Return to Transcripts main page

On the Story

U.S. Military is Bracing for Election Violence in Iraq; Iraq War Has Jacked up the Federal Deficit

Aired January 29, 2005 - 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.


BETTY NGUYEN, CNN ANCHOR: Good morning, everybody. I'm Betty Nguyen here at the CNN Center in Atlanta. Here's what is happening right "Now in the News."
As expected, violence in Baghdad is preceding tomorrow's Iraqi elections. Insurgents have staged attacks at a number of polling stations and polling places across the country.

And at least eight people are dead after two bombings at a U.S. and Iraqi military facility near Iraq's border with Iran. At least one of the explosions at the Joint Coordination Center northeast of Baquba was the work of a suicide bomber.

People across the southeast are waking up to a winter ice storm. Georgia police say freezing rain is responsible for at least two deaths. The storm is expected to stick around well into this afternoon. North and South Carolina are also getting hit with sleet, snow and ice.

Those are the top stories right "Now in the News." I'm Betty Nguyen. CNN's ON THE STORY starts right now.

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 how the U.S. military is bracing for election violence in Iraq and on guard for what may follow.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: I'm Christiane Amanpour in Baghdad, ON THE STORY with the preparations for these elections. Never have such elections taken place so blatantly at the point of a gun.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: And I'm Dana Bash, ON THE STORY of the challenge for the Bush administration taking credit, but avoiding blame if things go badly in Iraq.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena, ON THE STORY of the terrorism fight here at home and change at the top of the Justice Department.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, ON THE STORY of how the Iraq war has jacked up the federal deficit and how the markets are limping through the first month of 2005.

And we'll talk about how a made-up story of a radioactive bomb in London may hold lessons for real life.

E-mail us at ONTHESTORY@CNN.com.

Now, straight to Christiane, Iraq and election day.

(BEGIN VIDEO CLIP)

AMANPOUR: When do you think America should pull its forces out? When will the job be done?

UNIDENTIFIED MALE: When the job has been well done. The first steps for democracy, when we have enough strength within the government and when we have capable security forces.

(END VIDEO CLIP)

AMANPOUR: That was the interim president of Iraq, a moderate Sunni who is trying to pull those Sunnis who are threatening to boycott into the process. And today he said at a press conference that if the majority of Iraqi Sunnis or Iraqis in general don't vote, it will be because of the terrible security fears and not because they don't want to take part.

STARR: Christiane, we are now just really hours away from the first votes being cast in this election. What is the mood in Baghdad? What is the level of tension in the country right now?

AMANPOUR: Well, Barbara, I liken it to preparing for war. This is much more like a preparation for war than for an election, or any election that I've ever covered.

I went overhead in a helicopter today. This capital and presumably most of this country is a ghost town. There are Draconian curfews and security measures enforced, no traffic on the streets, no people out, really, in any -- in any meaningful way.

The actual polling booths are being protected. And overnight, we're told, concrete blocks will be pulled in. The final preparations will take place to try to secure these polling booths.

BASH: And Christiane, I want to ask you about what I'm hearing on my beat at the White House versus what you're hearing and seeing in reality on the ground. The White House, of course, is saying that this is the first step towards freedom, democracy. And Stephen Hadley, the president's new national security adviser, wrote this morning that "The overwhelming majority of Iraqis desperately want to vote."

Do you think that's true from all that you've seen and heard?

AMANPOUR: Well, in short, yes, in terms of the typical constituencies who do really want to vote, which are the Kurds in the north, which are the Shiites in the south. And they, together, make the majority of the people in this country.

The question is, will the -- who are essentially a minority, the Sunnis, in those troublesome several provinces, actually be able to come out and vote? And if they don't, what will that mean? That is the big question.

Will it cast doubt on the legitimacy? Will it mean that there for a long time will be challenges to any political structure? Sunni politicians and Shiites are trying to bend over backwards to pull Sunnis in, even if they don't vote, to get them into, for instance, the constitution writing exercise, to appoint them as cabinet members.

HAYS: Christiane, people in this country seem divided over whether this is an exercise in freedom, the U.S. assisting Iraq towards democracy, or if this is a rigged election, almost forced on these people by the U.S. military. I've heard both extremes. What is the division of sentiment or the unity of sentiment within Iraq?

AMANPOUR: Well, it is basically like that here, too. There is a division about what these mean.

I mean, many, many people say that it's basically a foregone conclusion, whoever the U.S. wants to win, will win. But other people say, no, this is a first step, that we have to start somewhere.

You know, we've never had an election where it wasn't absolutely clear that Saddam Hussein would win by, you know, that figure, 99.999 percent. So it will be exciting, the idea that you cast a ballot. And it will make a difference.

The question is, what happens as they leave their house, go to the polling station, what will happen? And I talked to the top -- one of the -- well, the deputy commander of all the forces here, General Mett (ph), who believes that there will be some violence, perhaps mortar attacks, perhaps some suicide belts strapped to some people. But hoping that the Draconian security measures they put in will secure the people as they come to vote.

ARENA: Christiane, it takes a great deal of courage under those circumstances for people to come out and vote. Do you have any personal stories or tales that you can share of people who are determined, in spite of those circumstances, to come out and cast that ballot?

AMANPOUR: You know, we've been talking to a fairly wide range of people here on the streets of Baghdad. We've talked to people in Tikrit. Some of our other colleagues who are around the country have talked to others, whether it be in Mosul or Falluja or elsewhere. And, you know, people say to us, it's really difficult because they really are afraid.

I mean, look, these are people who have lived with the brunt of the violence over the last couple of years. As many Americans have died, 10 or 20 times of Iraqis have been killed in the violence that plagues their lives every day.

So some of the people have told us, "Well, look, we've lived under these terrible conditions for so many years, starting with the wars between Iran and Iraq, the first Gulf War, the second Gulf War, the sanctions, the violence now, and this is just another day of violence." And others say, you know, "I'm not going to let my family go out. I'm going to stay home. I'm not going to go out. I can't put them at such risk."

So people are divided.

STARR: You know, Christiane, you talk about these Draconian security measures around the polling places. It's probably something that most Americans really can't relate to. It is quite severe, isn't it, what they're trying to do to protect them?

AMANPOUR: Yes. And to be honest, I don't think many people can relate to what's going on here.

This is an election unlike any that I've ever seen, frankly, unlike any that's ever taken place because it takes place in this crucible of violence. And so, you know, there are American tanks on the streets, there are helicopters overhead, there are huge concrete blocks around various polling stations. They're trying to do their best to make sure that this goes off without massive bloodshed.

But on the other hand, the -- you know, the people are preparing for the worst. The hospitals are stockpiling. Doctors have been staying overnight because they're a curfew, and they're getting prepared for what may be widespread violence tomorrow.

People have been stockpiling on food, on water, on fuel, on essentials. And so this is -- as I say, you know, it's more the characteristics of preparing for war. And to be frank, it is a war.

Tomorrow will be a war. It will be a war between the people who dare to come out and confront those insurgents and those insurgents who have threatened them and intimidated them so much.

BASH: Christiane, thank you for now. We will be checking back with you at the half-hour. We'll see you then.

And we're going to go on to President Bush. This week he said that the Iraqi vote is a "grand moment in history." I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A world with Saddam Hussein in power would have been a -- you know, would have been a more dangerous world today. Secondly, we're making progress in a -- in helping Iraq develop a democracy. And in the long term, our children and grandchildren will benefit from a free Iraq.

(END VIDEO CLIP)

BASH: President Bush at his Wednesday news conference, where he repeatedly said the United States is making progress in Iraq and just the fact that they are holding elections means that it is a success. Welcome back. We're ON THE STORY.

ARENA: That's interesting, because we're framing this as a success even before we know anything about voter turmoil -- voter turnout, possible conflict, casualties.

BASH: That's the MO of the White House. You heard the president in that news conference. You heard from his advisers. You heard from him, even giving an interview on Arab television this week, that they think no matter what happens it's a victory just that they're holding elections.

That's the MO. And you heard him doing it in sort of Bush speak, in ways that they think really appeals to people who like him.

He's bold. They say he's talking about big ideas, democracy, freedom. You saw him very sort of physical, emoting, saying, "We're planting the flag of freedom."

But the reality is, behind the scenes they understand it is a big deal. It's a political marker on the calendar everybody has been looking towards to say, OK, what happens next?

HAYS: Well, that's because even Christiane Amanpour just said basically everyone says, well, at least we have a real vote. At least we're not just voting for one candidate, even the Iraqis who disagree.

What will be do you think the marker of success for the administration? Just getting past it and people looking at something else? No big upraising of insurgency? What is their marker of success?

BASH: You know what? It's actually going to be -- it's going to be hard to answer that question until we actually see what happens in terms of the violence and in terms of the turnout.

