Just two weeks of the final days, of course.

And if you have to take a look and figure out those battleground states, just simply look at the president's schedule. We are talking about Oregon, Nevada, Wisconsin and, of course, ground zero of election 2000, today. That is where President Bush is going to be, in West Palm Beach, Florida.

WALLACE: Suzanne, you talked to Bush advisers privately. How worried are they? Because the polls, at least recent polls, trending in Senator Kerry's direction. The president's approval rating below 50 percent. Danger territory, as we know, for an incumbent.

MALVEAUX: Well, Kelly, all you have to do is just take a look at what's happened on the campaign trail just within the last week or so to realize this is a totally different phase within the campaign. I mean, we saw President Bush come back to the press cabin of Air Force One to talk to reporters. This is only the third time that this has happened in his administration, that he has gone on record with the press to talk about what is happening.

One of those times, of course, September 11. And what this means, essentially, is that the campaign was doing damage control from those three debates. There was a lot of talk about this 3-0 sweep from Kerry.

The Republicans, a lot of Bush supporters, really were concerned about this debate one. They thought he tied debate two. Debate three was his best performance. But many say even his best performance was not as good as Kerry's worst performance.

They realize that this was not his strong suit, so we saw President Bush this week come back to the back of the plane and say, "Yes, I was very happy for the debates. I'm looking forward, I'm looking ahead." And that is the kind of thing, that is the kind of sign you see in this campaign that shows, yes, there is some concern about how those debates went, but they also want to put that behind them and say, look, we're going to get him back on the campaign trail, this is where he is most comfortable, this is where he really reaches out to those voters.

HINOJOSA: So Suzanne, one of the things that people can certainly pick up on is the whole use of the term "liberal." I mean, he is really going after John Kerry now and using that "L" word. What's up with that? How do you think that came about? And do you think it's going to play or do you think it's going to be seen more as divisive?

MALVEAUX: Well, one of the things that they're finding in their focus groups, and also just with these huge rallies that we see, thousands and thousands of people -- it's now up to about 30,000, 40,000 people that you'll see at these rallies -- essentially, is that the -- liberal, the label of "liberal" really is a code word for their base.

They're talking about cultural issues. They are talking about gay marriage. They're talking about stem cell research. They're talking about abortion, those type of things.

And when you mention the word "liberal," and they say he's out of the mainstream, they have gone from kind of the flip-flop message to he is a consistent liberal extremist. That's the message that they're trying to go get across. And what they're doing is really just trying to rally the base so they get out there, that they're motivated to vote in these weeks ahead.

HAYS: Of course, Suzanne, we know a lot of the focus is on undecided voters and how they're going to go. You know, I interviewed Treasury -- Commerce Secretary Don Evans yesterday and asked him, "You're talking up the economy, you say it's so good, jobs growing, et cetera, et cetera. And if that's the case, why isn't your guy a slam dunk to be re-elected?"

Inside the campaign, what are they saying? Why is this a neck- and-neck race in their minds?

MALVEAUX: Well, really, they lost a bit of momentum. If you -- the Republicans that I speak to, even inside of this campaign, say, look, he lost quite a bit momentum coming out of the debates. He went in with a greater amount of momentum. He came out losing a good deal of that to Kerry. What they are trying to do is focus and emphasize on the things they feel that are slam dunk for the president. For instance, likeability, leadership, trustworthiness.

So even on the campaign stump, you'll hear it's been adjusted just slightly. And now you hear the president coming out and he makes jokes about this. He says, well, I -- I mangle the English language, but you know I speak the truth, I mean what I say.

This is the kind of thing, this is the message that they believe really resonates with their base, but they also believe that this is what's going to get those undecided voters as well. They say, well, Kerry is a good debater, he speaks well, but you can believe what the president says. And he says even, you know, I'll admit my shortcomings, but look, I'm the guy to vote for because I'm the one you know, I'm the one you trust.

WALLACE: And Suzanne, talk to us a little bit about the get out the vote effort. Because we know Karl Rove, the president's top political adviser, has said that if they get the some four million evangelical Christians who didn't vote in 2000 to vote this year, they think it could be a slam dunk for President Bush.

MALVEAUX: Absolutely. And what's really interesting, however, is that there are certain pockets within the population that we really have no idea how they're going to vote.

I mean, we know that they have registered, but we have no idea what's actually going to happen on Election Day. You take the urban vote, you take the black vote, the Hispanic vote, many up those really still up in -- up for grabs. I mean, we know that there's a great deal of an increase in registration. We just don't know if they're going to come out in the polls.

They could change this election. They can swing the election either way. But you bring up a very good point, and that's that the president is focusing on his base.

Particularly, he is talking to his religious base, and that's why you're going to hear those kind of code words in his stump speeches now, saying, look, this is the guy who does not represent you, this is the guy who's out of the mainstream. Go for me. I'm the one you can count on.

HINOJOSA: Suzanne, is it feeling like a little desperate, though? Is that the feeling on the -- with the troops there that you're with?

MALVEAUX: I wouldn't say it's desperation, but I would say that there has been a shift in strategy, definitely a shift in strategy over the weeks. We have seen quite a disappointment.

There's a great deal of disappointment that the debates, that they lost that momentum from the debates. And there's also a very quick shift that they have to focus on something else. That is -- you know, that has been what's been happening over the last couple of days or so.

I think what's rally telling, however -- and Kelly, you can probably relate to this -- is, you know, the spin, the amount of spin that you get now.

WALLACE: Nonstop spin.

MALVEAUX: You're dizzy from the spin. And the fact that you have fact checks, stories and, you know, investigative units just doing that alone is very telling on both sides here. You know? I mean, you take these messages that they're giving and you really have to look at it very closely about what it is they're saying and what is the truth.

WALLACE: Yes. We're going to try and clear through the spin as we turn our attention to Senator John Kerry. No surprise. Suzanne, as you know, they say he was the clear winner all of these debates, and they are feeling very confident.

So we'll look at how he's feel and his campaign is feeling after debate number three and the strategy ahead. I'm on that story after this break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: There's a mainstream in American politics. You sit right on the far left bank. As a matter of fact, your record is such that Ted Kennedy, your colleague, is the conservative senator from Massachusetts.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: Being lectured by the president on fiscal responsibility is a little bit like Tony Soprano talking to me about law and order in this country.

(END VIDEO CLIP)

WALLACE: Yes, both men trying out some new one-liners in their final face-to-face on Wednesday night. No knockout. No huge flubs. And some carefully-calibrated efforts by both men to hold on to their support and maybe win over a few undecideds, too.

Welcome back. We are ON THE STORY.

MALVEAUX: But Kelly, you know, the -- really the big, big issue here, the water cooler conversations seemed to be right after the debates -- not even after the debates -- people were e-mailing each other, were talking about when Kerry had mentioned Cheney's daughter, Mary Cheney, being a lesbian, and the fallout, the explosive fallout from that.

What is going on? Was that a miscalculation on Kerry's part? How are they reacting to this?

WALLACE: Well, Suzanne, the campaign will say this was an off- the-cuff remark. And to set the stage a little bit, the senator and the president were both asked about whether they believe homosexuality is a choice or something you're born with. And then John Kerry went ahead and said, well, Vice President Cheney's daughter, Mary, she basically is who she is, who she was born as, and he was sort of commending her.

Well, obviously, the Cheneys reacted in a very, very angry way. And as you said, it has dominated the discussion on the campaign trail.

Kerry's advisers say it was an off-the-cuff remark, he was meaning it in a sort of positive way. And he sat down in an interview with CNN's Candy Crowley last night, saying he was sort of commending the Cheneys in terms of how they deal with it, and sort of commending Mary Cheney for who she is.

But, as you know, Republicans think that this was a sort of carefully-orchestrated political move, because we remember that Senator John Edwards also mentioned it in the debate with Vice President Cheney. No matter what the Kerry advisers will say, though, this is a distraction.

John Kerry doesn't rally want to be talking about this, really. He would rather be talking about middle class, jobs, the economy. Although, the cynics out there would think the more discussion here could sort of split that conservative base, could anger some social conservatives who are angry that the vice president has a gay daughter and keep them away from the polls.

HINOJOSA: I wonder about that. Is that what you're hearing, Suzanne? That perhaps, in fact, there's a possibility that this could rally up some people to vote against Bush because of the fact, look, there's a division between the president and his vice president on this issue?

MALVEAUX: It's very interesting. I hadn't even considered this point, but I was speaking with a group of people last night, and one of them said, "Look, you may have had the soccer mom or the security mom, but this is definitely an issue that has split the mothers."

I mean, you noticed you had Mrs. Cheney, you had Mrs. Edwards afterwards. The two of them very strong words about this. And what they were saying is that you just don't talk about someone's child whether or not they're four or 40, that this was something that some mothers are responding kind of in a visceral way.

This is something -- an instinctual way. And they believe that this is going to backfire against Kerry.

I mean, it's not even something that I had even considered because they're not even talking about sexuality, whether or not that was appropriate to bring up, but just the fact that they brought up her child, the name of her child. That that was offensive. I thought what was interesting was that the Log Cabin Republicans, a gay Republican group, their response to all of this, very, very measured, immediate. They essentially slammed both sides and said that Kerry and Edwards did not need to use Mary Cheney to make their case about gay rights, about the amendment. But they also said that Bush and Cheney needed to stop using gay families as a political tool. They came right down the middle and criticized both sides for this.

WALLACE: You know, it's interesting, because people have said, political observers have said that if the Cheneys and other Republicans keep talking about it, keep bringing it up, then they can be accused of trying to sort of play politics with this. But Suzanne, you raise such an interesting point. Because looking at some of how the undecideds feel -- and the Kerry campaign believes its key to victory is winning over undecideds, swing voters, middle class voters.

