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CNN Wolf Blitzer Reports

President Bush Holds Press Conference; Interview with Nancy Pelosi; Interview with Dr. Robert Atkins

Aired July 08, 2002 - 16:59   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.
WOLF BLITZER, HOST: It is Monday, July 8, 2002. Hello, I am Wolf Blitzer in Washington.

We begin with the president of the United States. He's over at the White House, our CNN senior White House correspondent John king is in the briefing room. He's standing by. He's actually sitting awaiting the president. Briefly John, set the stage.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, the president will deliver about a five-minute opening statement calling on Congress to enact his legislative agenda, focusing on the war on terrorism, his call for a new Department of Homeland Security and corporate responsibility. Here is the president.

BLITZER: The president is walking into the briefing room.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good afternoon.

I hope you all enjoyed your weekend in Maine as much as I did. And I hope our fellow Americans all enjoyed a Fourth of July weekend with their family and friends.

And now it's back to work. Congress is coming back into Washington, and they got a lot of work ahead of them before the August vacation.

Congress has been making some important progress, but it also has a lot of unfinished business. I urge Congress to join me in advancing -- join me in acting to achieve and advance three big goals. We need to win the war. We need to protect our homeland. And we need to strengthen our economy.

Winning the war and protecting the homeland requires a sustained national commitment. More than 100 days ago, I asked Congress to appropriate additional money to equip our armed forces and strengthen security at our airports. Four months later, the Department of Defense and the new Transportation Security Administration are still waiting for the money, and they'll run out of operating funds maybe as soon as this week.

Congress simply must fund our troops while they're fighting a war. And Congress must provide the funds to improve security at our airports. Further delay is intolerable. Congress has got to act.

Congress must also pass the defense appropriations for next year's budget. The House has acted. The Senate must act. Our nation is at war and our budget priorities and actions need to reflect that reality.

These bills are critical. And quick action on them does not and should not preclude simultaneous progress on other legislation. Creating more jobs and strengthening our economy are critical priorities.

And Congress can act to create jobs by giving me trade promotion authority. Expanding trade means new jobs for American workers. Congress has debated trade now for more than a year. It's time to stop talking. It's time to start acting. Congress should act to create American jobs before it goes home for the August recess.

And Congress should act to make us less dependent on foreign sources of energy. Congress has the opportunity to pass legislation that gives America the energy policy it needs. One that makes us less dependent on foreign oil and promotes conservation. Reliable, affordable energy means more and better jobs.

Another key element of economic growth is consumer and investor confidence in our markets and in the integrity of corporate America. And right now that confidence has been shaken. Tomorrow in New York, I'll outline tough new laws and actions to punish abuses, restore investor confidence and protect the pensions of American workers. We have a duty to every worker, shareholder and investor in America to punish the guilty, to close loopholes and protect employee pensions, and we will.

The House has acted on the pension reforms I proposed in February and on the corporate responsibility proposals I made in March. It's time for the Senate to act in an equally responsive manner.

As Congress works on all this important legislation, it must keep a tight hand on taxpayers' money.

Excessive government spending is a drag and -- or will be a drag on our economy.

Congress is moving forward on the proposal for the new Department of Homeland Security, and it is doing so with speed and skill and a constructive spirit of bipartisan cooperation. I hope the Congress will apply the same spirit to other important legislation.

A safer and more prosperous American can also be a more compassionate country. The House has acted to encourage the charity and good works of private and religious groups throughout America. The House has also passed welfare reform that upholds the values of working family. If the Senate acts, we will improve the lives of millions of our fellow citizens.

I know that this is an election year, and both Republicans and Democrats will be focused on politics. It's normal during an election year. But we must not be distracted from the important work we share. It will take a lot of work and bipartisan cooperation to get important legislation out of the Congress before they all go home to campaign.

The agenda is full, the time is short, and the nation is watching.

In the coming weeks, I'll continue to focus on pursuing the war and protecting the homeland and strengthening our economy. I urge the Congress to join me on this unfinished business.

Now I'll be glad to answer some questions you have. Why don't we start here -- David.

QUESTION: Mr. President, the war on terrorism - you made it very clear that it's not just a matter of seeking justice for offenders, but also preventing another act of terrorism against our country. So when it comes to corporate corruption, beyond calling for tough penalties, what can you say to investors around the country about what this administration will do to prevent abuses from occurring in the future?

So when it comes to corporate corruption, beyond calling for tough penalties what can you say to investors around the country about what this administration will do to prevent abuses from occurring in the future?

BUSH: Well, let me start by telling you that I think by far the vast majority of CEOs in America are good, honorable, honest people who have nothing to hide and are willing the true facts speak for themselves.

It's the few that have stained the, have created the stains that we must deal with. And tomorrow I'm going to talk about some specifics and I'd rather kind of save those for tomorrow.

But let me just put it to you this way. We'll vigorously pursue people who break the law. And that's what, and I think that help restore confidence to the American people.

QUESTION: What about, how do you prevent it from happening again?

BUSH: Well, there is a -- listen there has been a period of time when everything seemed easy. Markets were roaring, capital was everywhere. And people forgot their responsibilities.

And as you know, you've had to suffer through many of my speeches, but I have been calling for a renewed sense of responsibility in America. And that includes corporate responsibility.

Because I'm very worried about a country that has -- could conceivably lose confidence in the free enterprise system. And I'm an avid backer of the free enterprise system. But I also understand that that requires trust. And we've had some destroy the trust of the American people, and we need to do something about it.

In the future, start -- we start with calling on people's -- calling on people's better nature, and I'll do some of that tomorrow as well.