You know, and it's going to take a while, as Christiane was saying, for those things to be measured. It's going to take a couple -- not the violence, but certainly the turnout will take a couple of weeks.

But in terms of the president domestically, you even have Republicans, people in his own party, looking towards this and saying, OK, OK, we've sort of held our breath, we haven't said anything, we've been waiting for these elections to come, and then it's time to talk about what's next. You even heard the Armed Services chairman in the Senate this week, Barbara, John Warner, saying, look, we're going to talk about in this committee, how are we going to get our troops home? And that is the bottom line.

STARR: I think that was one of the most interesting things in the confirmation hearings we saw at the Senate Foreign Relations Committee for Condoleezza Rice as secretary of state. Certainly a great percentage of the questions were actually military questions to her. What is the military strategy, how are you going to get troops out? How are you going to train Iraqis? BASH: That's right.

STARR: It was something that was watched probably on every television set in the Pentagon. It is a real undercurrent right now.

BASH: It is a real undercurrent, because as much as the president talks about freedom and liberty and spreading democracy for the American people right now, certainly that is important. But you're seeing in the polls and you're hearing from members of Congress who are just home with their constituents, and they're obviously telling this to the White House, what matters is, OK, it's been a couple years, we have this incredible high troop level...

STARR: After the election, why do we have to stay?

BASH: And why do we have to stay. It's about our men and women in the military and when they're going to have to come home. And that is -- already we're seeing how much that impacts the president's overall approval rating. It is...

(CROSSTALK)

ARENA: (UNINTELLIGIBLE) anything done from here, Dana? I mean, if this is going to be the preoccupying subject, and you know that people who have some -- we all know somebody who is there or a family who has somebody there. And you're saying, OK, all right, as Barbara said, the elections are done, now what? We've got issues like Social Security. I mean, these are huge.

BASH: Huge issues and, look, they get that. They know at the White House that this, that the tenor, the tone of the Iraqi elections, what happens in Iraq, more importantly, is going to determine what the president can do in his second term. Because, look, the bottom line is that he's a lame duck, and he's got to work with people who aren't, who have got to go back to their constituents, who have got to go back and get re-elected.

And they are going to need what the president calls his political capital. And if he doesn't really have that much, it's going to be hard to get Social Security done. And we've heard that loud and clear from Republican senators this week.

HAYS: It's interesting, you know, that we forget, according to an expert in Washington I spoke to this week, about Social Security. President Clinton also wanted to make Social Security reform his legacy.

BASH: We don't forget from the White House. We hear that a lot from the White House now, yes.

HAYS: Well, and the reason that he couldn't get it going was because of a certain sexual imbroglio that happened. And so I guess what you're saying is, if Iraq doesn't settle down for the president, his whole domestic agenda could get bogged down in this.

BASH: Well, yes. It's about how much his fellow members of Congress, Republicans, feel that they have -- that they have him as sort of backstop politically, political -- have him as political cover. And if he's not popular enough, they won't have it.

Look, this week we saw Republican senators come to the White House to meet with the president on Social Security. And they said coming out this is a separate issue from Iraq, but it's sort of all intertwined that he's out there and he's talking about Social Security as a problem, we've got to get this fixed. And they feel like it's not resonating, people aren't getting it.

Now, for that particular issue, it's because they feel that he's not giving very many details and he has just been talking generally about it being a crisis. But it's a believability issue and it's a credibility issue with this White House and this president.

ARENA: It's an $80 billion issue.

BASH: And it's an $80 billion issue. But that's about that.

STARR: Well, like the White House, the Pentagon is already looking beyond tomorrow, beyond that Iraqi election. I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEN. JOHN ABIZAID, CENTCOM COMMANDER: We believe that a combination of Iraqi security forces and coalition forces will make the situation stable enough for voting to take place.

(END VIDEO CLIP)

STARR: CENTCOM Commander General John Abizaid after briefing members of Congress on Wednesday predicting stability, at least stable enough for Iraqi election day.

Welcome back. We're ON THE STORY.

HAYS: And certainly everyone has their fingers crossed. We've heard so much about the tight security. So maybe that is the case, stability on election day, we get through this weekend without the terrible bloodshed and violence people expect. But what happens on Monday? What happens in these next few interesting weeks?

STARR: That is really what key military planners are dealing with right now. They've laid in all the plans for election day. They've done what they can. What will happen will happen, they say. But what about Monday?

What happens in the next several days or weeks as this election is certified, as new national assembly members may take their seats? What happens in this interim period?

There is a great deal of concern behind the scenes that this will be a new period of uncertainty, a new period of potential violence. And just the beginning of the post-election phase in Iraq, which may be more uncertain than ever before as various factions and parts of the country jockey for power. It's never happened in Iraq, and nobody is really sure how it's all going to turn out.

ARENA: Barbara, what's the thinking? I mean, I'm going out on a limb here. What happens if this new government comes into power and says, OK, thanks very much, you can go now?

STARR: This is, you know, the monster in the closet, if you will. The president saying this week, if a new Iraqi government were to ask the U.S. to withdraw its forces, that the U.S. would have to do that.

BASH: They said, oh, that's not going to happen.

STARR: Not going to happen. Everybody says, oh, no. Behind the scenes, the Iraqis are really privately...

BASH: It's going to happen some day.

STARR: ... asking the U.S. to stay. That's the thing.

President Bush now, you know, has laid a marker. Iraq is a front on the war on terrorism. What does the U.S. -- what position does it put the U.S. military in if they are ordered to leave, pack up, get on airplanes, come home and leave this front in the war on terrorism unresolved?

HAYS: Barbara, what's the latest on the strength of the insurgency? The numbers of insurgents, where they're coming from, how home grown they are. What does the military say about that right now?

STARR: They say that they don't really know the numbers. And I think they're getting away from the numbers game. They've been out there before, you know, 5,000, 10,000.

HAYS: 15,000, right.

STARR: Whatever. But what they're beginning to understand is there is basically two elements to this insurgency.

There is the Zarqawi element, which is -- which they now call al Qaeda inside Iraq. This network which, now they believe, has joined in a more organized alliance, if you will, with the former regime elements. Still somewhat dispersed, but that this is now underline what goes on in Iraq. And elections don't necessarily solve that underline current in a society.

BASH: We were talking earlier about U.S. troops coming home. Obviously, that is, unless they do kick the U.S. out, entirely dependent on those Iraqi security forces. What is the latest in terms of the strategy to actually get them trained?

STARR: You know, starting Monday morning, as we say. But it's evolving, it's overtime. But there is no question, now that the elections will have happened, the United States military strategy is to place anywhere from 200 to 300 10-man training teams of U.S. military personnel inside Iraqi units.

The feeling is that will give them a level of confidence, a level of back-up fire power that they haven't had. And this will take Iraqi security forces to the next step, which is to be able to defend and fight for their country. Therefore, allowing the U.S. gradually over time to withdraw. A lot of people say it sounds an awful lot like Vietnam.

BASH: Yes.

ARENA: You know, speaking -- I mean, it's been a very -- a brutally bloody week there. And I just -- I'm just not sure of what the strategy is in terms of -- in terms of morale, in terms of how long these tours can last. I mean, this is taking such an amazing emotional toll on not only on the people there, but their families back here. Barbara, is there any sense of that at the Pentagon?

STARR: My sense is within the military there is a great deal of concern about that. Whether the political side of the house, the civilian side of the house has that same deep, ingrained emotional gut feeling about what it takes to have your boots on the ground in a combat zone being fired at every day for 12 months -- because that's what it is, it's a one-year tour -- that's a little problematic to me. I don't know I feel as a reporter I see that same level of concern.

Inside the Army, a great deal of concern. You're now seeing kids go back to Iraq for their second tour. Kids who participated in the move to Baghdad, if you will, the march to Baghdad, are now going back for another year. That's awfully tough business.

HAYS: And apparently having to be in some helicopters that are flying much more than they would otherwise, old helicopters. The money question very important as this continues.

STARR: The equipment -- if the people are wearing that, which they are, the equipment is wearing out even more. And that is going to be a long-term issue for the military.

HAYS: OK. Well, we are going to go back to Iraq in just a moment. We're going to be speaking more with Christiane Amanpour.

I'll be talking about how $80 billion more to fight in Iraq and Afghanistan cranks up the federal deficit. And Kelli Arena talks about what to expect on the terrorism beat as Attorney General John Ashcroft leaves the stage.

All coming up, all ON THE STORY.

(COMMERCIAL BREAK)

NGUYEN: Well, good morning, everyone. I'm Betty Nguyen, here at the CNN Center in Atlanta, which is in the throws of a major winter storm this morning.

Check out this video. Ice, snow and freezing rain have frosted a large portion of the Southeast. Most highways are snarled with accidents, and portions of all the interstates in Atlanta have been shut down.

