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On the Story

Presidential candidate in Ukraine poisoned: Kerik removes his name as new head of homeland security

Aired December 11, 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.


(NEWSBREAK)
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY where our journalists have the inside word on the stories we covered this week. I'm Barbara Starr on the story of U.S. soldiers telling Secretary Rumsfeld they have to scrounge in the trash for armor to protect their vehicles.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: I'm Elaine Quijano at the White house on the story of a bump in the road to a new Bush cabinet. Homeland Security nominee Bernard Kerik pulled out.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena on the story of one of the theories that a different kind of terrorism by environmental radicals could be behind the destruction of a subdivision south of Washington.

MARIA HINOJOSA, CNN CORRESPONDENT: I'm Maria Hinojosa on the story of how an anti-terrorism law and immigration reform hit home for millions of undocumented immigrants.

KATHLEEN HAYES, CNN CORRESPONDENT: And I'm Kathleen Hayes on the story of he's going, going, no, not going. Treasury Secretary John Snow still in Bush's cabinet.

Also coming up how Martha Stewart's in prison but still cooking up a TV comeback.

CNN's Michelle Bonner is on the story of charges finally filed in the basket brawl.

And is baseball's talk of stricter rules on steroids just talk or will Congress step up to the plate?

E-mail us at onthestory@cnn.com.

Now, straight to Elaine Quijano and the surprise withdrawal of the president's choice for the homeland security.

(BEGIN VIDEO CLIP)

BERNARD KERIK: Mr. President, I understand as you do the tremendous challenge that faces America in securing our nation and its citizens from the threat of terrorism and I know what is at stake.

(END VIDEO CLIP) QUIJANO: Bernard Kerik just last week, as President Bush tapped him to be his new secretary of Homeland Security. Last night, he was out amidst reports that he failed to pay for taxes for a nanny who may have been an illegal immigrant and so an early significant speed bump for President Bush as he looks to put together his cabinet looking ahead to his second term.

ARENA: Elaine, this is startling to me. At this stage of the game, I mean up until yesterday I know that you and our CNN reporters were saying that the White House was unconcerned about Kerik thinking that this was going to be smooth sailing. This was just normal scrutiny. How could they not have known this?

QUIJANO: Well, that's a good question. You're right. Yesterday, White House officials both on background and on the record were saying they felt very comfortable with the vetting process. They were quite confident.

Of course, yesterday the main issue was centering around a "New York Times" article about perhaps conflict of interest, questions being raised about Bernard Kerik's involvement with Taser International, a stun gun company which he made millions off of stock options from.

But the White House officials I spoke with said that they were very confident, a high degree of confidence was the quote that they had that the officials had looked closely at that particular relationship.

And also, they say the larger picture of his personal background they feel was scrutinized very closely as well. So, certainly when this news came down, it was quite a shock.

STARR: But, Elaine, there was a lot of chatter under the radar, if you will, in Washington all week long about Bernard Kerik. Is there a feeling that there was something else here indeed besides this nanny situation?

QUIJANO: Well, that is certainly a possibility. At this point, we're still waiting to get all of the details, the news just rippling out, but there are other -- there have been other issues raised, personal issues not related to the Taser International situation but questions about perhaps his management style, questions about other financial dealings but right now difficult to pin down.

Obviously, the White House did not have a handle on the situation as far as Kerik's personal background with this nanny situation but, you're right, there has been a lot of speculation that perhaps, perhaps some of these other questions might be pushed to the forefront.

But we should note that initially Democrats, Senate Democrats, particularly from New York were very supportive saying that they felt, you know, we heard Chuck Schumer, we heard Senator Hillary Clinton say they felt this was a good step. They felt that Kerik was someone who understood because of his firsthand experience, and so to have this happen now, certainly a stunning development.

HAYES: You know and actually, Elaine, that's what I want to ask you about. The big irony is that one of the problems for him, one of the areas of scrutiny was his experience in the private sector with Taser International.

He actually has experience with homeland security, with the kinds of devices and the kinds of companies that are going to have to be used to make this work. He actually did law enforcement. He worked after 9/11. Who's next? Who are they going to find with these qualifications? Now, someone they're going to be extra sure, I guess, is squeaky clean.

QUIJANO: Well, absolutely, especially after this development. Undoubtedly the vetting process is going to be even more stringent. It's a good question who's going to be tapped next for this job.

It's an enormous job, 180,000 employees under the umbrella of the Homeland Security Department. There was a feeling that Tom Ridge did a good job. It was a yeoman's task to try and get all of the coordination just to get everybody sort of on the same page.

And now with the president trying to move on, of course, the intelligence bill signing that we're expecting to take place next week, so there will be some restructuring within the intelligence community.

And the homeland security chief job it's going to be an enormous one, so at this point no names are yet emerging. White House officials that I spoke with this morning are not going there just yet and they really aren't saying a whole lot about what might have gone wrong in this process.

HINOJOSA: You know, it's interesting, Elaine, because earlier in the week I was reporting with undocumented immigrants who feel about this whole issue of driver's licenses and them being taken away.

It's fascinating to me that at six o'clock last night I was watching a report that was critical of Bernard Kerik but basically the White House saying "We're standing behind him." At eleven o'clock I turn on the news, huge bombshell.

But the issue that I'm wondering about is if you have undocumented immigrants and have arrived at this level working for the man who is going to be in charge of homeland security do you think that this is going to open up some kind of national conversation, or at least an internal conversation within the White House, about hey just how closely tied and linked are we as American citizens to these undocumented immigrant workers? It seems like we just can't get away from them.

QUIJANO: Well, absolutely and, as you know, immigration reform is one of the things that almost held up the intelligence bill or rather did hold up the intelligence bill.

That was something that Congressman James Sensenbrenner pushed quite emphatically wanting to make sure that illegal immigrants that states were banned from giving driver's licenses to illegal immigrants.

The topic of illegal immigration is huge and certainly this will not only focus the spotlight on Kerik's own situation but then the larger picture of how the U.S., in fact, is dealing with the problem of people coming across the borders and staying in this country, remaining in this country under an illegal immigrant status.

Now, at the same time, President Bush has said that he is willing to work in the next term to take a look at that issue of immigration reform because he is anxious to try and get some of these other reforms that have already been included in this intel reform bill to get those pushed through but he says he will look at that issue at his next term.

STARR: Well, from the latest controversies at the White House to Don Rumsfeld caught off guard by friendly fire, U.S. soldiers angry their vehicles lack proper armor against Iraqi attacks. I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're taking pieces of rusted scrap metal and compromised ballistic glass that's already been shot up, dropped, busted, taking the best out of this scrap to put onto our vehicles to take into combat. We do not have proper armor on the vehicles to carry with us north.

DONALD RUMSFELD, DEFENSE SECRETARY: You go to war with the army you have, not the army you might want or wish to have at a later time.

(END VIDEO CLIP)

STARR: Soldiers griping is as old as warfare but that exchange in Kuwait on Wednesday rekindled questions about just how prepared the Pentagon was for the post invasion insurgency in Iraq and maybe another issue of whether National Guard troops are treated like second class citizens and served up the leftovers.

QUIJANO: So, Barbara, where do things stand now in the push for new armored vehicles? We had heard last night that there was some sort of frantic negotiating going on. Where do things stand now in that process?

STARR: Well, Elaine, it's fascinating. The head of the company essentially that makes these so-called up-armored Humvees, he had an official in his company come out during the week and say, "Hey, we can make more. The Pentagon just hasn't asked us."

So, the secretary of the Army took the company up on that offer. He picked up the phone, dialed it and said, "What do you mean? How many more can you make? We'll buy everything you can make for us" and the company took a deep breath and said, "Well, it will take us a while."

I mean this is what -- reality is now sorting out. The company is going to retool the production line, gear up and start making about another 100 vehicles a month but it's still going to be early next year before they really get all the vehicles into Iraq in the armor shape that they want them.

HINOJOSA: So, Barbara, you know I've been fascinated by hearing about stories from when the war first began that there were parents of their sons and daughters who are fighting in Iraq who were making care packages to send them body armor.

I didn't know about the whole issue of these unarmored cars but it seems to me, someone who I was speaking to actually yesterday about this said how can the United States be saying we've got the best, most well-equipped, best trained and the best equipment out there and then this comes to the fore. It seems somewhat hypocritical, no?

STARR: Well, it's interesting, Maria. You know, Rumsfeld says you go to war with the army you have but they met an enemy that they didn't anticipate and that indeed was the insurgency. This is something that even Rumsfeld has said he did not anticipate it would be at the point it is, the type of insurgency.