QUESTION: Sir, the government is stockpiling enough smallpox vaccine for every American but is only planning right now to offer it to emergency and health care workers. Why shouldn't every American be able to evaluate the health risks for themselves and then decide for themselves to get the vaccine?

BUSH: First of all, I haven't made any decisions as to who is going to be vaccinated or not. We're looking at all options. I think one concern that I can share with you is that if everybody received a vaccine, there are some who, to whom that vaccine might be fatal. And I worry about that. I worry about calling for a national vaccination program and that it could cause a loss of life.

And so I'm looking at all options before I make up my mind.

QUESTION: Mr. President, the Democrats have signaled that they are going to make your behavior while a director at Harken an election year issue. There's an ad out today, which is relatively new. I know you've said this has been vetted before. I mean, I've heard that. But would you take on the charge that you were eight months late with an $850,000 stock sale report?

BUSH: First, let me take on the notion that people love to play politics. You know, you said the Democrats are going to attack me based upon Harken. That's nothing new. That happened in 1994. I can't remember if it happened in 1998 or not. It happened in 2000. I mean, this is recycled stuff.

When I...

(LAUGHTER)

Thank you.

(LAUGHTER)

When I made the decision to sell I filed what's called a Form 144. I think you all have copies of the Form 144, it's an intention to sell, and I did sell. But, as you said, this has been fully vetted. It has been looked at by the SEC. You've got the documents. You've got the finding where the guy said there is no case here. And just the way I view it is it's old-style politics, and I guess that's the way it's going to be.

QUESTION: But, sir, if I might...

(CROSSTALK)

QUESTION: On the question that the Form 4 was eight months late, why was it?

BUSH: You know, the important document was the 144, the intention to sell. That was the important document. I think you got a copy of it. If you don't, we'll be glad to get you one, that showed the intention to sell.

As to why the Form 4 was late, I still haven't figured it out completely. But nevertheless, the SEC fully looked into the matter, they looked at all aspects of it, and they did so in a very thorough way, and the people that looked into it said there is no case. And that was the case in the early '90s, it was the case in the '94 campaign, it was the case in the '98 campaign. Same thing happened in 2000 campaign. I guess we're going to have to go through this again in the 2002 campaign.

BUSH: But nothing has changed. And the nothing that changed was the fact that this was fully looked into by the SEC and there's no there there.

Helen?

QUESTION: (OFF-MIKE) a way to clean up the corporate way and start the reform, Senator McCain is suggesting that you ask for the resignation of Harvey Pitt. And says that he's inept and had to recuse himself so many times in all these cases. What do you think? And are you 1,000 percent behind him?

BUSH: Very tricky. I support Harvey Pitt. Harvey Pitt has been fast to act. He's been in office less than 12 months, I think. I mean, he was -- we sent him up to the Senate and was unanimously approved. I'm not exactly sure when the vote was. I guess, it was about a year ago. And every senator said aye on Harvey Pitt, aye meaning that they thought he was the right may for the job. And I still think he is.

He has, in a quick period of time, he has taken 30 CEOs and directors to task by not allowing them to serve again on a board or serve in a CEO capacity of a company. He's encouraged, what they call disgorgement. In other words, if somebody has profited based upon malicious reporting or whatever the lawyers call it, obviously trying to scam somebody, they have to give their money back. And he's been very active on that. So I think Pitt's doing a fine job.

QUESTION: (OFF-MIKE) in your speech tomorrow you're going to talk about some of the excesses of the 1990s. A lot money was flying around, people were playing a lot of games with money. You weren't president then. Bill Clinton was president. Do you think in some way he contributed to that, set a moral (ph) tone in any way?

(CROSSTALK)

BUSH: No.

QUESTION: You asked about the SEC and the Harken Energy Company. Democrats are saying, would you have the SEC release all the papers in connection with that and end all the questions? Would you tell the SEC (UNINTELLIGIBLE) release those papers?

BUSH: This is old politics, John. This has been around for a long time.

In the early '90s, key members of Congress asked for relevant documents from the SEC on this case. They were given the documents. You've seen the relevant documents.

And I want to remind you all that I sold the stock at $4, and 14 months later -- the holding period for capital gains, I think, was 12 months in those days -- the person who bought my stock could have sold it for $8 -- could have doubled his or her money.

QUESTION: (UNINTELLIGIBLE) know, when you sold your Harken stock, that the company was going to restate its earnings. As a member of its audit committee, how could you not know that its earnings had not been properly ...

BUSH: Because that fact came up after I sold the stock. And the SEC fully looked into this. All these questions that you're asking were looked into by the SEC. And I repeat to you the summary, which I think you've seen -- I hope you've seen it; if not, we'll be glad to get it to you - said there was no case there.

QUESTION: First of all, my apologies for not having a tie, because I have an Indian summer suit today.

BUSH: That's OK. Therefore, you don't get to ask a question.

(LAUGHTER)

QUESTION: Happy birthday -- we share the birthday the same day.

BUSH: Thank you. That's a fine question.

QUESTION: My question is, sir, that we did a survey at India Globe in Asia today, around the United States, among Indian-American community, and also in India, and (UNINTELLIGIBLE). They all support your stand against fighting against terrorism.

The question is, sir, are you going to find Osama bin Laden before the first anniversary of September 11?

BUSH: Well, that's an interesting question, about Osama bin Laden. We haven't heard from him in a long time. I don't know if the man's living or the man's dead. But one thing is for certain: The war on terrorists is a lot bigger than one person.

And as I told the American people, this is going to be a long and -- a long struggle.

And we're making good progress. We're rounding people up slowly but surely. We're disrupting networks. This is -- and these are like international criminals -- is what they act like: They kind of hide and order (ph) things up and hide again. And we're just patiently hunting them down. And whether or not Osama bin Laden is alive or not, I don't know.