In other news this morning, polls open in Iraq just a little over 12 hours from now. Its first free election in half a century. Insurgents have promised it will be a bloody exercise in democracy. The country today has been peppered with attacks, with at least nine people killed. About one million expatriate Iraqis began casting their ballots yesterday.

And President Bush says the Iraqi election is only the beginning, not an end. In today's weekly radio address, delivered a short time ago, Mr. Bush reaffirmed long-term U.S. commitment to Iraq.

(BEGIN AUDIO CLIP)

BUSH: As democracy takes hold in Iraq, America's mission there will continue. Our military forces, diplomats and civilian personnel will help the newly-elected government of Iraq establish security and train Iraqi military police and other forces. Terrorist violence will not end with the election.

(END AUDIO CLIP)

NGUYEN: And those are the top stories "Now in the News." I'm Betty Nguyen. Now it's back to CNN's ON THE STORY.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All of the things that they said that they could not do are on short notice. They've asked us to assist them.

(END VIDEO CLIP)

BASH: Major James Orback (ph) of the U.S. Army 445 Civil Affairs Battalion talking about how the U.S. troops are ready and willing to help with all those preparations for elections.

Welcome back. We're ON THE STORY. And joining us again from Baghdad is Christiane Amanpour.

And Christiane, I want to ask sort of a big picture question again that we're hearing from the White House, which is that this election is obviously just the first step, but it's towards not just democracy in Iraq. They really are saying it's towards democracy more broadly in the whole region.

You've covered this region for a long time. What do you make of statements like that? And do you think they're actually plausible?

AMANPOUR: Well, you know, obviously, that has been the administration's policy in this whole exercise here in Iraq. I guess what I focused on more is Iraq and how this election, this first step is going to go off. And I think for people who are used to voting -- and it's really, you know, a typical exercise in civil liberties for most people in the west -- this one is so bizarre. It's so unusual.

There's been no campaigning because of the violence. Any campaigning to speak of. There's been some election ads on TV.

There have been no candidates' lists published, names -- people too afraid to have their names published until the very, very last minute. Some people, according to a poll taken by one of the U.S. organizations that's helping in this democracy building, 40 percent of the people think they're going it be voting for a president. Well, they're not.

This is a national assembly election. There'll also be provincial elections.

So it's very complex, to say the least, just in the very fact that it is an election and it is the first one. But because there has been no sort of -- no normal voter education, no normal campaigning, door-to-door politicking, that -- and all of that, it's been even more difficult.

Now, some experts are saying that in normal situations neither the U.S. nor the western democracies in any other country would accept this kind of election. There will be no international monitors, and as I've said, the whole campaign procedure has been so unbelievably truncated because of the violence.

HAYS: What about the role of women in these elections? It's striking that a certain number of seats are guaranteed to women. We know the women are not in the streets campaigning, but they're on the phone, they're running campaigns. How is that playing out, Christiane?

AMANPOUR: Well, according to the rules for this election, 30 percent of all the lists have to belong to women. In other words, women have to be part of any political party that is running, and they have to be 30 percent of any political party that's running.

And that's obviously a great thing. I mean, Iraq has never been a country which particularly violated women's rights. Iraq was always a secular country, women did take part even under Saddam Hussein. But now that it's going to be enshrined in the constitution, in the future law, women, of course, are very pleased about that.

ARENA: Christiane, a little off target here, but at the end of the day, if this is an election that is not seen as a full participation from all sects there, what -- what is your gauge on the possibility of a civil war?

AMANPOUR: Well, you know that even U.S. reports have sort of pointed to that grim possibility after the election, and some senior people believe that that is a possibility. What I've noticed in the last couple of weeks that we've been here, talking at least to the main party leaders, whether they be Shiite, Sunni or whatever, they have all basically bent over backwards to say, "Even if the Sunnis boycott, even if they don't turn out because of the violence in their provinces, we cannot leave them on the margins. We must have them included in a future Iraq. And, therefore, we will give them positions in the cabinet, we will make sure they take part in any future government." And most especially, they say that they're going to reach out to these people and make sure they help write the constitution. Because this country cannot afford to be looked at along sectarian, religious, ethnic lines. And actually, some expatriate Iraqis and even some here say to me never before has this country talked about Shia, Kurd, Sunni. It's really only since the war have these lines been drawn, and the people inside really don't want there to be any kind of civil war.

ARENA: If I may, one follow-up. You mention the expatriate element there. What do Iraqis living in country think about the fact that these other individuals who are not there, who have not been going what they have been going through, get a chance to vote?

AMANPOUR: Well, that's one thing about getting the chance to vote. I was going to say, what about the people who are running for the elections? Almost all of those who are leading the lists of candidates, the party lists for this election, the main well-known names, are all people who've come from abroad.

I mean, basically, most of the interim government of people who have come from abroad, who were exiles under Saddam Hussein. And that has thrown some confusion and distaste amongst the people.

People who said, "Look, we lived here, we went through all of this. You know, who are these people? I don't know who they are." So that's also showing some confusion.

STARR: Christiane, when you talk to Iraqi officials now, once there is this election and this emerging government is in place, what do they say it's going to take to really deal with the insurgency, not necessarily in a military sense, but more in a cultural and societal sense to basically eradicate any support in Iraq for the insurgency movement? Some people feel that's the way to really get rid of it at the end of the day.

AMANPOUR: Well, it's a multi-pronged effort, basically. And certainly the U.S. commanders here say it's not just combat operations that are going to get rid of this insurgency, if it can, but other what they call non-lethal.

In other words, helping to build up the infrastructure, the reconstruction, the economic viability, jobs. You know, electricity, water, garbage, sewage, all of those basics that make a proper life for the people, employ people and dry up any kind of ready pool of recruits into the insurgency.

Now, this I have to say, has been going slowly. There were many, many mistakes made in the beginning. A lot of bureaucratic inertia and slowness and emphasis on projects that perhaps weren't the right projects to begin with. And people, to be frank, have not seen the kind of improvement and quality of life that they thought they were going to see, and everybody knows that is something that's going to have to be accelerated.

And at the same time, to deal with it on a military level, they're going to have to accelerate the formation of the Iraqi army, police and all the other military forces that will form an Iraqi army. But at the end of the day, this election, according to most of the people I talked to, and the analysts, must produce a government that the Iraqi people, the Iraqi forces are willing to fight and die for. That is what is going to be the test and what's going to solidify this new Iraqi political structure.

HAYS: Christiane, thank you so much for laying out the picture so clearly.

Events in Iraq, of course, ripple across the globe and across the U.S. budget and economy. I'm back on that story in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Most people are optimistic about the economy next year. It's very important that we continue to put pro-growth policies in place.

(END VIDEO CLIP)

HAYS: President Bush this week turning briefly away from Iraq to focus on the economy. This week, new evidence of how expensive the Iraq mission really is, and a fresh boost to the federal deficit and new jitters on the stock market.

Welcome back. We're ON THE STORY.

BASH: Kathleen, we heard from the White House this week that they want Congress to give $80 billion more for the war. And that means that the deficit is now $427 billion.

HAYS: It's a lot of money. And getting bigger.

BASH: Wall Street must not have liked that very much.

HAYS: Well, you know, this has been on the back burner for a while. And clearly, this budget deficit and the impact it seems to have on the dollar, foreign investors wondering, how do we pay for all this stuff some day? It's something that's always swirling around.

I thought it was very interesting. In the morning, the Congressional Budget Office that gave its estimate, $368 billion, but it pointed out very clearly on the first page, but add in the war and it gets bigger. In the afternoon, the White House did the same.

The 10-year deficit, which their estimate had gotten down as low as $865 billion, they also pointed out that if you add in even the cost of winding down the war over the next 10 years, if you were to add in the cost of making the president's tax cuts permanent, which he is, of course, insisting this Congress will do, you get well over $2 trillion. So this is a large and growing deficit at a time when we have to worry about something that isn't in the budget deficit calculation, which is the reform, or what will cost reform, Social Security, and take care of Medicare.

BASH: And we have no idea how much that is going to cost.

HAYS: Well, we know we've got an unfounded liability in Social Security of $3.7 trillion over 75 years. And we know the Medicare unfounded liability is, guess what? $27 trillion. So we've got some big problems on the horizon.

ARENA: OK, so give me the bottom line here on Social Security. Because if you -- depending on who you listen to, the fund is either in crisis or...

BASH: No, it's not crisis this week. It's just a problem now.

ARENA: ... it's not a crisis. And then you're telling me, well, that's nothing. Medicare is even bigger than this. So...

HAYS: Perspective, right? Perspective. And actually, I think it's very interesting that they dropped the word "crisis" because I think many people have been kind of jumping on that.

