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On the Story
Inside the Week's Stories: APEC Summit; Sears and Kmart merge
Aired November 20, 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.
RUDI BAKHTIAR, ANCHOR: Hello, everybody, I'm Rudi Bakhtiar at the CNN center.
Topping our news now, President Bush's agenda this morning is nuclear standoff at an Asia Pacific summit in Chile. The president is calling on other nations to help ease nuclear tensions with North Korea and Iran. This is the president's first international trip since winning a second term.
A mass murderer in Afghanistan has brought the death penalty. A Kabul court has sentenced a man to death in the killings of four journalists in the year 2001. The man says he was forced into a gang that committed the murders on the orders of a top Taliban commander.
Back here in the U.S., two Georgia girls are accused of whipping up a poisoned cake and feeding it to their classmates in suburban Atlanta. More than a dozen students reported getting sick. Police suspect the cake contained bleach and glue, but they're still testing it.
Also in Michigan, some really behavior at a Detroit Pistons game. It all started when one player shoved another one, and it ended up as a brawl between players and fans. Police are reviewing the tape and talking to some witnesses.
Another check of the headlines is coming up. But the next half hour, ON THE STORY is next.
CANDY CROWLEY, CO-HOST: Welcome to CNN's ON THE STORY, where our journalists have the inside sword on the stories we covered this week. I'm Candy Crowley, ON THE STORY of the big party in Arkansas, what Democrats toasting the Clinton library were saying about the political future of their party.
DANA BASH, CO-HOST: And I'm Dana Bash in Santiago, Chile, where President Bush is back on the world stage with an election victory and new picks for his cabinet.
KELLI ARENA, CO-HOST: I'm Kelli Arena ON THE STORY of turmoil at the CIA and what it may mean for detecting the next terror attack.
KATHLEEN HAYS, CO-HOST: And I'm Kathleen Hays on how the Sears Kmart merger may change wait we shop.
We'll go to Iraq, where Jane Arraf is ON THE STORY of the dangerous house-to-house work in Falluja, secure, but not yet safe. And throwing in the towel. Was one of TV's "Desperate Housewives" off sides in the pre-game of "Monday Night Football"? E- mail us at OnTheStory@CNN.com.
Now straight to Dana Bash and President Bush on the world stage.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're at nation at war. We're leading a large coalition against a determined enemy.
(END VIDEO CLIP)
BASH: President Bush this week, as he announced key changes in his cabinet at home, and prepared for his first post-election trip abroad. He arrived here in Santiago, Chile last night.
Already this morning, he has had about half a dozen one-on-one meetings with world leaders where he is testing what the White House has said they believe is a mandate for a new aggressive foreign policy.
CROWLEY: So Dana, you know, a lot of these folks sort of waited out the election. Have you seen any sign yet that there will be any kind of different ambiance when the president goes overseas or down south?
BASH: Well, I guess ambience is sort of all in the eye of the beholder. In items of what's happening on the streets, nothing has changed. It's really sort of interesting to watch, that just as we saw throughout most of the president's first term, we've seen some protesters in the streets.
Some of the standard protesters talking about anti-globalization and things like that. But also some of the more personal protests and demonstrations against President Bush, as a warmonger and some, you know, hanging and burning of President Bush in effigy.
But in terms of the internals of the diplomacy, you're right, Candy. It's sort of interesting and will be more interesting to see as we hear more about what happened, what went on behind the scenes in these one-on-one negotiations.
Whether or not the president is going to change it, whether or not, for example, on North Korea, which is really his top agenda item here, whether he's going to show a little bit more flexibility, which is what a lot of these leaders really want him to do.
He was very, very steadfast, and it sounds this morning as if he's not changing that much, in saying he's not, for example, give in at all to North Korea on giving them some aid or security assurances until they dismantle their nuclear programs. And that is certainly something that some of these leaders want to see.
ARENA: Dana, you talk a little about diplomacy. I'm very interested in -- in the background story of Colin Powell. He's leaving, maybe he didn't want to leave, some power (ph) intrigue. What's up there?
BASH: No big Powell (ph) intrigue much at the Bush White House, but it seems that -- that this week we did.
Of course, Colin Powell announced on Monday that he is leaving the cabinet. And of course, it was just that night that we were told by administration officials that Condoleezza Rice, the president's national security adviser, would be nominated to take his job.
And you know, I think it was about a year and a half ago that there were reports that Colin Powell was going to leave. And at that point the president hadn't even started his campaign, and everybody was sort of raising eyebrows. So nobody really expected him to leave.
However, after the president won re-election, there were some reports from associates of Secretary Powell that perhaps after Arafat's death that he saw some openings in the Middle East, that maybe he wanted to stay for a couple of months.
Well, the White House essentially wanted to put the kibosh on that kind of talk. The president already decided that he wanted Condoleezza Rice in that job. So they moved pretty quickly to announce that Colin Powell was -- was going to leave and that Condoleezza Rice was going to take that job.
It was interesting to watch Colin Powell. He was, I think, the only departing member of the cabinet to go before the cameras after announcing his resignation, to get his side of the story out. He was very clear to say that he only did want to stay one term, but he was also very careful not to say that he asked President Bush to stay or to say that President Bush asked him, because it didn't happen.
HAYS: So Dana, in light of -- in that context, Colin Powell, a bit of a lame duck at this point, what is the dust being kicked up over Iran for at this point?
BASH: You know, that's certainly thus far been the story down here in Santiago, the question about Iran.
Colin Powell came down here a few days before President Bush and told reporters, as we've all been reporting all week, that -- that Iran is moving towards actually not just having nuclear capability, but actually making a missile to send the nuclear capability, to actually launch -- to launch it.
And that is something that has gotten a lot of people raising their eyebrows, particularly in the intelligence community, whether or not that was adequate, that was adequate information to be talking about that.
But the president today talked about Iran, talked about the fact that he does believe it's a threat. At this point, certainly they're moving a diplomatically.
And perhaps Colin Powell, some inside the administration think, said that and wants to make that abundantly clear, that he thinks Iran is a big issue. Because there is some concern about the way the Europeans are negotiating with Iran. Perhaps they think, in the Bush White House, that the Europeans, they're letting Iran off the hook where they wanted to be more aggressive.
And that's what -- you're sort of seeing that diplomatic dance down here in Santiago.
CROWLEY: And Dana, when you look at the sort of inside White House, the people that are closest to President Bush, being moved to the outside, to the Justice Department, to the State Department. You're even getting some Republicans going, "Oh, this looks really, really tight-knit, maybe a little too tight-knit."
What's -- what's the White House pushback on that? What's their -- what's their take on why this is a good thing?
BASH: Candy, we're joking this week that so far the president essentially opened the door to the Oval Office and screamed down the hall to find the members of his cabinet. That's how close he has been looking to replace the secretary of state, the attorney general, and, of course, his -- his top -- top counsel.
But what the administration says when they do hear from Republicans, as you said, who say that this may not be such a good idea. You need tension inside the administration, you need healthy debates. And there is a danger in having an echo chamber which could hurt, ultimately, the president's policy.
What they say inside the White House is, "Look, we have a mandate. We won. We got the support of the American people for our policies, for our personnel, and there's no reason to change course. We got no signals that there's a desire to change course, so we're not doing it."
ARENA: Dana, what's the word on Condi Rice? I think the bottom line is they expect confirmation, but maybe a little flack, 16 words in a speech here and some misguided advice over here. What's the -- what's the bottom line?
BASH: The bottom line is she's going to be confirmed. Democrats and Republicans alike say there's no question about that.
But, you know, Democrats are sort of feeling a little bit -- a little bit stung, as you well know. And some of the folks I've talked to on the foreign relations committee, who will have jurisdiction over that confirmation, say that they're going to -- they're going to try to -- maybe rough her up is a little bit too strong, but they're definitely going to question her on some of the missteps they see that she was overseeing during the first four years of the Bush White House in terms of foreign policy.
Iraq, of course, is first and foremost. Kelli, you mentioned the 16 words, talking about, of course, the idea that a statement got into the president's State of the Union address saying that Africa was -- that Saddam Hussein was trying to get uranium from Africa. Later the National Security Council essentially had to say that they were in charge of making sure that everything was accurate in the speech, and they basically fell down on the job.
You, of course, have the major issue, which is the question about weapons of mass destruction, some of the statements that we've heard Condoleezza Rice made, perhaps some of the most explosive statements saying that she believes that there could be a mushroom cloud. And you want to make sure that doesn't happen.
Those were some of the warnings, some of the dire warnings that we heard about weapons of mass destruction in Iraq what turned out not to be true.
CROWLEY: So from travels from one president to a rare chance to see four U.S. presidents sharing the same stage, I'm back ON THE STORY of the Clinton library opening, and what Democrats were saying about their past and their future.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: The William J. Clinton Presidential Library is a gift to the future by man who always believed in the future. And today we thank him for loving and serving America.
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Today we're all red, white, and blue.
(END VIDEO CLIP)
CROWLEY: Hang on a second, wasn't it just a couple of weeks ago we were neck deep in rough and tumble name-calling, reputation bashing, no holds barred partisan politics?
But in Little Rock, Arkansas, it was raining like crazy, but the speeches were all sunshine, and the Clinton Presidential Library was launched.
Welcome back. We are ON THE STORY.
BASH: Candy, you know, I was there with President Bush, watching President Clinton's face as it got -- he looked more and more upset as the rain got harder and harder and harder. It really became so miserable there.
But certainly, once he got up to speak, it became so obvious to most, listening to him, that he still seems to be the leading voice for the Democratic Party, somebody obviously, who can't run again.
What are you hearing from Democrats about the phenomenon and how do they get over it?
CROWLEY: It was -- it was really interesting. The hotel lobbies in Little Rock were packed with, you know, Dean people and Gore people and Kerry people and Clinton people. And they all talked about, well, where is our next Bill Clinton, you know? Where do we find the next guy like this?