"New York Times," front page, day after the debate, a handful of undecided voters in Iowa were very turned off by Senator Kerry mentioning the vice president's daughter. So it is interesting. For the Kerry strategy to go after the undecideds, could this in some way, as people are deciding about him, play a role? Again, too early to know, of course.

HAYS: Yes, it certainly is.

So what about the more substantive things? I mean, what about the fact that they're so sure that John Kerry won the debate? Fair enough. But does winning the debate mean you really won any votes when it comes to November 2?

WALLACE: Well, what they feel that this did -- first of all, just by being on the same stage with President Bush, he looks like, you know, equal -- equal -- equality there. But they feel that in these three debates, his knowledge of the issues, his conviction of the issues, hammering away at the president's record, that he showed he is presidential, that he won points as commander in chief, leadership. Won some points in terms of, you know, honesty and integrity.

So they feel that the Republican, 100 million negative ad campaign painting him as a flip-flopper and all that, is gone. And so that they've really scored points. And now they feel like things are potentially moving in their direction.

HAYS: But I'll ask you the same question as I asked Suzanne. Why -- do they have an explanation for why he has not spurted further ahead in the polls then?

WALLACE: Well, you know, they don't, of course. But here I think is one of the issues with Senator Kerry.

He missed some opportunities. And his advisers will concede there were a few moments. One moment, and I'm sure Suzanne will agree, asked about someone who has a job, who lost the job to a company overseas. The president first, many believe, mishandled the question, started talking about education. And then here was a chance for Senator Kerry. His big critique is he doesn't connect. People don't really know what's in his gut, what's his heart. And he didn't neither.

You know, no one did a President Bill Clinton and said, you know, I feel your pain and I'm going to work hard to help you. So the sense is that, as people are still trying to decide, they're angry with President Bush. They might want to vote for someone else. But they still haven't sort of sold the deal and said, "I'm going to go with Senator Kerry."

HINOJOSA: But there was that moment -- there was that moment when Senator Kerry said, "You said that you weren't worried about Osama bin Laden." And, in fact, it was your question to the president that's now -- this was a year ago when you asked him his concern about Osama bin Laden, and he actually said -- well, you tell us.

WALLACE: Well, what was so interesting, as Senator Kerry was talking about this, I sort of recalled and remembered -- of course you remember questions you asked the president, right, Suzanne? Of course you remember that.

MALVEAUX: Absolutely.

WALLACE: Absolutely. And I remember it was six months after September 11, and there I am trying to come up with -- with all of these questions. And giving my credit to my husband here, too, who played a role as I'm going over and discussing it, talking about Osama bin Laden.

You know, we weren't even asking him about Osama bin Laden. And so I asked him, "You never mention Osama bin Laden. Why is that? And don't you believe in your gut that the threat won't be eliminated until he's found dead or alive?"

And the president gave an answer. He said, he's on the run, he's not in control. You know, "Frankly, I'm not that concerned about him."

And many people picked up on that, wrote columns about it. So the president, obviously, when he said, whoa, I don't believe I ever said I'm not worried about it, the Democrats within minutes were putting out the transcript. It certainly could hurt the president, but again, I'm not sure in that sense people are looking forward a little bit, how much that comment might...

HAYS: Kelly, I want to ask you about something that has to do with a different kind of hurt, domestic violence and the piece in "Marie Claire" that you're involved in this month.

WALLACE: Yes. It's a very nice part.

The magazine was devoting its issue to Domestic Violence Awareness Month; October 14, Domestic Violence Awareness Day. And they call this campaign "It's Time to Talk," to talk about the issue, to talk about, you know, how important it is to get people talking about it, and not to be afraid to talk about it.

I think they invited me because of the presidential campaign, although I said to them, "Honestly, it's not really been an issue that's been discussed." But in local news, I did do a number of stories. And my big belief is the more stories you do, the more that it might get a message out that it's OK to talk about it and that maybe someone will take some steps, get to some safety to get away from a domestic abuser.

HINOJOSA: You know, Kelly, my mom worked on that issue for 25 years in Chicago. Very, very committed.

Well, switching topics here, another important issue in this campaign is immigration. I'm back on that story with my documentary, "Immigrant Nation, Divided Country." I'll be talking about people living on the front lines on the newest wave of immigration, personal stories from a changing American South.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD ARTHUR KING, "IMMIGRANT NATION, DIVIDED COUNTRY": What do you think about illegal immigration? Tell me true.

UNIDENTIFIED MALE: It ain't right.

KING: It ain't right? It's going to get worse.

(END VIDEO CLIP)

HINOJOSA: That is Donald Arthur King, D.A. King, one of the characters in my documentary. And he's upset about what he calls a modern day invasion of undocumented immigrants. He calls them illegal aliens, just one of the four people that I am profiling in my new CNN PRESENTS: "Immigration Nation, Divided Country." It can be viewed here tomorrow evening at 8:00 p.m. Eastern.

But despite efforts by King and others, an estimated three million undocumented immigrants arrive in the United States every year.

HAYS: Maria, I think people are going to find a lot of surprises in your documentary. And I think one surprise is going to be that here is Maria Hinojosa. She's an immigrant herself, Mexican family, right? Legal -- we like to point that out.

And they would think, oh, these bad people opposing immigration. I bet Maria's really going to give it to them. I think they're going to be surprised the sympathy you give to all of the people you profiled in this piece.

HINOJOSA: Well, you know, the reality is that we have to talk about this issue. Every single one of us who lives in this country is affected by it. And that's why I decided to focus on the American South, because I almost, as a Mexican immigrant growing up in Chicago, then living in New York and seeing Mexicans there, I never thought I would be seeing such a wave of immigration into the American South.

But really, I would say, except for maybe Maine and Vermont, the Mexican population, the Latino population is everywhere. So we have to talk about it. And you know what? If we stand on both sides and yell at each other, we're really not going to make a lot of progress.

MALVEAUX: But Maria, tell us an about that main character. Because obviously he has very strong feelings about this. Where does that come from?

HINOJOSA: You know what it comes from, Suzanne, is that there's a real frustration. There's a sense like they're not being heard.

People are concerned, they're seeing something that is changing in their society, and they turn to the politicians -- like Donald Arthur King calls up the immigration service, who knows, like every other day, and he says, "Come." You know, "They're here. They're breaking the law."

And he gets a recording. Or they never come. They show up. There is so much frustration on the ground. And I think we have to talk about this because people are taking to the streets.

WALLACE: We have to talk about it, and we're all frustrated, I think, because it's not a big topic of discussion in the president's campaign. But also, you wipe away stereotypes. Because tell us about another character who is here, who is here, in essence, illegally, but has been paying taxes, has a job, son graduating with honors, married to a Korean immigrant himself, I believe. That whole story likely to change perceptions that people might have.

HINOJOSA: This is an incredible story. It's the family of Gabe, and he lives in northern Georgia in the Blue Ridge Mountains, you guys, in the tiniest, tiniest town in northern Georgia.

And I sort of -- when I asked him this question, I didn't know he was going to give me -- give me this response. I didn't know that he was paying the federal taxes. You can, in fact, if you are living in this country illegally, you can, in fact, pay your federal taxes. The U.S. government gives you that opportunity. It lets you fill out a form.

HAYS: So bizarre.

HINOJOSA: And he said, "I love to pay my taxes. I love to pay my taxes to this country because it's my school contribution." Never did I imagine I would be hearing that.

His son is now going to college. He graduated fifth in his class. And they spoke to me -- even though they were putting themselves at risk, they spoke to me because they said, "We don't want to be seen as those criminals that are invisible that don't have a choice. We want to talk, we want to let the American people know who we are, that we are not interested in being seen just as criminals."

HAYS: Maria, what do the illegal immigrants themselves feel about this? There's a huge hypocrisy in this country, because we do have laws against illegal immigration.

You're pointing out they aren't enforced. Many, many people employ illegals. The government even takes their taxes. If I'm an illegal immigrant, I'm thinking, you guys are either crazy or, again, you're just big hypocrites.

HINOJOSA: You know, I'm going to -- I'm going to show you something that happened when I was down in Mexico. And usually when I'm in Mexico, I'm visiting family and friends, I'm not reporting. But I was down there in this small town called Villa Juanita in Veracruz, and this is the sister of another one of our characters. This gives you a sense of what people on the ground in Mexico are saying.

(BEGIN VIDEO CLIP)

HINOJOSA: How many people just from this little part of the town have gone to the United States?

UNIDENTIFIED FEMALE (through translator): Her husband, the son of the lady that lives over there, three sons of one of the ladies that lives in the houses over there, her husband, the son of the lady that lives over there with his wife and child, and a block down, the husband of the woman that lives there, also left.

HINOJOSA: And what about people who are thinking about going?

UNIDENTIFIED FEMALE (through translator): Oh, the ones who are thinking of leaving? There are many. Well, me.

(END VIDEO CLIP)

HINOJOSA: And actually, believe it or not, her sister, Rosa, who we profiled, she is trying as we speak to bring her children into this country. A drama that we just see every day, children being smuggled into the United States to be reunited with their parents.

MALVEAUX: Maria, why do you suppose people opened up to you for this documentary? I mean, they're risking so much by talking to you.

HINOJOSA: I think they want to be visible, they want to be heard. They understand that there's a real sense of anger towards them, and they say, "You know what? We understand that we're breaking the law. But we don't get the fact that we come to this country and then we can't find a job, but then we can't drive to get there. Because if we're driving and we don't have a legal license, then we're going to be arrested."

All of these mixed messages. And I think they just wanted to be heard. And they knew that because I'm a Mexican immigrant and I understand their story, they knew that they could essentially open up. Really dramatic stuff. WALLACE: Bravo!

(APPLAUSE)

HAYS: Yes. And again, not just the immigrants opened up to you, Maria, but I think the people here who are angry, fighting, and again, I think it's a real testament to your fairness and your sympathy for all the people.

WALLACE: And we said -- we said Bob Schieffer, before the debate Wednesday night, he said the biggest issue that he's getting e-mails about right now, immigration issues, issues related to it. So it is so important.