QUESTION: Mr. President, if I may...

BUSH: If you would've worn a tie, you could've had a follow up.

(LAUGHTER)

QUESTION: Let me ask a question from just before the sale of stock that you mentioned. Could you please explain your role when you were on the board of Harken and the sale of 1999 -- 1989 of its Aloha Petroleum subsidiary, which later caused the SEC to require Harken to restate its earnings. The sale has been described as creating a phantom profit to hide large losses. How did you see it, sir? And do you think that this transaction hurts your credibility on corporate responsibility?

BUSH: This and all matters that related to Harken were fully looked into by the SEC. And in this case the system worked. There was an honest difference of opinion as to how to account for a complicated transaction. You're going to find that in different corporations. Sometimes the rules aren't as specific as one would expect, and therefore the accountants and the auditors make a decision.

And then it's the SEC's role to make the determination as to whether or not the accounting procedure used in this particular instance was proper or not. And -- let me finish -- and they made the decision that Harken ought to restate some earnings, which Harken did. And that's how the system is supposed to work.

QUESTION: Mr. President, if I may ask you, right before the accounting -- the sale itself of the subsidiary, did you favor that? Were you involved...

BUSH: You need to look back on the director's minutes, but all I can tell you is is that in the corporate world sometimes things aren't exactly black and white when it comes to accounting procedures, and the SEC's job is to look and is to determine whether or not the decision by the auditors was the appropriate decision. And they did look, and they decided that earnings ought to be restated, and the company did so immediately upon the SEC's finding.

QUESTION: Sir, in that SEC investigation you waived attorney- client privilege, so that the SEC could question Harken attorneys and your personal attorneys about your dealings. In light of that, do you think it is appropriate today, given the fact that you say investors are nervous about the markets, for senior executives of these companies to go before Congress and invoke the Fifth Amendment and refuse to discuss their dealings in controversial?

And on a related point, one of the differences right now between the administration and the Senate bill on corporate responsibility is the Sarbanes proposal to have this independent board appointed by the SEC police the accounting industry. You have opposed that so far. Are you prepared today to endorse that? BUSH: I'll give you my opinion on that.

Look, I think people, obviously if they're called up, ought to tell what they know, but lawyers have different opinions. And these people are listening to the advice of their counsels.

QUESTION: Does it hurt the very market confidence...

(CROSSTALK)

BUSH: Well, I think what hurts the market confidence is the -- in the recent cases was the inflated numbers. And so people look at balance sheets and wonder if they're real.

And now, as to the Sarbanes bill, we share the same goals, and I'm confident we can get a good piece of legislation out of the Congress. I, too, called for an independent board. My concern in the Sarbanes bill is that there's overlapping jurisdiction which will make it harder to enforce rules and regulations, not easier. If you have overlapping jurisdiction it creates confusion as to who is in charge of what. But I'm confident we can work that out. I am.

QUESTION: You gave your speech on the Mideast nearly two weeks ago now, and after your previous speech on the Mideast you repeatedly called on the Israelis to withdraw from the West Bank. You made a brief allusion to that in this most recent speech. You haven't discussed it since. And of course they're still there. Should they take your silence as an indication that they should stay where they are or that they should stay there while Yasser Arafat is still in power?

BUSH: I said in my speech, as security improves. I also will call upon the Israelis as security improves to allow for more freedom of movement by the Palestinian people.

At the same time, we are working to begin the reforms necessary amongst the Palestinians to create enough confidence in all parties so that security will improve, as well.

Undersecretary Burns was recently there in the Middle East. He's back to report this week. Colin Powell will be following up on his meetings. And I haven't had the briefing yet, but I believe some progress is being made toward the institutions that I talked about that are necessary for a Palestinian state to emerge, which will give us all confidence in its ability to fight off terrorist activities. Its ability to receive international aid without stealing the money. Its ability to develop a judiciary.

And what's very important in the Middle East today is that those institutions evolve and grow so that the true will of the Palestinian people can be reflected in the government. And that the institutions grow and evolve so that there's, in fact, separation of power so that all hopes of the Palestinians don't rest on one person. And I believe we're making some progress there.

QUESTION: With security at its current state, do I understand you correctly, and you're saying, things are in its current state, you're perfectly comfortable to have the Israelis where they are?

BUSH: I would hope that everybody got the message that we all have responsibilities to fight off terrorist attacks.

Yes?

QUESTION: Mr. President, good afternoon. Since shortly after September 11, you said that you would like to see Osama bin Laden dead or alive, and you've also said that American is after justice and not revenge.

BUSH: Right.

QUESTION: Could you please tell us to your way of thinking, what is the difference?

BUSH: Between justice and revenge?

QUESTION: Yes.

BUSH: I think it's a difference of attitude. I mean, I seek justice for the deaths done to American people. You can be tough and seek justice. And you can be disciplined and focused and seek justice. But it's a frame of mind. We don't take -- we take lives when we have to protect the people and to hold people accountable for killing thousands. That's how I look at it.

QUESTION: Yes, Mr. President, thank you. We continue to see reports on the state of planning to get rid of Saddam Hussein in Iraq. I know it's unlikely that you'll share any details with us, but we'd be delighted to hear them, sir.

BUSH: Somebody else thinks they are.

QUESTION: But I wonder, Mr. President, regardless of when or how, is it your firm intention to get rid of Saddam Hussein in Iraq...

BUSH: Yes.

QUESTION: ... and how hard do you think it will be?

BUSH: It's a stated policy of this government to have regime change. And it hasn't changed. And we'll use all tools at our disposal to do so.