You are talking about protecting truck drivers, guys who are usually rear echelon that you don't have to worry about that much and it really underscores the fundamental problem here. In Iraq the front line is everywhere. Everybody is in mortal danger and that's what they're really struggling to still catch up with.

The real question, Congress has given them over $1 billion in armor for money for all of this and they're still working on it. That's the question (UNINTELLIGIBLE).

HAYES: But, of course, it inflames the old debate about why we went to war because the team, the pro-war team, the Bush side says we had to go. We went to protect the country. The anti-war people say you chose to go when you went. It's your fault if you weren't as prepared as you should have been.

But I want to ask you about something. It was interesting to me on Thursday, Barbara, "The Wall Street Journal" carried this story about this big inside the paper. "The New York Times" had it upper left-hand corner emblazoned, this big story after this press conference, right?

How important is this story? In the context of what's going on for the Pentagon, what's going on for the war, is it an opportunity to bash Rumsfeld? Does it really show something fundamentally flawed from the Pentagon? What's the perspective here?

STARR: It's pretty much like everything else these days. Many things are all true at the same time. There is politics. It shows Rumsfeld hasn't even begun his second term yet but Congress is still taking their shots. You know everybody on the Hill took their best shot at him this week. That's not going to go away so there is politics.

There is the fundamental issue of armor, of protecting soldiers' lives in Iraq now more than 18 months into the war, into the insurgency, obviously still problematic.

And there's how it resonates with the American people. One of the things this young soldier said is we're going through landfills, junkyards, this type of thing.

What is very interesting is several days later now nobody is criticizing the soldier. He made a valid point but there's no real evidence yet that anyone has demonstrated soldiers are going through landfills finding scrap metal and bits of glass to bolt onto their vehicles. So, you know, truth always lies, as we know as reporters, always lies somewhere in between what everybody is out there saying.

ARENA: Well, the question was written for him, wasn't it by a reporter?

STARR: Well, there you go. I have been to many of these town halls overseas that Secretary Rumsfeld holds with the troops. We do not get to ask questions. This is for the soldiers and there was an embedded, if you will, soldier from a Tennessee newspaper who apparently coached the soldier and, you know, wanted to get him to ask this question, very dicey as to whether that reporter crossed the line. I think people are going to have to make their own judgments. No question the Pentagon is not thrilled.

HAYES: Not thrilled to say the least but an interesting debate and probably a healthy one and, as many people said, at least give Don Rumsfeld credit for being there and answering the question.

Like ON THE STORY, we're always here answering the questions from national defense to how you and I might want to feel secure at a sporting event. Charges filed in the so-called basket brawl this week on players and fans. CNN's Sports Anchor Michelle Bonner coming up on that story right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DAVID CORCYCA, PROSECUTOR: Jersey or no jersey, regardless of your stature, you are going to be held accountable.

UNIDENTIFIED FEMALE: We hoe this is a turning point. This is egregious behavior by fans and by players.

(END VIDEO CLIP)

MICHELLE BONNER, CNN SPORTS ANCHOR: The prosecutor and the chief of police in Michigan announcing on Wednesday that Indiana Pacers players and fans have been charged for their part in last month's melee during the game against the Detroit Pistons.

Welcome back. I'm Michelle Bonner in Atlanta and we're ON THE STORY.

HAYES: So, Michelle, update us on what this really means for this particular incident and what it means for the sport. The players were suspended immediately, the main players in the brawl with misdemeanor charges and one fan in particular singled out by the prosecutor as setting this whole thing off.

BONNER: Yes, John Green, you know. It was the guy in the white baseball cap who decided when Ron Artest was lying on the table to toss that cup with some form of liquid in it and that's what ignited this entire thing.

The prosecutor in this, David Corcyca, saying though that essentially nobody will probably serve any jail time. They'll probably get probation. But what I think the prosecutor is doing is sending a message that we will undergo this incredible tedious task of going through every single frame of video to figure out who is responsible for what.

And they have put these charges forth and, you know, $500 for the fines for some of these players, if convicted, is nothing but for the fans essentially that could be a lot of money. So, they're trying to send a message. What message, you know, is received by everyone remains to be seen.

QUIJANO: Michelle, talking about the players though and looking at their situations, I mean it seems to me that a lot of people looking at this might say, well, you know, is this the sign of things to come? Is this really where professional sports is headed where you have these people who are earning millions of dollars and really are role models?

We hear that word so much used to describe sports figures but people are looking up to these folks and yet this is the behavior that sort of gets off easy in a lot of people's eyes. You know, some would argue, well it is a severe punishment for some of these players.

But, at the same time, when you have people also like making comments that, oh, we can't feed our families on millions of dollars a year, I mean it's really incredulous.

BONNER: Yes, right.

QUIJANO: Is this the state of the future of professional sports in America?

BONNER: Well, they're trying to halt it right now but essentially you have to realize too that the fans have to accept some of the blame in this situation. I mean throwing something on a player is completely unacceptable.

But it's interesting when you point out that these guys are role models because one of the 50 greatest players ever to play the game, Charles Barkley, once said "I'm not a role model. Your parents are."

Charles Barkley on "Dennis Miller Live" show the other night saying, you know what, if a fan does something like that he doesn't agree that you shouldn't go into the stands. He actually said you should go in and actually kick somebody real good.

So, you're hearing from a guy who is actually an analyst right now saying, you know, if a fan does this you should go into the stands. But the league says at the very beginning of the season you are absolutely not allowed to go into the stands.

Now, Latrell Sprewell, uttered a sexual slur to a female heckler last week. He got suspended for one game. There was immediately the first game following this brawl, the first game in Detroit a fan uttered a sexual slur toward the Miami Heat assistant. He was ejected. So, the league is trying to stop this right now and not make this something about the future.

HINOJOSA: All right, so here's the thing. For me as a mom, and I'm not a jock. My husband is an artist. I'm a writer. I'm a reporter. Who has the time anyway? But I always have these conflicting feelings about, you know, should I be getting my kids more into like Little League and all this.

And then I see these stories about the steroids and this interview with Conte and he's saying, the president of Balco, and he's saying, you know what, all of the Olympics it's everybody is doing this in all sports. Everybody is doing it.

And I'm just saying, gosh, you know, what are we supposed to do in terms of what's real, what's not? You look at these bodies and you're thinking, wow, they really work out hard. I should try harder to have that body. And then you're like, oh no, it's not because they work out hard. It's because they're shooting themselves up.

BONNER: And that's the problem. I mean, you know, young kids are seeing that this seems to be the norm of what's going on. You know, Victor Conte, you know, put it best when he said, you know, perhaps he should be the one doing the testing because he's always one step ahead of the people who are doing the testing.

You know, years ago they knew what to look for. Then somebody goes and makes something else and then they figure out how to test for that and then so on and so forth and so forth.

So, you know, someone is always going to -- there's going to be other Victor Conte's of the world that are going to continue to come up with undetectable substances to make these people faster, stronger, bigger, no matter what.

HAYES: Yes, it's a big story and a shocking one for many people but I guess maybe not if you're really inside the world of sports. Michelle Bonner, thank you so much for bringing that to the show. Come back soon ON THE STORY in fact.

From sports to the investing game on Wall Street. I'm back on that story in a moment.

And, Maria Hinojosa will be on the story of how a new law in Washington hits immigrants where they and their families live coming up next ON THE STORY.

(COMMERCIAL BREAK)

(NEWSBREAK)

STARR: Now, more on this developing story about the poisoning of one of the presidential candidates in Ukraine. We are now joined by Jill Dougherty, our Moscow Bureau Chief. Jill, this story unfolding in just recent hours. They do believe he was poisoned and I take it they have a fair idea that this might have happened at a dinner he was attending.

JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: They do. Actually, here's what the doctors in Vienna have determined. He went back, by the way, for testing the third time and they took multiple samples, et cetera.

They say that it was definitely dioxin poisoning, that it appears that it was administered by a third party and then probably, since it is soluble, in some type of liquid and that goes with the theory all along that the only thing that could really explain the severe scarring and swelling, et cetera, on the face of Viktor Yushchenko would be dioxin poisoning.

The doctors said, Barbara, that they found 1,000 times the normal level in his skin. His overall health is OK but that scarring could last a very long time, maybe even years, and certainly politically this is going to be a very important chapter in this unfolding political story in Ukraine.

QUIJANO: Jill, I wanted to ask about that because from the perspective here at the White House, obviously this is such a delicate situation. When asked, Scott McClellan would say about whether or not the U.S. backed one candidate or another he would only say, well the United States government backs the will of the Ukrainian people, being very careful because, as you know, Moscow has backed Yuschenko's opponent and that has created a delicate situation here for the United States in terms of its relations with Moscow.