There was a part of the library where you go in, where Bill Clinton says, "Hello, and welcome to the library." It's on tape, obviously. He's not standing there. He's not that retired.
And, you know -- and one of the Democrats remarked to me and said, you know, "He just -- even the way he talks on tape, where did we go wrong? Where did we love that sort of common touch, the red state Bill?"
It was very funny, because one of the architects called the Clinton library the world's largest doublewide, because it's this very modern thing.
ARENA: Right.
CROWLEY: And he just embraced it. He said, "That's kind of me. I'm a little blue state. I'm a little bit red state." He had no problem with it being, you know, a trailer.
It was -- it was a very interesting time for them to look back, but they really were fretting about the future.
ARENA: Well, I have to say, when I was looking at that lineup, you know, Jimmy Carter and, you know, former President Bush, and you go all the way down, and all of a sudden, boom, Senator Clinton, Hillary.
And -- and you couldn't help but think, this is the only person in this entire lineup who represents the future here, rather than the past. I mean, is the momentum truly building? And do they think that a little bit of her hubby is going to rub off and get them there?
CROWLEY: It's interesting. I mean, look, we were in Little Rock, Arkansas, where she had been, obviously, first lady of the state for some time. We were celebrating a man named Clinton.
So obviously, you heard a lot about Hillary Clinton. There were "Hillary in '08" bumper sticks on cars already. There were T-shirts for Hillary '08.
But look, there were also people in the lobbies going, "If we nominate Hillary Clinton, we get what we deserve." There are a lot of people that think, "A blue state northeastern senator, is this what we need in '08? Didn't we just do that in '04?"
ARENA: Exactly.
CROWLEY: So look, there are a lot -- and you hear other names out there: John Kerry, he hasn't taken his name off the list. In fact, he seems to be quite intent on keeping it out there. John Edwards, Howard Dean. There are a number of people. And there are some senators out there, some people that didn't play big this year, who, in fact, we may see again. So it's by no means a big, big Hillary push. She's the most known. She's the one that leads the polls. But good heavens, you know, name recognition at this point is everything.
HAYS: Tell us about how Bill Clinton seemed to you, Candy, maybe looking a little bit tired, kind of upset it was raining so hard, but, you know, a tremendous accomplishment, this whole complex, which has uplifted this whole area.
But I think that so much writing and talking this week about the section that talks about politics of persecution. And one of my colleagues said, the spin never ends.
CROWLEY: It's true. I mean, look, this is his library and it is his vision and his interpretation of what the Clinton era was about.
And so there's this section in it, and it's called "The Politics of Persecution, and it's a time line of Whitewater and Ken Starr and Monica Lewinsky. It's certainly isn't seen as, "I lied under oath and I got caught." I mean, that's not ever how he sees it.
He sees it as -- so if you are inclined to support how the Clinton White House viewed this, you will see that as history. If you are not, this is going to make you furious. But then, you know, the more things change, the more they stay the same.
And when you look at -- when I looked at him on the stage, he obviously has had open-heart surgery. That is huge. And this is has not been that long since he had it.
HAYS: Two months.
CROWLEY: Does he look older? Yes. He looked smaller. You know, part of that is, God bless him, you know, well, he's lost weight and he wants to lose weight, and so that's a good thing.
But it was raining. I mean, and it wasn't just -- the pictures don't do it justice, people.
ARENA: It was ridiculous.
CROWLEY: It was ridiculous and steady, steady, steady for five and six hours. So...
ARENA: Can you spell tent, maybe?
CROWLEY: Right. Well, it rained on his parade, and that's hard.
But I'll tell you, he got out there and started to talk, and it was that -- and you saw immediately what the Democrats were missing. And I know we have a bite of him, and he's talking about this last 2004 election where you saw why Bill Clinton appealed to both the blue state and the red state.
I think we've got that, Charlie.
(BEGIN VIDEO CLIP)
CLINTON: I once said to a friend of mine about three days before the election, and I heard all these terrible things, I said, "You know, am I the only person in the entire United States of America who likes both George W. Bush and John Kerry? Who believes they're both good people? Who believes they both love our country, and they just see the world differently?"
What should our shared values be? Everybody counts. Everybody deserves a chance. Everybody's got a responsibility to fulfill.
(END VIDEO CLIP)
CROWLEY: So now all they have to do is find a replacement for that.
ARENA: Right.
BASH: Candy, you know, watching -- watching all the presidents -- former presidents on stage, I was just dying to be able to read lips and see what they were saying to each other.
You know, when George H.W. Bush was speaking, talking about how he was not that happy about President Clinton dissing his son, on the stage, President Bush leaned forward and said something to President Clinton. Sort of dying to see what was going on there.
But as you mentioned, as they were all talking, there was somebody in the crowd you couldn't see, because he was under an umbrella. That was John Kerry. What are you specifically hearing about his plans, perhaps, for 2008? Is he really already preparing for that?
CROWLEY: I think preparing overstates the case. I was talking to someone who was in the staff room when John Kerry talked to his staff after losing, and he said, well, you know, Ronald Reagan took a couple tries at this, you know, before he did it. And they all stand up and applauded him.
And more than a few of them, I'm told, rolled their eyes thinking, you know, I'm just not sure he's our guy in '08.
And again, he's going to have a lot of competition. The fact of the matter is, Ronald Reagan was never nominated until he was nominated and then he won.
Now, Richard Nixon is the exception to the rule. He did come back after being nominated, and he won again. I'm not sure that the image that John Kerry wants, the role model out there.
But, you know, it's -- look, you don't at this point go, "No, I'm not running."
ARENA: Sure.
CROWLEY: Al Gore, as we all remember, waited until December, I think. I mean, you want to keep your options open. He is determined.
Look, 55 million Americans voted for this guy. He wants to take that push, that power that he's got behind him and use it. He's out, you know, he's using his web site. He's pushing for things. He gave his first -- his first floor speech on the debt ceiling. So the old John Kerry is back.
HAYS: A nice, long speech for John Kerry, indeed. Of course.
ARENA: Well, Dana, we want to thank you because you've got to get back ON THE STORY. So thanks for joining us for the short time that you were here.
BASH: Thank you.
ARENA: We're sad to see you go.
Well, all of that bipartisanship in Little Rock turns to dust when politicians start talking about changes at the CIA. I am back on that story right after this.
(BEGIN VIDEO CLIP)
ANNOUNCER: Kelli Arena is CNN's justice correspondent. Earlier she worked for CNN's financial news. The New York Festivals awarded her a 2002 best correspondent award.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
PORTER GOSS, CIA DIRECTOR: My attitude towards the intelligence community and, I guess, my own at the CIA is one of tough love.
REP. JANE HARMAN (D), CALIFORNIA: The direction sent by this highly partisan, inexperienced management team, which Porter Goss brought over with him to the CIA may cause the wrong people to resign in protest and may hurt our efforts to win the war on terror.
(END VIDEO CLIP)
ARENA: New CIA director Porter Goss and ranking Democrat on the House Intelligence committee, Jane Harman.
Top people have left already. The Goss tough love signals more shakeup to come.
Welcome back. We're ON THE STORY.
HAYS: Those are some tough words. We're hearing "tough love." We're hearing "inexperience." We're hearing "politicized." I sitting here as a citizen of the United States wondering, I don't want to hear about turf battles. I want to hear about being protected in the war on terror. What's going on? ARENA: Right. Well, you know, politics is what's going on, and -- and there are those that believe that Porter Goss had a mandate to shake things up. And you know, the CIA failed miserably pre-9/11 and in Iraq, and so on, so there need to be big changes.
There are those who say we're in the middle of war on terror. We need institutional memory. We need people who know what they're doing. This is -- this is a catastrophe.
The guys that I'm talking to who work in counterterrorism are saying that the same people that they deal with online are the same people they deal with online. That they have not seen a major impact and major difference in how they do business every day.
Of course, it's when that ripple down effect really does sink in and take affect and we'll start seeing massive changes in the field. That's what...
CROWLEY: So the field stays the same. And it seems to me that it's a very tough argument to say, "The CIA missed 9/11. They missed the entire war on terrorism. And now they're all leaving. Oh, my God."
I mean, it sounds like, you know, everybody sort of switched their positions.
ARENA: Right.
CROWLEY: You know, they've taken the CIA that has been roundly criticized by the Democrats, and now all of a sudden they want them to stay. So...
ARENA: Well, I mean, change in any agency, as you know, and change in Washington doesn't make anybody comfortable. And so while we all like to have that familiar, you know, guy to beat up, and the CIA was that familiar guy to beat up.
So I think we all have to see how this shakes out. Obviously, my colleague, David Ensor, will be the one who will really get into the nitty-gritty of this.
But from my side of the fence, from the counterterrorism, you know, domestic side of the fence, they're saying, "OK. We've got a few changes, but you know, the institution is what it is. We have TTIC, the Terrorism Threat Information Center, working. It's working well. Cooperation is working. We've come a long way, baby, since September 11."
HAYS: You know, another area, and I always wonder if, as journalists, this is the kind of thing that resonates with us more than it does with the public. But this Rhode Island reporter who is probably going to go to jail for six months for not giving up a source.
I just wonder if people who aren't journalists realize how important it is for a source's anonymity to be protected so THAT journalists can get the information we need.
ARENA: Well, Jim Taricani is an interesting story. He's the reporter in Rhode Island.
What he did was he aired a videotape of a Rhode Island official accepting a bribe. So one would argue, this is good public citizenship, right? I mean, you're getting -- getting the fraud out there.
The crime was not in airing the videotape. He just wouldn't tell who gave him the videotape.
And so first he was fined $1,000 a day. Then they upped it, and they said, "You know what? You're facing jail."
And -- and every legal expert I've spoken to...
CROWLEY: Why?
ARENA: Because -- because it was -- it was leaked. The tape -- there was a protective order on the case...