I actually didn't read the whole story about somebody down there at level five flexing some know-how muscle. But there's all kind -- listen, I recognize there's speculation out there, but people shouldn't speculate about the desire of the government to have a regime change. And there's different ways to do it...

QUESTION: How involved are you in the planning, sir? We know that you meet with General Franks. You meet with Rumsfeld to talk about this. How involved are you?

BUSH: I am involved. I mean, I'm involved in the military plan, diplomatic planning, financial planning -- all aspects of -- reviewing all the tools at my disposal.

But in my remarks to the American people, I remind them I'm a patient person. But I do firmly believe that the world will be safer and more peaceful if there's a regime change in that government.

And -- let me see, you are -- I don't have my -- no name is ...

(LAUGHTER)

QUESTION: (OFF--MIKE)

BUSH: Thank you.

QUESTION: Thank you for the comment.

Earlier, you signaled your staunch support for Harvey Pitt. On August 8, his one year will have come up, and he will no longer have to recuse himself. Do you think that he should voluntarily recuse himself after that point? Would that be ...

BUSH: I think Harvey Pitt was put in place to clean up a mess. And he's working hard to do that. It's an amazing town where -- the man barely got his uniform on, barely got a chance to perform, and now, for whatever reason, people think he ought to move on -- the very ones who voted for him.

And I would ask them to look at this record. And I'm going to -- since I am the decision-maker, I'm going to give him a chance to continue to perform -- Elizabeth.

QUESTION: Mr. President ...

BUSH: Your name's not Elizabeth..

QUESTION: Thank you.

The accounting procedures that (UNINTELLIGIBLE) have been compared to what went on at Enron. Would you agree with that?

BUSH: No.

QUESTION: Why not, sir?

BUSH: Again, this is -- there was no malfeasance involved. This was an honest disagreement about accounting procedures.

And the SEC took a good look at it and decided that the procedures used by the auditors and the accounting firm needed to, were not the right procedure in this particular case, or the right ruling, and therefore asked Harken to restate earnings, which it did.

I mean that's the way the SEC works. That's the proper role of an oversight group. There was no malfeasance, no attempt to hide anything, it was just a accounting firm making a decision along with the corporate officers as to how to account for a complex transaction. QUESTION: Mr. President, to put your speech tomorrow in a larger context, at the turn of the last century, Theodore Roosevelt complained about what he called "the malefactors of great wealth," and he asked in a very famous speech, "who shall rule this country," the people or what he called those who hide behind the breastworks (ph) of corporate organizations. I wonder if you feel this era is comparable to that one, and if you feel you should respond as aggressively as Roosevelt did?

BUSH: Well, of course, he was referring to trusts. I'm referring to a lapse of ethics and of people forgetting the fact that they represent things other than their own compensation packages, however inflated they may be, that they have a responsibility to employees and shareholders, and I am -- I also understand how tender the free enterprise system can be if people lose confidence in the system. It can be hard to attract capital in the markets. And that's one reason I've reacted so steadily against what I have seen. And I don't like it a bit, and I'm going to talk about it tomorrow.

David asked an interesting question about how do you prevent the things in the future?

It's like asking how do you, you know -- if somebody has, doesn't have that ethical compass, they'll find ways to cut corners. There are ways that people should hold people accountable. I mean investors need to be -- pay attention; there's investor groups that will do that.

Obviously, boards of directors need to hold CEOs accountable. But if you get a bunch of people together that have no sense of ethics, you're going to get this kind of behavior.

And so, then what the government must do, and it's a legitimate role of government, is to step in and hold people accountable.

QUESTION: Mr. President, one way to establish or restore investor confidence being quoted right now as making public the tax returns of corporations. Would you favor that policy?

BUSH: Making public -- I need to look at that. I'll take a look at that.

QUESTION: Yes, Mr. President, the NAACP is meeting this week in Houston, as you probably know. And there's been some criticism that you've not attended their convention since the 2000 campaign. How would you respond to that and respond generally to suggestions from some critics that your civil rights record in the administration is not a stellar one?

BUSH: Let's see. There I was sitting around the leader -- the table with foreign leaders looking at Colin Powell and Condi Rice.

Yes?

QUESTION: Sir, on the Middle East, to follow-up. Realistically, can anything be accomplished in the Middle East before the Palestinian elections? And does the White House have anything to say about the rise of anti-Semitism which is sweeping Europe? Are you concerned that that could spread to this country?

BUSH: We're concerned about anti-Semitism anywhere. And, yes, progress can be made. We can help write a -- encourage the writing of a new constitution, a reformulation of security forces, prepare aid packages that will be disbursed if there is transparency. So progress can be made into the elections.

QUESTION: Mr. President, how do you respond (OFF-MIKE) that your administration and you, particularly, are more interested in protecting the interest of corporate America than the needs of...

BUSH: What I'm interested in protecting is the confidence of all Americans in the marketplace so that people feel comfortable investing, because investment means jobs, and so that people feel comfortable that their savings' plans and pension plans are protected. That's why I put out the pension reform package.

Remember, in February, I laid out a pension reform package and in March I laid out 10 steps for good corporate governance. And I'm waiting for Congress to act. And it's been a while.

But I'm a believe in the free enterprise system. But I'm also a strong believer in holding people accountable when they betray the trust of employees and shareholders. And that's exactly what we're going to do.

QUESTION: On Iraq, can the American people expect that by the end of your first term you will have effected a regime change in Iraq, one way or another? And by the same token...

BUSH: It's hypothetical.

QUESTION: But can the American people expect that? Should they expect that?

BUSH: It's a hypothetical question.

QUESTION: What about Osama...