At this particular point any indication specifically who may be behind this and what does this do as far as the overall picture of U.S.-Moscow relations with respect to what's happening there in the Ukraine?

DOUGHERTY: Well, so far Moscow is not being implicated in this but I can tell you what he was doing that night, September 5th, when he went to what's variously described as a dinner or reception but he was with the leadership of the SBU.

Now, the SBU is what we would call here in Russia the former KGB. It's security services and there was one member of his political entourage, a member of his party who was there as well.

Now, nobody is saying that anybody else was poisoned at this dinner. He became violently ill the next day and the on the 10th of September that's when he went to Vienna. Now, he has always said that he feels that it was a deliberate attempt to kill him and it was a deliberate attempt by his political enemies. He has not named names but you can certainly bet that there is going to be an investigation. They want to find out who tried to do this.

STARR: Jill, absolutely fascinating. We'll be continuing to check in with you.

But now we're going to go to Kathleen Hayes and the story of the economy.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We appreciate the great job that Secretary Snow is doing. He's an outstanding member of this team.

(END VIDEO CLIP)

HAYES: That's Scott McClellan, White House Press Secretary, trying to deflect reporters' questions earlier in the week about the future of Treasury Secretary Snow. A lot of us thought Snow was really out as President Bush cleaned house but, in the end, Snow, an old railroad executive is still driving the train.

Welcome back. We're ON THE STORY.

HINOJOSA: OK, Kathleen, so take us to the back story. What's really going on? He's in, he's out, what's the back story? Why was all of this happening and why ultimately has he chosen or been allowed to stay?

HAYES: Maria, I have heard so many different things but certainly what a senior administration official told me I think is the main story coming out of the White House now that basically there were some low level chatter that was picked up, first by the "Washington Post," then by "The New York Times," that he was definitely out that Bush has made up his mind.

He was looking for a new guy, new gal, who could better sell Social Security reform, for example, tax reform. And while Snow was loyal, campaigned like crazy for Bush during the election, helped sell, you know, the second and third rounds of tax cuts, they needed someone with more charisma.

Well, but the inside story is that that was wrong, that Bush was thinking about all his cabinet appointments. He had never made up his mind and other media outlets treated this as a speculative thing.

In the end, I don't know if we'll ever find the whole story. We do know this. John Snow is in. John Snow is the man. I think financial markets, a whole other side of this story, some people, some currency people hoping maybe they would get a new treasury secretary because they don't want to see the weak dollar policy still in place but with Snow at the helm you can expect that policy not to change. ARENA: And so, Snow attending this White House economic conference. I mean what will go on there?

HAYES: This White House economic summit is interesting. Remember in Waco, in President Bush's first term, Waco, Texas they had this economic summit. Of course, that was a different time. The economy was, you know, in recession, coming out of recession. The White House feels the economy is strong now. That's one of the things they'll discuss, the state of the economy.

John Snow's role in this I think is interesting. There are six panels. This is a Wednesday/Thursday conference. Snow is going to be in charge of the panel talking about tax reform, tax simplification, making tax cuts permanent.

The piece about Social Security and entitlement reform will be handled by Josh Bolton, who is the OMB, Office of Management and Budget director, but it's also health and legal reform, a wide variety of topics.

I think it's going to -- it seems more not as a chance for them to lay out specific proposals because, as Elaine pointed out earlier, a lot of things do not have all the specifics yet, but it's a chance they say for entrepreneurs, some workers, experts, policymakers to get together and bat these issues around. President Bush will be in the mix somewhere, as will the Vice President Dick Cheney.

QUIJANO: Kathleen, that's right. President Bush is expected to participate in a couple of panels but we have heard that the main focus or one of the main focuses for the administration looking ahead to the second term is Social Security reform, that the president very much wants to try and get partial privatization anyway in place because the reports from the trustees are that it's going to fun out of money in something like 2042.

But there hasn't been any mention of exactly how they'll pay for that. Has there been any word about what specifically might be on the table, anything that you've heard?

HAYES: Well, of course, the president, as you know Elaine, as you've mentioned, has ruled out raising the payroll tax. I'm sure a lot of people are happy to hear that but if they did raise it, what they would do -- right now everybody pays payroll tax until you make $87,000 and once you get above $87,000 you don't pay any more tax because that's the ceiling.

So, there's been talk well why not raise that ceiling higher, OK? But the Bush team says no, no, we won't do that. We won't cut benefits. So, what is left is borrowing and that means going out into the financial markets and selling more U.S. government bonds.

We already have a big deficit. That will make the deficit much bigger. This cost of the transition of allowing people to put money in this fund takes money out of other funds. I think what's interesting is there is some question now, chatter from people who watch this very closely, about the possibility that the Bush administration might try to take these costs and put them off budget.

ARENA: There you go.

HAYES: Make it a special kind of expenditure as they did say with the savings and loan crisis. If they did that, they could fix the accounting so it wouldn't make the budget deficit bigger. It would just be something off to the side.

But, again, I think the Bush team isn't there yet. So far they're just speculating but I think most people figure at this point they'll be borrowing money and a bigger deficit.

STARR: OK, Kathleen, just to shift gears for a minute to a different issue. I can't believe we're going to go back to this but we are. There was Martha news this week.

HAYES: Oh, yes, Martha Stewart. You know isn't it amazing someone can be in jail for five months and still create so much news? Everything this woman does. Well, the latest is that Mark Brunette (ph) the (UNINTELLIGIBLE) of reality TV, has teamed up with NBC and Martha.

I guess -- I don't know if she does this because she can't talk business in jail but I guess everyone is talking for her. She's going to have a reality TV show, an hour program in front of a live audience.

ARENA: Martha in jail.

HAYES: Martha out of jail but talking about what she did in jail, all the things she learned to microwave, you know.

ARENA: There you go.

HAYES: So, and I think people are figuring, I've always been someone thinking, don't count Martha Stewart down and out. People are betting on a big Martha comeback and this is going to be the thing that leads the way.

ARENA: Well, her fan base is still pretty incredible.

HAYES: That's right.

ARENA: Just amazing.

Well moving on, dozens of homeowners in this area are checking their finances and their insurance policies.

A sad story about 30 miles south of here, suspicion that eco- terrorism could be one of the reasons behind the arson that destroyed much of a neighborhood of new houses. I am back on that story in just a moment. (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)

FARON TAYLOR, MARYLAND DEPUTY FIRE MARSHAL: The cause has been identified as arson.

(END VIDEO CLIP)

ARENA: Faron Taylor, Maryland Deputy Fire Marshal, talking about the fires in 19 houses in an upscale subdivision just south of Washington. There were attempts to torch another ten houses and, at the outset, there were questions about whether this was the work of radical environmentalists, a rare example of eco-terrorism in this region.

STARR: So, Kelli, what is the latest? Do they think it's eco- terrorism and is that a serious threat?

ARENA: Well, eco-terrorism -- it's two separate issues. As far as the fires are concerned, I've had several sources back away from the theory that it was eco-terrorism. They say it doesn't have the usual M.O., that there were no spray painting, you know, symbols. There's been no claim of responsibility.

There were some protests about this development before it was built by environmentalist groups but the environmentalist groups here in this -- in the northeast don't usually engage in that type of activity.

We've seen a lot of that out west, so as far as this is concerned, it's a mystery. They have everything, everything is still on the table for this investigation.

STARR: Arson might be under investigation.

ARENA: Arson, you know, everything, and they're checking into a series of good leads is what we're told. On the issue of eco- terrorism overall, major problem and the biggest threat of domestic terrorism that the FBI is facing.

QUIJANO: That's what I was going to ask, Kelli. How big a problem is this? Because, you're right, we don't hear about that very much here but you certainly occasionally hear about that out west.

ARENA: Yes.

QUIJANO: I mean is this something that they're looking at as sort of an emerging kind of threat or is...

ARENA: Yes, they are. I mean they are looking at it as a very serious threat and the reason many people speculate we don't hear a lot about it is because it doesn't usually involve the loss of life but it involves a loss of billions of dollars.

And every single investigator you speak to says it's only going to be a matter of time until you do have someone killed in one of these -- in one of these protests. It depends on who you talk to whether it's a protest or an attack.

Some people have a real problem with the term, you know, terrorist being applied to these environmental acts but that's what the FBI calls it is eco-terrorism, so a major problem and growing, growing.