I interviewed the consular general of the United States this week who is basically like the chief auditor. He signs off on the government accounts, basically, Dave Walker. He said the same thing. It's not a crisis, but it's a problem.

Here's what happens. In 2018, the system starts taking in less money than it pays out. OK? At that point the government will have to do something.

It will -- it has the legal requirement in the trust fund for the Treasury to pay it money, but the Treasury has to get the money. The Treasury will have to raise taxes, cut the benefits back.

Something will have to happen to cut the spending of the government, raise the taxes to pay that. OK? So that's 2018.

At mid century, let's say nothing happens. Let's say it's not a crisis, we sit back and relax. By mid century, if nothing happens, there will be a day when you will open your Social Security check and you will see that instead of getting $1 you'll get 73 cents. Is that a crisis? Is it a problem? It's a big problem.

BASH: Right. Because even when the trust fund, it goes kaput, people will still get 73, 74 percent of their investment.

HAYS: Exactly. So that's why -- that's why the defenders, who say, don't blow this thing apart, say, look, it's not that bad. It just needs to be tweaked.

ARENA: Well, it depends on who you are of how bad it is.

(CROSSTALK)

STARR: Kathleen, you look at all these components that you're laying out, the budget deficit, the tax cut, the question of permanency, Social Security, health care, entitlements, all of it. But yet, it doesn't seem to yet resonate in the economy in terms of any indicators that would get so bad that it would pressure the politicians to do something about it.

HAYS: Well, that's a very good point. And if you look, a lot of the indicators on the economy right now are looking pretty good.

We had good news on manufacturing this week, record home sales. The unemployment claims are coming down.

At the same time, when we saw the economy's growth rate in the fourth quarter, we said, uh-oh, it slowed down. Great, the best year in like five years on the overall growth rate, but a slower quarter.

Now, that's largely because we're buying so much from overseas, which is a whole other problem, right? But I think what we're seeing in the stock market, which has had a really, really tough January, is that there is a long -- there is a concern about if these problems are going to be addressed. Because just because you don't address it now -- and if you're in the financial markets, you discount the future.

You put an investment in place for the future. So you know these things have to be addressed, and you're wondering what form it will take. A big tax increase would have a very different effect on the economy than a spending cut at some point. But something will have to happen.

ARENA: So it's the uncertainty that has been dragging my 401k down.

HAYS: Well, yes. And there's -- I think so. And certainly over the elections, another issue. And certainly over oil prices.

But I just have to say, in spite of all this uncertainty, two gigantic deals this week. Procter and Gamble, think Tide, think Crest, think, you know, Pampers, deodorant, you name it, buying Gillette, a $54 billion deal. We have SBC, the world's -- excuse me, the country's second biggest telephone company looking to buy AT&T, which now basically serves business -- remember Ma Bell? It's like the babies buying the mom.

ARENA: Right.

HAYS: Mergers are generally assigned, that companies are more confident, that all this cash they've been sitting on, they're willing to start investing. That's a very, very positive sign.

But I think if you look at the stock market as kind of an indicator for how investors feel about things overall, it tells you that there is a lot of concern and there is a lot of uncertainty. And I would think this is something that's also on the back of the president's mind as he looks to see his approval ratings of all kinds come up.

ARENA: Well, Kathleen, from the business world, back to Washington, the farewell of Attorney General John Ashcroft and the latest on the terrorism fight.

Of course, stay tuned to CNN day and night for the most reliable news about your security. I'm back on that story coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN ASHCROFT, FMR. ATTORNEY GENERAL: I'll sleep at night because I know that there are people in the law enforcement community who are doing vastly more than they ever did before to keep America safe.

(END VIDEO CLIP)

ARENA: John Ashcroft, of course, bidding farewell to his job, his colleagues and his leading role in the war on terrorism as attorney general.

Welcome back. We are ON THE STORY.

HAYS: Well, as Ashcroft leaves, the tension certainly on Mr. Gonzales, the man who is going to take his place. But one of the analogies I would draw is, as much as John Ashcroft was a lightning rod for a lot of people, he had -- he really drew the lines in terms of how people reacted. Gonzales is shaping up apparently perhaps to be the same kind of attorney general.

ARENA: Well, the big concern, as expressed loudly by Democrats this week, is that he will just be an extension of the White House. That instead of upholding the law of the land, that he will be pushing the Bush agenda. Of course, he has said, I understand what my role will be, not the case, but he has been very close to this president for many years, and that is a great concern.

BASH: What are you hearing from your beat and from the people you talk to, sort of the rank and file on your beat, about that? Is there concern from within the Department of Justice about that?

ARENA: You know, right now you have a lot of people looking for jobs. And a lot of people -- you know, people are changing. You know, there's moving, there's fluctuation.

So, it's not there yet, Dana. It's just not there.

And then again, you have so many people that are just career employees. Attorney generals come and go, and they just go about their business. And if you're dealing with those guys in counterterrorism, and women, they, too, say, it's business as usual, despite who is sitting in that chair. The big test, of course, will be the Patriot Act and the selling of the Patriot Act and those provisions that will (UNINTELLIGIBLE).

STARR: And what is Judge Gonzales's view on that? Does he feel the Patriot Act should stand as it is? Or is there any tweaking he would support for it at this point? ARENA: You know, we haven't heard much from him. But the Bush administration in general has been very supportive of the Patriot Act. And I can tell you that many people on the front lines of this war have been very supportive, that it has increased information sharing, it has allowed the FBI to gather intelligence in a way that it couldn't. So it really -- I think that they'll be towing the line on that one.

STARR: And Congress didn't really seem to penetrate fully his role in the White House in the detainee question, the so-called -- we'll just call it the torture abuse.

BASH: Not for a lack of trying, though.

STARR: Right. The torture abuse question.

ARENA: Not that they didn't try. I mean, you know...

(CROSSTALK)

HAYS: And they said his responses were arrogant, right?

ARENA: Right. Well, they said he was evasive. He didn't come right out and directly answer the questions that were posed, which is why you saw that vote on such a party line.

There wasn't a single Democrat in that committee that voted for him. And they even -- even Chuck Schumer out of New York said, you know, "I was on board before, but he was so evasive that I withheld a vote for him."

HAYS: Right. Kelli, did Ashcroft leave us with any final terrorism warnings, particularly this weekend? I mean, domestically, are we worried about these elections spurring any kind of activity here?

ARENA: Well, listen, two separate issues. The -- there was a threat assessment done for the possible danger taking place around those polling places here in the United States where Iraqis are going to vote.

The bottom line is, there is no credible intelligence that there is any plot. However, it makes for a very attractive target only because of the symbolism, because of the crowds that will join. So -- the media coverage. This is a ripe target for al Qaeda or a related group.

BASH: So what are they doing about it? What is the sort of strategy to deal with places like New Carrollton and particularly Detroit and...

ARENA: Well, security, intelligence-gathering. You know, they are very careful with the security measures put in place. You don't want to be an intimidating force to keep people away from the polls.

And so, you'll have some security, but not an overbearing security. They handle it very differently in the United States than they do in Iraq.

Now, on the question of the larger issue of terrorism, the attorney general's parting words were, well, you know what? I'm sleeping OK because I know everybody is trying really hard. But if al Qaeda gets its hands on a nuclear weapon that -- you know, that is the biggest concern that he has leaving his job. And not that there has been any credible intelligence suggesting that it has, but there is a lot of intelligence, he says, suggesting that they have made repeated attempts.

STARR: Well, that is the key question, of course. It's a little more complex than just do they have one or they don't have one.

ARENA: Right. Right.

STARR: You know, their efforts to get the materials. What does he say about whether it's really plausible that they could put it all together? Is this just a vague worry, or does he have...

ARENA: You know, he doesn't -- he doesn't get into those details. But I can tell you that the people I talk to on a daily basis about that -- about that, say, look, this is not something that will be easy to do. But the determination is there. And the recruiting effort is strong.

STARR: And if it takes them 10 years, they'll keep trying.

ARENA: Right. But their timeline is not our timeline. And so they'll just keep trying until they get it right. Lovely.

BASH: Kelli, thank you very much.

And we're going to be talking obviously a lot more about security and about the Iraqi elections. And stay tuned to CNN day and night for the most reliable news about your security.

We're right back ON THE STORY after this.

(COMMERCIAL BREAK)

HAYS: Thanks to all my colleagues, including Karen and Claire Arena here with us today. They're on the school in preschool beat.

We thank you for watching ON THE STORY. We're going to be back next week, but we have an exciting announcement. We are moving from Saturday mornings to Sundays. We're still going to be on at 10:00 a.m., Eastern, 7:00 a.m. Pacific, but Sunday, ON THE STORY Sunday. So get ready to watch us.

Still ahead -- on Sunday you're going to watch us -- "PEOPLE IN THE NEWS" right now focusing this week on Don Rumsfeld and Tony Blair.