HAYS: Right. It is totally hot button right now. No doubt about it.

Well, unfortunately, we have to let Kelly Wallace go. She is going to be anchoring for much of the rest of the day.

So thanks, Kelly. Have a great day.

WALLACE: Great to see you all.

HAYS: We'll be watching you.

And, of course, immigration is also a major force in the national economy, which was buffeted this week by oil prices, retail sales numbers. I'm back on that story and a lot more in a moment.

(COMMERCIAL BREAK)

HARRIS: And good morning, everyone. Here's a look at the stories "Now in the News."

In Iraq early today, explosions rocked five Christian churches in four different Baghdad neighborhoods. Homemade bombs exploded inside and outside the churches, but no casualties have been reported.

And we are following breaking news this morning. CNN is reporting that two U.S. soldiers, a Marine and an Iraqi were killed Friday night in a suicide car bomb outside of Qaim. That's near the Syrian border. And that report is coming from the U.S. military. We will continue to follow that story.

While President Bush campaigns in Florida today, this morning's pre-taped radio address picked up where he left off in the debate, attacking John Kerry's record and stressing his own agenda.

(BEGIN AUDIO CLIP)

BUSH: On issues that are vital to this nation's future, all Americans know where I stand. I'm a compassionate conservative.

I believe in policies that empower people to improve their lives, not try to run their lives. I believe in helping men and women find the skills and tools to prosper in a changing world. I have worked to help all Americans build a future of dignity and independence, and that is how I will continue to lead this nation for four more years.

(END AUDIO CLIP)

HARRIS: A rookie crew had to jam on the brakes of the Russian spacecraft before docking with the International Space Station. But then the three-man crew of two Russians and one American completed the docking manually and successfully. The men replace a grateful ISS crew who had been on board since April.

Those are the headlines. I'm Tony Harris at CNN's global headquarters.

Now back to ON THE STORY.

(BEGIN VIDEO CLIP)

BUSH: I believe that younger workers ought to be allowed to take some of their own money and put it into personal savings accounts, because I understand that they need to get better rates of return.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: You just heard the president say that young people ought to be able to take money out of Social Security and put it into their own accounts. Now, my fellow Americans, that's an invitation to disaster.

(END VIDEO CLIP)

HAYS: It also highlights the black and white differences about privatizing Social Security. But that was just one of the economic issues that was fought out in the Wednesday debate.

Welcome back. We're ON THE STORY.

HINOJOSA: So, Kathleen, yesterday, our own Candy Crowley had a one-on-one interview with Senator John Kerry. I was fascinated by one of the questions that she asked.

She said, "I talked to this unemployed worker" -- I think in Wisconsin. "If you get into office, how soon will he be able to get a job?" And he said something like, oh, within months, but if Bush stays is in power, it will be, you know, years, or something like that. And I'm just like, "How is it that a presidential candidate can say something like that?"

HAYS: Remember four-letter word, spin? I mean, we were talking -- Suzanne was talking about spin and how much we're getting. And we know this is the kind of thing politicians say.

Because there are differences between the two candidates about their philosophy of the economy, what drives it and what government's role is in driving the economy. A lot of economists say let's get real here.

The number one thing that creates jobs and affects the economy isn't the president and what the president does. There's a business cycle. There's new technology, there's the Federal Reserve changing interest rates, there's the stock market. There's all kinds of things.

Having said that, though, there are substantial differences between these two men. And they probably would have different affects on the economy.

MALVEAUX: And you know what -- what's interesting, too, is how both of the sides are using these numbers. Because you hear the Bush campaign, of course, talking about the jobs that have been created over the last year. You listen to the Kerry folks, who talk about the jobs that have been lost.

Very interesting, however. This past week, there was a nonpartisan group that came without a study. They said about one in five or 28 million jobs in the country provide these below-poverty level wages. That's $8.84 an hour.

What kinds of jobs are being created here? Because we know that the manufacturing base has lost a great deal of ground. We know a lot of jobs are being outsourced. Who are the people who are getting these kinds of jobs and what are they?

HAYS: Well, you know, actually, some of the fastest jobs growth right now is in health care and in professional services. So you have got to say, when President Bush talks about creating the jobs of the 21st century, and emphasizing the role of education, there is some -- there is some merit to it. But it's not like John Kerry wouldn't agree, yes, we should create the jobs in the 21st century.

And, of course, we face a global economy now. You know, a lot of new jobs don't have the same kind of benefits. Employers don't want to pay them, right? Or they can't afford to pay them.

That kind of speaks to John Kerry's point about, well, let's reform the health care system, let's make it easier and cheaper for employers to provide health care to their workers. Suzanne, no matter how nonpartisan they are, the thing about a lot of these numbers is, you can take different time periods, you can take different ways of looking at it.

Do you look at the hourly wage? Do you include the benefits the jobs pay? And you can come up with somewhat different answers about whether or not there's more high-paying jobs created or low-paying. But I think both candidates would agree, yes, we'd like to see higher wages. But again, they have different approaches to doing that.

HINOJOSA: OK. So, at one moment in the debate, I think Kerry said something like, the tax breaks that you have gotten are going to benefit myself and the president, but all of you in the audience, you're really not going to feel that. Talk to me about this new tax rebound that is the biggest tax revamp in 20 years, if I'm not mistaken. And, I mean, I don't know all about this. But what does this really mean? I mean, for the little guy, what does it really mean?

HAYS: Well, President Bush cut taxes three times. And I think the middle fifth got something like an average of $756.

Now, it's true that the top, say, 1 percent got like 34 percent of the tax break. But they paid 35 percent of the taxes, and that's what the president will say. Look, the people who pay the most, get the biggest cut.

President Bush says they've stimulated the economy and that they will stimulate long-term investment. John Kerry said, no, the wealthy didn't need that. It doesn't matter how much they pay, they didn't need it. We've got a big deficit. We've got to pay attention to that. We need money to reform health care.

I think one of the funniest things is that the Concord Coalition, who is the watchdog of the budget deficit in government spending says, you know what, over 10 years, they both bust the budget by exactly the same amount.

HINOJOSA: Wow.

HAYS: They are both going to increase the deficit by $1.3 trillion. So you can put them in a bag, shake them up and take them out.

Now, in their camps, they'll say, but wait a minute. We're going to increase the deficit, but we're doing different things, privatizing Social Security, versus giving -- trying to change the tax code so that it doesn't favor companies sending jobs overseas.

These are the two approaches that are so different. So they'd say the numbers may look the same, but you'll end up with a different kind of economy.

MALVEAUX: Kathleen, what do you think is the bottom line for the middle class American? Because you look at, you know, the costs. You talk about oil costs and the cost to heat up your home, and these kinds of things.

The fact that everything is going up in cost, but people may or may not still have these jobs, may or may not have these raises. But there's an incredible increase in just how much it costs day-to-day to live.

HAYS: Well, you know, I think the oil question is becoming more and more and more crucial because the price of crude oil up almost -- up $55 a barrel this week. This is a volatile market. These prices could come crashing back down.

But you know what? They'll never -- they'll probably never crash as low as they used to be. So, again, what does Mr. -- what does President Bush say? Let's drill more. Let's find more ways to get more oil from the rest of the world.

Kerry, I think, is little bit -- it's really just a question of degree. Because John Kerry would say, well, yes, we've got to conserve more, alternative sources. But you can take almost anything Kerry would -- has said about it and you'll find it in Bush's plan.

Meanwhile, a lot of people, are they willing to buy a more fuel- efficient car? Are they willing to give up their SUV? Are the states willing to say, instead of having 16 different kinds of fuel to meet state air pollution standards, we'll have just five or six?

There's so many things that need to be done. I don't think it's front and center in the campaign, except for the fact that each wants to say, hey, it's his fault this is happening. I'll fix it if I'm the president.

HINOJOSA: Well, thanks to Kathleen, who always helps us understand all the numbers out there.

Well, from business and taxes to the war in Iraq, we're back in a moment, ON THE STORY with Jane Arraf and the latest search-and-destroy efforts against insurgents in northern Iraq.

(COMMERCIAL BREAK)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: That's the sight and the sound of the hard and dangerous work by U.S. and Iraqi forces in finding and fighting insurgents in the Sunni Triangle.

I'm Jane Arraf. Welcome back to ON THE STORY from Baquba, about 30 miles north of Baghdad.

MALVEAUX: Jane, tell us about what's happening on the ground. Obviously, there's a security situation. A lot of people concerned about that. A pacification effort and, of course, even greater concern in the holy month of Ramadan that things may get worse.

ARRAF: Well, they've been working really hard here. And we're talking the Sunni Triangle in general, as well as other places, to crack down on insurgents before this expected surge in violence. And what they're looking at really is a year ago, when there was more violence during Ramadan, this holy month, when they expect extremists to be more active.

So they've been launching crackdowns. In Samarra, they retook the whole city. They've been doing house-to-house searches. And they pretty well pulled out all the guns, including actual weapons and civil affairs operations to try to make sure that this doesn't spike the violence.

HINOJOSA: Jane, has something changed in terms of what the troops are doing by going house to house? Is it that they are now searching every single house and that's becoming more efficient than just targeting a certain number of houses?

ARRAF: It's been a really interesting evolution. Now, when they first came here, we went around with these soldiers and they were basically casting nets, as they put it, instead of fishing lines.

They didn't have a lot of intelligence. So you would see them going to entire neighborhoods, basically on speck, just launching these raids in case they find something. Or launching them on the basis of information that might or might not have been correct.

Now what they're doing is getting better intelligence from Iraqis and from Iraqi security forces, and they're doing targeted raids. But we went into one little village here very close to here that had been a particular problem. There are a lot of bomb makers in what looks like a very innocuous village, according to these soldiers. And it's an illustration of how heavily armed this country is.