BUSH: They can expect me not to answer hypothetical questions...

QUESTION: On Osama bin Laden, does your promise still hold...

BUSH: ... on sensitive subjects.

(LAUGHTER)

QUESTION: Sir, on Osama bin Laden, does your promise still hold that he will be caught dead or alive at some point?

BUSH: What? Say that again.

QUESTION: Does your promise on -- or your goal of catching Osama bin Laden dead or alive, does that still stand? BUSH: You know, I don't know if he is dead or alive, for starters. So I'm going to answer your question with a hypothetical.

Osama bin Laden, he may be alive. If he is, we'll get him. If he's not alive, we got him. And...

(LAUGHTER)

It's a -- but the issue is bigger than one person. It's what I keep trying to explain to the American people. We're talking about networks that need to be disrupted, plans that need to be stopped. These people are cold-blooded killers. They're interested in killing innocent Americans still. And therefore we will continue to pursue them.

And I understand the frustrations of this war. Everybody wants to be a war correspondent, they want to go out there and see the tanks moving across the plains or the airplanes flying in formation. But that's not the way this war is going to be fought all the time. There's a lot of actions that take place that you'll never see. And some of it hopefully will continue to take place as a result of the actions of our friends, such as that which took place in the Philippines. Abu Sayyaf, the leader evidently was killed by Philippine troops, and that's positive, that's a positive development.

We're constantly working with nations that might become havens for terrorists to make sure that there's no place for them to bunch up or train. And we're making progress. But it's a long journey, and that's what people have got to know.

QUESTION: Mr. President, you mentioned that sometimes the accounting laws are just too difficult to calculate...

BUSH: No, I said sometimes there's difference -- ability to interpret one way or the other.

QUESTION: There are differences of opinion. But isn't that -- wouldn't that provide a handy excuse to some of the folks who are involved in these scandals today who say...

BUSH: Sure.

QUESTION: ... Well, internally we had...

BUSH: Sure. This is a handy excuse.

But good prosecutors and a strong SEC will determine the difference between what becomes a handy excuse by somebody willing to, you know, defraud, and somebody who has just a difference of opinion. And that's the difference. And that's the role of the SEC. And that's why the SEC has to be strengthened.

And tomorrow, I'll call for a stronger SEC -- more investigators and more budget. But that's precisely what the role of the SEC is, and that's what it does, and -- I know the Democrats are trying to divert attention from the major goal, and I hope they -- I hope we can work together to get good legislation.

The important thing is to restore confidence to the economy. And we can. But -- go ahead.

QUESTION: I just wonder if you think, then, that some of the companies that are in play today, in terms of scandal, could actually be places where the accounting was just (UNINTELLIGIBLE) disagreed over accounting ...

BUSH: It could be...

(CROSSTALK)

BUSH: ... it's not my role to judge, or the Congress' role to judge. It is the SEC's role to judge. And that's why we need a strong, vibrant SEC -- to make those judgments.

And -- but I think it's pretty clear when somebody's trying to defraud. And when you've got an error of $3.4 billion, I think it was, it's a pretty clear indication that something might be there. But everybody ought to have their day in court. We ought not to rush to judgment on every single case that comes up. And the SEC ought to do its job. It can do it, and do it well.

Thank you all very much.

BLITZER: President Bush leaving the White House briefing room after answering reporters questions for just a bit more than a half an hour. The president opening with a statement urging Congress to pass legislation supporting funding for the Department of Defense as well as the Transportation Security Administration. The president also saying that tomorrow he will unveil a new plan to deal with some of these corporate scandals.

Our senior White House correspondent John King has been standing by listening and watching.

John, a lot of viewers might be confused why reporters at this news conference were asking so many questions about the president's own personal business transactions long before he was even governor of Texas let alone becoming president of the United States. Just briefly, give us some background what's that all about.

KING: Well, Wolf, most of our viewers would remember that before getting into politics Mr. Bush was the owner of the Texas Rangers - the part owner of the Texas Rangers baseball team. To buy that ownership interest, he sold stock in a company on which he was on the board. It was called Harken Energy. Mr. Bush sold more than 212,000 shares, made about $850,000 -- all of this back in 1991.

After that sale, the company had an accounting issue with the Securities and Exchange Commission and there was an adjustment of the earnings. Some asking questions as to whether Mr. Bush knew about that and engaged in any insider trading. He was investigated in 1991, 1992 1993 by the federal government, by the Securities and Exchange Commission. The SEC decided there was no evidence of insider trading and closed the case. But Mr. Bush's conduct now being revived, if you will, by Democrats and other critics who say this president has engaged in controversial practices of his own and therefore, does not have the moral standing, if you will, to impose his new agenda for corporate responsibility now.

And you heard the president. It came up over and over again. The president gets a bit irritated at the questions actually because in his view, he says there was an investigation that ran for several years and that the SEC, the federal government, decided there was no case and decided not to take any action against him.

BLITZER: The president was very forceful in supporting the chairman of the - head of the SEC, the Securities and Exchange Commission, Harvey Pitt, even in the face of many Democrats and even a Republican or two calling for his stepping down.

KING: He was. And it's a difficult one for the president right now because he does not want to say most of the accounting practices we are learning about in Enron, in WorldCom and some other cases - yes, the disclosures are being made now but most of the years at issue happened before he was president. You heard him. He said he would not blame President Clinton - former President Clinton for any of this.

At that time, the Democrats were trying to stir up politics about the president's business dealings, about the vice president's dealings in business. Mr. Bush does not want to get into that debate because he wants to try to keep about the policy argument, but privately, that's what most of his aides say. They say, "Go back and look at the years in which Enron was cooking the books. Go back and look at the years at issue in the WorldCom scandal." That was before Harvey Pitt's watch. And they say it's typical Washington politics that people in Washington know this is a big political issue and that they want a scapegoat.