HINOJOSA: Kelli, one of the things that you brought up that I was fascinated by is that you were saying that perhaps among all of the possibilities that they're looking at is that perhaps there might have been a racially motivated issue here. What's that about?

ARENA: Well, you know, it's interesting. When the fires were first being looked at and inspected the inspectors had spray painted some symbols just to give them a sense of where they had been and what they needed to do and from a distance, I'm told, some of the residents in that area saw these symbols and thought that they were racially motivated.

And so, that word spread like wildfire throughout the community that perhaps this was a racially motivated crime and when the investigators got down to it, they said, oh, no, no, no, we drew those. Those were, those were our inspectors spray painted, you know, signs.

But this community is predominantly black. The homeowners that bought in this community are predominantly black. It is a diverse neighborhood by all accounts but there was real concern that maybe this was racially motivated.

Law enforcement officials have said they have absolutely no evidence to support that. They even reached out to the African American leadership to say, hey wait a minute. You know, we don't have any evidence to support this, you know. Let the evidence take us where it leads us. It's not leading us there.

HAYES: You know, Kelli, this story I think points out something. People really take for granted how much they rely on reporters like you, like all of us at CNN, to ferret out the details of a story before the authorities are ready to tell us what they know, right?

ARENA: Yes.

HAYES: Police, they'll keep their mouth shut. That's their job. It's your job to find out what's going on and give us this information.

Reporters getting in trouble right now, big trouble, going to jail for not revealing sources.

ARENA: That's right.

HAYES: We've been talking about the story the last few weeks on, ON THE STORY, what's the latest?

ARENA: Well, this weekend our colleague Judy Miller from "The New York Times," Matt Cooper from "Time" magazine, both appeared before an appeals court, a three-panel appeals court to make their argument that they should not be forced to reveal their confidential sources in the CIA leak investigation.

Very harsh questioning by those judges who said, you know, how is this case any different than previous cases that have gone before the Supreme Court? There is no federal shield for reporters. There may be some state shields in place but federally you have no protection. There is no First Amendment protection for you. You can be asked, just like anyone else.

We have a reporter in Rhode Island who is now under house arrest. We heard from Matt Cooper. I think he says it most poignantly. Let's go to that if we do have that.

(BEGIN VIDEO CLIP)

MATTHEW COOPER, "TIME" MAGAZINE: For me the central question is in the United States of America no reporter should have to go to jail for doing his or her job at a time when we're trying to promote democracy abroad. No American reporter should have to go to jail for doing his or her job and that's the bottom line.

(END VIDEO CLIP)

ARENA: Matt is actually going to discuss that more on "RELIABLE SOURCES" this weekend on CNN.

But I can tell you that in private conversations that I've had with sources, because on my beat we cover, Barbara knows this as well, we deal with confidential information every single day and there is great deal of discussion going on behind the scenes as to some sources asking me well what does this mean? What do you think about this?

And the fear is that there will be a chilling effect, that sources will not reveal information even if it -- if the end result is to -- is for the better good because they're worried about investigations and putting people in jeopardy.

HINOJOSA: It's an issue that we all face.

But from Washington, D.C. to where some of the new rules hit home, especially for undocumented immigrants who may lose their driver's licenses when anti-terrorism regulations take effect. I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BRIAN DECELL: Somebody who is undocumented is a person that you don't know who they are gets a driver's license. That gives them the keys to the city.

(END VIDEO CLIP)

HINOJOSA: Brian Decell, who lost his son-in-law on September 11th, says without changing the law to crack down on driver's licenses for undocumented immigrants terrorists can use that I.D. to rent cars, open bank accounts and board planes.

Welcome back. We're ON THE STORY.

HAYES: Okay, Maria, your big story this week fascinates me on many levels but certainly talking to undocumented immigrants on TV about the fact that their driver's licenses might get taken away from them. This resonates on so many levels but let's start with the family itself.

HINOJOSA: Well, you know, I've reported on immigration issues for a long time but I have to tell you the amount of real fear and stress and, dare I use the term, terror within this community of undocumented immigrants in upstate New York was something that I haven't really seen in a long time.

These people are saying, you know what, we're in this country. We're not going anywhere. We're driving to get to work or to get to your homes to clean them or to take care of your children, as in the case of Bernard Kerik, and now you want to take away our driver's licenses so that we're going to have to be forced to do other illegal acts?

People are really feeling like they're up against the wall and just finally one of these families said, listen, if we could, we would probably leave just because we feel so unable to move our lives forward but our kids were born in this country and they don't want to go back to Mexico.

So they're being American kids and they're saying "Heck no, mom, I'm not going back to Mexico. I'm an American citizen. I'm going to defend my rights by staying in this country."

STARR: OK, Maria, some people for a variety of legal reasons have had problems becoming legal over the years. They stay in this country for many, many years. And let's take everybody on good faith.

The people on the terrorism question have their concerns. The people who are undocumented have their concerns. Where's the middle ground? What's the solution to this?

HINOJOSA: Listen, that's a huge question, Barbara. Thanks for getting to that very early on this Saturday morning. People have been debating this for years and years.

What I can tell you from my reporting is this. You've got about seven million undocumented immigrants, illegal immigrants, some people call them illegal aliens. They are here. They have -- most of them don't have any plans of going back to the countries where they came from. It's unrealistic to think that seven million people are going to be deported. So, what are we going to do about this?

STARR: Right.

HINOJOSA: The people who I was speaking to in New York, upstate New York, are saying, you know what, give us something that documents us so that you, the government, knows where we are. We're telling you we want to be upfront with you. We'll give you our names, our addresses. Give us a number and that's all we want.

So, it's a conversation that I think we have to have on a national scale, particularly with what just happened with Bernard Kerik when it's at that level that undocumented immigrants and American citizens are living just like this.

QUIJANO: And, Maria, what do they say though when you talk to them about obviously there are specific concerns that people have that if immigration reform doesn't get passed that there could be a gigantic loophole there for terrorists to get into the country. Now what do these undocumented people say about that? I mean what is their sort of response, besides from maybe having an ID?

HINOJOSA: Well, listen, what they say is that it's interesting because the Mexican immigrants who I was speaking to upstate said, you know what, we do not want to harm this country. We are not terrorists. We're here to work. But they also understand that this country needs to control its borders so they, again, want to be upfront on this.

At the same time, one of the women who employs one of these undocumented immigrants who we spoke to said, you know what, I have to say that I remember, these are her words, that not all terrorists that have attacked in this country have been foreign born.

She pointed to Timothy McVeigh, John Walker Lindh, so they understand the issue of controlling the borders but they also say, you know, what, we may be having -- and we were just talking about eco- terrorists within the United States, so it really opens up a broader conversation about well how do we control the people who are here in this country and let those who want to work continue to work and be upfront and legal?

HAYES: I don't know if I should say we're schizophrenic or hypocritical or what, Maria, but I want to quickly mention some new recognition for Maria. We're all going to take here, sit here and take notes. This woman is piling them up like crazy.

"Catalina" magazine is the official publication of the National Association of Latino Leaders. It has Maria Hinojosa as one of its must meet now women who sets themselves apart and are groundbreakers in the Latino community.

Also, "The Book of Latino Women," includes Maria, calls her a hard-hitting journalist with heart who tells the stories of immigrants like her who came to the United States and felt like lost souls. Well, Maria, I'm betting you're not feeling at all like a lost soul now.

HINOJOSA: Hey, I'll take the recognition, why not? No, it's really wonderful to be recognized but most importantly what I always -- what I appreciate in terms of these kinds of honors is that I'm hoping that younger journalists will say, hey, if she can do it so can I.

STARR: Well, Maria, all of us offer our congratulations to you.

We're back with more ON THE STORY after this.

(BEGIN VIDEO CLIP)

ANNOUNCER: A Kenyan woman is awarded the Nobel Peace Prize. What's her story? More when we return.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANNOUNCER: Wangan Maathai, what's her story? Maathai won the Nobel Peace Prize for her environmental activism in Africa. As leader of the Green Belt Movement, she's taught women forestry and independence. She's also the first African woman to win the award.

WANGAN MAATHAI: A great honor, such as this, bestowed on an African woman can only encourage and empower women, especially in the African region and it can only make men stand up and wonder what's hit them.

ANNOUNCER: Maathai is the first environmentalist to win the Nobel Peace Prize and she emphasizes the connection between preserving natural resources and peace.

(END VIDEO CLIP)

HAYES: Thanks so much to my colleagues for another great show. Thank you for watching ON THE STORY. Of course, we'll be back next week. We expect to see you then.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on evangelist TV (UNINTELLIGIBLE) and Billy Graham.