We went into one house with the soldiers. There was a woman impossibly old hunched over, half blind. She said, "No, of course I don't have any weapons. What would I do with them?"

Now, a moment later, a neighbor comes to report that she has two rifles hidden in her closet. And those are taken away.

But everyone here has weapons. And it's very difficult to try to get the weapons back. Very difficult to try to find the insurgents when they're so well hidden.

HAYS: Certainly it's a part of their culture. Jane, I want to ask you about a story that's been breaking here the last couple of days about a group of soldiers allegedly who refused to get in a convoy north of Baghdad.

I know you have been embedded where you are, near Baquba. So you haven't covered this exactly. But are the troops hearing about this? Is this something people are talking about?

Is there a sense among them that at times they are being asked to put themselves in harm's way in a way that even a soldier shouldn't? That isn't -- that doesn't make sense?

ARRAF: There certainly is a sense in many places that soldiers are stretched too thin, that there aren't enough troops to go around, and that they don't have the equipment. And one of the particular problems -- we don't know the specific of this case, but one of the particular problems has been, as you probably know, that they don't have enough armored vehicles.

And what they were facing, what a lot of soldiers face is the prospect of driving down these roads where the biggest pillar of these roadside bombs that are increasingly sophisticated to do the maximum damage and kill maximum number of people in vehicles that are not necessarily the safest. But there are simply because there's a shortage of vehicles. It's something that you hear over and over.

Having said that, it takes a lot for soldiers to say, no, I will not follow a direct order in wartime. They know the consequence to that. So people were rather stunned to hear of that.

MALVEAUX: Jane, why are we seeing this happening now? Why are we seeing this new aggressive operation by the United States? You know, there's some cynics who say it's tied to the presidential campaign, to the elections. Why do you think we're seeing an uptick in this now?

ARRAF: Well, a lot of it always comes back to politics, doesn't it? Not just the presidential campaign, but the Iraqi elections here.

And they swear they are going to hold them in January, whether they can hold them everywhere in the country or not. Here in Baquba, they are already making preparations for how they're going to set up polling sites.

Now, they can't have elections, they can't be seem to be credible, they can't stabilize this country until the streets are safe enough for people to go out and vote. And they are quite worried that they're beginning to lose control in some places on what has been an increasingly coordinated effort on the part of the insurgents.

And one of the other interesting things is we're hearing less that these are foreign fighters. What we're now hearing is that a lot of this home-grown insurgency, including these people blowing themselves up.

HAYS: Well, something that is very hard for soldiers to fight. Tough for you to cover at times, I'm sure.

Jane Arraf, thank you for joining us. But first, tell us before you go, what are you looking for ON THE STORY in the coming day?

ARRAF: We'll be moving on to Kirkuk, which is always thought of as the eternal capital of the Kurds, a city that's been contested for decades, centuries, in fact. And one of the most ethnically-mixed cities in the country. Interesting things going on there.

We're also doing a story on the electricity minister here, who has faced more than anyone should have to in a lifetime. This man lost six daughters and his wife when U.S. troops opened fire on his car.

We met with him today. And amazingly, he is not bitter. He still expects there to be a better Iraq, and he's still hopeful about the future.

HAYS: Hopeful about the future, that's amazing in a situation like that. We certainly look forward to hearing that story. Jane Arraf, again, thank you very much.

From Iraq, to the uproar here over flu vaccine, and not enough to go around, we're back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) DR. JULIE GERBERDING, CDC: Shame on the people who are price gouging. This is a reprehensible thing to be doing. I think an immoral thing in this context.

(END VIDEO CLIP)

CHRISTY FEIG, CNN MEDICAL CORRESPONDENT: Dr. Julie Gerberding of the Centers for Disease Control and prevention this week, talking about the shortage of flu vaccine, and reports that some people are jacking up the price to make a quick buck.

I'm Christy Feig. Welcome back. We're ON THE STORY.

HAYS: You know, Christy, I'm the one who's watching the supply and demand in the markets. I think a lot of people don't understand how this market works. It really isn't a market. The government is controlling it, and that's one reason why we have a shortage of flu vaccine.

FEIG: That's a very good point to bring up. The problem is there's only two companies that make this flu shot. The nasal spray is something else. We won't go there.

The flu shot, there's only two companies that make it because there's really no incentive. It is not cost-effective to make a flue vaccine. There's a couple of reasons.

Number one, the liability issue. You're putting a vaccine in a healthy person. If there's something wrong with that vaccine, or if for some reason you get sick from that vaccine, people are going to sue. It's just a fact of life in the United States. It's going to happen.

The second thing is, because the strain changes every year, you have to throw out what you don't sell. A couple of years ago, there were companies throwing out millions of doses from this vaccine.

So it's money down the drain for a company if they can't figure out how much to sell. So that's a big problem. There's just not enough incentive to make a vaccine for the flu.

MALVEAUX: So, Christy, this was a subject that even came up in the presidential debates, as you know. The president was hit hard with that question. But how do you prevent this price gouging from happening? I mean, how are they reacting to that? What can they do?

FEIG: Boy, the price gouging is a real problem. And price gouging is not stopped at the federal level. They can do price fixing. They can't do price gouging.

Price gouging is done at the state level. We're already starting to see lots of reports of price gouging, but we're also starting to see some state governments crack down.

For example, just yesterday a survey crossed my desk. They had talked about 3,000 hospital pharmacists. Eighty percent of them said people had approached them, legitimate sellers had approached them to sell the flu vaccine to them at four times the original cost. Twenty percent said it was 10 times the markup.

Just, yesterday, the state attorney general in Kansas filed suit against the company in Florida. That company had tried to sell flu vaccine to a pharmacy in Kansas, five doses for $900. October 1, guys, that same amount would have cost $85.

HINOJOSA: OK. So here is a question from someone like me, who has never gotten a flu vaccine. I've never given my kids a flu vaccine. And honestly, I don't think I would get a flu vaccine.

So there are many people across the country, I think, who kind of come from the perspective. How do we...

HAYS: Guess what? You're sitting right next to one. I never get the flu shot either. And I don't understand why doctors for so many years have encouraged healthy people who don't need it to get it. That's one reason why there's a shortage.

FEIG: Well, a lot of the problem is you guys can be carriers. You guys can get the flu. You won't get as sick as somebody who has chronic disease.

But say you sit next to somebody at work who as diabetes or asthma. That is a very dangerous situation for them, because if they haven't gotten the flu vaccine, it can be very dangerous for them to get the flu. Say you're caring for somebody, say you're around a grandmother or somebody. You can get it to them. That's a lot of the reasons that healthy people do get it, because you're going to be around a lot of people that don't.

HINOJOSA: OK. So why is it that the flu now is worse than it was 30 years ago? Or is it -- was it just as bad 30 years ago?

FEIG: It's not necessarily as bad. I mean, every -- periodically we get these huge pandemics.

You remember in 1918, I mean, that was just astronomical. They live in fear that we're going to have another pandemic. That's the problem. So they don't know what strain is going to hit when.

They already know this strain is going to be very similar to last year's strain, which isn't totally unusual, but it does change a little bit.

They're just terrified that we're going to have a lot of deaths from this. Every year on average 36,000 people die from the flu. The vast majority of them, 90 percent over the age of 65. Very dangerous.

MALVEAUX: Christy, tell us about that story as well, and the antidepressants a big story this week on that.

FEIG: Yes, absolutely. We've been hearing a lot about this for about a year, year and a half now, the use of antidepressants in teens and whether or not that increases the risk of suicide in teens. Just yesterday, the FDA finally made their decision on this. They're going to require all antidepressants to carry what they call a black box warning. This is the most dangerous, most severe warning that you can put on a pharmaceutical. It's literally one step from banning the drugs used in teens.

They did not go there. And they didn't go there -- which is the obvious question here -- they didn't go there because these things are very useful in depressed teens. They have to be used very carefully. I mean, just as many stories of -- you know, "My child committed suicide on antidepressants," you're going to hear a mother say, you know, "My child was saved by antidepressants."

HAYS: There you go. Well, it's been very controversial. Interesting, though, that they take this step. I assume that it limits their liability somewhat.

Well, stay with us, folks. We're back ON THE STORY right after this.

(COMMERCIAL BREAK)

HINOJOSA: Well, thanks to all of my colleagues. And thank you for watching ON THE STORY. We'll all be back next week right here. And I'll see you Sunday night at 8:00 for "Immigrant Nation, Divided Country."

Coming up, "PEOPLE IN THE NEWS," focusing today on Jennifer Lopez and Alex Rodriguez straight ahead.

Now a check on what's making news right now.

HARRIS: I'm Tony Harris at the CNN Center in Atlanta. "PEOPLE IN THE NEWS" is next. But first, stories "Now in the News."

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 October 16, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: And good morning, everyone. I'm Tony Harris.
Bombers using homemade devices attacked five Christian churches this morning in four Baghdad neighborhoods. No casualties were reported but the churches were damaged, some extensively. In August, four Christian churches in Baghdad and one in Mosul were attacked.

An Iraqi government official was gunned down today in downtown Kirkuk. The education department official was driving with his two young children when three gunmen stopped his car, dragged him from it and killed him as the children looked on.

In Afghanistan, a homemade bomb explodes in a south central province, killing two American soldiers and wounding three others. The attack occurred on Thursday but was not reported until this morning.

And back here in the U.S., President Bush is heading for Florida, with rallies today in Fort Lauderdale, West Palm Beach and Melbourne. Senator John Kerry is in Ohio visiting a high school in Xenia and holding a rally in Wakefield.

Those are the headlines. I'm Tony Harris of the CNN global headquarters.

ON THE STORY starts right now.

MARIA HINOJOSA, CNN URBAN AFFAIRS CORRESPONDENT: Welcome to CNN's ON THE STORY, where our journalists have the inside word on the stories we covered this week. I'm Maria Hinojosa, ON THE STORY of my new documentary, "Immigrant Nation, Divided Country."