HAYS: Because there was a probe of corruption in Rhode Island.
CROWLEY: And somebody gave him the tape and they weren't supposed to. And so they want to know, "Who leaked the tape, Jim?" Jim won't say.
And so off to jail he will probably go. Most legal experts think he's going.
But this isn't the first. This is -- this is one in a series of rulings that have really gone against journalists. And I can tell you that I have been approached by at least three senior sources that I work with on a pretty consistent basis saying, "What does this mean? I mean, what would you do?"
If at the end of the day, don't forget, sometimes I get all the classified information, information about terrorism that I'm not supposed to see, you know. If I -- if there's a thought that reporters are going to go out there and start getting pressured and saying, "Well, you know, it was Joe Blow, your honor, who gave me that piece of paper," because you know, I've got three kids and I don't want to land in jail. That is a problem, because there's a chilling effect.
CROWLEY: So far that hasn't happened. I mean, the reporters have stuck with it in these case.
ARENA: Right, right. But there has been a series of rulings that really indicate that that -- that precedent that we all thought existed for awhile, where we could sort of stand on our laurels and say, "We're journalists. We don't have to divulge our sources." Turns out there really isn't solid legal ground for us to stand on.
And so there is some movement on the Hill to possibly come up with a shield for journalists, much like doctors and lawyers.
HAYS: Right. Lawyers have client privilege.
I wonder how somebody Alberto Gonzales, attorney general to be, would rule on something like this? You know, he's being viewed somewhat skeptically by conservatives and skeptically by liberals, particularly with his regard on some stances with treatment of prisoners during the war.
ARENA: Right. Well, you know, he is most famous for two issues, at least in my circle. I don't think he's famous to the world, but I mean, famous in my circles.
Saying that the Geneva Convention didn't apply to the detainees held in Guantanamo Bay, and also to signing on to the thought that torture in some circumstances might be legally OK.
These are two things he will get pinned on during confirmation hearings. But again, much like Condi Rice and everyone else, they expect, you know, a big hubbub, but at the end of the day for them to get through.
He is perceived as a more moderate Republican than John Ashcroft. I mean, some Democrats have been quoted as saying, "Well, you know, anything's better than John Ashcroft, so you know, we're happy."
But he's very much seen as sort of an appendage of the White House by some, and John Ashcroft was not part of that inner circle. He sort of marched to his own drummer and -- and did provide some tension, you know, between the Justice Department and the White House.
CROWLEY: Right. I think so.
ARENA: Anyway, it was tension and some people argue tension is good, you know?
HAYS: Well, a lot of tension on Wall Street. Yesterday in particular. We're wondering, did the Bush boom on Wall Street hit the wall on Friday? And shoppers alert, does the marriage of Sears and Kmart spell savings for you? I'm back on those stories in just a moment.
ARENA: We'll go to Iraq where Jane Arraf is ON THE STORY of what she saw as U.S. troops went house to house in the dangerous streets of Falluja.
And what's the etiquette? What's the buzz over kiss in the workplace for a boss's congratulations?
Plus, a check on what's in the news right now, all coming up.
(COMMERCIAL BREAK)
BAKHTIAR: Hello, everyone, I'm Rudi Bakhtiar at the CNN Center in Atlanta. Let's give you a check of the day's top stories. Vocal demonstrations in the streets of Santiago in Chile, denouncing globalization and the war in Iraq. But inside the APEC summit, much of the talk is about nuclear weapons on the Korean peninsula. President Bush is spending the morning talking with the leaders of China, Russia, South Korea and Japan on how best to discourage North Korea from pursuing nuclear weapons.
In Baghdad, insurgents this morning used homemade bombs, rocket- propelled grenades and small arms to attack a U.S. Army patrol. One soldier was killed; nine others were wounded.
And Condoleezza Rice is back at home after spending the night at a Washington, D.C., hospital. She was treated yesterday for non- cancerous growths of the uterus. The medical procedure was described as minor. Rice, who's been nominated to be secretary of the state, is expected to be back in the office on Monday.
In Michigan, charges are possible in the aftermath of last night's NBA brawl. Look at this. With just 45 seconds left in the game between the Pistons and the Pacers, shove turns to punches, and then mayhem. No one was seriously injured, but police may present a case to prosecutors after reviewing the video and talking to witnesses.
Another check of the headlines is coming up at the next half hour. Back now to Candy Crowley and ON THE STORY.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I think the consumers are going to be a little confused. Am I now going to go to Kmart and get tires? Am I now going to go to Sears to get, you know, a white satin sheet? I think you're going to just see a lot of changes. Is there going to be a name change? Is there not going to be a name change?
(END VIDEO CLIP)
HAYS: That was Linda Caplin-Thater (ph), a branding expert, just one of the many people trying to sort out the Sears and Kmart merger this week. Is it a good idea for the companies? And what about Wal- Mart and what about you and me?
Welcome back. We're ON THE STORY.
CROWLEY: Well, forget Wal-Mart. I mean, what about us here? I mean, so answer her questions here.
I mean, do you -- which one do you go to for your tires and which one do you go to -- how are they going to work this merger out, and what is it going to look like for the shoppers?
HAYS: What we know so far is that they are definitely going to put Kmart merchandise in Sears stores and Sears merchandise into Kmart stores. So think hard goods, soft goods.
Because what we think of Sears for is Craftsmen tools. Maybe not you, Candy. I don't know how -- I've got a house (ph). But certainly Kenmore appliances.
With Kmart you think of some of the high-profile names like, you know, Martha Stewart's line, which has caught on so well; Joe Boxer with those cute little commercials, things like that.
They're definitely going to cross-reference the merchandise.
If there are -- if there's any name change, what will happen is, you know when you go to Sears nowadays, you go to the mall. And that's apparently been hurting Sears, because more and more it's the stores like Home Depot and Lowe's, which have the big stand-alone stores where people go to buy their appliances and their paint and that kind of thing.
So those are the kind of stores Kmart has. So what they may do is move some of their big Sears stores into their Kmart stores. And if there's any name change, it's going to go to Sears.
But I think it is going to be a little confusing, because there's still going to be some Sears stores and some Kmart stores. And we're just not confident. I think people who have not shopped at Sears and Kmart lately is because they don't like what they see there or they don't like the service or they don't like the merchandise.
So if they don't like one, is that going to draw them into the other? And if they don't like either one of them, why would they go to a merged Kmart and Sears? I think that's what people are kind of wondering.
ARENA: And I think I heard you say that there were some saying, well, this is a combination of two mediocres anyway, so the chances of them really pulling this off are...
HAYS: We don't know, OK. Because we know that Wal-Mart is, by far and away, the leader. You know, Wal-Mart's market cap is something like $240 billion, with a "b," dollars. They're huge. You know, they have -- they beat everybody.
In terms of Kmart and Sears, they're now an $18 billion market cap store. So I think there's a, really, question about how this does work out.
The guy who put this whole deal together is brilliant. Eddie Lampert was a Goldman Sachs equities trader. He started out with $28 million. In 1988 he was back, built that to $10 billion, bought Kmart, sold off the real estate, changed the management, got the money and the vision to get Sears.
But the question is, does Eddie really want to build it into another competitive retailer, or is it just a step to his next acquisition? And people aren't sure.
CROWLEY: Seems like there's lots of possibilities. Like a Martha Stewart tool kit.
HAYS: There you go. Or your Joe Boxers in the Kenmore washer and dryer.
CROWLEY: Now stock market, we've had a couple of weeks for it to shakeout post-election. Where is it and why is it there?
HAYS: You know, we were going into the -- another consecutive week of great things, you know, for the S&P 500, for the Dow Industrials, for the NASDAQ.
We had good numbers on the economy, housing charts back up, industrial production up. The market shrugged off some kind of -- a little bit scary inflation numbers.
Dollar, dollar, dollar, dollar has been in the background. The dollar has been under pressure, sliding since Bush's re-election, because now traders are focused on the fact that we've got a big budget deficit and above all, a big and growing trade deficit.
And they know the Bush administration in the first four years were very happy to see the dollar fall to help correct the trade deficit. A week dollar makes it tougher for us to buy all that cheap stuff from China or from overseas.
So on Friday Alan Greenspan, head of the Federal Reserve, gave a speech, and just pointed out, "You know what? This can't go on forever. The trade deficit has to start shrinking."
And it just put focus, once again on this. This is the 800-pound gorilla hanging on the financial markets: hit stocks, hit bonds, hit the dollar.
CROWLEY: And oil?
HAYS: Oil. You know, oil is still back below its peak of $55 a barrel. This number, this weekly report everyone's watching on Wall Street, and it's the inventory numbers. And it tells us our basic, our U.S. inventories of crude oil and heating oil are going up or down. And so if traders see crude oil inventories go up, we'll sell oil. You see the price go down.
Well, on Wednesday we see the crude oil inventories rising, so you think oil goes down. It did for awhile until they went, "Oh, look over here. Here's the distillates." This is the heating oil stocks. They continued to fall.
And we're at the point now where weather is going to make all the difference for oil prices. If the winter is cold, well, as they say it will, "The Farmer's Almanac," well, that could mean -- that could mean oil prices shooting back up.
That was the other thing that hit the stock market on Friday, though, is this -- after this -- this inventory report, people just got kind of nervous and that -- oil prices are up again on Friday, as well.
ARENA: The bearer of such good news. We love having you here, Kathleen.
Well, from the business world in the U.S. to life and death street fights, street cleanup in Falluja. Our Jane Arraf is on that story, and she'll join us in a moment.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You never know if it happens, you know. You've got to stay visual.
(END VIDEO CLIP)
ARENA: Stay alert, stay vigilant. The rules of staying alive in Falluja, says Magareto Ramirez (ph), U.S. Army.
Welcome back. We are ON THE STORY.