Straight ahead a check on what's making news right now.

(NEWSBREAK)


Aired December 11, 2004 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEWSBREAK)
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Welcome to CNN's ON THE STORY where our journalists have the inside word on the stories we covered this week. I'm Barbara Starr on the story of U.S. soldiers telling Secretary Rumsfeld they have to scrounge in the trash for armor to protect their vehicles.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: I'm Elaine Quijano at the White house on the story of a bump in the road to a new Bush cabinet. Homeland Security nominee Bernard Kerik pulled out.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena on the story of one of the theories that a different kind of terrorism by environmental radicals could be behind the destruction of a subdivision south of Washington.

MARIA HINOJOSA, CNN CORRESPONDENT: I'm Maria Hinojosa on the story of how an anti-terrorism law and immigration reform hit home for millions of undocumented immigrants.

KATHLEEN HAYES, CNN CORRESPONDENT: And I'm Kathleen Hayes on the story of he's going, going, no, not going. Treasury Secretary John Snow still in Bush's cabinet.

Also coming up how Martha Stewart's in prison but still cooking up a TV comeback.

CNN's Michelle Bonner is on the story of charges finally filed in the basket brawl.

And is baseball's talk of stricter rules on steroids just talk or will Congress step up to the plate?

E-mail us at onthestory@cnn.com.

Now, straight to Elaine Quijano and the surprise withdrawal of the president's choice for the homeland security.

(BEGIN VIDEO CLIP)

BERNARD KERIK: Mr. President, I understand as you do the tremendous challenge that faces America in securing our nation and its citizens from the threat of terrorism and I know what is at stake.

(END VIDEO CLIP) QUIJANO: Bernard Kerik just last week, as President Bush tapped him to be his new secretary of Homeland Security. Last night, he was out amidst reports that he failed to pay for taxes for a nanny who may have been an illegal immigrant and so an early significant speed bump for President Bush as he looks to put together his cabinet looking ahead to his second term.

ARENA: Elaine, this is startling to me. At this stage of the game, I mean up until yesterday I know that you and our CNN reporters were saying that the White House was unconcerned about Kerik thinking that this was going to be smooth sailing. This was just normal scrutiny. How could they not have known this?

QUIJANO: Well, that's a good question. You're right. Yesterday, White House officials both on background and on the record were saying they felt very comfortable with the vetting process. They were quite confident.

Of course, yesterday the main issue was centering around a "New York Times" article about perhaps conflict of interest, questions being raised about Bernard Kerik's involvement with Taser International, a stun gun company which he made millions off of stock options from.

But the White House officials I spoke with said that they were very confident, a high degree of confidence was the quote that they had that the officials had looked closely at that particular relationship.

And also, they say the larger picture of his personal background they feel was scrutinized very closely as well. So, certainly when this news came down, it was quite a shock.

STARR: But, Elaine, there was a lot of chatter under the radar, if you will, in Washington all week long about Bernard Kerik. Is there a feeling that there was something else here indeed besides this nanny situation?

QUIJANO: Well, that is certainly a possibility. At this point, we're still waiting to get all of the details, the news just rippling out, but there are other -- there have been other issues raised, personal issues not related to the Taser International situation but questions about perhaps his management style, questions about other financial dealings but right now difficult to pin down.

Obviously, the White House did not have a handle on the situation as far as Kerik's personal background with this nanny situation but, you're right, there has been a lot of speculation that perhaps, perhaps some of these other questions might be pushed to the forefront.

But we should note that initially Democrats, Senate Democrats, particularly from New York were very supportive saying that they felt, you know, we heard Chuck Schumer, we heard Senator Hillary Clinton say they felt this was a good step. They felt that Kerik was someone who understood because of his firsthand experience, and so to have this happen now, certainly a stunning development.

HAYES: You know and actually, Elaine, that's what I want to ask you about. The big irony is that one of the problems for him, one of the areas of scrutiny was his experience in the private sector with Taser International.

He actually has experience with homeland security, with the kinds of devices and the kinds of companies that are going to have to be used to make this work. He actually did law enforcement. He worked after 9/11. Who's next? Who are they going to find with these qualifications? Now, someone they're going to be extra sure, I guess, is squeaky clean.

QUIJANO: Well, absolutely, especially after this development. Undoubtedly the vetting process is going to be even more stringent. It's a good question who's going to be tapped next for this job.

It's an enormous job, 180,000 employees under the umbrella of the Homeland Security Department. There was a feeling that Tom Ridge did a good job. It was a yeoman's task to try and get all of the coordination just to get everybody sort of on the same page.

And now with the president trying to move on, of course, the intelligence bill signing that we're expecting to take place next week, so there will be some restructuring within the intelligence community.

And the homeland security chief job it's going to be an enormous one, so at this point no names are yet emerging. White House officials that I spoke with this morning are not going there just yet and they really aren't saying a whole lot about what might have gone wrong in this process.

HINOJOSA: You know, it's interesting, Elaine, because earlier in the week I was reporting with undocumented immigrants who feel about this whole issue of driver's licenses and them being taken away.

It's fascinating to me that at six o'clock last night I was watching a report that was critical of Bernard Kerik but basically the White House saying "We're standing behind him." At eleven o'clock I turn on the news, huge bombshell.

But the issue that I'm wondering about is if you have undocumented immigrants and have arrived at this level working for the man who is going to be in charge of homeland security do you think that this is going to open up some kind of national conversation, or at least an internal conversation within the White House, about hey just how closely tied and linked are we as American citizens to these undocumented immigrant workers? It seems like we just can't get away from them.

QUIJANO: Well, absolutely and, as you know, immigration reform is one of the things that almost held up the intelligence bill or rather did hold up the intelligence bill.

That was something that Congressman James Sensenbrenner pushed quite emphatically wanting to make sure that illegal immigrants that states were banned from giving driver's licenses to illegal immigrants.

The topic of illegal immigration is huge and certainly this will not only focus the spotlight on Kerik's own situation but then the larger picture of how the U.S., in fact, is dealing with the problem of people coming across the borders and staying in this country, remaining in this country under an illegal immigrant status.

Now, at the same time, President Bush has said that he is willing to work in the next term to take a look at that issue of immigration reform because he is anxious to try and get some of these other reforms that have already been included in this intel reform bill to get those pushed through but he says he will look at that issue at his next term.

STARR: Well, from the latest controversies at the White House to Don Rumsfeld caught off guard by friendly fire, U.S. soldiers angry their vehicles lack proper armor against Iraqi attacks. I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're taking pieces of rusted scrap metal and compromised ballistic glass that's already been shot up, dropped, busted, taking the best out of this scrap to put onto our vehicles to take into combat. We do not have proper armor on the vehicles to carry with us north.

DONALD RUMSFELD, DEFENSE SECRETARY: You go to war with the army you have, not the army you might want or wish to have at a later time.

(END VIDEO CLIP)

STARR: Soldiers griping is as old as warfare but that exchange in Kuwait on Wednesday rekindled questions about just how prepared the Pentagon was for the post invasion insurgency in Iraq and maybe another issue of whether National Guard troops are treated like second class citizens and served up the leftovers.

QUIJANO: So, Barbara, where do things stand now in the push for new armored vehicles? We had heard last night that there was some sort of frantic negotiating going on. Where do things stand now in that process?

STARR: Well, Elaine, it's fascinating. The head of the company essentially that makes these so-called up-armored Humvees, he had an official in his company come out during the week and say, "Hey, we can make more. The Pentagon just hasn't asked us."

So, the secretary of the Army took the company up on that offer. He picked up the phone, dialed it and said, "What do you mean? How many more can you make? We'll buy everything you can make for us" and the company took a deep breath and said, "Well, it will take us a while."

I mean this is what -- reality is now sorting out. The company is going to retool the production line, gear up and start making about another 100 vehicles a month but it's still going to be early next year before they really get all the vehicles into Iraq in the armor shape that they want them.

HINOJOSA: So, Barbara, you know I've been fascinated by hearing about stories from when the war first began that there were parents of their sons and daughters who are fighting in Iraq who were making care packages to send them body armor.

I didn't know about the whole issue of these unarmored cars but it seems to me, someone who I was speaking to actually yesterday about this said how can the United States be saying we've got the best, most well-equipped, best trained and the best equipment out there and then this comes to the fore. It seems somewhat hypocritical, no?

STARR: Well, it's interesting, Maria. You know, Rumsfeld says you go to war with the army you have but they met an enemy that they didn't anticipate and that indeed was the insurgency. This is something that even Rumsfeld has said he did not anticipate it would be at the point it is, the type of insurgency.