More undocumented immigrants are arriving here than ever before. What are their stories? And why some Americans are taking to the streets against them.

KELLY WALLACE, CNN NATIONAL CORRESPONDENT: I'm Kelly Wallace, ON THE STORY of campaign 2004 and the impact of that final presidential debate.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: I'm Suzanne Malveaux, in San Francisco, ON THE STORY of President Bush and the campaign counting down the days and, of course, mapping out their strategy.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, ON THE STORY of how the stock market is watching more than politics and how oil and retail sales stir things up this week.

Also coming up, talk about supply and demand. Look at those long lines for the flu vaccine that isn't there. Medical correspondent Christy Feig is ON THE STORY.

And we'll get the latest from Jane Arraf, ON THE STORY in northern Iraq.

E-mail us at ONTHESTORY@CNN.com.

Now straight to Suzanne Malveaux on the campaign story.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Get a smile on your faces, everybody. Nineteen days left.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This is the most important election of our lifetime.

(END VIDEO CLIP)

MALVEAUX: Well, of course, from the Air Force One to on the campaign trail, no stopping them. These are new days ahead. Just two weeks of the final days, of course.

And if you have to take a look and figure out those battleground states, just simply look at the president's schedule. We are talking about Oregon, Nevada, Wisconsin and, of course, ground zero of election 2000, today. That is where President Bush is going to be, in West Palm Beach, Florida.

WALLACE: Suzanne, you talked to Bush advisers privately. How worried are they? Because the polls, at least recent polls, trending in Senator Kerry's direction. The president's approval rating below 50 percent. Danger territory, as we know, for an incumbent.

MALVEAUX: Well, Kelly, all you have to do is just take a look at what's happened on the campaign trail just within the last week or so to realize this is a totally different phase within the campaign. I mean, we saw President Bush come back to the press cabin of Air Force One to talk to reporters. This is only the third time that this has happened in his administration, that he has gone on record with the press to talk about what is happening.

One of those times, of course, September 11. And what this means, essentially, is that the campaign was doing damage control from those three debates. There was a lot of talk about this 3-0 sweep from Kerry.

The Republicans, a lot of Bush supporters, really were concerned about this debate one. They thought he tied debate two. Debate three was his best performance. But many say even his best performance was not as good as Kerry's worst performance.

They realize that this was not his strong suit, so we saw President Bush this week come back to the back of the plane and say, "Yes, I was very happy for the debates. I'm looking forward, I'm looking ahead." And that is the kind of thing, that is the kind of sign you see in this campaign that shows, yes, there is some concern about how those debates went, but they also want to put that behind them and say, look, we're going to get him back on the campaign trail, this is where he is most comfortable, this is where he really reaches out to those voters.

HINOJOSA: So Suzanne, one of the things that people can certainly pick up on is the whole use of the term "liberal." I mean, he is really going after John Kerry now and using that "L" word. What's up with that? How do you think that came about? And do you think it's going to play or do you think it's going to be seen more as divisive?

MALVEAUX: Well, one of the things that they're finding in their focus groups, and also just with these huge rallies that we see, thousands and thousands of people -- it's now up to about 30,000, 40,000 people that you'll see at these rallies -- essentially, is that the -- liberal, the label of "liberal" really is a code word for their base.

They're talking about cultural issues. They are talking about gay marriage. They're talking about stem cell research. They're talking about abortion, those type of things.

And when you mention the word "liberal," and they say he's out of the mainstream, they have gone from kind of the flip-flop message to he is a consistent liberal extremist. That's the message that they're trying to go get across. And what they're doing is really just trying to rally the base so they get out there, that they're motivated to vote in these weeks ahead.

HAYS: Of course, Suzanne, we know a lot of the focus is on undecided voters and how they're going to go. You know, I interviewed Treasury -- Commerce Secretary Don Evans yesterday and asked him, "You're talking up the economy, you say it's so good, jobs growing, et cetera, et cetera. And if that's the case, why isn't your guy a slam dunk to be re-elected?"

Inside the campaign, what are they saying? Why is this a neck- and-neck race in their minds?

MALVEAUX: Well, really, they lost a bit of momentum. If you -- the Republicans that I speak to, even inside of this campaign, say, look, he lost quite a bit momentum coming out of the debates. He went in with a greater amount of momentum. He came out losing a good deal of that to Kerry. What they are trying to do is focus and emphasize on the things they feel that are slam dunk for the president. For instance, likeability, leadership, trustworthiness.

So even on the campaign stump, you'll hear it's been adjusted just slightly. And now you hear the president coming out and he makes jokes about this. He says, well, I -- I mangle the English language, but you know I speak the truth, I mean what I say.

This is the kind of thing, this is the message that they believe really resonates with their base, but they also believe that this is what's going to get those undecided voters as well. They say, well, Kerry is a good debater, he speaks well, but you can believe what the president says. And he says even, you know, I'll admit my shortcomings, but look, I'm the guy to vote for because I'm the one you know, I'm the one you trust.

WALLACE: And Suzanne, talk to us a little bit about the get out the vote effort. Because we know Karl Rove, the president's top political adviser, has said that if they get the some four million evangelical Christians who didn't vote in 2000 to vote this year, they think it could be a slam dunk for President Bush.

MALVEAUX: Absolutely. And what's really interesting, however, is that there are certain pockets within the population that we really have no idea how they're going to vote.

I mean, we know that they have registered, but we have no idea what's actually going to happen on Election Day. You take the urban vote, you take the black vote, the Hispanic vote, many up those really still up in -- up for grabs. I mean, we know that there's a great deal of an increase in registration. We just don't know if they're going to come out in the polls.

They could change this election. They can swing the election either way. But you bring up a very good point, and that's that the president is focusing on his base.

Particularly, he is talking to his religious base, and that's why you're going to hear those kind of code words in his stump speeches now, saying, look, this is the guy who does not represent you, this is the guy who's out of the mainstream. Go for me. I'm the one you can count on.

HINOJOSA: Suzanne, is it feeling like a little desperate, though? Is that the feeling on the -- with the troops there that you're with?

MALVEAUX: I wouldn't say it's desperation, but I would say that there has been a shift in strategy, definitely a shift in strategy over the weeks. We have seen quite a disappointment.

There's a great deal of disappointment that the debates, that they lost that momentum from the debates. And there's also a very quick shift that they have to focus on something else. That is -- you know, that has been what's been happening over the last couple of days or so.

I think what's rally telling, however -- and Kelly, you can probably relate to this -- is, you know, the spin, the amount of spin that you get now.

WALLACE: Nonstop spin.

MALVEAUX: You're dizzy from the spin. And the fact that you have fact checks, stories and, you know, investigative units just doing that alone is very telling on both sides here. You know? I mean, you take these messages that they're giving and you really have to look at it very closely about what it is they're saying and what is the truth.

WALLACE: Yes. We're going to try and clear through the spin as we turn our attention to Senator John Kerry. No surprise. Suzanne, as you know, they say he was the clear winner all of these debates, and they are feeling very confident.

So we'll look at how he's feel and his campaign is feeling after debate number three and the strategy ahead. I'm on that story after this break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: There's a mainstream in American politics. You sit right on the far left bank. As a matter of fact, your record is such that Ted Kennedy, your colleague, is the conservative senator from Massachusetts.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: Being lectured by the president on fiscal responsibility is a little bit like Tony Soprano talking to me about law and order in this country.

(END VIDEO CLIP)

WALLACE: Yes, both men trying out some new one-liners in their final face-to-face on Wednesday night. No knockout. No huge flubs. And some carefully-calibrated efforts by both men to hold on to their support and maybe win over a few undecideds, too.

Welcome back. We are ON THE STORY.

MALVEAUX: But Kelly, you know, the -- really the big, big issue here, the water cooler conversations seemed to be right after the debates -- not even after the debates -- people were e-mailing each other, were talking about when Kerry had mentioned Cheney's daughter, Mary Cheney, being a lesbian, and the fallout, the explosive fallout from that.

What is going on? Was that a miscalculation on Kerry's part? How are they reacting to this?

WALLACE: Well, Suzanne, the campaign will say this was an off- the-cuff remark. And to set the stage a little bit, the senator and the president were both asked about whether they believe homosexuality is a choice or something you're born with. And then John Kerry went ahead and said, well, Vice President Cheney's daughter, Mary, she basically is who she is, who she was born as, and he was sort of commending her.

Well, obviously, the Cheneys reacted in a very, very angry way. And as you said, it has dominated the discussion on the campaign trail.

Kerry's advisers say it was an off-the-cuff remark, he was meaning it in a sort of positive way. And he sat down in an interview with CNN's Candy Crowley last night, saying he was sort of commending the Cheneys in terms of how they deal with it, and sort of commending Mary Cheney for who she is.

But, as you know, Republicans think that this was a sort of carefully-orchestrated political move, because we remember that Senator John Edwards also mentioned it in the debate with Vice President Cheney. No matter what the Kerry advisers will say, though, this is a distraction.

John Kerry doesn't rally want to be talking about this, really. He would rather be talking about middle class, jobs, the economy. Although, the cynics out there would think the more discussion here could sort of split that conservative base, could anger some social conservatives who are angry that the vice president has a gay daughter and keep them away from the polls.

HINOJOSA: I wonder about that. Is that what you're hearing, Suzanne? That perhaps, in fact, there's a possibility that this could rally up some people to vote against Bush because of the fact, look, there's a division between the president and his vice president on this issue?

MALVEAUX: It's very interesting. I hadn't even considered this point, but I was speaking with a group of people last night, and one of them said, "Look, you may have had the soccer mom or the security mom, but this is definitely an issue that has split the mothers."

I mean, you noticed you had Mrs. Cheney, you had Mrs. Edwards afterwards. The two of them very strong words about this. And what they were saying is that you just don't talk about someone's child whether or not they're four or 40, that this was something that some mothers are responding kind of in a visceral way.

