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CNN Wolf Blitzer Reports

Iraqi Leaders Negotiate with Radical Cleric; Sadr Aide Negotiating Release of American Journalist; Oil Prices Expected to Reach New High; Kerry Campaign to Sue Over Ads; Group Helps Secretly Gay Men

Aired August 20, 2004 - 17:00   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.


WOLF BLITZER, HOST: Happening now. John Kerry's campaign ready to file a suit with the FEC, complaining about those swift war veteran ads against him. There's breaking news. We'll have details.
Also, an American journalist held hostage in Iraq, one step closer to being released?

Stand by for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Najaf: who's in control? A shrine is shrouded in smoke and confusion.

Attack ads. This time it's Kerry's anti-war record.

UNIDENTIFIED MALE: The accusations that John Kerry made against the veterans who served in Vietnam was just devastating.

BLITZER: Who's supplying that swift boat group with ammunition?

Double lies.

GOV. JIM MCGREEVEY (D), NEW JERSEY: Throughout my life, I have grappled with my own identity.

BLITZER: A governor is out of the closet. We'll get an inside look at those who are still struggling.

Far from Neverland: As a court looks into events at his California ranch, will Michael Jackson find a new home in the Alps of Liechtenstein?

ANNOUNCER: This is WOLF BLITZER REPORTS for Friday, August 20, 2004.

(END VIDEOTAPE)

BLITZER: It's not over until it's over. In the war-torn city of Najaf, it's been a day of continuing conflict and conflicting claims.

Despite a final ultimatum, a ring of steel on the ground and a pounding from the air, fighters loyal to the rebel Shiite cleric Muqtada al-Sadr are still apparently in control of the sacred Imam Ali mosque. But are they finally ready to hand over the keys?

Let's get the very latest. CNN's Matthew Chance on the ground for us in Najaf -- Matthew.

MATTHEW CHANCE, CNN CORRESPONDENT: Wolf, thanks.

In the last two hours it's been confirmed by U.S. military officials that they have suspended offensive operations in Najaf, in their words, to make way for political negotiations to take place to try and bring to an end this long-running standoff between U.S. forces and those of Muqtada al-Sadr and his Mehdi Army militia.

And the governor of Najaf has been on this military base on the northern outskirts of Najaf within the last few hours. He's been telling reporters that he believes that members of that militia are now leaving the mosque.

He says Iraqi police are stationed around the city, have arrested at least 50 Mehdi Army fighters, attempting to leave the city as a result of perhaps, he said, of the pressure that's been placed on them by the constant and ferocious barrage by U.S. forces over the past few weeks.

U.S. officials say that a delegation from the Iraqi interim government is still expected in Najaf to try and bring to some kind of conclusion this standoff with the Mehdi Army, although no time frame has yet been given for that delegation to actually arrive in Najaf.

Nor do we understand at this point who would be actually included in the delegation, although it's said to have been or said to be a high-level one.

We do have confirmation, though, from representatives of the highest religious cleric here in the Shia Islam in Iraq, the Grand Ayatollah al-Sistani, that they're saying that they are in negotiations with the representatives of Muqtada al-Sadr to receive the keys of the Imam Ali mosque.

If that happens, they say, if they get those keys, the Mehdi Army will be outside of the mosque and left to fight their battle on the streets of Najaf. The Imam Ali shrine will be locked up, safe, as they say, from any combat zone. So that would bring to an end one very controversial aspect of this battle in Najaf, Wolf.

BLITZER: Matthew Chance in Najaf for us. Matthew, thanks very much. We'll check back with you as developments unfold.

Two more U.S. troops died today in Iraq. The soldiers from the Army's 1st Infantry Division were killed when a roadside bomb exploded next to their patrol in Samarra, just north of Baghdad.

That brings the number of troops killed since the start of the war to 957, including 715 listed as hostile deaths.

There's a new development in the case of the hostage journalist, Micah Garen, and it may be positive development. For that, let's turn to our State Department correspondent, Andrea Koppel -- Andrea.

ANDREA KOPPEL, CNN CORRESPONDENT: Wolf, one week to the day after Micah Garen and his Iraqi translator went missing in the southern Iraqi city of Nasiriyah, a flurry of activity.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): In the second videotape broadcast this week on the Arabic language network Al Jazeera, Micah Garen says he is an American journalist in Iraq and is being treated well.