Mr. Pitt was someone who defended the accounting industry before he became the SEC chairman. Mr. Bush standing by his man right now. Some Democrats want Harvey Pitt to step aside. Senator John McCain, a prominent Republican, making that call as well. But you heard the president, I believe, on two occasions say quite forcefully "Harvey Pitt deserves a chance" and that Harvey Pitt is his man.

BLITZER: And he was very forceful on that. John King, thank you very much for that report. Let's get a response now from a key Democrat in the U.S. Congress. Representative Nancy Pelosi represents California's eighth Congressional district. She joins me now live from Capitol Hill.

Congresswoman Pelosi, you're the highest-ranking Democrat in the House of Representatives, the high-ranking woman ever to serve in the U.S. Congress. You heard the president make a very forceful statement saying that he's going to get tough in his address tomorrow, dealing with some of these corporate scandals. Did he satisfy you?

REP. NANCY PELOSI (D), CALIFORNIA: Well, we'll see what his speech is tomorrow. Quite frankly, I thought it was a very weak statement. He may have said he was going to get tough tomorrow, but I think his statement today was very weak.

At a time when the country needs confidence - confidence restored in our markets, confidence restored in our economy, the president came out limply railing against the Congress of the United States, talking about legislation that he wants to see passed that he knows is well on its way to passage. Clearly, the administration has decided that they want to divert attention from the corporate governance issue, which is coming so close to home for them.

So I didn't find it a strong statement at all. I thought it was very weak, hard to understand why a president of the United States would come out with such a weak statement on a day like today.

BLITZER: Well, Congresswoman Pelosi, if he wants to divert attention from the corporate scandals unfolding now - and all of us have been watching them so carefully -- why would he go to Wall Street tomorrow and address the business community and the American public in a major address and make the case for getting tough with some of the fuzzy math or the accounting practices of these big corporations?

PELOSI: Well, you heard him say two different things in his comments. First, he said, "Well, accounting is not a black and white situation. It's sort of gray and it's up to SEC to sort it out." And then he said, "Fraud is very clear. It's pretty clear what WorldCom did. It was clear to see they were trying to defraud." So you hear two different things.

Tomorrow, we will hear his statement. If he's serious about corporate governance, he will come out in support of the Sarbanes Bill. The bill he mentioned today that came out of the House that he supports is a very, very weak bill that would indeed give the industry the call on how to regulate itself. It would be vague in its funding, vague in its authority as opposed to the Sarbanes Bill, which by the way, received almost overwhelming support, strong, strong bipartisan support in the United States Senate. If he's serious about corporate governance, he will support...

BLITZER: It was passed...

PELOSI: ... to support that bill.

BLITZER: It was pasted in the committee...

PELOSI: In the committee.

BLITZER: ... in the Senate 17 to four. What about the president -- he was repeatedly questioned about his own business practices way back -- more than a decade ago - Harken Oil in Texas. Are you among those Democrats who are raising issues about his own propriety in dealing with these kinds of business issues?

PELOSI: I am not. I'm focusing on the larger issue, those issues that addresses the pensions of America's families, the savings that people had in their investments for their children's education and in a better future for their families and for their children. We need to have more confidence in our markets. Whatever we decide to do has to restore confidence and not paint all business with the same brush.

But I'd rather go down that path and spend time on the president's dealings. I think that his dealings make it harder for him to be a moral authority on the subject. But I'd rather not go into it. We have much bigger fish to fry and that is to deal with the corporate governance issue. I think the president was trying to set the stage of a big fanfare that he was going to be tough tomorrow and then come out with a weak speech. But I think that he's going to have to step up to the plate tomorrow.

I mean, accounting -- do you know the story of the little boy when they said to him, how much is two and two? He said four and his teacher said that's good. He said, "It's not good. It's perfect." This is about numbers.

BLITZER: Right.

PELOSI: And the numbers here just don't add up. Harvey Pitt should go. He's been the lobbyist for the accounting industry. He's not the person to restore confidence in our markets.

BLITZER: Congresswoman Nancy Pelosi, the minority whip in the House of Representatives. Thanks for joining us.

PELOSI: My pleasure. Thank you.

BLITZER: And to our viewers, you have a chance to weigh in on the president's thoughts towards corporate responsibility. It's on our web "Question of The Day." Who should be responsible for cleaning up corporate accounting problems, Wall Street, Congress, the Justice Department? Go to my web page, CNN.com/wolf. That's where can you vote. While you're there, let me know what you're thinking. Send me your comments. I'll try to read some of them on the air each day at the end of this program. It's also where you can read my daily online column -- CNN.com/wolf.

California police caught on tape - an amateur video sets off new accusations of brutality. We'll take a closer look at the confrontation with a 16-year-old boy. Also, fats versus carbs, what's going to make you skinny? Still to come, Dr. Robert Atkins defends his diet and answers your questions. Call us quickly, 1-888-CNN-0561.

(COMMERCIAL BREAK)

BLITZER: Welcome back. I'm Wolf Blitzer in Washington. Trouble is brewing for a suburban Los Angeles police department under scrutiny for an alleged case of brutality. An amateur videotape has turned up showing Inglewood police officers punching handcuffed teenagers. CNN's Thelma Gutierrez is on the scene. She joins us now live with the very latest - Thelma.

THELMA GUTIERREZ, CNN CORRESPONDENT: Wolf, for Inglewood police, this is a public relation nightmare. First, you have a videotape of a police officer, who appears to take a teenager who's in handcuffs, and slams him up against the hood of a car and then appears to slug at his head. Now, an amateur photographer shot the tape from a nearby hotel room. It happened on Saturday at a gas station in Inglewood, outside of Los Angeles.