Straight ahead, on 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 January 29, 2005 - 10:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: Good morning, everybody. I'm Betty Nguyen here at the CNN Center in Atlanta. Here's what is happening right "Now in the News."
As expected, violence in Baghdad is preceding tomorrow's Iraqi elections. Insurgents have staged attacks at a number of polling stations and polling places across the country.

And at least eight people are dead after two bombings at a U.S. and Iraqi military facility near Iraq's border with Iran. At least one of the explosions at the Joint Coordination Center northeast of Baquba was the work of a suicide bomber.

People across the southeast are waking up to a winter ice storm. Georgia police say freezing rain is responsible for at least two deaths. The storm is expected to stick around well into this afternoon. North and South Carolina are also getting hit with sleet, snow and ice.

Those are the top stories right "Now in the News." I'm Betty Nguyen. CNN's ON THE STORY starts right now.

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 how the U.S. military is bracing for election violence in Iraq and on guard for what may follow.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: I'm Christiane Amanpour in Baghdad, ON THE STORY with the preparations for these elections. Never have such elections taken place so blatantly at the point of a gun.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: And I'm Dana Bash, ON THE STORY of the challenge for the Bush administration taking credit, but avoiding blame if things go badly in Iraq.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: I'm Kelli Arena, ON THE STORY of the terrorism fight here at home and change at the top of the Justice Department.

KATHLEEN HAYS, CNN CORRESPONDENT: And I'm Kathleen Hays, ON THE STORY of how the Iraq war has jacked up the federal deficit and how the markets are limping through the first month of 2005.

And we'll talk about how a made-up story of a radioactive bomb in London may hold lessons for real life.

E-mail us at ONTHESTORY@CNN.com.

Now, straight to Christiane, Iraq and election day.

(BEGIN VIDEO CLIP)

AMANPOUR: When do you think America should pull its forces out? When will the job be done?

UNIDENTIFIED MALE: When the job has been well done. The first steps for democracy, when we have enough strength within the government and when we have capable security forces.

(END VIDEO CLIP)

AMANPOUR: That was the interim president of Iraq, a moderate Sunni who is trying to pull those Sunnis who are threatening to boycott into the process. And today he said at a press conference that if the majority of Iraqi Sunnis or Iraqis in general don't vote, it will be because of the terrible security fears and not because they don't want to take part.

STARR: Christiane, we are now just really hours away from the first votes being cast in this election. What is the mood in Baghdad? What is the level of tension in the country right now?

AMANPOUR: Well, Barbara, I liken it to preparing for war. This is much more like a preparation for war than for an election, or any election that I've ever covered.

I went overhead in a helicopter today. This capital and presumably most of this country is a ghost town. There are Draconian curfews and security measures enforced, no traffic on the streets, no people out, really, in any -- in any meaningful way.

The actual polling booths are being protected. And overnight, we're told, concrete blocks will be pulled in. The final preparations will take place to try to secure these polling booths.

BASH: And Christiane, I want to ask you about what I'm hearing on my beat at the White House versus what you're hearing and seeing in reality on the ground. The White House, of course, is saying that this is the first step towards freedom, democracy. And Stephen Hadley, the president's new national security adviser, wrote this morning that "The overwhelming majority of Iraqis desperately want to vote."

Do you think that's true from all that you've seen and heard?

AMANPOUR: Well, in short, yes, in terms of the typical constituencies who do really want to vote, which are the Kurds in the north, which are the Shiites in the south. And they, together, make the majority of the people in this country.

The question is, will the -- who are essentially a minority, the Sunnis, in those troublesome several provinces, actually be able to come out and vote? And if they don't, what will that mean? That is the big question.

Will it cast doubt on the legitimacy? Will it mean that there for a long time will be challenges to any political structure? Sunni politicians and Shiites are trying to bend over backwards to pull Sunnis in, even if they don't vote, to get them into, for instance, the constitution writing exercise, to appoint them as cabinet members.

HAYS: Christiane, people in this country seem divided over whether this is an exercise in freedom, the U.S. assisting Iraq towards democracy, or if this is a rigged election, almost forced on these people by the U.S. military. I've heard both extremes. What is the division of sentiment or the unity of sentiment within Iraq?

AMANPOUR: Well, it is basically like that here, too. There is a division about what these mean.

I mean, many, many people say that it's basically a foregone conclusion, whoever the U.S. wants to win, will win. But other people say, no, this is a first step, that we have to start somewhere.

You know, we've never had an election where it wasn't absolutely clear that Saddam Hussein would win by, you know, that figure, 99.999 percent. So it will be exciting, the idea that you cast a ballot. And it will make a difference.

The question is, what happens as they leave their house, go to the polling station, what will happen? And I talked to the top -- one of the -- well, the deputy commander of all the forces here, General Mett (ph), who believes that there will be some violence, perhaps mortar attacks, perhaps some suicide belts strapped to some people. But hoping that the Draconian security measures they put in will secure the people as they come to vote.

ARENA: Christiane, it takes a great deal of courage under those circumstances for people to come out and vote. Do you have any personal stories or tales that you can share of people who are determined, in spite of those circumstances, to come out and cast that ballot?

AMANPOUR: You know, we've been talking to a fairly wide range of people here on the streets of Baghdad. We've talked to people in Tikrit. Some of our other colleagues who are around the country have talked to others, whether it be in Mosul or Falluja or elsewhere. And, you know, people say to us, it's really difficult because they really are afraid.

I mean, look, these are people who have lived with the brunt of the violence over the last couple of years. As many Americans have died, 10 or 20 times of Iraqis have been killed in the violence that plagues their lives every day.

So some of the people have told us, "Well, look, we've lived under these terrible conditions for so many years, starting with the wars between Iran and Iraq, the first Gulf War, the second Gulf War, the sanctions, the violence now, and this is just another day of violence." And others say, you know, "I'm not going to let my family go out. I'm going to stay home. I'm not going to go out. I can't put them at such risk."

So people are divided.

STARR: You know, Christiane, you talk about these Draconian security measures around the polling places. It's probably something that most Americans really can't relate to. It is quite severe, isn't it, what they're trying to do to protect them?

AMANPOUR: Yes. And to be honest, I don't think many people can relate to what's going on here.

This is an election unlike any that I've ever seen, frankly, unlike any that's ever taken place because it takes place in this crucible of violence. And so, you know, there are American tanks on the streets, there are helicopters overhead, there are huge concrete blocks around various polling stations. They're trying to do their best to make sure that this goes off without massive bloodshed.

But on the other hand, the -- you know, the people are preparing for the worst. The hospitals are stockpiling. Doctors have been staying overnight because they're a curfew, and they're getting prepared for what may be widespread violence tomorrow.

People have been stockpiling on food, on water, on fuel, on essentials. And so this is -- as I say, you know, it's more the characteristics of preparing for war. And to be frank, it is a war.

Tomorrow will be a war. It will be a war between the people who dare to come out and confront those insurgents and those insurgents who have threatened them and intimidated them so much.

BASH: Christiane, thank you for now. We will be checking back with you at the half-hour. We'll see you then.

And we're going to go on to President Bush. This week he said that the Iraqi vote is a "grand moment in history." I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A world with Saddam Hussein in power would have been a -- you know, would have been a more dangerous world today. Secondly, we're making progress in a -- in helping Iraq develop a democracy. And in the long term, our children and grandchildren will benefit from a free Iraq.

(END VIDEO CLIP)

BASH: President Bush at his Wednesday news conference, where he repeatedly said the United States is making progress in Iraq and just the fact that they are holding elections means that it is a success. Welcome back. We're ON THE STORY.

ARENA: That's interesting, because we're framing this as a success even before we know anything about voter turmoil -- voter turnout, possible conflict, casualties.

BASH: That's the MO of the White House. You heard the president in that news conference. You heard from his advisers. You heard from him, even giving an interview on Arab television this week, that they think no matter what happens it's a victory just that they're holding elections.

That's the MO. And you heard him doing it in sort of Bush speak, in ways that they think really appeals to people who like him.

He's bold. They say he's talking about big ideas, democracy, freedom. You saw him very sort of physical, emoting, saying, "We're planting the flag of freedom."

But the reality is, behind the scenes they understand it is a big deal. It's a political marker on the calendar everybody has been looking towards to say, OK, what happens next?

HAYS: Well, that's because even Christiane Amanpour just said basically everyone says, well, at least we have a real vote. At least we're not just voting for one candidate, even the Iraqis who disagree.

What will be do you think the marker of success for the administration? Just getting past it and people looking at something else? No big upraising of insurgency? What is their marker of success?

BASH: You know what? It's actually going to be -- it's going to be hard to answer that question until we actually see what happens in terms of the violence and in terms of the turnout.