You are talking about protecting truck drivers, guys who are usually rear echelon that you don't have to worry about that much and it really underscores the fundamental problem here. In Iraq the front line is everywhere. Everybody is in mortal danger and that's what they're really struggling to still catch up with.

The real question, Congress has given them over $1 billion in armor for money for all of this and they're still working on it. That's the question (UNINTELLIGIBLE).

HAYES: But, of course, it inflames the old debate about why we went to war because the team, the pro-war team, the Bush side says we had to go. We went to protect the country. The anti-war people say you chose to go when you went. It's your fault if you weren't as prepared as you should have been.

But I want to ask you about something. It was interesting to me on Thursday, Barbara, "The Wall Street Journal" carried this story about this big inside the paper. "The New York Times" had it upper left-hand corner emblazoned, this big story after this press conference, right?

How important is this story? In the context of what's going on for the Pentagon, what's going on for the war, is it an opportunity to bash Rumsfeld? Does it really show something fundamentally flawed from the Pentagon? What's the perspective here?

STARR: It's pretty much like everything else these days. Many things are all true at the same time. There is politics. It shows Rumsfeld hasn't even begun his second term yet but Congress is still taking their shots. You know everybody on the Hill took their best shot at him this week. That's not going to go away so there is politics.

There is the fundamental issue of armor, of protecting soldiers' lives in Iraq now more than 18 months into the war, into the insurgency, obviously still problematic.

And there's how it resonates with the American people. One of the things this young soldier said is we're going through landfills, junkyards, this type of thing.

What is very interesting is several days later now nobody is criticizing the soldier. He made a valid point but there's no real evidence yet that anyone has demonstrated soldiers are going through landfills finding scrap metal and bits of glass to bolt onto their vehicles. So, you know, truth always lies, as we know as reporters, always lies somewhere in between what everybody is out there saying.

ARENA: Well, the question was written for him, wasn't it by a reporter?

STARR: Well, there you go. I have been to many of these town halls overseas that Secretary Rumsfeld holds with the troops. We do not get to ask questions. This is for the soldiers and there was an embedded, if you will, soldier from a Tennessee newspaper who apparently coached the soldier and, you know, wanted to get him to ask this question, very dicey as to whether that reporter crossed the line. I think people are going to have to make their own judgments. No question the Pentagon is not thrilled.

HAYES: Not thrilled to say the least but an interesting debate and probably a healthy one and, as many people said, at least give Don Rumsfeld credit for being there and answering the question.

Like ON THE STORY, we're always here answering the questions from national defense to how you and I might want to feel secure at a sporting event. Charges filed in the so-called basket brawl this week on players and fans. CNN's Sports Anchor Michelle Bonner coming up on that story right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DAVID CORCYCA, PROSECUTOR: Jersey or no jersey, regardless of your stature, you are going to be held accountable.

UNIDENTIFIED FEMALE: We hoe this is a turning point. This is egregious behavior by fans and by players.

(END VIDEO CLIP)

MICHELLE BONNER, CNN SPORTS ANCHOR: The prosecutor and the chief of police in Michigan announcing on Wednesday that Indiana Pacers players and fans have been charged for their part in last month's melee during the game against the Detroit Pistons.

Welcome back. I'm Michelle Bonner in Atlanta and we're ON THE STORY.

HAYES: So, Michelle, update us on what this really means for this particular incident and what it means for the sport. The players were suspended immediately, the main players in the brawl with misdemeanor charges and one fan in particular singled out by the prosecutor as setting this whole thing off.

BONNER: Yes, John Green, you know. It was the guy in the white baseball cap who decided when Ron Artest was lying on the table to toss that cup with some form of liquid in it and that's what ignited this entire thing.

The prosecutor in this, David Corcyca, saying though that essentially nobody will probably serve any jail time. They'll probably get probation. But what I think the prosecutor is doing is sending a message that we will undergo this incredible tedious task of going through every single frame of video to figure out who is responsible for what.

And they have put these charges forth and, you know, $500 for the fines for some of these players, if convicted, is nothing but for the fans essentially that could be a lot of money. So, they're trying to send a message. What message, you know, is received by everyone remains to be seen.

QUIJANO: Michelle, talking about the players though and looking at their situations, I mean it seems to me that a lot of people looking at this might say, well, you know, is this the sign of things to come? Is this really where professional sports is headed where you have these people who are earning millions of dollars and really are role models?

We hear that word so much used to describe sports figures but people are looking up to these folks and yet this is the behavior that sort of gets off easy in a lot of people's eyes. You know, some would argue, well it is a severe punishment for some of these players.

But, at the same time, when you have people also like making comments that, oh, we can't feed our families on millions of dollars a year, I mean it's really incredulous.

BONNER: Yes, right.

QUIJANO: Is this the state of the future of professional sports in America?

BONNER: Well, they're trying to halt it right now but essentially you have to realize too that the fans have to accept some of the blame in this situation. I mean throwing something on a player is completely unacceptable.

But it's interesting when you point out that these guys are role models because one of the 50 greatest players ever to play the game, Charles Barkley, once said "I'm not a role model. Your parents are."

Charles Barkley on "Dennis Miller Live" show the other night saying, you know what, if a fan does something like that he doesn't agree that you shouldn't go into the stands. He actually said you should go in and actually kick somebody real good.

So, you're hearing from a guy who is actually an analyst right now saying, you know, if a fan does this you should go into the stands. But the league says at the very beginning of the season you are absolutely not allowed to go into the stands.

Now, Latrell Sprewell, uttered a sexual slur to a female heckler last week. He got suspended for one game. There was immediately the first game following this brawl, the first game in Detroit a fan uttered a sexual slur toward the Miami Heat assistant. He was ejected. So, the league is trying to stop this right now and not make this something about the future.

HINOJOSA: All right, so here's the thing. For me as a mom, and I'm not a jock. My husband is an artist. I'm a writer. I'm a reporter. Who has the time anyway? But I always have these conflicting feelings about, you know, should I be getting my kids more into like Little League and all this.

And then I see these stories about the steroids and this interview with Conte and he's saying, the president of Balco, and he's saying, you know what, all of the Olympics it's everybody is doing this in all sports. Everybody is doing it.

And I'm just saying, gosh, you know, what are we supposed to do in terms of what's real, what's not? You look at these bodies and you're thinking, wow, they really work out hard. I should try harder to have that body. And then you're like, oh no, it's not because they work out hard. It's because they're shooting themselves up.

BONNER: And that's the problem. I mean, you know, young kids are seeing that this seems to be the norm of what's going on. You know, Victor Conte, you know, put it best when he said, you know, perhaps he should be the one doing the testing because he's always one step ahead of the people who are doing the testing.

You know, years ago they knew what to look for. Then somebody goes and makes something else and then they figure out how to test for that and then so on and so forth and so forth.

So, you know, someone is always going to -- there's going to be other Victor Conte's of the world that are going to continue to come up with undetectable substances to make these people faster, stronger, bigger, no matter what.

HAYES: Yes, it's a big story and a shocking one for many people but I guess maybe not if you're really inside the world of sports. Michelle Bonner, thank you so much for bringing that to the show. Come back soon ON THE STORY in fact.

From sports to the investing game on Wall Street. I'm back on that story in a moment.

And, Maria Hinojosa will be on the story of how a new law in Washington hits immigrants where they and their families live coming up next ON THE STORY.

(COMMERCIAL BREAK)

(NEWSBREAK)

STARR: Now, more on this developing story about the poisoning of one of the presidential candidates in Ukraine. We are now joined by Jill Dougherty, our Moscow Bureau Chief. Jill, this story unfolding in just recent hours. They do believe he was poisoned and I take it they have a fair idea that this might have happened at a dinner he was attending.

JILL DOUGHERTY, CNN MOSCOW BUREAU CHIEF: They do. Actually, here's what the doctors in Vienna have determined. He went back, by the way, for testing the third time and they took multiple samples, et cetera.

They say that it was definitely dioxin poisoning, that it appears that it was administered by a third party and then probably, since it is soluble, in some type of liquid and that goes with the theory all along that the only thing that could really explain the severe scarring and swelling, et cetera, on the face of Viktor Yushchenko would be dioxin poisoning.

The doctors said, Barbara, that they found 1,000 times the normal level in his skin. His overall health is OK but that scarring could last a very long time, maybe even years, and certainly politically this is going to be a very important chapter in this unfolding political story in Ukraine.