Garen also communicates a message from his captors, the Martyrs Brigade, a previously unknown group which asked the American people to end the fighting in Najaf, where American and Iraqi troops are battling forces loyal to Iraqi Shiite cleric Muqtada al-Sadr.

On Wednesday, the Martyrs Brigade had threatened to kill Garen unless forces withdrew within 48 hours.

But in another videotape broadcast on Al Jazeera Friday, Aws al- Khafaji, al-Sadr's office manager in Nasiriyah, appealed to Garen's captors to release the 36-year-old journalist because, in his words, of all of the good things Garen has done in making sure the voice of truth goes out.

Another al-Sadr aide told CNN that he had been, quote, "assured" Garen would be released Friday or Saturday.

The journalist advocacy group Reporters Without Borders welcomed the news.

LUCIE MORILLON, REPORTERS WITHOUT BORDERS: But we want to be careful because we Reporters Without Borders have a lot of experience of these kind of cases, unfortunately. And we know that new developments can happen at any time.

(END VIDEOTAPE)

KOPPEL: Now one reason to be a little bit -- with -- that this is more than just wishful thinking about Garen's possible release, Wolf, the same al-Sadr aide who is involved in trying to negotiate Garen's release was also involved in negotiating the successful release of another journalist, a British journalist just last week. He'd been kidnapped, and this al-Sadr aide was involved in that case, as well -- Wolf.

BLITZER: Andrea, one final question before I let you go. The State Department, that's the building you cover right there, do they say they have any clout, any ability to intervene and help out in this kind of a situation?

KOPPEL: No. In fact, one senior State Department official I spoke with today said that the U.S. really is trying to not just be on the sidelines here but keep a rather lower profile.

They are working directly with the Iraqi government and with the Italian military, which patrols the southern part of Iraq in Nasiriyah, where Garen and his translator went missing last week.

But the State Department itself is really allowing the Iraqis and, in particular, Muqtada al-Sadr's aides, to take the lead in this case -- Wolf.

BLITZER: All right. Andrea Koppel with that story. Let's hope for the very best on Micah Garen. Appreciate it very much.

Let's get some breaking news now from CNN's political unit.

The Kerry campaign is telling reporters in Florida they're filing a legal complaint with the Federal Election Commission against the Swift Boat Veterans for Truth group. This group is putting out television ads against John Kerry's war record.

Yesterday John Kerry came out against the campaign, telling them to denounce the ad, saying the Bush campaign is a front for this group.

The campaign alleges the swift boat veterans are violating the law by running inaccurate ads in illegal coordination with the Republican National Committee and the Bush/Cheney campaign.

We're going to have some more details coming up on this developing story. But once again, we are reporting the Kerry campaign ready to file a formal complaint with the FEC, the Federal Election Commission, charging the Bush/Cheney campaign with being behind -- illegally being behind these swift boat veterans ads that are airing on television right now.

More on that coming up.

Let's get back to Iraq now. There were some fresh attacks on the oil infrastructure of that country earlier today, the continuing violence there sending tremors through world oil markets and analysts saying the soaring prices are likely to be felt by American consumers.

More now from CNN's Mary Snow. She's joining us from New York -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, oil prices eased from record highs today. The decline is not expected to last. Many anticipate that oil prices could reach $50 a barrel, a new milestone.

And there are real concerns about the impact on the overall economy and the impact on consumers.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Traders described the tone as jittery, headlines out of Iraq being the latest trigger moving the market. Crude futures eased during the day, after coming close to hitting $50 a barrel, a new milestone.

ERIC BOLLING, ENERGY TRADER: I think it's mostly psychological. Like I said, the demand picture brought us up from $25 area up to the $45 area. And the last few dollars of it was pretty much kind of a snowball effect, people jumping in the markets.

SNOW: Besides tightening supplies, there's also growing demand, especially from China, which has seen demand rise 40 percent this year. And there's real concern how all these higher oil prices will impact the economy.

LAKSHMAN ACSHUTHAN, ECONOMIC CYCLE RESEARCH HISTORIAN: Already we've seen that it's been slowing down consumer spending. And that has been going on for a few months now. That's not going to change. I think as long as oil prices remain high, you're going to see the consumer having less disposable income. The economy will be a little bit softer as a result.

SNOW: Gasoline prices for one are expected to go back up after declining in recent weeks, and home heating oil is another concern.