From the tape, you see 16-year-old Donovan Jackson in handcuffs. He's picked up by the shirt collar and belt and slammed onto the car. Seconds later, Inglewood Police Officer Jeremy Morris, a three-year veteran of the force, swings at his head. Two Los Angeles County Sheriff's deputies say it all began with a routine traffic stop. But Donovan's father, Koby Chavis, was driving with a suspended license when some sort of altercation began. Four Inglewood police were driving by and then, stopped to - quote - "assist."

(BEGIN VIDEO CLIP)

LT. EVE IRVINE, INGLEWOOD POLICE: What occurred within the video is extremely disturbing to the Inglewood Police Department as well as the administrators of the City of Inglewood. The incident is being taken very seriously.

After reviewing the tape, a formal internal affairs investigation was immediately initiated. The officers involved in the incident are - and you all received their names on the printout - Officer Jeremy Morris, a three year officer with Inglewood Police Department, Officer Bichon Darvich (ph), a two year officer with Inglewood Police Department, Officer Mariano Salsido (ph), and eight year veteran of Inglewood Police Department and Officer Antoine Cook (ph), a one year officer with Inglewood Police Department.

(END VIDEO CLIP)

GUTIERREZ: Sixteen-year-old Donovan Jackson is described by family members as quiet and non-confrontational sort of young man. In fact, several of his relatives told me that he's a special education student, that he has an auditory disability and even a speech impediment and that perhaps that caused his inability to communicate with the officers. Relatives claim that the video did not catch everything. They say that Donovan had been allegedly beaten by police before the cameras started rolling.

(BEGIN VIDEO CLIP)

TALIBAH SHAKIR, DONOVAN'S COUSIN: They hit him in his face with a flashlight. He wasn't doing anything. And they choked him with his chain until he passed out. And that's why the guy that took the film is talking about how brutal it was because that kid was passed out when you saw - he was unconscious on the ground. And he has the marks of his chain all over. He has several bruises on his neck, his face, his eyes bloodshot, bumps on his head, all over his body, upper torso, just bruises all over his body and cuts.

(END VIDEO CLIP)

GUTIERREZ: Donovan's family has told me that he has been treated. He has been released. He is now with his family members. And they have, by the way, retained an attorney.

Wolf, back to you. BLITZER: Now, Thelma Gutierrez, thank you very much for that report. And this important note - please be sure to watch "CONNIE CHUNG TONIGHT," 8:00 Eastern. Among her guests, the teenager in the tape, his father and his lawyer.

A "New York Times" report is cooking up yet another hot diet debate. It says some doctors admit there's an element of truth in the controversial high fat/low carb Atkins diet. Some of those doctors talked with CNN and tell us, while they'd never recommend the Atkins diet outright, they would recommend a diet with less carbs and more of what's known as good fat. The diet doctor, Robert Atkins, joins us now live from New York.

Dr. Atkins, thanks so much for joining us. I'm sure you're very pleased by that lengthy cover story in the "New York Times" Sunday magazine yesterday. But let me just point out that some doctors quoted in the article are not telling our medical correspondent, Elizabeth Cohen, that there's a difference between good and bad fat. Olive oil, for example, is a good fat whereas pork chops or steak is not necessarily a good fat as far as cholesterol and heart disease are concerned.

DR. ROBERT ATKINS, DIET DOCTOR: Well, you know, that's the way that they think. But in point of fact, when one is on a low carbohydrate diet, then, fat takes a different pathway. When you restrict carbohydrate, fat doesn't go into storage. Fat goes, instead, into energy. It provides energy. It's called key tones and because of it, all of the research, which shows that saturated fats are bad for cholesterol and other things, doesn't apply when the carbohydrates are as restricted as we do on the low carbohydrate diet.

And in order to understand - go ahead.

BLITZER: I was going to say, Dr. Atkins, the cardiologists who are listening and watching and are concerned about high cholesterol coming from fat, is that -- is that not a source of potential concern to you?

ATKINS: Well, look, I've treated some 45,000 patients and with -- before and after. So I know what happens. The cholesterol not only drops, but there's an improvement in the good cholesterol relative to the bad cholesterol. And the triglycerides drop dramatically. And it turns out that triglycerides are really a greater source of heart disease than cholesterol is anyway.

So we have all of this to work with, plus every study that was ever done using a low carbohydrate diet shows the improvement in cholesterol and the improvement on triglycerides. So that whatever they're worried about is part of what Mr. Taubes called the big fat lie.

BLITZER: That's certainly - that's certainly the upshot of his article...

ATKINS: But it is true. BLITZER: ... based on several years of research. Well, let's take a caller because as you can imagine, there's enormous interest in your diet right now in the aftermath of -- especially of this "New York Times" article. There's always been high interest. But let's take a caller from Los Angeles who has a question. Go ahead, L.A.

CALLER: Hello, Wolf. Hello, Dr. Atkins.

ATKINS: Hi.

CALLER: My question is why can't you do the protein/low carb diet and have it be low fat, not cheese and bacon and all these things that have saturated fat that can contribute to heart disease?

ATKINS: All right, now, you can. But in point of fact, it has been shown that a low carbohydrate diet high in fat actually takes more weight off than one that's low in fact and high in protein. Now, that's been show all the way back in 1955.