QUIJANO: Jill, I wanted to ask about that because from the perspective here at the White House, obviously this is such a delicate situation. When asked, Scott McClellan would say about whether or not the U.S. backed one candidate or another he would only say, well the United States government backs the will of the Ukrainian people, being very careful because, as you know, Moscow has backed Yuschenko's opponent and that has created a delicate situation here for the United States in terms of its relations with Moscow.

At this particular point any indication specifically who may be behind this and what does this do as far as the overall picture of U.S.-Moscow relations with respect to what's happening there in the Ukraine?

DOUGHERTY: Well, so far Moscow is not being implicated in this but I can tell you what he was doing that night, September 5th, when he went to what's variously described as a dinner or reception but he was with the leadership of the SBU.

Now, the SBU is what we would call here in Russia the former KGB. It's security services and there was one member of his political entourage, a member of his party who was there as well.

Now, nobody is saying that anybody else was poisoned at this dinner. He became violently ill the next day and the on the 10th of September that's when he went to Vienna. Now, he has always said that he feels that it was a deliberate attempt to kill him and it was a deliberate attempt by his political enemies. He has not named names but you can certainly bet that there is going to be an investigation. They want to find out who tried to do this.

STARR: Jill, absolutely fascinating. We'll be continuing to check in with you.

But now we're going to go to Kathleen Hayes and the story of the economy.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We appreciate the great job that Secretary Snow is doing. He's an outstanding member of this team.

(END VIDEO CLIP)

HAYES: That's Scott McClellan, White House Press Secretary, trying to deflect reporters' questions earlier in the week about the future of Treasury Secretary Snow. A lot of us thought Snow was really out as President Bush cleaned house but, in the end, Snow, an old railroad executive is still driving the train.

Welcome back. We're ON THE STORY.

HINOJOSA: OK, Kathleen, so take us to the back story. What's really going on? He's in, he's out, what's the back story? Why was all of this happening and why ultimately has he chosen or been allowed to stay?

HAYES: Maria, I have heard so many different things but certainly what a senior administration official told me I think is the main story coming out of the White House now that basically there were some low level chatter that was picked up, first by the "Washington Post," then by "The New York Times," that he was definitely out that Bush has made up his mind.

He was looking for a new guy, new gal, who could better sell Social Security reform, for example, tax reform. And while Snow was loyal, campaigned like crazy for Bush during the election, helped sell, you know, the second and third rounds of tax cuts, they needed someone with more charisma.

Well, but the inside story is that that was wrong, that Bush was thinking about all his cabinet appointments. He had never made up his mind and other media outlets treated this as a speculative thing.

In the end, I don't know if we'll ever find the whole story. We do know this. John Snow is in. John Snow is the man. I think financial markets, a whole other side of this story, some people, some currency people hoping maybe they would get a new treasury secretary because they don't want to see the weak dollar policy still in place but with Snow at the helm you can expect that policy not to change. ARENA: And so, Snow attending this White House economic conference. I mean what will go on there?

HAYES: This White House economic summit is interesting. Remember in Waco, in President Bush's first term, Waco, Texas they had this economic summit. Of course, that was a different time. The economy was, you know, in recession, coming out of recession. The White House feels the economy is strong now. That's one of the things they'll discuss, the state of the economy.

John Snow's role in this I think is interesting. There are six panels. This is a Wednesday/Thursday conference. Snow is going to be in charge of the panel talking about tax reform, tax simplification, making tax cuts permanent.

The piece about Social Security and entitlement reform will be handled by Josh Bolton, who is the OMB, Office of Management and Budget director, but it's also health and legal reform, a wide variety of topics.

I think it's going to -- it seems more not as a chance for them to lay out specific proposals because, as Elaine pointed out earlier, a lot of things do not have all the specifics yet, but it's a chance they say for entrepreneurs, some workers, experts, policymakers to get together and bat these issues around. President Bush will be in the mix somewhere, as will the Vice President Dick Cheney.

QUIJANO: Kathleen, that's right. President Bush is expected to participate in a couple of panels but we have heard that the main focus or one of the main focuses for the administration looking ahead to the second term is Social Security reform, that the president very much wants to try and get partial privatization anyway in place because the reports from the trustees are that it's going to fun out of money in something like 2042.

But there hasn't been any mention of exactly how they'll pay for that. Has there been any word about what specifically might be on the table, anything that you've heard?

HAYES: Well, of course, the president, as you know Elaine, as you've mentioned, has ruled out raising the payroll tax. I'm sure a lot of people are happy to hear that but if they did raise it, what they would do -- right now everybody pays payroll tax until you make $87,000 and once you get above $87,000 you don't pay any more tax because that's the ceiling.

So, there's been talk well why not raise that ceiling higher, OK? But the Bush team says no, no, we won't do that. We won't cut benefits. So, what is left is borrowing and that means going out into the financial markets and selling more U.S. government bonds.

We already have a big deficit. That will make the deficit much bigger. This cost of the transition of allowing people to put money in this fund takes money out of other funds. I think what's interesting is there is some question now, chatter from people who watch this very closely, about the possibility that the Bush administration might try to take these costs and put them off budget.

ARENA: There you go.

HAYES: Make it a special kind of expenditure as they did say with the savings and loan crisis. If they did that, they could fix the accounting so it wouldn't make the budget deficit bigger. It would just be something off to the side.

But, again, I think the Bush team isn't there yet. So far they're just speculating but I think most people figure at this point they'll be borrowing money and a bigger deficit.

STARR: OK, Kathleen, just to shift gears for a minute to a different issue. I can't believe we're going to go back to this but we are. There was Martha news this week.

HAYES: Oh, yes, Martha Stewart. You know isn't it amazing someone can be in jail for five months and still create so much news? Everything this woman does. Well, the latest is that Mark Brunette (ph) the (UNINTELLIGIBLE) of reality TV, has teamed up with NBC and Martha.

I guess -- I don't know if she does this because she can't talk business in jail but I guess everyone is talking for her. She's going to have a reality TV show, an hour program in front of a live audience.

ARENA: Martha in jail.

HAYES: Martha out of jail but talking about what she did in jail, all the things she learned to microwave, you know.

ARENA: There you go.

HAYES: So, and I think people are figuring, I've always been someone thinking, don't count Martha Stewart down and out. People are betting on a big Martha comeback and this is going to be the thing that leads the way.

ARENA: Well, her fan base is still pretty incredible.

HAYES: That's right.

ARENA: Just amazing.

Well moving on, dozens of homeowners in this area are checking their finances and their insurance policies.

A sad story about 30 miles south of here, suspicion that eco- terrorism could be one of the reasons behind the arson that destroyed much of a neighborhood of new houses. I am back on that story in just a moment. (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.

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FARON TAYLOR, MARYLAND DEPUTY FIRE MARSHAL: The cause has been identified as arson.

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ARENA: Faron Taylor, Maryland Deputy Fire Marshal, talking about the fires in 19 houses in an upscale subdivision just south of Washington. There were attempts to torch another ten houses and, at the outset, there were questions about whether this was the work of radical environmentalists, a rare example of eco-terrorism in this region.

STARR: So, Kelli, what is the latest? Do they think it's eco- terrorism and is that a serious threat?

ARENA: Well, eco-terrorism -- it's two separate issues. As far as the fires are concerned, I've had several sources back away from the theory that it was eco-terrorism. They say it doesn't have the usual M.O., that there were no spray painting, you know, symbols. There's been no claim of responsibility.

There were some protests about this development before it was built by environmentalist groups but the environmentalist groups here in this -- in the northeast don't usually engage in that type of activity.

We've seen a lot of that out west, so as far as this is concerned, it's a mystery. They have everything, everything is still on the table for this investigation.

STARR: Arson might be under investigation.

ARENA: Arson, you know, everything, and they're checking into a series of good leads is what we're told. On the issue of eco- terrorism overall, major problem and the biggest threat of domestic terrorism that the FBI is facing.

QUIJANO: That's what I was going to ask, Kelli. How big a problem is this? Because, you're right, we don't hear about that very much here but you certainly occasionally hear about that out west.

ARENA: Yes.

QUIJANO: I mean is this something that they're looking at as sort of an emerging kind of threat or is...

ARENA: Yes, they are. I mean they are looking at it as a very serious threat and the reason many people speculate we don't hear a lot about it is because it doesn't usually involve the loss of life but it involves a loss of billions of dollars.

And every single investigator you speak to says it's only going to be a matter of time until you do have someone killed in one of these -- in one of these protests. It depends on who you talk to whether it's a protest or an attack.

Some people have a real problem with the term, you know, terrorist being applied to these environmental acts but that's what the FBI calls it is eco-terrorism, so a major problem and growing, growing.