This is something -- an instinctual way. And they believe that this is going to backfire against Kerry.

I mean, it's not even something that I had even considered because they're not even talking about sexuality, whether or not that was appropriate to bring up, but just the fact that they brought up her child, the name of her child. That that was offensive. I thought what was interesting was that the Log Cabin Republicans, a gay Republican group, their response to all of this, very, very measured, immediate. They essentially slammed both sides and said that Kerry and Edwards did not need to use Mary Cheney to make their case about gay rights, about the amendment. But they also said that Bush and Cheney needed to stop using gay families as a political tool. They came right down the middle and criticized both sides for this.

WALLACE: You know, it's interesting, because people have said, political observers have said that if the Cheneys and other Republicans keep talking about it, keep bringing it up, then they can be accused of trying to sort of play politics with this. But Suzanne, you raise such an interesting point. Because looking at some of how the undecideds feel -- and the Kerry campaign believes its key to victory is winning over undecideds, swing voters, middle class voters.

"New York Times," front page, day after the debate, a handful of undecided voters in Iowa were very turned off by Senator Kerry mentioning the vice president's daughter. So it is interesting. For the Kerry strategy to go after the undecideds, could this in some way, as people are deciding about him, play a role? Again, too early to know, of course.

HAYS: Yes, it certainly is.

So what about the more substantive things? I mean, what about the fact that they're so sure that John Kerry won the debate? Fair enough. But does winning the debate mean you really won any votes when it comes to November 2?

WALLACE: Well, what they feel that this did -- first of all, just by being on the same stage with President Bush, he looks like, you know, equal -- equal -- equality there. But they feel that in these three debates, his knowledge of the issues, his conviction of the issues, hammering away at the president's record, that he showed he is presidential, that he won points as commander in chief, leadership. Won some points in terms of, you know, honesty and integrity.

So they feel that the Republican, 100 million negative ad campaign painting him as a flip-flopper and all that, is gone. And so that they've really scored points. And now they feel like things are potentially moving in their direction.

HAYS: But I'll ask you the same question as I asked Suzanne. Why -- do they have an explanation for why he has not spurted further ahead in the polls then?

WALLACE: Well, you know, they don't, of course. But here I think is one of the issues with Senator Kerry.

He missed some opportunities. And his advisers will concede there were a few moments. One moment, and I'm sure Suzanne will agree, asked about someone who has a job, who lost the job to a company overseas. The president first, many believe, mishandled the question, started talking about education. And then here was a chance for Senator Kerry. His big critique is he doesn't connect. People don't really know what's in his gut, what's his heart. And he didn't neither.

You know, no one did a President Bill Clinton and said, you know, I feel your pain and I'm going to work hard to help you. So the sense is that, as people are still trying to decide, they're angry with President Bush. They might want to vote for someone else. But they still haven't sort of sold the deal and said, "I'm going to go with Senator Kerry."

HINOJOSA: But there was that moment -- there was that moment when Senator Kerry said, "You said that you weren't worried about Osama bin Laden." And, in fact, it was your question to the president that's now -- this was a year ago when you asked him his concern about Osama bin Laden, and he actually said -- well, you tell us.

WALLACE: Well, what was so interesting, as Senator Kerry was talking about this, I sort of recalled and remembered -- of course you remember questions you asked the president, right, Suzanne? Of course you remember that.

MALVEAUX: Absolutely.

WALLACE: Absolutely. And I remember it was six months after September 11, and there I am trying to come up with -- with all of these questions. And giving my credit to my husband here, too, who played a role as I'm going over and discussing it, talking about Osama bin Laden.

You know, we weren't even asking him about Osama bin Laden. And so I asked him, "You never mention Osama bin Laden. Why is that? And don't you believe in your gut that the threat won't be eliminated until he's found dead or alive?"

And the president gave an answer. He said, he's on the run, he's not in control. You know, "Frankly, I'm not that concerned about him."

And many people picked up on that, wrote columns about it. So the president, obviously, when he said, whoa, I don't believe I ever said I'm not worried about it, the Democrats within minutes were putting out the transcript. It certainly could hurt the president, but again, I'm not sure in that sense people are looking forward a little bit, how much that comment might...

HAYS: Kelly, I want to ask you about something that has to do with a different kind of hurt, domestic violence and the piece in "Marie Claire" that you're involved in this month.

WALLACE: Yes. It's a very nice part.

The magazine was devoting its issue to Domestic Violence Awareness Month; October 14, Domestic Violence Awareness Day. And they call this campaign "It's Time to Talk," to talk about the issue, to talk about, you know, how important it is to get people talking about it, and not to be afraid to talk about it.

I think they invited me because of the presidential campaign, although I said to them, "Honestly, it's not really been an issue that's been discussed." But in local news, I did do a number of stories. And my big belief is the more stories you do, the more that it might get a message out that it's OK to talk about it and that maybe someone will take some steps, get to some safety to get away from a domestic abuser.

HINOJOSA: You know, Kelly, my mom worked on that issue for 25 years in Chicago. Very, very committed.

Well, switching topics here, another important issue in this campaign is immigration. I'm back on that story with my documentary, "Immigrant Nation, Divided Country." I'll be talking about people living on the front lines on the newest wave of immigration, personal stories from a changing American South.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD ARTHUR KING, "IMMIGRANT NATION, DIVIDED COUNTRY": What do you think about illegal immigration? Tell me true.

UNIDENTIFIED MALE: It ain't right.

KING: It ain't right? It's going to get worse.

(END VIDEO CLIP)

HINOJOSA: That is Donald Arthur King, D.A. King, one of the characters in my documentary. And he's upset about what he calls a modern day invasion of undocumented immigrants. He calls them illegal aliens, just one of the four people that I am profiling in my new CNN PRESENTS: "Immigration Nation, Divided Country." It can be viewed here tomorrow evening at 8:00 p.m. Eastern.

But despite efforts by King and others, an estimated three million undocumented immigrants arrive in the United States every year.

HAYS: Maria, I think people are going to find a lot of surprises in your documentary. And I think one surprise is going to be that here is Maria Hinojosa. She's an immigrant herself, Mexican family, right? Legal -- we like to point that out.

And they would think, oh, these bad people opposing immigration. I bet Maria's really going to give it to them. I think they're going to be surprised the sympathy you give to all of the people you profiled in this piece.

HINOJOSA: Well, you know, the reality is that we have to talk about this issue. Every single one of us who lives in this country is affected by it. And that's why I decided to focus on the American South, because I almost, as a Mexican immigrant growing up in Chicago, then living in New York and seeing Mexicans there, I never thought I would be seeing such a wave of immigration into the American South.

But really, I would say, except for maybe Maine and Vermont, the Mexican population, the Latino population is everywhere. So we have to talk about it. And you know what? If we stand on both sides and yell at each other, we're really not going to make a lot of progress.

MALVEAUX: But Maria, tell us an about that main character. Because obviously he has very strong feelings about this. Where does that come from?

HINOJOSA: You know what it comes from, Suzanne, is that there's a real frustration. There's a sense like they're not being heard.

People are concerned, they're seeing something that is changing in their society, and they turn to the politicians -- like Donald Arthur King calls up the immigration service, who knows, like every other day, and he says, "Come." You know, "They're here. They're breaking the law."

And he gets a recording. Or they never come. They show up. There is so much frustration on the ground. And I think we have to talk about this because people are taking to the streets.

WALLACE: We have to talk about it, and we're all frustrated, I think, because it's not a big topic of discussion in the president's campaign. But also, you wipe away stereotypes. Because tell us about another character who is here, who is here, in essence, illegally, but has been paying taxes, has a job, son graduating with honors, married to a Korean immigrant himself, I believe. That whole story likely to change perceptions that people might have.

HINOJOSA: This is an incredible story. It's the family of Gabe, and he lives in northern Georgia in the Blue Ridge Mountains, you guys, in the tiniest, tiniest town in northern Georgia.

And I sort of -- when I asked him this question, I didn't know he was going to give me -- give me this response. I didn't know that he was paying the federal taxes. You can, in fact, if you are living in this country illegally, you can, in fact, pay your federal taxes. The U.S. government gives you that opportunity. It lets you fill out a form.

HAYS: So bizarre.

HINOJOSA: And he said, "I love to pay my taxes. I love to pay my taxes to this country because it's my school contribution." Never did I imagine I would be hearing that.

His son is now going to college. He graduated fifth in his class. And they spoke to me -- even though they were putting themselves at risk, they spoke to me because they said, "We don't want to be seen as those criminals that are invisible that don't have a choice. We want to talk, we want to let the American people know who we are, that we are not interested in being seen just as criminals."

HAYS: Maria, what do the illegal immigrants themselves feel about this? There's a huge hypocrisy in this country, because we do have laws against illegal immigration.

You're pointing out they aren't enforced. Many, many people employ illegals. The government even takes their taxes. If I'm an illegal immigrant, I'm thinking, you guys are either crazy or, again, you're just big hypocrites.

HINOJOSA: You know, I'm going to -- I'm going to show you something that happened when I was down in Mexico. And usually when I'm in Mexico, I'm visiting family and friends, I'm not reporting. But I was down there in this small town called Villa Juanita in Veracruz, and this is the sister of another one of our characters. This gives you a sense of what people on the ground in Mexico are saying.

(BEGIN VIDEO CLIP)

HINOJOSA: How many people just from this little part of the town have gone to the United States?

UNIDENTIFIED FEMALE (through translator): Her husband, the son of the lady that lives over there, three sons of one of the ladies that lives in the houses over there, her husband, the son of the lady that lives over there with his wife and child, and a block down, the husband of the woman that lives there, also left.

HINOJOSA: And what about people who are thinking about going?

UNIDENTIFIED FEMALE (through translator): Oh, the ones who are thinking of leaving? There are many. Well, me.