But more importantly, we want a diet to be a person's diet for a lifetime. Now for a lifetime, the idea is so to arrive at your goal weight, eating in such away that you don't want to eat any differently. And for that, you've got to have the most delicious main courses because most of your diet is going to be these wonderful main courses. And if you like foods, which have fat in it like a rib eye steak or a duck or something like that, then to cheat yourself out of that for no reason at all -- because it has been shown over and over again, that the people who eat the high fat version of the diet do exactly as well as the people who eat the low fat version...

BLITZER: All right.

ATKINS: ... of the diet.

BLITZER: Dr. Atkins, let's take another quick call from Tampa.

ATKINS: Sure.

BLITZER: Our phone lines are really buzzing right now. Go ahead, Tampa? Tampa, go ahead. Hello? We lost Tampa. But let me just wind up. The upshot of your diet, is forget about the carbohydrates, the potatoes, the starches, the pasta. Go with the high protein even if it includes a lot of fats, steaks and bacon and eggs and food like that and you'll lose weight, is that right?

ATKINS: Well, the main purpose that you've got to get across is that fat is the backup fuel system. And to burn it up, you have to restrict carbohydrates. This makes fat the primary fuel system and that's why it's so simple and so direct and the most effective die that there ever could be for losing weight easily and in such a way that you would stay on it all your life.

BLITZER: Dr. Robert Atkins, we could go on for a long time. We were planning on going on much longer. Unfortunately, the president's news conference cut short our amount of time.

ATKINS: I understand.

BLITZER: We'll have you back. Thank you so much for joining us.

The American Heart Association has something else to say very often about whether fat really does a body good. Dr. Bob Eckel of the American Heart Association joins us now from Denver. He's a professor of medicine at the University of Colorado.

You read the article in the "New York Times," which makes a strong case for the Dr. Atkins diet based on a lot of new research. What do you say?

DR. BOB ECKEL, AMERICAN HEART ASSOCIATION: Well, the American Heart Association has great concerns, Wolf, about this position. In a sense, I sense that the journalism that's been presented is fairly flawed in terms of argument.

There's no question as Dr. Atkins says that people can lose weight on a high fat intake and a low carbohydrate intake. But the issue is what happens long-term. I've seen no evidence nor has the American Heart Association seen any evidence that a diet such as his long-term reduces the risk of heart disease or for that matter of fact, helps preserve the weight lost once achieved. So we're real concerned about a diet that is really what we would call atherogenic or would tend to promote heart disease. Keep in mind that the evidence is overwhelming to suggest that diets high in saturated fat, in particular, and cholesterol increase bad cholesterol and relate to heart disease risk.

BLITZER: Well, what do you say, Doctor, about the - what the "New York Times" says -- for 20 or 30 years, Americans have been living on this notion, cut down the fat, but they've been getting fatter. They've got worse heart problems. They've got diabetes problems. What do you say about that point that was made in the article?

ECKEL: That's easy to respond to, Wolf. Obesity is simply calories and calories alone. You can gain weight on high carbohydrate intakes. You can gain weight on high fat intakes. So the increase in body waist circumference or body weight as a whole could be blamed on diet soda if in fact you use that kind of argument.

In fact, the intake of fat in America has not fallen. The percent of calories as fat ingested has fallen, but that's because we're eating more calories. So therefore, fat intake has not changed and the argument remains the same. Obesity is too many calories and too little physical activity.

BLITZER: Let's take a caller from Port St. Lucy. Go ahead, Port St. Lucy.

CALLER: Yes, Doctor, I was on the Atkins diet. And before I went on it, I had high cholesterol, high triglycerides, high blood pressure -- you name it, I had it. And I did lose 30 pounds following it. And I - and my heart doctor was amazed because I -- my triglycerides went way down and my blood pressure went down... ECKEL: All right.

CALLER: ... and my cholesterol went down. The problem I had is keeping it off and that's the main problem with anything.

BLITZER: All right, well, what about that? We hear a lot of stories just like that, Dr. Eckel.

ECKEL: Yes, that's true. People do lose weight on the diet, but keeping it off is difficult. There's no magic to this diet in terms of long-term weight maintenance. The reason the lipids improved is when people are losing weight, their triglycerides fall and their cholesterol falls. So to suggest that the fact that those lipids fall during the diet is insufficient evidence to prove that these diets are long-term safe.

The American Heart Association has great concerns about the long- term efficacy or effectiveness or safety of these diets.

BLITZER: Dr. Bob Eckel, thanks for your insight as well, appreciate it very much.

ECKEL: You're welcome, Wolf.

BLITZER: We'll continue to update you throughout the week on this important debate, carbs versus fat.

Let's go to New York now and get a preview of "LOU DOBBS MONEYLINE." That begins right at the top of the hour. No fat in his program - Lou.

LOU DOBBS, HOST, "LOU DOBBS MONEYLINE": Well, with one glaring exception, Wolf, thank you.

Coming up tonight, Washington focusing on the corporate scandals. Hearings began today in the Capitol - on Capitol Hill in the WorldCom investigation. Lawmakers looking for answers surrounding the worst accounting fraud in history. We'll have complete coverage for you.

And Congressman Michael Oxley, chairman of the House Financial Committee, will be my guest, leading that investigation on Capitol Hill. The flood of corporate scandals today led the president to plan his own attack on white-collar crime. We'll have a live report for you from the White House.

And we begin our new "MONEYLINE" series, "Great Expectation." We examine the steps companies must take to survive. All of that and a lot more coming up on "MONEYLINE." Please join us. Now back to Wolf Blitzer - Wolf.

BLITZER: Thank you very much, Lou. I want to put up on the screen the results of our web "Question of The Day." Take a look at these answers. We are going to continue follow up all of this tomorrow.

I'm Wolf Blitzer in Washington. "LOU DOBBS MONEYLINE" begins right now.

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