Baghdad bureau chief Jane Arraf has been in the midst of the fight for Falluja. Jane, is this door-to-door operation still going on there?
JANE ARRAF, CNN CORRESPONDENT: It is in a sense, Kelli. They're going door-to-door, because there's a lot of the city they haven't actually been through.
And this is a city, we have to remember, that's essentially been sealed off, closed to U.S. forces since April. So the doors that we went through, following soldiers who kicked them down, shot off the locks and did an unimaginable variety of things to bust those doors open, contained things like car bomb factories, weapons arsenals.
Some of them contained a home that was believed to have been used by top lieutenants of Abu Musab al-Zarqawi. So they are going door- to-door, and it's a very long process.
ARENA: Jane, we know you can't tell us exactly where you are, or where you're going next. Many details you can't reveal. But remind us what it's like to be an embedded reporter.
How close to the fighting are you? Where are you when the soldiers are actually doing this kind of thing? Every time I see you on television, I'm wondering about your safety.
ARRAF: Oh, thanks. We're right there with the soldiers. We're now actually at Camp Falluja. The Army operation that we were with was winding down. They were kind of at the forefront of things.
Where we were physically most of the time was in an armored personal carrier. And if you've been in those, you know they're very crammed. It's basically like living in your car, if one ever lived in one's car for a week at a time, but without the benefit of being able to stop at a gas station to clean up.
But when the fighting was going on, we were right there. We were -- rocket-propelled grenades flying, mortars, all kinds of things.
But the thing is that a lot of the scariest sounding stuff and the scariest looking stuff is actually coming from the U.S. side; it's outgoing. So while it sounds terrifying, what's far more terrifying is that single bullet ricocheting or a rocket-propelled grenade, possibly the most evil sound in the world, whizzing over your head.
But we are actually with the soldiers. And the ones who draw the short straw, it's their unfortunate job to keep us safe, which they do very well.
CROWLEY: Jane, two things that have filtered out here and made big headlines, and I'm wondering if they are talked among the rank and file where you are.
The first being the case of a prisoner being shot and killed by someone during this assault on Falluja, and an investigation into that.
And the second, a very widely publicized memo from commanders on the ground, saying big mistake we are going to pull our troops out of Falluja any time soon, for which apparently there were plans.
Is there talk of either of those incidences in and among the rank and file?
ARRAF: You know, among the rank and file, certainly the incident where the Marine is being investigated for possibly shooting a wounded detainee. That is something that they -- a lot of them feel it's really unfortunate, because it detracts from what they're doing.
They say the investigation is still underway, obviously, and is yet to be determined what exactly happened or what will happen to that soldier.
But they -- this is war, and a lot of them, when you talk to them, really have a different perspective on it, without having to say, it's quite apparent that this is going to take a lot of work.
This is a damaged, destroyed city. It is absolutely scarred. It's empty of people for the most part. We have to get those people back in.
And then where do you start? You've got to have a government. You've got to have a police force. And if you look at other places in Iraq, their police forces are running away in some areas.
Immense problems, which doesn't mean they're insurmountable. Certainly, they're not saying they are. They feel that this went really well.
But the rank and file, they believe that troops are going to be in Falluja for a long time, and not only that, they believe that they themselves will probably be back for another deployment in Iraq.
ARENA: Jane, what about Abu Musab al Zarqawi, obviously some hints of where he may have been, but any leads on where he may have gone? Is there any optimism at all on that front?
ARRAF: I think the only thing that there seems to be at least a partial consensus on, if there is such a thing, is that he's gone. No evidence that he's around. No evidence that he was killed yet.
And they're going around and -- how's this for a job? The mortuary detail, military people who go around and collect the dead bodies, like 10 days after they've been killed.
Have to collect those bodies, and then during that process, there is some investigation as to who these people are. Are there documents next to them? No indication that any of the dead men are Abu Musab al-Zarqawi.
And the feeling is, among military officials, really, is that the leadership fled. And that's part of the reason they had a relatively painless time doing what they did in this city.
The mid-level leadership appears to have stayed and fought. And in the case of the southeast where we were, fought till the death, but top-level leaders appear to have fled to who knows where.
HAYS: Jane, in terms of the deployments, a story that the Marines prepared, an assessment of the needs for troops, and the need of the -- the amount of people they need just to stay in Falluja.
And there seems like there's not enough bodies there right now, particularly going into these elections, which are coming in January. That is just around the corner.
What are you hearing from the troops? What are you picking up?
ARRAF: There is in this case -- we have to be completely honest -- there is a disconnect between what you hear in public statements from military officials and what you hear from the rank and file.
And what you hear from the rank and file sort of mirrors what we can see with our own eyes when we go through the streets of Falluja. It's going to be a stretch getting elections up in January.
Now, they might have civilians back there. There might be rebuilding. That would be an absolutely wonderful thing. But to have a full-fledged, working, functioning, civil administration there, to have a police force when they're not quite sure where that police force will come from, that could take awhile.
Now, the success, they believe they've had, Marine officials particularly, in this, is that they really believe that they have rooted out the command and control center for the insurgency in other parts of Iraq, that this will make it that much harder for insurgents to regroup.
CROWLEY: Jane, before you take off, tell us what you're going to be looking for on the story in the coming week.
ARRAF: We're hoping to stay around Falluja for just a little bit to see that absolutely fascinating and challenging part of this battle, where it transitions from the incredibly intense combat that we've seen for the last 10 days or so to a low-level conflict.
Now, we're seeing things like the battle to root out individual insurgents. Those are still there in small groups. There's a report, for instance, that someone waving a white flag -- the Marines say that someone waving a white flag dropped that white flag and shot at the Marines.
Immense difficulties going forward, transitioning from battle to bringing back civilians.
CROWLEY: As always, we thank Jane Arraf. Hope to see you soon.
From Iraq to what else grabs attention this week, a White House kiss; a Monday night pre-game promo for "Desperate Housewives"; and how one senator leaves Washington and the women he says you can't shut up.
We're ON THE STORY, straight ahead.
(COMMERCIAL BREAK)
CROWLEY: A quick moment this week when President Bush congratulates his trusted adviser and long-time friend, Condi Rice, his choice for secretary of state, and he gave her a quick kiss. To kiss or not to kiss.
Welcome back. We're back ON THE STORY.
Hey, I'm all to kiss, OK? I'm not really sure what -- perhaps I wasn't paying attention, but what's the big deal?
HAYS: What's the big thing? Come on, I say what the world needs now is love, sweet love. OK? I mean, a little kiss on the cheek. I can't believe anybody would make a big deal out of this.
ARENA: And considering -- I mean, you know, we've talked about this -- how close they are, I mean, personally...
CROWLEY: She's always described as a member of the family.
We also have a long history of kisses, by the way, that have become very famous.
ARENA: yes.
CROWLEY: We had the Al Gore/Tipper Gore kiss that everybody said changed the face of his campaign, you know, at the convention. We had a very famous, was it Chirac?
HAYS: Laura -- It's Laura Bush, accepting a kiss on the hand from Jacques Chirac, you know. A kiss on the hand is quite continental.
ARENA: There it is. See? HAYS: Now, that I wonder about.
CROWLEY: Almost embarrassing (ph).
ARENA: At least it was his wife.
CROWLEY: So they do have something in common.
ARENA: There's another thing though, I mean, another controversy. We're rushing along here.
Desperate, desperate, "Desperate Housewives," Nicolette Sheridan during the NFL game.
HAYS: "Monday Night Football."
ARENA: She, you know, there was this big thing where she was coming on to this player to -- let's listen to this. I can't explain it and look at it. It's better.
(BEGIN VIDEO CLIP)
NICOLETTE SHERIDAN, ACTRESS: Where are you off to, looking so pretty?
TERRELL OWENS, PHILADELPHIA EAGLES PLAYER: Baby, it's "Monday Night Football." The game starts in ten minutes.
SHERIDAN: I love you, T.O.
OWENS: Then how about you tell me what's buried underneath that pool?
SHERIDAN: You know I can't tell you that.
OWENS: Then I've got a game to play.
SHERIDAN: Terrell, wait!
OWENS: Oh, hell, the team's going to have to win this one without me.
(END VIDEOTAPE)
ARENA: OK, I can understand kids are watching, they don't expect this, but I just think it was just dumb.
CROWLEY: First of all, you had to wash "Desperate Housewives," which I haven't.
You know, I think at some point we have to think red state here. You know, I -- we first had the Janet Jackson wardrobe malfunction...
HAYS: Wardrobe malfunction.
CROWLEY: ... breast in the middle of... ARENA: Right.
CROWLEY: Well, I guess that was a football game. Some kind of sporting thing.
ARENA: It was the Super Bowl.
CROWLEY: And then -- then we have this. I think it's -- you've got your 6- or your 7-year-old and you're sitting out there, that you do find that offensive.
HAYS: Well, I'm much more -- I'll just say it quickly, I'm much more offended by what happened in the NBA game, the Pistons...
CROWLEY: But the commercial was playing.
ARENA: All right. You know what? We've got to wrap it up, folks. I'm sorry. I'm getting screamed at. We're right back ON THE STORY after this.
(BEGIN VIDEO CLIP)
ANNOUNCER: The president nominated a new education secretary this week. What's her story? More when we return.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ANNOUNCER: Margaret Spellings, what's her story? The president named her to the top education post on Wednesday.
Since 2001, she served as the president's domestic policy adviser. Spellings is also an architect of the president's education initiative, the No Child Left Behind Act.
MARGARET SPELLINGS, EDUCATION SECRETARY NOMINEE: If confirmed by the Senate, I commit to work alongside America's educators and my new colleagues at the Department of Education to make our schools the finest in the world.
ANNOUNCER: Spellings was an education advisor to the president while he was governor of Texas. She will take the place of outgoing education secretary, Rod Paige.
(END VIDEO CLIP)
HAYS: Thanks so much to my colleagues. Straight ahead, a check on what's making news right now.