(END VIDEO CLIP)

HINOJOSA: And actually, believe it or not, her sister, Rosa, who we profiled, she is trying as we speak to bring her children into this country. A drama that we just see every day, children being smuggled into the United States to be reunited with their parents.

MALVEAUX: Maria, why do you suppose people opened up to you for this documentary? I mean, they're risking so much by talking to you.

HINOJOSA: I think they want to be visible, they want to be heard. They understand that there's a real sense of anger towards them, and they say, "You know what? We understand that we're breaking the law. But we don't get the fact that we come to this country and then we can't find a job, but then we can't drive to get there. Because if we're driving and we don't have a legal license, then we're going to be arrested."

All of these mixed messages. And I think they just wanted to be heard. And they knew that because I'm a Mexican immigrant and I understand their story, they knew that they could essentially open up. Really dramatic stuff. WALLACE: Bravo!

(APPLAUSE)

HAYS: Yes. And again, not just the immigrants opened up to you, Maria, but I think the people here who are angry, fighting, and again, I think it's a real testament to your fairness and your sympathy for all the people.

WALLACE: And we said -- we said Bob Schieffer, before the debate Wednesday night, he said the biggest issue that he's getting e-mails about right now, immigration issues, issues related to it. So it is so important.

HAYS: Right. It is totally hot button right now. No doubt about it.

Well, unfortunately, we have to let Kelly Wallace go. She is going to be anchoring for much of the rest of the day.

So thanks, Kelly. Have a great day.

WALLACE: Great to see you all.

HAYS: We'll be watching you.

And, of course, immigration is also a major force in the national economy, which was buffeted this week by oil prices, retail sales numbers. I'm back on that story and a lot more in a moment.

(COMMERCIAL BREAK)

HARRIS: And good morning, everyone. Here's a look at the stories "Now in the News."

In Iraq early today, explosions rocked five Christian churches in four different Baghdad neighborhoods. Homemade bombs exploded inside and outside the churches, but no casualties have been reported.

And we are following breaking news this morning. CNN is reporting that two U.S. soldiers, a Marine and an Iraqi were killed Friday night in a suicide car bomb outside of Qaim. That's near the Syrian border. And that report is coming from the U.S. military. We will continue to follow that story.

While President Bush campaigns in Florida today, this morning's pre-taped radio address picked up where he left off in the debate, attacking John Kerry's record and stressing his own agenda.

(BEGIN AUDIO CLIP)

BUSH: On issues that are vital to this nation's future, all Americans know where I stand. I'm a compassionate conservative.

I believe in policies that empower people to improve their lives, not try to run their lives. I believe in helping men and women find the skills and tools to prosper in a changing world. I have worked to help all Americans build a future of dignity and independence, and that is how I will continue to lead this nation for four more years.

(END AUDIO CLIP)

HARRIS: A rookie crew had to jam on the brakes of the Russian spacecraft before docking with the International Space Station. But then the three-man crew of two Russians and one American completed the docking manually and successfully. The men replace a grateful ISS crew who had been on board since April.

Those are the headlines. I'm Tony Harris at CNN's global headquarters.

Now back to ON THE STORY.

(BEGIN VIDEO CLIP)

BUSH: I believe that younger workers ought to be allowed to take some of their own money and put it into personal savings accounts, because I understand that they need to get better rates of return.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KERRY: You just heard the president say that young people ought to be able to take money out of Social Security and put it into their own accounts. Now, my fellow Americans, that's an invitation to disaster.

(END VIDEO CLIP)

HAYS: It also highlights the black and white differences about privatizing Social Security. But that was just one of the economic issues that was fought out in the Wednesday debate.

Welcome back. We're ON THE STORY.

HINOJOSA: So, Kathleen, yesterday, our own Candy Crowley had a one-on-one interview with Senator John Kerry. I was fascinated by one of the questions that she asked.

She said, "I talked to this unemployed worker" -- I think in Wisconsin. "If you get into office, how soon will he be able to get a job?" And he said something like, oh, within months, but if Bush stays is in power, it will be, you know, years, or something like that. And I'm just like, "How is it that a presidential candidate can say something like that?"

HAYS: Remember four-letter word, spin? I mean, we were talking -- Suzanne was talking about spin and how much we're getting. And we know this is the kind of thing politicians say.

Because there are differences between the two candidates about their philosophy of the economy, what drives it and what government's role is in driving the economy. A lot of economists say let's get real here.

The number one thing that creates jobs and affects the economy isn't the president and what the president does. There's a business cycle. There's new technology, there's the Federal Reserve changing interest rates, there's the stock market. There's all kinds of things.

Having said that, though, there are substantial differences between these two men. And they probably would have different affects on the economy.

MALVEAUX: And you know what -- what's interesting, too, is how both of the sides are using these numbers. Because you hear the Bush campaign, of course, talking about the jobs that have been created over the last year. You listen to the Kerry folks, who talk about the jobs that have been lost.

Very interesting, however. This past week, there was a nonpartisan group that came without a study. They said about one in five or 28 million jobs in the country provide these below-poverty level wages. That's $8.84 an hour.

What kinds of jobs are being created here? Because we know that the manufacturing base has lost a great deal of ground. We know a lot of jobs are being outsourced. Who are the people who are getting these kinds of jobs and what are they?

HAYS: Well, you know, actually, some of the fastest jobs growth right now is in health care and in professional services. So you have got to say, when President Bush talks about creating the jobs of the 21st century, and emphasizing the role of education, there is some -- there is some merit to it. But it's not like John Kerry wouldn't agree, yes, we should create the jobs in the 21st century.

And, of course, we face a global economy now. You know, a lot of new jobs don't have the same kind of benefits. Employers don't want to pay them, right? Or they can't afford to pay them.

That kind of speaks to John Kerry's point about, well, let's reform the health care system, let's make it easier and cheaper for employers to provide health care to their workers. Suzanne, no matter how nonpartisan they are, the thing about a lot of these numbers is, you can take different time periods, you can take different ways of looking at it.

Do you look at the hourly wage? Do you include the benefits the jobs pay? And you can come up with somewhat different answers about whether or not there's more high-paying jobs created or low-paying. But I think both candidates would agree, yes, we'd like to see higher wages. But again, they have different approaches to doing that.

HINOJOSA: OK. So, at one moment in the debate, I think Kerry said something like, the tax breaks that you have gotten are going to benefit myself and the president, but all of you in the audience, you're really not going to feel that. Talk to me about this new tax rebound that is the biggest tax revamp in 20 years, if I'm not mistaken. And, I mean, I don't know all about this. But what does this really mean? I mean, for the little guy, what does it really mean?

HAYS: Well, President Bush cut taxes three times. And I think the middle fifth got something like an average of $756.

Now, it's true that the top, say, 1 percent got like 34 percent of the tax break. But they paid 35 percent of the taxes, and that's what the president will say. Look, the people who pay the most, get the biggest cut.

President Bush says they've stimulated the economy and that they will stimulate long-term investment. John Kerry said, no, the wealthy didn't need that. It doesn't matter how much they pay, they didn't need it. We've got a big deficit. We've got to pay attention to that. We need money to reform health care.

I think one of the funniest things is that the Concord Coalition, who is the watchdog of the budget deficit in government spending says, you know what, over 10 years, they both bust the budget by exactly the same amount.

HINOJOSA: Wow.

HAYS: They are both going to increase the deficit by $1.3 trillion. So you can put them in a bag, shake them up and take them out.

Now, in their camps, they'll say, but wait a minute. We're going to increase the deficit, but we're doing different things, privatizing Social Security, versus giving -- trying to change the tax code so that it doesn't favor companies sending jobs overseas.

These are the two approaches that are so different. So they'd say the numbers may look the same, but you'll end up with a different kind of economy.

MALVEAUX: Kathleen, what do you think is the bottom line for the middle class American? Because you look at, you know, the costs. You talk about oil costs and the cost to heat up your home, and these kinds of things.

The fact that everything is going up in cost, but people may or may not still have these jobs, may or may not have these raises. But there's an incredible increase in just how much it costs day-to-day to live.

HAYS: Well, you know, I think the oil question is becoming more and more and more crucial because the price of crude oil up almost -- up $55 a barrel this week. This is a volatile market. These prices could come crashing back down.

But you know what? They'll never -- they'll probably never crash as low as they used to be. So, again, what does Mr. -- what does President Bush say? Let's drill more. Let's find more ways to get more oil from the rest of the world.

Kerry, I think, is little bit -- it's really just a question of degree. Because John Kerry would say, well, yes, we've got to conserve more, alternative sources. But you can take almost anything Kerry would -- has said about it and you'll find it in Bush's plan.

Meanwhile, a lot of people, are they willing to buy a more fuel- efficient car? Are they willing to give up their SUV? Are the states willing to say, instead of having 16 different kinds of fuel to meet state air pollution standards, we'll have just five or six?

There's so many things that need to be done. I don't think it's front and center in the campaign, except for the fact that each wants to say, hey, it's his fault this is happening. I'll fix it if I'm the president.

HINOJOSA: Well, thanks to Kathleen, who always helps us understand all the numbers out there.

Well, from business and taxes to the war in Iraq, we're back in a moment, ON THE STORY with Jane Arraf and the latest search-and-destroy efforts against insurgents in northern Iraq.

(COMMERCIAL BREAK)

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: That's the sight and the sound of the hard and dangerous work by U.S. and Iraqi forces in finding and fighting insurgents in the Sunni Triangle.

I'm Jane Arraf. Welcome back to ON THE STORY from Baquba, about 30 miles north of Baghdad.

MALVEAUX: Jane, tell us about what's happening on the ground. Obviously, there's a security situation. A lot of people concerned about that. A pacification effort and, of course, even greater concern in the holy month of Ramadan that things may get worse.