You know, and it's going to take a while, as Christiane was saying, for those things to be measured. It's going to take a couple -- not the violence, but certainly the turnout will take a couple of weeks.

But in terms of the president domestically, you even have Republicans, people in his own party, looking towards this and saying, OK, OK, we've sort of held our breath, we haven't said anything, we've been waiting for these elections to come, and then it's time to talk about what's next. You even heard the Armed Services chairman in the Senate this week, Barbara, John Warner, saying, look, we're going to talk about in this committee, how are we going to get our troops home? And that is the bottom line.

STARR: I think that was one of the most interesting things in the confirmation hearings we saw at the Senate Foreign Relations Committee for Condoleezza Rice as secretary of state. Certainly a great percentage of the questions were actually military questions to her. What is the military strategy, how are you going to get troops out? How are you going to train Iraqis? BASH: That's right.

STARR: It was something that was watched probably on every television set in the Pentagon. It is a real undercurrent right now.

BASH: It is a real undercurrent, because as much as the president talks about freedom and liberty and spreading democracy for the American people right now, certainly that is important. But you're seeing in the polls and you're hearing from members of Congress who are just home with their constituents, and they're obviously telling this to the White House, what matters is, OK, it's been a couple years, we have this incredible high troop level...

STARR: After the election, why do we have to stay?

BASH: And why do we have to stay. It's about our men and women in the military and when they're going to have to come home. And that is -- already we're seeing how much that impacts the president's overall approval rating. It is...

(CROSSTALK)

ARENA: (UNINTELLIGIBLE) anything done from here, Dana? I mean, if this is going to be the preoccupying subject, and you know that people who have some -- we all know somebody who is there or a family who has somebody there. And you're saying, OK, all right, as Barbara said, the elections are done, now what? We've got issues like Social Security. I mean, these are huge.

BASH: Huge issues and, look, they get that. They know at the White House that this, that the tenor, the tone of the Iraqi elections, what happens in Iraq, more importantly, is going to determine what the president can do in his second term. Because, look, the bottom line is that he's a lame duck, and he's got to work with people who aren't, who have got to go back to their constituents, who have got to go back and get re-elected.

And they are going to need what the president calls his political capital. And if he doesn't really have that much, it's going to be hard to get Social Security done. And we've heard that loud and clear from Republican senators this week.

HAYS: It's interesting, you know, that we forget, according to an expert in Washington I spoke to this week, about Social Security. President Clinton also wanted to make Social Security reform his legacy.

BASH: We don't forget from the White House. We hear that a lot from the White House now, yes.

HAYS: Well, and the reason that he couldn't get it going was because of a certain sexual imbroglio that happened. And so I guess what you're saying is, if Iraq doesn't settle down for the president, his whole domestic agenda could get bogged down in this.

BASH: Well, yes. It's about how much his fellow members of Congress, Republicans, feel that they have -- that they have him as sort of backstop politically, political -- have him as political cover. And if he's not popular enough, they won't have it.

Look, this week we saw Republican senators come to the White House to meet with the president on Social Security. And they said coming out this is a separate issue from Iraq, but it's sort of all intertwined that he's out there and he's talking about Social Security as a problem, we've got to get this fixed. And they feel like it's not resonating, people aren't getting it.

Now, for that particular issue, it's because they feel that he's not giving very many details and he has just been talking generally about it being a crisis. But it's a believability issue and it's a credibility issue with this White House and this president.

ARENA: It's an $80 billion issue.

BASH: And it's an $80 billion issue. But that's about that.

STARR: Well, like the White House, the Pentagon is already looking beyond tomorrow, beyond that Iraqi election. I'm back on that story after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEN. JOHN ABIZAID, CENTCOM COMMANDER: We believe that a combination of Iraqi security forces and coalition forces will make the situation stable enough for voting to take place.

(END VIDEO CLIP)

STARR: CENTCOM Commander General John Abizaid after briefing members of Congress on Wednesday predicting stability, at least stable enough for Iraqi election day.

Welcome back. We're ON THE STORY.

HAYS: And certainly everyone has their fingers crossed. We've heard so much about the tight security. So maybe that is the case, stability on election day, we get through this weekend without the terrible bloodshed and violence people expect. But what happens on Monday? What happens in these next few interesting weeks?

STARR: That is really what key military planners are dealing with right now. They've laid in all the plans for election day. They've done what they can. What will happen will happen, they say. But what about Monday?

What happens in the next several days or weeks as this election is certified, as new national assembly members may take their seats? What happens in this interim period?

There is a great deal of concern behind the scenes that this will be a new period of uncertainty, a new period of potential violence. And just the beginning of the post-election phase in Iraq, which may be more uncertain than ever before as various factions and parts of the country jockey for power. It's never happened in Iraq, and nobody is really sure how it's all going to turn out.

ARENA: Barbara, what's the thinking? I mean, I'm going out on a limb here. What happens if this new government comes into power and says, OK, thanks very much, you can go now?

STARR: This is, you know, the monster in the closet, if you will. The president saying this week, if a new Iraqi government were to ask the U.S. to withdraw its forces, that the U.S. would have to do that.

BASH: They said, oh, that's not going to happen.

STARR: Not going to happen. Everybody says, oh, no. Behind the scenes, the Iraqis are really privately...

BASH: It's going to happen some day.

STARR: ... asking the U.S. to stay. That's the thing.

President Bush now, you know, has laid a marker. Iraq is a front on the war on terrorism. What does the U.S. -- what position does it put the U.S. military in if they are ordered to leave, pack up, get on airplanes, come home and leave this front in the war on terrorism unresolved?

HAYS: Barbara, what's the latest on the strength of the insurgency? The numbers of insurgents, where they're coming from, how home grown they are. What does the military say about that right now?

STARR: They say that they don't really know the numbers. And I think they're getting away from the numbers game. They've been out there before, you know, 5,000, 10,000.

HAYS: 15,000, right.

STARR: Whatever. But what they're beginning to understand is there is basically two elements to this insurgency.

There is the Zarqawi element, which is -- which they now call al Qaeda inside Iraq. This network which, now they believe, has joined in a more organized alliance, if you will, with the former regime elements. Still somewhat dispersed, but that this is now underline what goes on in Iraq. And elections don't necessarily solve that underline current in a society.

BASH: We were talking earlier about U.S. troops coming home. Obviously, that is, unless they do kick the U.S. out, entirely dependent on those Iraqi security forces. What is the latest in terms of the strategy to actually get them trained?

STARR: You know, starting Monday morning, as we say. But it's evolving, it's overtime. But there is no question, now that the elections will have happened, the United States military strategy is to place anywhere from 200 to 300 10-man training teams of U.S. military personnel inside Iraqi units.

The feeling is that will give them a level of confidence, a level of back-up fire power that they haven't had. And this will take Iraqi security forces to the next step, which is to be able to defend and fight for their country. Therefore, allowing the U.S. gradually over time to withdraw. A lot of people say it sounds an awful lot like Vietnam.

BASH: Yes.

ARENA: You know, speaking -- I mean, it's been a very -- a brutally bloody week there. And I just -- I'm just not sure of what the strategy is in terms of -- in terms of morale, in terms of how long these tours can last. I mean, this is taking such an amazing emotional toll on not only on the people there, but their families back here. Barbara, is there any sense of that at the Pentagon?

STARR: My sense is within the military there is a great deal of concern about that. Whether the political side of the house, the civilian side of the house has that same deep, ingrained emotional gut feeling about what it takes to have your boots on the ground in a combat zone being fired at every day for 12 months -- because that's what it is, it's a one-year tour -- that's a little problematic to me. I don't know I feel as a reporter I see that same level of concern.

Inside the Army, a great deal of concern. You're now seeing kids go back to Iraq for their second tour. Kids who participated in the move to Baghdad, if you will, the march to Baghdad, are now going back for another year. That's awfully tough business.

HAYS: And apparently having to be in some helicopters that are flying much more than they would otherwise, old helicopters. The money question very important as this continues.

STARR: The equipment -- if the people are wearing that, which they are, the equipment is wearing out even more. And that is going to be a long-term issue for the military.

HAYS: OK. Well, we are going to go back to Iraq in just a moment. We're going to be speaking more with Christiane Amanpour.

I'll be talking about how $80 billion more to fight in Iraq and Afghanistan cranks up the federal deficit. And Kelli Arena talks about what to expect on the terrorism beat as Attorney General John Ashcroft leaves the stage.

All coming up, all ON THE STORY.

(COMMERCIAL BREAK)

NGUYEN: Well, good morning, everyone. I'm Betty Nguyen, here at the CNN Center in Atlanta, which is in the throws of a major winter storm this morning.

Check out this video. Ice, snow and freezing rain have frosted a large portion of the Southeast. Most highways are snarled with accidents, and portions of all the interstates in Atlanta have been shut down.