HINOJOSA: Kelli, one of the things that you brought up that I was fascinated by is that you were saying that perhaps among all of the possibilities that they're looking at is that perhaps there might have been a racially motivated issue here. What's that about?

ARENA: Well, you know, it's interesting. When the fires were first being looked at and inspected the inspectors had spray painted some symbols just to give them a sense of where they had been and what they needed to do and from a distance, I'm told, some of the residents in that area saw these symbols and thought that they were racially motivated.

And so, that word spread like wildfire throughout the community that perhaps this was a racially motivated crime and when the investigators got down to it, they said, oh, no, no, no, we drew those. Those were, those were our inspectors spray painted, you know, signs.

But this community is predominantly black. The homeowners that bought in this community are predominantly black. It is a diverse neighborhood by all accounts but there was real concern that maybe this was racially motivated.

Law enforcement officials have said they have absolutely no evidence to support that. They even reached out to the African American leadership to say, hey wait a minute. You know, we don't have any evidence to support this, you know. Let the evidence take us where it leads us. It's not leading us there.

HAYES: You know, Kelli, this story I think points out something. People really take for granted how much they rely on reporters like you, like all of us at CNN, to ferret out the details of a story before the authorities are ready to tell us what they know, right?

ARENA: Yes.

HAYES: Police, they'll keep their mouth shut. That's their job. It's your job to find out what's going on and give us this information.

Reporters getting in trouble right now, big trouble, going to jail for not revealing sources.

ARENA: That's right.

HAYES: We've been talking about the story the last few weeks on, ON THE STORY, what's the latest?

ARENA: Well, this weekend our colleague Judy Miller from "The New York Times," Matt Cooper from "Time" magazine, both appeared before an appeals court, a three-panel appeals court to make their argument that they should not be forced to reveal their confidential sources in the CIA leak investigation.

Very harsh questioning by those judges who said, you know, how is this case any different than previous cases that have gone before the Supreme Court? There is no federal shield for reporters. There may be some state shields in place but federally you have no protection. There is no First Amendment protection for you. You can be asked, just like anyone else.

We have a reporter in Rhode Island who is now under house arrest. We heard from Matt Cooper. I think he says it most poignantly. Let's go to that if we do have that.

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MATTHEW COOPER, "TIME" MAGAZINE: For me the central question is in the United States of America no reporter should have to go to jail for doing his or her job at a time when we're trying to promote democracy abroad. No American reporter should have to go to jail for doing his or her job and that's the bottom line.

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ARENA: Matt is actually going to discuss that more on "RELIABLE SOURCES" this weekend on CNN.

But I can tell you that in private conversations that I've had with sources, because on my beat we cover, Barbara knows this as well, we deal with confidential information every single day and there is great deal of discussion going on behind the scenes as to some sources asking me well what does this mean? What do you think about this?

And the fear is that there will be a chilling effect, that sources will not reveal information even if it -- if the end result is to -- is for the better good because they're worried about investigations and putting people in jeopardy.

HINOJOSA: It's an issue that we all face.

But from Washington, D.C. to where some of the new rules hit home, especially for undocumented immigrants who may lose their driver's licenses when anti-terrorism regulations take effect. I'm back on that story after this.

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BRIAN DECELL: Somebody who is undocumented is a person that you don't know who they are gets a driver's license. That gives them the keys to the city.

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HINOJOSA: Brian Decell, who lost his son-in-law on September 11th, says without changing the law to crack down on driver's licenses for undocumented immigrants terrorists can use that I.D. to rent cars, open bank accounts and board planes.

Welcome back. We're ON THE STORY.

HAYES: Okay, Maria, your big story this week fascinates me on many levels but certainly talking to undocumented immigrants on TV about the fact that their driver's licenses might get taken away from them. This resonates on so many levels but let's start with the family itself.

HINOJOSA: Well, you know, I've reported on immigration issues for a long time but I have to tell you the amount of real fear and stress and, dare I use the term, terror within this community of undocumented immigrants in upstate New York was something that I haven't really seen in a long time.

These people are saying, you know what, we're in this country. We're not going anywhere. We're driving to get to work or to get to your homes to clean them or to take care of your children, as in the case of Bernard Kerik, and now you want to take away our driver's licenses so that we're going to have to be forced to do other illegal acts?

People are really feeling like they're up against the wall and just finally one of these families said, listen, if we could, we would probably leave just because we feel so unable to move our lives forward but our kids were born in this country and they don't want to go back to Mexico.

So they're being American kids and they're saying "Heck no, mom, I'm not going back to Mexico. I'm an American citizen. I'm going to defend my rights by staying in this country."

STARR: OK, Maria, some people for a variety of legal reasons have had problems becoming legal over the years. They stay in this country for many, many years. And let's take everybody on good faith.

The people on the terrorism question have their concerns. The people who are undocumented have their concerns. Where's the middle ground? What's the solution to this?

HINOJOSA: Listen, that's a huge question, Barbara. Thanks for getting to that very early on this Saturday morning. People have been debating this for years and years.

What I can tell you from my reporting is this. You've got about seven million undocumented immigrants, illegal immigrants, some people call them illegal aliens. They are here. They have -- most of them don't have any plans of going back to the countries where they came from. It's unrealistic to think that seven million people are going to be deported. So, what are we going to do about this?

STARR: Right.

HINOJOSA: The people who I was speaking to in New York, upstate New York, are saying, you know what, give us something that documents us so that you, the government, knows where we are. We're telling you we want to be upfront with you. We'll give you our names, our addresses. Give us a number and that's all we want.

So, it's a conversation that I think we have to have on a national scale, particularly with what just happened with Bernard Kerik when it's at that level that undocumented immigrants and American citizens are living just like this.

QUIJANO: And, Maria, what do they say though when you talk to them about obviously there are specific concerns that people have that if immigration reform doesn't get passed that there could be a gigantic loophole there for terrorists to get into the country. Now what do these undocumented people say about that? I mean what is their sort of response, besides from maybe having an ID?

HINOJOSA: Well, listen, what they say is that it's interesting because the Mexican immigrants who I was speaking to upstate said, you know what, we do not want to harm this country. We are not terrorists. We're here to work. But they also understand that this country needs to control its borders so they, again, want to be upfront on this.

At the same time, one of the women who employs one of these undocumented immigrants who we spoke to said, you know what, I have to say that I remember, these are her words, that not all terrorists that have attacked in this country have been foreign born.

She pointed to Timothy McVeigh, John Walker Lindh, so they understand the issue of controlling the borders but they also say, you know, what, we may be having -- and we were just talking about eco- terrorists within the United States, so it really opens up a broader conversation about well how do we control the people who are here in this country and let those who want to work continue to work and be upfront and legal?

HAYES: I don't know if I should say we're schizophrenic or hypocritical or what, Maria, but I want to quickly mention some new recognition for Maria. We're all going to take here, sit here and take notes. This woman is piling them up like crazy.

"Catalina" magazine is the official publication of the National Association of Latino Leaders. It has Maria Hinojosa as one of its must meet now women who sets themselves apart and are groundbreakers in the Latino community.

Also, "The Book of Latino Women," includes Maria, calls her a hard-hitting journalist with heart who tells the stories of immigrants like her who came to the United States and felt like lost souls. Well, Maria, I'm betting you're not feeling at all like a lost soul now.

HINOJOSA: Hey, I'll take the recognition, why not? No, it's really wonderful to be recognized but most importantly what I always -- what I appreciate in terms of these kinds of honors is that I'm hoping that younger journalists will say, hey, if she can do it so can I.

STARR: Well, Maria, all of us offer our congratulations to you.

We're back with more ON THE STORY after this.

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ANNOUNCER: A Kenyan woman is awarded the Nobel Peace Prize. What's her story? More when we return.

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ANNOUNCER: Wangan Maathai, what's her story? Maathai won the Nobel Peace Prize for her environmental activism in Africa. As leader of the Green Belt Movement, she's taught women forestry and independence. She's also the first African woman to win the award.

WANGAN MAATHAI: A great honor, such as this, bestowed on an African woman can only encourage and empower women, especially in the African region and it can only make men stand up and wonder what's hit them.

ANNOUNCER: Maathai is the first environmentalist to win the Nobel Peace Prize and she emphasizes the connection between preserving natural resources and peace.

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HAYES: Thanks so much to my colleagues for another great show. Thank you for watching ON THE STORY. Of course, we'll be back next week. We expect to see you then.

Still ahead, "PEOPLE IN THE NEWS," focusing this week on evangelist TV (UNINTELLIGIBLE) and Billy Graham.

Straight ahead a check on what's making news right now.

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