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 November 20, 2004 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RUDI BAKHTIAR, ANCHOR: Hello, everybody, I'm Rudi Bakhtiar at the CNN center.
Topping our news now, President Bush's agenda this morning is nuclear standoff at an Asia Pacific summit in Chile. The president is calling on other nations to help ease nuclear tensions with North Korea and Iran. This is the president's first international trip since winning a second term.
A mass murderer in Afghanistan has brought the death penalty. A Kabul court has sentenced a man to death in the killings of four journalists in the year 2001. The man says he was forced into a gang that committed the murders on the orders of a top Taliban commander.
Back here in the U.S., two Georgia girls are accused of whipping up a poisoned cake and feeding it to their classmates in suburban Atlanta. More than a dozen students reported getting sick. Police suspect the cake contained bleach and glue, but they're still testing it.
Also in Michigan, some really behavior at a Detroit Pistons game. It all started when one player shoved another one, and it ended up as a brawl between players and fans. Police are reviewing the tape and talking to some witnesses.
Another check of the headlines is coming up. But the next half hour, ON THE STORY is next.
CANDY CROWLEY, CO-HOST: Welcome to CNN's ON THE STORY, where our journalists have the inside sword on the stories we covered this week. I'm Candy Crowley, ON THE STORY of the big party in Arkansas, what Democrats toasting the Clinton library were saying about the political future of their party.
DANA BASH, CO-HOST: And I'm Dana Bash in Santiago, Chile, where President Bush is back on the world stage with an election victory and new picks for his cabinet.
KELLI ARENA, CO-HOST: I'm Kelli Arena ON THE STORY of turmoil at the CIA and what it may mean for detecting the next terror attack.
KATHLEEN HAYS, CO-HOST: And I'm Kathleen Hays on how the Sears Kmart merger may change wait we shop.
We'll go to Iraq, where Jane Arraf is ON THE STORY of the dangerous house-to-house work in Falluja, secure, but not yet safe. And throwing in the towel. Was one of TV's "Desperate Housewives" off sides in the pre-game of "Monday Night Football"? E- mail us at OnTheStory@CNN.com.
Now straight to Dana Bash and President Bush on the world stage.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're at nation at war. We're leading a large coalition against a determined enemy.
(END VIDEO CLIP)
BASH: President Bush this week, as he announced key changes in his cabinet at home, and prepared for his first post-election trip abroad. He arrived here in Santiago, Chile last night.
Already this morning, he has had about half a dozen one-on-one meetings with world leaders where he is testing what the White House has said they believe is a mandate for a new aggressive foreign policy.
CROWLEY: So Dana, you know, a lot of these folks sort of waited out the election. Have you seen any sign yet that there will be any kind of different ambiance when the president goes overseas or down south?
BASH: Well, I guess ambience is sort of all in the eye of the beholder. In items of what's happening on the streets, nothing has changed. It's really sort of interesting to watch, that just as we saw throughout most of the president's first term, we've seen some protesters in the streets.
Some of the standard protesters talking about anti-globalization and things like that. But also some of the more personal protests and demonstrations against President Bush, as a warmonger and some, you know, hanging and burning of President Bush in effigy.
But in terms of the internals of the diplomacy, you're right, Candy. It's sort of interesting and will be more interesting to see as we hear more about what happened, what went on behind the scenes in these one-on-one negotiations.
Whether or not the president is going to change it, whether or not, for example, on North Korea, which is really his top agenda item here, whether he's going to show a little bit more flexibility, which is what a lot of these leaders really want him to do.
He was very, very steadfast, and it sounds this morning as if he's not changing that much, in saying he's not, for example, give in at all to North Korea on giving them some aid or security assurances until they dismantle their nuclear programs. And that is certainly something that some of these leaders want to see.
ARENA: Dana, you talk a little about diplomacy. I'm very interested in -- in the background story of Colin Powell. He's leaving, maybe he didn't want to leave, some power (ph) intrigue. What's up there?
BASH: No big Powell (ph) intrigue much at the Bush White House, but it seems that -- that this week we did.
Of course, Colin Powell announced on Monday that he is leaving the cabinet. And of course, it was just that night that we were told by administration officials that Condoleezza Rice, the president's national security adviser, would be nominated to take his job.
And you know, I think it was about a year and a half ago that there were reports that Colin Powell was going to leave. And at that point the president hadn't even started his campaign, and everybody was sort of raising eyebrows. So nobody really expected him to leave.
However, after the president won re-election, there were some reports from associates of Secretary Powell that perhaps after Arafat's death that he saw some openings in the Middle East, that maybe he wanted to stay for a couple of months.
Well, the White House essentially wanted to put the kibosh on that kind of talk. The president already decided that he wanted Condoleezza Rice in that job. So they moved pretty quickly to announce that Colin Powell was -- was going to leave and that Condoleezza Rice was going to take that job.
It was interesting to watch Colin Powell. He was, I think, the only departing member of the cabinet to go before the cameras after announcing his resignation, to get his side of the story out. He was very clear to say that he only did want to stay one term, but he was also very careful not to say that he asked President Bush to stay or to say that President Bush asked him, because it didn't happen.
HAYS: So Dana, in light of -- in that context, Colin Powell, a bit of a lame duck at this point, what is the dust being kicked up over Iran for at this point?
BASH: You know, that's certainly thus far been the story down here in Santiago, the question about Iran.
Colin Powell came down here a few days before President Bush and told reporters, as we've all been reporting all week, that -- that Iran is moving towards actually not just having nuclear capability, but actually making a missile to send the nuclear capability, to actually launch -- to launch it.
And that is something that has gotten a lot of people raising their eyebrows, particularly in the intelligence community, whether or not that was adequate, that was adequate information to be talking about that.
But the president today talked about Iran, talked about the fact that he does believe it's a threat. At this point, certainly they're moving a diplomatically.
And perhaps Colin Powell, some inside the administration think, said that and wants to make that abundantly clear, that he thinks Iran is a big issue. Because there is some concern about the way the Europeans are negotiating with Iran. Perhaps they think, in the Bush White House, that the Europeans, they're letting Iran off the hook where they wanted to be more aggressive.
And that's what -- you're sort of seeing that diplomatic dance down here in Santiago.
CROWLEY: And Dana, when you look at the sort of inside White House, the people that are closest to President Bush, being moved to the outside, to the Justice Department, to the State Department. You're even getting some Republicans going, "Oh, this looks really, really tight-knit, maybe a little too tight-knit."
What's -- what's the White House pushback on that? What's their -- what's their take on why this is a good thing?
BASH: Candy, we're joking this week that so far the president essentially opened the door to the Oval Office and screamed down the hall to find the members of his cabinet. That's how close he has been looking to replace the secretary of state, the attorney general, and, of course, his -- his top -- top counsel.
But what the administration says when they do hear from Republicans, as you said, who say that this may not be such a good idea. You need tension inside the administration, you need healthy debates. And there is a danger in having an echo chamber which could hurt, ultimately, the president's policy.
What they say inside the White House is, "Look, we have a mandate. We won. We got the support of the American people for our policies, for our personnel, and there's no reason to change course. We got no signals that there's a desire to change course, so we're not doing it."
ARENA: Dana, what's the word on Condi Rice? I think the bottom line is they expect confirmation, but maybe a little flack, 16 words in a speech here and some misguided advice over here. What's the -- what's the bottom line?
BASH: The bottom line is she's going to be confirmed. Democrats and Republicans alike say there's no question about that.
But, you know, Democrats are sort of feeling a little bit -- a little bit stung, as you well know. And some of the folks I've talked to on the foreign relations committee, who will have jurisdiction over that confirmation, say that they're going to -- they're going to try to -- maybe rough her up is a little bit too strong, but they're definitely going to question her on some of the missteps they see that she was overseeing during the first four years of the Bush White House in terms of foreign policy.
Iraq, of course, is first and foremost. Kelli, you mentioned the 16 words, talking about, of course, the idea that a statement got into the president's State of the Union address saying that Africa was -- that Saddam Hussein was trying to get uranium from Africa. Later the National Security Council essentially had to say that they were in charge of making sure that everything was accurate in the speech, and they basically fell down on the job.
You, of course, have the major issue, which is the question about weapons of mass destruction, some of the statements that we've heard Condoleezza Rice made, perhaps some of the most explosive statements saying that she believes that there could be a mushroom cloud. And you want to make sure that doesn't happen.
Those were some of the warnings, some of the dire warnings that we heard about weapons of mass destruction in Iraq what turned out not to be true.
CROWLEY: So from travels from one president to a rare chance to see four U.S. presidents sharing the same stage, I'm back ON THE STORY of the Clinton library opening, and what Democrats were saying about their past and their future.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BUSH: The William J. Clinton Presidential Library is a gift to the future by man who always believed in the future. And today we thank him for loving and serving America.
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Today we're all red, white, and blue.
(END VIDEO CLIP)
CROWLEY: Hang on a second, wasn't it just a couple of weeks ago we were neck deep in rough and tumble name-calling, reputation bashing, no holds barred partisan politics?
But in Little Rock, Arkansas, it was raining like crazy, but the speeches were all sunshine, and the Clinton Presidential Library was launched.
Welcome back. We are ON THE STORY.
BASH: Candy, you know, I was there with President Bush, watching President Clinton's face as it got -- he looked more and more upset as the rain got harder and harder and harder. It really became so miserable there.
But certainly, once he got up to speak, it became so obvious to most, listening to him, that he still seems to be the leading voice for the Democratic Party, somebody obviously, who can't run again.
What are you hearing from Democrats about the phenomenon and how do they get over it?
CROWLEY: It was -- it was really interesting. The hotel lobbies in Little Rock were packed with, you know, Dean people and Gore people and Kerry people and Clinton people. And they all talked about, well, where is our next Bill Clinton, you know? Where do we find the next guy like this?