ARRAF: Well, they've been working really hard here. And we're talking the Sunni Triangle in general, as well as other places, to crack down on insurgents before this expected surge in violence. And what they're looking at really is a year ago, when there was more violence during Ramadan, this holy month, when they expect extremists to be more active.

So they've been launching crackdowns. In Samarra, they retook the whole city. They've been doing house-to-house searches. And they pretty well pulled out all the guns, including actual weapons and civil affairs operations to try to make sure that this doesn't spike the violence.

HINOJOSA: Jane, has something changed in terms of what the troops are doing by going house to house? Is it that they are now searching every single house and that's becoming more efficient than just targeting a certain number of houses?

ARRAF: It's been a really interesting evolution. Now, when they first came here, we went around with these soldiers and they were basically casting nets, as they put it, instead of fishing lines.

They didn't have a lot of intelligence. So you would see them going to entire neighborhoods, basically on speck, just launching these raids in case they find something. Or launching them on the basis of information that might or might not have been correct.

Now what they're doing is getting better intelligence from Iraqis and from Iraqi security forces, and they're doing targeted raids. But we went into one little village here very close to here that had been a particular problem. There are a lot of bomb makers in what looks like a very innocuous village, according to these soldiers. And it's an illustration of how heavily armed this country is.

We went into one house with the soldiers. There was a woman impossibly old hunched over, half blind. She said, "No, of course I don't have any weapons. What would I do with them?"

Now, a moment later, a neighbor comes to report that she has two rifles hidden in her closet. And those are taken away.

But everyone here has weapons. And it's very difficult to try to get the weapons back. Very difficult to try to find the insurgents when they're so well hidden.

HAYS: Certainly it's a part of their culture. Jane, I want to ask you about a story that's been breaking here the last couple of days about a group of soldiers allegedly who refused to get in a convoy north of Baghdad.

I know you have been embedded where you are, near Baquba. So you haven't covered this exactly. But are the troops hearing about this? Is this something people are talking about?

Is there a sense among them that at times they are being asked to put themselves in harm's way in a way that even a soldier shouldn't? That isn't -- that doesn't make sense?

ARRAF: There certainly is a sense in many places that soldiers are stretched too thin, that there aren't enough troops to go around, and that they don't have the equipment. And one of the particular problems -- we don't know the specific of this case, but one of the particular problems has been, as you probably know, that they don't have enough armored vehicles.

And what they were facing, what a lot of soldiers face is the prospect of driving down these roads where the biggest pillar of these roadside bombs that are increasingly sophisticated to do the maximum damage and kill maximum number of people in vehicles that are not necessarily the safest. But there are simply because there's a shortage of vehicles. It's something that you hear over and over.

Having said that, it takes a lot for soldiers to say, no, I will not follow a direct order in wartime. They know the consequence to that. So people were rather stunned to hear of that.

MALVEAUX: Jane, why are we seeing this happening now? Why are we seeing this new aggressive operation by the United States? You know, there's some cynics who say it's tied to the presidential campaign, to the elections. Why do you think we're seeing an uptick in this now?

ARRAF: Well, a lot of it always comes back to politics, doesn't it? Not just the presidential campaign, but the Iraqi elections here.

And they swear they are going to hold them in January, whether they can hold them everywhere in the country or not. Here in Baquba, they are already making preparations for how they're going to set up polling sites.

Now, they can't have elections, they can't be seem to be credible, they can't stabilize this country until the streets are safe enough for people to go out and vote. And they are quite worried that they're beginning to lose control in some places on what has been an increasingly coordinated effort on the part of the insurgents.

And one of the other interesting things is we're hearing less that these are foreign fighters. What we're now hearing is that a lot of this home-grown insurgency, including these people blowing themselves up.

HAYS: Well, something that is very hard for soldiers to fight. Tough for you to cover at times, I'm sure.

Jane Arraf, thank you for joining us. But first, tell us before you go, what are you looking for ON THE STORY in the coming day?

ARRAF: We'll be moving on to Kirkuk, which is always thought of as the eternal capital of the Kurds, a city that's been contested for decades, centuries, in fact. And one of the most ethnically-mixed cities in the country. Interesting things going on there.

We're also doing a story on the electricity minister here, who has faced more than anyone should have to in a lifetime. This man lost six daughters and his wife when U.S. troops opened fire on his car.

We met with him today. And amazingly, he is not bitter. He still expects there to be a better Iraq, and he's still hopeful about the future.

HAYS: Hopeful about the future, that's amazing in a situation like that. We certainly look forward to hearing that story. Jane Arraf, again, thank you very much.

From Iraq, to the uproar here over flu vaccine, and not enough to go around, we're back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) DR. JULIE GERBERDING, CDC: Shame on the people who are price gouging. This is a reprehensible thing to be doing. I think an immoral thing in this context.

(END VIDEO CLIP)

CHRISTY FEIG, CNN MEDICAL CORRESPONDENT: Dr. Julie Gerberding of the Centers for Disease Control and prevention this week, talking about the shortage of flu vaccine, and reports that some people are jacking up the price to make a quick buck.

I'm Christy Feig. Welcome back. We're ON THE STORY.

HAYS: You know, Christy, I'm the one who's watching the supply and demand in the markets. I think a lot of people don't understand how this market works. It really isn't a market. The government is controlling it, and that's one reason why we have a shortage of flu vaccine.

FEIG: That's a very good point to bring up. The problem is there's only two companies that make this flu shot. The nasal spray is something else. We won't go there.

The flu shot, there's only two companies that make it because there's really no incentive. It is not cost-effective to make a flue vaccine. There's a couple of reasons.

Number one, the liability issue. You're putting a vaccine in a healthy person. If there's something wrong with that vaccine, or if for some reason you get sick from that vaccine, people are going to sue. It's just a fact of life in the United States. It's going to happen.

The second thing is, because the strain changes every year, you have to throw out what you don't sell. A couple of years ago, there were companies throwing out millions of doses from this vaccine.

So it's money down the drain for a company if they can't figure out how much to sell. So that's a big problem. There's just not enough incentive to make a vaccine for the flu.

MALVEAUX: So, Christy, this was a subject that even came up in the presidential debates, as you know. The president was hit hard with that question. But how do you prevent this price gouging from happening? I mean, how are they reacting to that? What can they do?

FEIG: Boy, the price gouging is a real problem. And price gouging is not stopped at the federal level. They can do price fixing. They can't do price gouging.

Price gouging is done at the state level. We're already starting to see lots of reports of price gouging, but we're also starting to see some state governments crack down.

For example, just yesterday a survey crossed my desk. They had talked about 3,000 hospital pharmacists. Eighty percent of them said people had approached them, legitimate sellers had approached them to sell the flu vaccine to them at four times the original cost. Twenty percent said it was 10 times the markup.

Just, yesterday, the state attorney general in Kansas filed suit against the company in Florida. That company had tried to sell flu vaccine to a pharmacy in Kansas, five doses for $900. October 1, guys, that same amount would have cost $85.

HINOJOSA: OK. So here is a question from someone like me, who has never gotten a flu vaccine. I've never given my kids a flu vaccine. And honestly, I don't think I would get a flu vaccine.

So there are many people across the country, I think, who kind of come from the perspective. How do we...

HAYS: Guess what? You're sitting right next to one. I never get the flu shot either. And I don't understand why doctors for so many years have encouraged healthy people who don't need it to get it. That's one reason why there's a shortage.

FEIG: Well, a lot of the problem is you guys can be carriers. You guys can get the flu. You won't get as sick as somebody who has chronic disease.

But say you sit next to somebody at work who as diabetes or asthma. That is a very dangerous situation for them, because if they haven't gotten the flu vaccine, it can be very dangerous for them to get the flu. Say you're caring for somebody, say you're around a grandmother or somebody. You can get it to them. That's a lot of the reasons that healthy people do get it, because you're going to be around a lot of people that don't.

HINOJOSA: OK. So why is it that the flu now is worse than it was 30 years ago? Or is it -- was it just as bad 30 years ago?

FEIG: It's not necessarily as bad. I mean, every -- periodically we get these huge pandemics.

You remember in 1918, I mean, that was just astronomical. They live in fear that we're going to have another pandemic. That's the problem. So they don't know what strain is going to hit when.

They already know this strain is going to be very similar to last year's strain, which isn't totally unusual, but it does change a little bit.

They're just terrified that we're going to have a lot of deaths from this. Every year on average 36,000 people die from the flu. The vast majority of them, 90 percent over the age of 65. Very dangerous.

MALVEAUX: Christy, tell us about that story as well, and the antidepressants a big story this week on that.

FEIG: Yes, absolutely. We've been hearing a lot about this for about a year, year and a half now, the use of antidepressants in teens and whether or not that increases the risk of suicide in teens. Just yesterday, the FDA finally made their decision on this. They're going to require all antidepressants to carry what they call a black box warning. This is the most dangerous, most severe warning that you can put on a pharmaceutical. It's literally one step from banning the drugs used in teens.

They did not go there. And they didn't go there -- which is the obvious question here -- they didn't go there because these things are very useful in depressed teens. They have to be used very carefully. I mean, just as many stories of -- you know, "My child committed suicide on antidepressants," you're going to hear a mother say, you know, "My child was saved by antidepressants."

HAYS: There you go. Well, it's been very controversial. Interesting, though, that they take this step. I assume that it limits their liability somewhat.

Well, stay with us, folks. We're back ON THE STORY right after this.

(COMMERCIAL BREAK)

HINOJOSA: Well, thanks to all of my colleagues. And thank you for watching ON THE STORY. We'll all be back next week right here. And I'll see you Sunday night at 8:00 for "Immigrant Nation, Divided Country."

Coming up, "PEOPLE IN THE NEWS," focusing today on Jennifer Lopez and Alex Rodriguez straight ahead.

Now a check on what's making news right now.

HARRIS: I'm Tony Harris at the CNN Center in Atlanta. "PEOPLE IN THE NEWS" is next. But first, stories "Now in the News."

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