In other news this morning, polls open in Iraq just a little over 12 hours from now. Its first free election in half a century. Insurgents have promised it will be a bloody exercise in democracy. The country today has been peppered with attacks, with at least nine people killed. About one million expatriate Iraqis began casting their ballots yesterday.

And President Bush says the Iraqi election is only the beginning, not an end. In today's weekly radio address, delivered a short time ago, Mr. Bush reaffirmed long-term U.S. commitment to Iraq.

(BEGIN AUDIO CLIP)

BUSH: As democracy takes hold in Iraq, America's mission there will continue. Our military forces, diplomats and civilian personnel will help the newly-elected government of Iraq establish security and train Iraqi military police and other forces. Terrorist violence will not end with the election.

(END AUDIO CLIP)

NGUYEN: And those are the top stories "Now in the News." I'm Betty Nguyen. Now it's back to CNN's ON THE STORY.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All of the things that they said that they could not do are on short notice. They've asked us to assist them.

(END VIDEO CLIP)

BASH: Major James Orback (ph) of the U.S. Army 445 Civil Affairs Battalion talking about how the U.S. troops are ready and willing to help with all those preparations for elections.

Welcome back. We're ON THE STORY. And joining us again from Baghdad is Christiane Amanpour.

And Christiane, I want to ask sort of a big picture question again that we're hearing from the White House, which is that this election is obviously just the first step, but it's towards not just democracy in Iraq. They really are saying it's towards democracy more broadly in the whole region.

You've covered this region for a long time. What do you make of statements like that? And do you think they're actually plausible?

AMANPOUR: Well, you know, obviously, that has been the administration's policy in this whole exercise here in Iraq. I guess what I focused on more is Iraq and how this election, this first step is going to go off. And I think for people who are used to voting -- and it's really, you know, a typical exercise in civil liberties for most people in the west -- this one is so bizarre. It's so unusual.

There's been no campaigning because of the violence. Any campaigning to speak of. There's been some election ads on TV.

There have been no candidates' lists published, names -- people too afraid to have their names published until the very, very last minute. Some people, according to a poll taken by one of the U.S. organizations that's helping in this democracy building, 40 percent of the people think they're going it be voting for a president. Well, they're not.

This is a national assembly election. There'll also be provincial elections.

So it's very complex, to say the least, just in the very fact that it is an election and it is the first one. But because there has been no sort of -- no normal voter education, no normal campaigning, door-to-door politicking, that -- and all of that, it's been even more difficult.

Now, some experts are saying that in normal situations neither the U.S. nor the western democracies in any other country would accept this kind of election. There will be no international monitors, and as I've said, the whole campaign procedure has been so unbelievably truncated because of the violence.

HAYS: What about the role of women in these elections? It's striking that a certain number of seats are guaranteed to women. We know the women are not in the streets campaigning, but they're on the phone, they're running campaigns. How is that playing out, Christiane?

AMANPOUR: Well, according to the rules for this election, 30 percent of all the lists have to belong to women. In other words, women have to be part of any political party that is running, and they have to be 30 percent of any political party that's running.

And that's obviously a great thing. I mean, Iraq has never been a country which particularly violated women's rights. Iraq was always a secular country, women did take part even under Saddam Hussein. But now that it's going to be enshrined in the constitution, in the future law, women, of course, are very pleased about that.

ARENA: Christiane, a little off target here, but at the end of the day, if this is an election that is not seen as a full participation from all sects there, what -- what is your gauge on the possibility of a civil war?

AMANPOUR: Well, you know that even U.S. reports have sort of pointed to that grim possibility after the election, and some senior people believe that that is a possibility. What I've noticed in the last couple of weeks that we've been here, talking at least to the main party leaders, whether they be Shiite, Sunni or whatever, they have all basically bent over backwards to say, "Even if the Sunnis boycott, even if they don't turn out because of the violence in their provinces, we cannot leave them on the margins. We must have them included in a future Iraq. And, therefore, we will give them positions in the cabinet, we will make sure they take part in any future government." And most especially, they say that they're going to reach out to these people and make sure they help write the constitution. Because this country cannot afford to be looked at along sectarian, religious, ethnic lines. And actually, some expatriate Iraqis and even some here say to me never before has this country talked about Shia, Kurd, Sunni. It's really only since the war have these lines been drawn, and the people inside really don't want there to be any kind of civil war.

ARENA: If I may, one follow-up. You mention the expatriate element there. What do Iraqis living in country think about the fact that these other individuals who are not there, who have not been going what they have been going through, get a chance to vote?

AMANPOUR: Well, that's one thing about getting the chance to vote. I was going to say, what about the people who are running for the elections? Almost all of those who are leading the lists of candidates, the party lists for this election, the main well-known names, are all people who've come from abroad.

I mean, basically, most of the interim government of people who have come from abroad, who were exiles under Saddam Hussein. And that has thrown some confusion and distaste amongst the people.

People who said, "Look, we lived here, we went through all of this. You know, who are these people? I don't know who they are." So that's also showing some confusion.

STARR: Christiane, when you talk to Iraqi officials now, once there is this election and this emerging government is in place, what do they say it's going to take to really deal with the insurgency, not necessarily in a military sense, but more in a cultural and societal sense to basically eradicate any support in Iraq for the insurgency movement? Some people feel that's the way to really get rid of it at the end of the day.

AMANPOUR: Well, it's a multi-pronged effort, basically. And certainly the U.S. commanders here say it's not just combat operations that are going to get rid of this insurgency, if it can, but other what they call non-lethal.

In other words, helping to build up the infrastructure, the reconstruction, the economic viability, jobs. You know, electricity, water, garbage, sewage, all of those basics that make a proper life for the people, employ people and dry up any kind of ready pool of recruits into the insurgency.

Now, this I have to say, has been going slowly. There were many, many mistakes made in the beginning. A lot of bureaucratic inertia and slowness and emphasis on projects that perhaps weren't the right projects to begin with. And people, to be frank, have not seen the kind of improvement and quality of life that they thought they were going to see, and everybody knows that is something that's going to have to be accelerated.

And at the same time, to deal with it on a military level, they're going to have to accelerate the formation of the Iraqi army, police and all the other military forces that will form an Iraqi army. But at the end of the day, this election, according to most of the people I talked to, and the analysts, must produce a government that the Iraqi people, the Iraqi forces are willing to fight and die for. That is what is going to be the test and what's going to solidify this new Iraqi political structure.

HAYS: Christiane, thank you so much for laying out the picture so clearly.

Events in Iraq, of course, ripple across the globe and across the U.S. budget and economy. I'm back on that story in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Most people are optimistic about the economy next year. It's very important that we continue to put pro-growth policies in place.

(END VIDEO CLIP)

HAYS: President Bush this week turning briefly away from Iraq to focus on the economy. This week, new evidence of how expensive the Iraq mission really is, and a fresh boost to the federal deficit and new jitters on the stock market.

Welcome back. We're ON THE STORY.

BASH: Kathleen, we heard from the White House this week that they want Congress to give $80 billion more for the war. And that means that the deficit is now $427 billion.

HAYS: It's a lot of money. And getting bigger.

BASH: Wall Street must not have liked that very much.

HAYS: Well, you know, this has been on the back burner for a while. And clearly, this budget deficit and the impact it seems to have on the dollar, foreign investors wondering, how do we pay for all this stuff some day? It's something that's always swirling around.

I thought it was very interesting. In the morning, the Congressional Budget Office that gave its estimate, $368 billion, but it pointed out very clearly on the first page, but add in the war and it gets bigger. In the afternoon, the White House did the same.

The 10-year deficit, which their estimate had gotten down as low as $865 billion, they also pointed out that if you add in even the cost of winding down the war over the next 10 years, if you were to add in the cost of making the president's tax cuts permanent, which he is, of course, insisting this Congress will do, you get well over $2 trillion. So this is a large and growing deficit at a time when we have to worry about something that isn't in the budget deficit calculation, which is the reform, or what will cost reform, Social Security, and take care of Medicare.

BASH: And we have no idea how much that is going to cost.

HAYS: Well, we know we've got an unfounded liability in Social Security of $3.7 trillion over 75 years. And we know the Medicare unfounded liability is, guess what? $27 trillion. So we've got some big problems on the horizon.

ARENA: OK, so give me the bottom line here on Social Security. Because if you -- depending on who you listen to, the fund is either in crisis or...

BASH: No, it's not crisis this week. It's just a problem now.

ARENA: ... it's not a crisis. And then you're telling me, well, that's nothing. Medicare is even bigger than this. So...

HAYS: Perspective, right? Perspective. And actually, I think it's very interesting that they dropped the word "crisis" because I think many people have been kind of jumping on that.

I interviewed the consular general of the United States this week who is basically like the chief auditor. He signs off on the government accounts, basically, Dave Walker. He said the same thing. It's not a crisis, but it's a problem.