There was a part of the library where you go in, where Bill Clinton says, "Hello, and welcome to the library." It's on tape, obviously. He's not standing there. He's not that retired.
And, you know -- and one of the Democrats remarked to me and said, you know, "He just -- even the way he talks on tape, where did we go wrong? Where did we love that sort of common touch, the red state Bill?"
It was very funny, because one of the architects called the Clinton library the world's largest doublewide, because it's this very modern thing.
ARENA: Right.
CROWLEY: And he just embraced it. He said, "That's kind of me. I'm a little blue state. I'm a little bit red state." He had no problem with it being, you know, a trailer.
It was -- it was a very interesting time for them to look back, but they really were fretting about the future.
ARENA: Well, I have to say, when I was looking at that lineup, you know, Jimmy Carter and, you know, former President Bush, and you go all the way down, and all of a sudden, boom, Senator Clinton, Hillary.
And -- and you couldn't help but think, this is the only person in this entire lineup who represents the future here, rather than the past. I mean, is the momentum truly building? And do they think that a little bit of her hubby is going to rub off and get them there?
CROWLEY: It's interesting. I mean, look, we were in Little Rock, Arkansas, where she had been, obviously, first lady of the state for some time. We were celebrating a man named Clinton.
So obviously, you heard a lot about Hillary Clinton. There were "Hillary in '08" bumper sticks on cars already. There were T-shirts for Hillary '08.
But look, there were also people in the lobbies going, "If we nominate Hillary Clinton, we get what we deserve." There are a lot of people that think, "A blue state northeastern senator, is this what we need in '08? Didn't we just do that in '04?"
ARENA: Exactly.
CROWLEY: So look, there are a lot -- and you hear other names out there: John Kerry, he hasn't taken his name off the list. In fact, he seems to be quite intent on keeping it out there. John Edwards, Howard Dean. There are a number of people. And there are some senators out there, some people that didn't play big this year, who, in fact, we may see again. So it's by no means a big, big Hillary push. She's the most known. She's the one that leads the polls. But good heavens, you know, name recognition at this point is everything.
HAYS: Tell us about how Bill Clinton seemed to you, Candy, maybe looking a little bit tired, kind of upset it was raining so hard, but, you know, a tremendous accomplishment, this whole complex, which has uplifted this whole area.
But I think that so much writing and talking this week about the section that talks about politics of persecution. And one of my colleagues said, the spin never ends.
CROWLEY: It's true. I mean, look, this is his library and it is his vision and his interpretation of what the Clinton era was about.
And so there's this section in it, and it's called "The Politics of Persecution, and it's a time line of Whitewater and Ken Starr and Monica Lewinsky. It's certainly isn't seen as, "I lied under oath and I got caught." I mean, that's not ever how he sees it.
He sees it as -- so if you are inclined to support how the Clinton White House viewed this, you will see that as history. If you are not, this is going to make you furious. But then, you know, the more things change, the more they stay the same.
And when you look at -- when I looked at him on the stage, he obviously has had open-heart surgery. That is huge. And this is has not been that long since he had it.
HAYS: Two months.
CROWLEY: Does he look older? Yes. He looked smaller. You know, part of that is, God bless him, you know, well, he's lost weight and he wants to lose weight, and so that's a good thing.
But it was raining. I mean, and it wasn't just -- the pictures don't do it justice, people.
ARENA: It was ridiculous.
CROWLEY: It was ridiculous and steady, steady, steady for five and six hours. So...
ARENA: Can you spell tent, maybe?
CROWLEY: Right. Well, it rained on his parade, and that's hard.
But I'll tell you, he got out there and started to talk, and it was that -- and you saw immediately what the Democrats were missing. And I know we have a bite of him, and he's talking about this last 2004 election where you saw why Bill Clinton appealed to both the blue state and the red state.
I think we've got that, Charlie.
(BEGIN VIDEO CLIP)
CLINTON: I once said to a friend of mine about three days before the election, and I heard all these terrible things, I said, "You know, am I the only person in the entire United States of America who likes both George W. Bush and John Kerry? Who believes they're both good people? Who believes they both love our country, and they just see the world differently?"
What should our shared values be? Everybody counts. Everybody deserves a chance. Everybody's got a responsibility to fulfill.
(END VIDEO CLIP)
CROWLEY: So now all they have to do is find a replacement for that.
ARENA: Right.
BASH: Candy, you know, watching -- watching all the presidents -- former presidents on stage, I was just dying to be able to read lips and see what they were saying to each other.
You know, when George H.W. Bush was speaking, talking about how he was not that happy about President Clinton dissing his son, on the stage, President Bush leaned forward and said something to President Clinton. Sort of dying to see what was going on there.
But as you mentioned, as they were all talking, there was somebody in the crowd you couldn't see, because he was under an umbrella. That was John Kerry. What are you specifically hearing about his plans, perhaps, for 2008? Is he really already preparing for that?
CROWLEY: I think preparing overstates the case. I was talking to someone who was in the staff room when John Kerry talked to his staff after losing, and he said, well, you know, Ronald Reagan took a couple tries at this, you know, before he did it. And they all stand up and applauded him.
And more than a few of them, I'm told, rolled their eyes thinking, you know, I'm just not sure he's our guy in '08.
And again, he's going to have a lot of competition. The fact of the matter is, Ronald Reagan was never nominated until he was nominated and then he won.
Now, Richard Nixon is the exception to the rule. He did come back after being nominated, and he won again. I'm not sure that the image that John Kerry wants, the role model out there.
But, you know, it's -- look, you don't at this point go, "No, I'm not running."
ARENA: Sure.
CROWLEY: Al Gore, as we all remember, waited until December, I think. I mean, you want to keep your options open. He is determined.
Look, 55 million Americans voted for this guy. He wants to take that push, that power that he's got behind him and use it. He's out, you know, he's using his web site. He's pushing for things. He gave his first -- his first floor speech on the debt ceiling. So the old John Kerry is back.
HAYS: A nice, long speech for John Kerry, indeed. Of course.
ARENA: Well, Dana, we want to thank you because you've got to get back ON THE STORY. So thanks for joining us for the short time that you were here.
BASH: Thank you.
ARENA: We're sad to see you go.
Well, all of that bipartisanship in Little Rock turns to dust when politicians start talking about changes at the CIA. I am back on that story right after this.
(BEGIN VIDEO CLIP)
ANNOUNCER: Kelli Arena is CNN's justice correspondent. Earlier she worked for CNN's financial news. The New York Festivals awarded her a 2002 best correspondent award.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
PORTER GOSS, CIA DIRECTOR: My attitude towards the intelligence community and, I guess, my own at the CIA is one of tough love.
REP. JANE HARMAN (D), CALIFORNIA: The direction sent by this highly partisan, inexperienced management team, which Porter Goss brought over with him to the CIA may cause the wrong people to resign in protest and may hurt our efforts to win the war on terror.
(END VIDEO CLIP)
ARENA: New CIA director Porter Goss and ranking Democrat on the House Intelligence committee, Jane Harman.
Top people have left already. The Goss tough love signals more shakeup to come.
Welcome back. We're ON THE STORY.
HAYS: Those are some tough words. We're hearing "tough love." We're hearing "inexperience." We're hearing "politicized." I sitting here as a citizen of the United States wondering, I don't want to hear about turf battles. I want to hear about being protected in the war on terror. What's going on? ARENA: Right. Well, you know, politics is what's going on, and -- and there are those that believe that Porter Goss had a mandate to shake things up. And you know, the CIA failed miserably pre-9/11 and in Iraq, and so on, so there need to be big changes.
There are those who say we're in the middle of war on terror. We need institutional memory. We need people who know what they're doing. This is -- this is a catastrophe.
The guys that I'm talking to who work in counterterrorism are saying that the same people that they deal with online are the same people they deal with online. That they have not seen a major impact and major difference in how they do business every day.
Of course, it's when that ripple down effect really does sink in and take affect and we'll start seeing massive changes in the field. That's what...
CROWLEY: So the field stays the same. And it seems to me that it's a very tough argument to say, "The CIA missed 9/11. They missed the entire war on terrorism. And now they're all leaving. Oh, my God."
I mean, it sounds like, you know, everybody sort of switched their positions.
ARENA: Right.
CROWLEY: You know, they've taken the CIA that has been roundly criticized by the Democrats, and now all of a sudden they want them to stay. So...
ARENA: Well, I mean, change in any agency, as you know, and change in Washington doesn't make anybody comfortable. And so while we all like to have that familiar, you know, guy to beat up, and the CIA was that familiar guy to beat up.
So I think we all have to see how this shakes out. Obviously, my colleague, David Ensor, will be the one who will really get into the nitty-gritty of this.
But from my side of the fence, from the counterterrorism, you know, domestic side of the fence, they're saying, "OK. We've got a few changes, but you know, the institution is what it is. We have TTIC, the Terrorism Threat Information Center, working. It's working well. Cooperation is working. We've come a long way, baby, since September 11."
HAYS: You know, another area, and I always wonder if, as journalists, this is the kind of thing that resonates with us more than it does with the public. But this Rhode Island reporter who is probably going to go to jail for six months for not giving up a source.
I just wonder if people who aren't journalists realize how important it is for a source's anonymity to be protected so THAT journalists can get the information we need.
ARENA: Well, Jim Taricani is an interesting story. He's the reporter in Rhode Island.
What he did was he aired a videotape of a Rhode Island official accepting a bribe. So one would argue, this is good public citizenship, right? I mean, you're getting -- getting the fraud out there.
The crime was not in airing the videotape. He just wouldn't tell who gave him the videotape.
And so first he was fined $1,000 a day. Then they upped it, and they said, "You know what? You're facing jail."
And -- and every legal expert I've spoken to...
CROWLEY: Why?
ARENA: Because -- because it was -- it was leaked. The tape -- there was a protective order on the case...
HAYS: Because there was a probe of corruption in Rhode Island.
CROWLEY: And somebody gave him the tape and they weren't supposed to. And so they want to know, "Who leaked the tape, Jim?" Jim won't say.
And so off to jail he will probably go. Most legal experts think he's going.
But this isn't the first. This is -- this is one in a series of rulings that have really gone against journalists. And I can tell you that I have been approached by at least three senior sources that I work with on a pretty consistent basis saying, "What does this mean? I mean, what would you do?"
If at the end of the day, don't forget, sometimes I get all the classified information, information about terrorism that I'm not supposed to see, you know. If I -- if there's a thought that reporters are going to go out there and start getting pressured and saying, "Well, you know, it was Joe Blow, your honor, who gave me that piece of paper," because you know, I've got three kids and I don't want to land in jail. That is a problem, because there's a chilling effect.
CROWLEY: So far that hasn't happened. I mean, the reporters have stuck with it in these case.
ARENA: Right, right. But there has been a series of rulings that really indicate that that -- that precedent that we all thought existed for awhile, where we could sort of stand on our laurels and say, "We're journalists. We don't have to divulge our sources." Turns out there really isn't solid legal ground for us to stand on.
And so there is some movement on the Hill to possibly come up with a shield for journalists, much like doctors and lawyers.
HAYS: Right. Lawyers have client privilege.
I wonder how somebody Alberto Gonzales, attorney general to be, would rule on something like this? You know, he's being viewed somewhat skeptically by conservatives and skeptically by liberals, particularly with his regard on some stances with treatment of prisoners during the war.
ARENA: Right. Well, you know, he is most famous for two issues, at least in my circle. I don't think he's famous to the world, but I mean, famous in my circles.
Saying that the Geneva Convention didn't apply to the detainees held in Guantanamo Bay, and also to signing on to the thought that torture in some circumstances might be legally OK.
These are two things he will get pinned on during confirmation hearings. But again, much like Condi Rice and everyone else, they expect, you know, a big hubbub, but at the end of the day for them to get through.
He is perceived as a more moderate Republican than John Ashcroft. I mean, some Democrats have been quoted as saying, "Well, you know, anything's better than John Ashcroft, so you know, we're happy."
But he's very much seen as sort of an appendage of the White House by some, and John Ashcroft was not part of that inner circle. He sort of marched to his own drummer and -- and did provide some tension, you know, between the Justice Department and the White House.
CROWLEY: Right. I think so.
ARENA: Anyway, it was tension and some people argue tension is good, you know?
HAYS: Well, a lot of tension on Wall Street. Yesterday in particular. We're wondering, did the Bush boom on Wall Street hit the wall on Friday? And shoppers alert, does the marriage of Sears and Kmart spell savings for you? I'm back on those stories in just a moment.
ARENA: We'll go to Iraq where Jane Arraf is ON THE STORY of what she saw as U.S. troops went house to house in the dangerous streets of Falluja.
And what's the etiquette? What's the buzz over kiss in the workplace for a boss's congratulations?
Plus, a check on what's in the news right now, all coming up.
(COMMERCIAL BREAK)
BAKHTIAR: Hello, everyone, I'm Rudi Bakhtiar at the CNN Center in Atlanta. Let's give you a check of the day's top stories. Vocal demonstrations in the streets of Santiago in Chile, denouncing globalization and the war in Iraq. But inside the APEC summit, much of the talk is about nuclear weapons on the Korean peninsula. President Bush is spending the morning talking with the leaders of China, Russia, South Korea and Japan on how best to discourage North Korea from pursuing nuclear weapons.
In Baghdad, insurgents this morning used homemade bombs, rocket- propelled grenades and small arms to attack a U.S. Army patrol. One soldier was killed; nine others were wounded.
And Condoleezza Rice is back at home after spending the night at a Washington, D.C., hospital. She was treated yesterday for non- cancerous growths of the uterus. The medical procedure was described as minor. Rice, who's been nominated to be secretary of the state, is expected to be back in the office on Monday.
In Michigan, charges are possible in the aftermath of last night's NBA brawl. Look at this. With just 45 seconds left in the game between the Pistons and the Pacers, shove turns to punches, and then mayhem. No one was seriously injured, but police may present a case to prosecutors after reviewing the video and talking to witnesses.
Another check of the headlines is coming up at the next half hour. Back now to Candy Crowley and ON THE STORY.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I think the consumers are going to be a little confused. Am I now going to go to Kmart and get tires? Am I now going to go to Sears to get, you know, a white satin sheet? I think you're going to just see a lot of changes. Is there going to be a name change? Is there not going to be a name change?
(END VIDEO CLIP)
HAYS: That was Linda Caplin-Thater (ph), a branding expert, just one of the many people trying to sort out the Sears and Kmart merger this week. Is it a good idea for the companies? And what about Wal- Mart and what about you and me?
Welcome back. We're ON THE STORY.
CROWLEY: Well, forget Wal-Mart. I mean, what about us here? I mean, so answer her questions here.
I mean, do you -- which one do you go to for your tires and which one do you go to -- how are they going to work this merger out, and what is it going to look like for the shoppers?
HAYS: What we know so far is that they are definitely going to put Kmart merchandise in Sears stores and Sears merchandise into Kmart stores. So think hard goods, soft goods.
Because what we think of Sears for is Craftsmen tools. Maybe not you, Candy. I don't know how -- I've got a house (ph). But certainly Kenmore appliances.
With Kmart you think of some of the high-profile names like, you know, Martha Stewart's line, which has caught on so well; Joe Boxer with those cute little commercials, things like that.
They're definitely going to cross-reference the merchandise.
If there are -- if there's any name change, what will happen is, you know when you go to Sears nowadays, you go to the mall. And that's apparently been hurting Sears, because more and more it's the stores like Home Depot and Lowe's, which have the big stand-alone stores where people go to buy their appliances and their paint and that kind of thing.
So those are the kind of stores Kmart has. So what they may do is move some of their big Sears stores into their Kmart stores. And if there's any name change, it's going to go to Sears.
But I think it is going to be a little confusing, because there's still going to be some Sears stores and some Kmart stores. And we're just not confident. I think people who have not shopped at Sears and Kmart lately is because they don't like what they see there or they don't like the service or they don't like the merchandise.
So if they don't like one, is that going to draw them into the other? And if they don't like either one of them, why would they go to a merged Kmart and Sears? I think that's what people are kind of wondering.
ARENA: And I think I heard you say that there were some saying, well, this is a combination of two mediocres anyway, so the chances of them really pulling this off are...
HAYS: We don't know, OK. Because we know that Wal-Mart is, by far and away, the leader. You know, Wal-Mart's market cap is something like $240 billion, with a "b," dollars. They're huge. You know, they have -- they beat everybody.
In terms of Kmart and Sears, they're now an $18 billion market cap store. So I think there's a, really, question about how this does work out.
The guy who put this whole deal together is brilliant. Eddie Lampert was a Goldman Sachs equities trader. He started out with $28 million. In 1988 he was back, built that to $10 billion, bought Kmart, sold off the real estate, changed the management, got the money and the vision to get Sears.
But the question is, does Eddie really want to build it into another competitive retailer, or is it just a step to his next acquisition? And people aren't sure.
CROWLEY: Seems like there's lots of possibilities. Like a Martha Stewart tool kit.
HAYS: There you go. Or your Joe Boxers in the Kenmore washer and dryer.
CROWLEY: Now stock market, we've had a couple of weeks for it to shakeout post-election. Where is it and why is it there?
HAYS: You know, we were going into the -- another consecutive week of great things, you know, for the S&P 500, for the Dow Industrials, for the NASDAQ.
We had good numbers on the economy, housing charts back up, industrial production up. The market shrugged off some kind of -- a little bit scary inflation numbers.
Dollar, dollar, dollar, dollar has been in the background. The dollar has been under pressure, sliding since Bush's re-election, because now traders are focused on the fact that we've got a big budget deficit and above all, a big and growing trade deficit.
And they know the Bush administration in the first four years were very happy to see the dollar fall to help correct the trade deficit. A week dollar makes it tougher for us to buy all that cheap stuff from China or from overseas.
So on Friday Alan Greenspan, head of the Federal Reserve, gave a speech, and just pointed out, "You know what? This can't go on forever. The trade deficit has to start shrinking."
And it just put focus, once again on this. This is the 800-pound gorilla hanging on the financial markets: hit stocks, hit bonds, hit the dollar.
CROWLEY: And oil?
HAYS: Oil. You know, oil is still back below its peak of $55 a barrel. This number, this weekly report everyone's watching on Wall Street, and it's the inventory numbers. And it tells us our basic, our U.S. inventories of crude oil and heating oil are going up or down. And so if traders see crude oil inventories go up, we'll sell oil. You see the price go down.
Well, on Wednesday we see the crude oil inventories rising, so you think oil goes down. It did for awhile until they went, "Oh, look over here. Here's the distillates." This is the heating oil stocks. They continued to fall.
And we're at the point now where weather is going to make all the difference for oil prices. If the winter is cold, well, as they say it will, "The Farmer's Almanac," well, that could mean -- that could mean oil prices shooting back up.
That was the other thing that hit the stock market on Friday, though, is this -- after this -- this inventory report, people just got kind of nervous and that -- oil prices are up again on Friday, as well.
ARENA: The bearer of such good news. We love having you here, Kathleen.
Well, from the business world in the U.S. to life and death street fights, street cleanup in Falluja. Our Jane Arraf is on that story, and she'll join us in a moment.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You never know if it happens, you know. You've got to stay visual.
(END VIDEO CLIP)
ARENA: Stay alert, stay vigilant. The rules of staying alive in Falluja, says Magareto Ramirez (ph), U.S. Army.
Welcome back. We are ON THE STORY.
Baghdad bureau chief Jane Arraf has been in the midst of the fight for Falluja. Jane, is this door-to-door operation still going on there?