Here's what happens. In 2018, the system starts taking in less money than it pays out. OK? At that point the government will have to do something.

It will -- it has the legal requirement in the trust fund for the Treasury to pay it money, but the Treasury has to get the money. The Treasury will have to raise taxes, cut the benefits back.

Something will have to happen to cut the spending of the government, raise the taxes to pay that. OK? So that's 2018.

At mid century, let's say nothing happens. Let's say it's not a crisis, we sit back and relax. By mid century, if nothing happens, there will be a day when you will open your Social Security check and you will see that instead of getting $1 you'll get 73 cents. Is that a crisis? Is it a problem? It's a big problem.

BASH: Right. Because even when the trust fund, it goes kaput, people will still get 73, 74 percent of their investment.

HAYS: Exactly. So that's why -- that's why the defenders, who say, don't blow this thing apart, say, look, it's not that bad. It just needs to be tweaked.

ARENA: Well, it depends on who you are of how bad it is.

(CROSSTALK)

STARR: Kathleen, you look at all these components that you're laying out, the budget deficit, the tax cut, the question of permanency, Social Security, health care, entitlements, all of it. But yet, it doesn't seem to yet resonate in the economy in terms of any indicators that would get so bad that it would pressure the politicians to do something about it.

HAYS: Well, that's a very good point. And if you look, a lot of the indicators on the economy right now are looking pretty good.

We had good news on manufacturing this week, record home sales. The unemployment claims are coming down.

At the same time, when we saw the economy's growth rate in the fourth quarter, we said, uh-oh, it slowed down. Great, the best year in like five years on the overall growth rate, but a slower quarter.

Now, that's largely because we're buying so much from overseas, which is a whole other problem, right? But I think what we're seeing in the stock market, which has had a really, really tough January, is that there is a long -- there is a concern about if these problems are going to be addressed. Because just because you don't address it now -- and if you're in the financial markets, you discount the future.

You put an investment in place for the future. So you know these things have to be addressed, and you're wondering what form it will take. A big tax increase would have a very different effect on the economy than a spending cut at some point. But something will have to happen.

ARENA: So it's the uncertainty that has been dragging my 401k down.

HAYS: Well, yes. And there's -- I think so. And certainly over the elections, another issue. And certainly over oil prices.

But I just have to say, in spite of all this uncertainty, two gigantic deals this week. Procter and Gamble, think Tide, think Crest, think, you know, Pampers, deodorant, you name it, buying Gillette, a $54 billion deal. We have SBC, the world's -- excuse me, the country's second biggest telephone company looking to buy AT&T, which now basically serves business -- remember Ma Bell? It's like the babies buying the mom.

ARENA: Right.

HAYS: Mergers are generally assigned, that companies are more confident, that all this cash they've been sitting on, they're willing to start investing. That's a very, very positive sign.

But I think if you look at the stock market as kind of an indicator for how investors feel about things overall, it tells you that there is a lot of concern and there is a lot of uncertainty. And I would think this is something that's also on the back of the president's mind as he looks to see his approval ratings of all kinds come up.

ARENA: Well, Kathleen, from the business world, back to Washington, the farewell of Attorney General John Ashcroft and the latest on the terrorism fight.

Of course, stay tuned to CNN day and night for the most reliable news about your security. I'm back on that story coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN ASHCROFT, FMR. ATTORNEY GENERAL: I'll sleep at night because I know that there are people in the law enforcement community who are doing vastly more than they ever did before to keep America safe.

(END VIDEO CLIP)

ARENA: John Ashcroft, of course, bidding farewell to his job, his colleagues and his leading role in the war on terrorism as attorney general.

Welcome back. We are ON THE STORY.

HAYS: Well, as Ashcroft leaves, the tension certainly on Mr. Gonzales, the man who is going to take his place. But one of the analogies I would draw is, as much as John Ashcroft was a lightning rod for a lot of people, he had -- he really drew the lines in terms of how people reacted. Gonzales is shaping up apparently perhaps to be the same kind of attorney general.

ARENA: Well, the big concern, as expressed loudly by Democrats this week, is that he will just be an extension of the White House. That instead of upholding the law of the land, that he will be pushing the Bush agenda. Of course, he has said, I understand what my role will be, not the case, but he has been very close to this president for many years, and that is a great concern.

BASH: What are you hearing from your beat and from the people you talk to, sort of the rank and file on your beat, about that? Is there concern from within the Department of Justice about that?

ARENA: You know, right now you have a lot of people looking for jobs. And a lot of people -- you know, people are changing. You know, there's moving, there's fluctuation.

So, it's not there yet, Dana. It's just not there.

And then again, you have so many people that are just career employees. Attorney generals come and go, and they just go about their business. And if you're dealing with those guys in counterterrorism, and women, they, too, say, it's business as usual, despite who is sitting in that chair. The big test, of course, will be the Patriot Act and the selling of the Patriot Act and those provisions that will (UNINTELLIGIBLE).

STARR: And what is Judge Gonzales's view on that? Does he feel the Patriot Act should stand as it is? Or is there any tweaking he would support for it at this point? ARENA: You know, we haven't heard much from him. But the Bush administration in general has been very supportive of the Patriot Act. And I can tell you that many people on the front lines of this war have been very supportive, that it has increased information sharing, it has allowed the FBI to gather intelligence in a way that it couldn't. So it really -- I think that they'll be towing the line on that one.

STARR: And Congress didn't really seem to penetrate fully his role in the White House in the detainee question, the so-called -- we'll just call it the torture abuse.

BASH: Not for a lack of trying, though.

STARR: Right. The torture abuse question.

ARENA: Not that they didn't try. I mean, you know...

(CROSSTALK)

HAYS: And they said his responses were arrogant, right?

ARENA: Right. Well, they said he was evasive. He didn't come right out and directly answer the questions that were posed, which is why you saw that vote on such a party line.

There wasn't a single Democrat in that committee that voted for him. And they even -- even Chuck Schumer out of New York said, you know, "I was on board before, but he was so evasive that I withheld a vote for him."

HAYS: Right. Kelli, did Ashcroft leave us with any final terrorism warnings, particularly this weekend? I mean, domestically, are we worried about these elections spurring any kind of activity here?

ARENA: Well, listen, two separate issues. The -- there was a threat assessment done for the possible danger taking place around those polling places here in the United States where Iraqis are going to vote.

The bottom line is, there is no credible intelligence that there is any plot. However, it makes for a very attractive target only because of the symbolism, because of the crowds that will join. So -- the media coverage. This is a ripe target for al Qaeda or a related group.

BASH: So what are they doing about it? What is the sort of strategy to deal with places like New Carrollton and particularly Detroit and...

ARENA: Well, security, intelligence-gathering. You know, they are very careful with the security measures put in place. You don't want to be an intimidating force to keep people away from the polls.

And so, you'll have some security, but not an overbearing security. They handle it very differently in the United States than they do in Iraq.

Now, on the question of the larger issue of terrorism, the attorney general's parting words were, well, you know what? I'm sleeping OK because I know everybody is trying really hard. But if al Qaeda gets its hands on a nuclear weapon that -- you know, that is the biggest concern that he has leaving his job. And not that there has been any credible intelligence suggesting that it has, but there is a lot of intelligence, he says, suggesting that they have made repeated attempts.

STARR: Well, that is the key question, of course. It's a little more complex than just do they have one or they don't have one.

ARENA: Right. Right.

STARR: You know, their efforts to get the materials. What does he say about whether it's really plausible that they could put it all together? Is this just a vague worry, or does he have...

ARENA: You know, he doesn't -- he doesn't get into those details. But I can tell you that the people I talk to on a daily basis about that -- about that, say, look, this is not something that will be easy to do. But the determination is there. And the recruiting effort is strong.

STARR: And if it takes them 10 years, they'll keep trying.

ARENA: Right. But their timeline is not our timeline. And so they'll just keep trying until they get it right. Lovely.

BASH: Kelli, thank you very much.

And we're going to be talking obviously a lot more about security and about the Iraqi elections. And stay tuned to CNN day and night for the most reliable news about your security.

We're right back ON THE STORY after this.

(COMMERCIAL BREAK)

HAYS: Thanks to all my colleagues, including Karen and Claire Arena here with us today. They're on the school in preschool beat.

We thank you for watching ON THE STORY. We're going to be back next week, but we have an exciting announcement. We are moving from Saturday mornings to Sundays. We're still going to be on at 10:00 a.m., Eastern, 7:00 a.m. Pacific, but Sunday, ON THE STORY Sunday. So get ready to watch us.

Still ahead -- on Sunday you're going to watch us -- "PEOPLE IN THE NEWS" right now focusing this week on Don Rumsfeld and Tony Blair.

Straight ahead, on 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