JANE ARRAF, CNN CORRESPONDENT: It is in a sense, Kelli. They're going door-to-door, because there's a lot of the city they haven't actually been through.
And this is a city, we have to remember, that's essentially been sealed off, closed to U.S. forces since April. So the doors that we went through, following soldiers who kicked them down, shot off the locks and did an unimaginable variety of things to bust those doors open, contained things like car bomb factories, weapons arsenals.
Some of them contained a home that was believed to have been used by top lieutenants of Abu Musab al-Zarqawi. So they are going door- to-door, and it's a very long process.
ARENA: Jane, we know you can't tell us exactly where you are, or where you're going next. Many details you can't reveal. But remind us what it's like to be an embedded reporter.
How close to the fighting are you? Where are you when the soldiers are actually doing this kind of thing? Every time I see you on television, I'm wondering about your safety.
ARRAF: Oh, thanks. We're right there with the soldiers. We're now actually at Camp Falluja. The Army operation that we were with was winding down. They were kind of at the forefront of things.
Where we were physically most of the time was in an armored personal carrier. And if you've been in those, you know they're very crammed. It's basically like living in your car, if one ever lived in one's car for a week at a time, but without the benefit of being able to stop at a gas station to clean up.
But when the fighting was going on, we were right there. We were -- rocket-propelled grenades flying, mortars, all kinds of things.
But the thing is that a lot of the scariest sounding stuff and the scariest looking stuff is actually coming from the U.S. side; it's outgoing. So while it sounds terrifying, what's far more terrifying is that single bullet ricocheting or a rocket-propelled grenade, possibly the most evil sound in the world, whizzing over your head.
But we are actually with the soldiers. And the ones who draw the short straw, it's their unfortunate job to keep us safe, which they do very well.
CROWLEY: Jane, two things that have filtered out here and made big headlines, and I'm wondering if they are talked among the rank and file where you are.
The first being the case of a prisoner being shot and killed by someone during this assault on Falluja, and an investigation into that.
And the second, a very widely publicized memo from commanders on the ground, saying big mistake we are going to pull our troops out of Falluja any time soon, for which apparently there were plans.
Is there talk of either of those incidences in and among the rank and file?
ARRAF: You know, among the rank and file, certainly the incident where the Marine is being investigated for possibly shooting a wounded detainee. That is something that they -- a lot of them feel it's really unfortunate, because it detracts from what they're doing.
They say the investigation is still underway, obviously, and is yet to be determined what exactly happened or what will happen to that soldier.
But they -- this is war, and a lot of them, when you talk to them, really have a different perspective on it, without having to say, it's quite apparent that this is going to take a lot of work.
This is a damaged, destroyed city. It is absolutely scarred. It's empty of people for the most part. We have to get those people back in.
And then where do you start? You've got to have a government. You've got to have a police force. And if you look at other places in Iraq, their police forces are running away in some areas.
Immense problems, which doesn't mean they're insurmountable. Certainly, they're not saying they are. They feel that this went really well.
But the rank and file, they believe that troops are going to be in Falluja for a long time, and not only that, they believe that they themselves will probably be back for another deployment in Iraq.
ARENA: Jane, what about Abu Musab al Zarqawi, obviously some hints of where he may have been, but any leads on where he may have gone? Is there any optimism at all on that front?
ARRAF: I think the only thing that there seems to be at least a partial consensus on, if there is such a thing, is that he's gone. No evidence that he's around. No evidence that he was killed yet.
And they're going around and -- how's this for a job? The mortuary detail, military people who go around and collect the dead bodies, like 10 days after they've been killed.
Have to collect those bodies, and then during that process, there is some investigation as to who these people are. Are there documents next to them? No indication that any of the dead men are Abu Musab al-Zarqawi.
And the feeling is, among military officials, really, is that the leadership fled. And that's part of the reason they had a relatively painless time doing what they did in this city.
The mid-level leadership appears to have stayed and fought. And in the case of the southeast where we were, fought till the death, but top-level leaders appear to have fled to who knows where.
HAYS: Jane, in terms of the deployments, a story that the Marines prepared, an assessment of the needs for troops, and the need of the -- the amount of people they need just to stay in Falluja.
And there seems like there's not enough bodies there right now, particularly going into these elections, which are coming in January. That is just around the corner.
What are you hearing from the troops? What are you picking up?
ARRAF: There is in this case -- we have to be completely honest -- there is a disconnect between what you hear in public statements from military officials and what you hear from the rank and file.
And what you hear from the rank and file sort of mirrors what we can see with our own eyes when we go through the streets of Falluja. It's going to be a stretch getting elections up in January.
Now, they might have civilians back there. There might be rebuilding. That would be an absolutely wonderful thing. But to have a full-fledged, working, functioning, civil administration there, to have a police force when they're not quite sure where that police force will come from, that could take awhile.
Now, the success, they believe they've had, Marine officials particularly, in this, is that they really believe that they have rooted out the command and control center for the insurgency in other parts of Iraq, that this will make it that much harder for insurgents to regroup.
CROWLEY: Jane, before you take off, tell us what you're going to be looking for on the story in the coming week.
ARRAF: We're hoping to stay around Falluja for just a little bit to see that absolutely fascinating and challenging part of this battle, where it transitions from the incredibly intense combat that we've seen for the last 10 days or so to a low-level conflict.
Now, we're seeing things like the battle to root out individual insurgents. Those are still there in small groups. There's a report, for instance, that someone waving a white flag -- the Marines say that someone waving a white flag dropped that white flag and shot at the Marines.
Immense difficulties going forward, transitioning from battle to bringing back civilians.
CROWLEY: As always, we thank Jane Arraf. Hope to see you soon.
From Iraq to what else grabs attention this week, a White House kiss; a Monday night pre-game promo for "Desperate Housewives"; and how one senator leaves Washington and the women he says you can't shut up.
We're ON THE STORY, straight ahead.
(COMMERCIAL BREAK)
CROWLEY: A quick moment this week when President Bush congratulates his trusted adviser and long-time friend, Condi Rice, his choice for secretary of state, and he gave her a quick kiss. To kiss or not to kiss.
Welcome back. We're back ON THE STORY.
Hey, I'm all to kiss, OK? I'm not really sure what -- perhaps I wasn't paying attention, but what's the big deal?
HAYS: What's the big thing? Come on, I say what the world needs now is love, sweet love. OK? I mean, a little kiss on the cheek. I can't believe anybody would make a big deal out of this.
ARENA: And considering -- I mean, you know, we've talked about this -- how close they are, I mean, personally...
CROWLEY: She's always described as a member of the family.
We also have a long history of kisses, by the way, that have become very famous.
ARENA: yes.
CROWLEY: We had the Al Gore/Tipper Gore kiss that everybody said changed the face of his campaign, you know, at the convention. We had a very famous, was it Chirac?
HAYS: Laura -- It's Laura Bush, accepting a kiss on the hand from Jacques Chirac, you know. A kiss on the hand is quite continental.
ARENA: There it is. See? HAYS: Now, that I wonder about.
CROWLEY: Almost embarrassing (ph).
ARENA: At least it was his wife.
CROWLEY: So they do have something in common.
ARENA: There's another thing though, I mean, another controversy. We're rushing along here.
Desperate, desperate, "Desperate Housewives," Nicolette Sheridan during the NFL game.
HAYS: "Monday Night Football."
ARENA: She, you know, there was this big thing where she was coming on to this player to -- let's listen to this. I can't explain it and look at it. It's better.
(BEGIN VIDEO CLIP)
NICOLETTE SHERIDAN, ACTRESS: Where are you off to, looking so pretty?
TERRELL OWENS, PHILADELPHIA EAGLES PLAYER: Baby, it's "Monday Night Football." The game starts in ten minutes.
SHERIDAN: I love you, T.O.
OWENS: Then how about you tell me what's buried underneath that pool?
SHERIDAN: You know I can't tell you that.
OWENS: Then I've got a game to play.
SHERIDAN: Terrell, wait!
OWENS: Oh, hell, the team's going to have to win this one without me.
(END VIDEOTAPE)
ARENA: OK, I can understand kids are watching, they don't expect this, but I just think it was just dumb.
CROWLEY: First of all, you had to wash "Desperate Housewives," which I haven't.
You know, I think at some point we have to think red state here. You know, I -- we first had the Janet Jackson wardrobe malfunction...
HAYS: Wardrobe malfunction.
CROWLEY: ... breast in the middle of... ARENA: Right.
CROWLEY: Well, I guess that was a football game. Some kind of sporting thing.
ARENA: It was the Super Bowl.
CROWLEY: And then -- then we have this. I think it's -- you've got your 6- or your 7-year-old and you're sitting out there, that you do find that offensive.
HAYS: Well, I'm much more -- I'll just say it quickly, I'm much more offended by what happened in the NBA game, the Pistons...
CROWLEY: But the commercial was playing.
ARENA: All right. You know what? We've got to wrap it up, folks. I'm sorry. I'm getting screamed at. We're right back ON THE STORY after this.
(BEGIN VIDEO CLIP)
ANNOUNCER: The president nominated a new education secretary this week. What's her story? More when we return.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ANNOUNCER: Margaret Spellings, what's her story? The president named her to the top education post on Wednesday.
Since 2001, she served as the president's domestic policy adviser. Spellings is also an architect of the president's education initiative, the No Child Left Behind Act.
MARGARET SPELLINGS, EDUCATION SECRETARY NOMINEE: If confirmed by the Senate, I commit to work alongside America's educators and my new colleagues at the Department of Education to make our schools the finest in the world.
ANNOUNCER: Spellings was an education advisor to the president while he was governor of Texas. She will take the place of outgoing education secretary, Rod Paige.
(END VIDEO CLIP)
HAYS: Thanks so much to my colleagues. Straight ahead, a check on what's making news right now.
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