PETER BEUTEL, ANALYST: Consumers are in for a big shock this winter. They're going to be paying $350 to as much as $600 more to heat their homes this winter season.

(END VIDEOTAPE)

SNOW: Now while gasoline prices are expected to rise, analysts don't expect to see a steep increase. One analyst projecting five- cent increase from where prices are now. That's mainly having to do with the fact that the summer's coming to an end and the driving season is closing out -- Wolf.

BLITZER: All right. Mary Snow, an important story for all of our viewers to watch. Thanks, Mary, very much.

In the war on terror, the Justice Department today announced the arrests of two alleged moneymen for the Palestinian group Hamas and the indictment of a Syrian-based Hamas leader.

The trio allegedly used American bank accounts to launder millions of dollars for Hamas, which has been designated a terrorist organization by the U.S. State Department.

We continue to monitor a breaking story. John Kerry's campaign taking legal action right now against the Swift Boat Veterans for Truth. It comes as that group comes out with the newest ad, attacking John Kerry's Vietnam record.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I do think that Senator Kerry losing his cool should not be an excuse for him to lash out at the president with false and baseless attacks.

(END VIDEO CLIP)

BLITZER: New shots fired in the swift boat war and strong statements from both campaigns. We'll hear from both sides.

A secret life revealed: why Governor McGreevey's situation may not be as rare as many think.

Plus, will it be the new Neverland? The next location Michael Jackson could call home. Plus the one nickname he doesn't want to be called.

(COMMERCIAL BREAK)

BLITZER: We've been following a developing story, a potentially significant story on the entire flap surrounding the Swift Boat Veterans for Truth, the ads that they're running against John Kerry criticizing his fighting during the Vietnam War.

Let's bring in our congressional correspondent, Ed Henry.

The Kerry campaign making a decision now to file a formal complaint with the FEC?

ED HENRY, CNN CORRESPONDENT: Right. They're taking this to the Federal Election Commission, Wolf. There's a lot of criticism among Democratic strategists that the Kerry campaign has not moved aggressively enough to try to fight back against the Swift Boat Vets for Truth. They feel that these ads have been damaging the campaign.

There's a new poll out, just came out in the last 24 hours, suggesting that Senator Kerry is losing ground among military veterans. Obviously, Democrats now feeling that the campaign has to get more aggressive.

A statement from the Kerry campaign says that this is, quote, "a front group funded by Bush allies that is trying to smear John Kerry. The newest ad takes Kerry's testimony out of context, editing what he said to distort the facts. He testified as a 27-year-old Vietnam veteran. He opposed a war that, at that point, cost over 44,000 lives of the 58,245 names that are on the Vietnam memorial wall."

That is the statement, and what they are referring to there is that this new ad by the Swift Boat Veterans for Truth focuses on the 1971 testimony before the Senate Foreign Relations Committee that Senator Kerry, at that point, he was head of Vietnam War Veterans Against the War.

He had come home after earning those medals that have become a source of controversy that were the focus of the first ad by the swift boat veterans. Now the second ad is taking a look at his testimony to the Senate in 1971.

As you remember, Wolf, in that testimony Senator Kerry, at that point just a 27-year-old veteran, coming home to America, was expressing his outrage about the war.

But also some very strong statements in that testimony, in which Senator Kerry repeated allegations that various military veterans had committed atrocities. That has frustrated a lot of veterans who say that Senator Kerry should not have attacked his fellow veterans, Wolf.

BLITZER: All right. We're going to have much more on this story coming up. It's interesting. When I interviewed Tad Devine from the Kerry campaign a couple of hours ago, I asked him, "Will you file a complaint?" He said they had no plans to do so.

Now they are going forward and filing this formal complaint with the FEC. Much more on this coming up.

Ed Henry, thanks very much.

Here to talk a little bit more about all of this, some more about politics and other issues, the speaker of the House of Representatives, Dennis Hastert, Republican of Illinois. He's also the author of a brand new book, entitled, "Speaker: Lessons from 40 Years of Coaching and Politics." He's joining us live from Denver.

Mr. Speaker, the coaching refers to when you were a wrestling coach back in Illinois. We'll get to that later.

But what do you make of this current dustup over the Swift Boat Veterans for Truth, the Kerry campaign now going to go ahead and file a formal complaint with the FEC?

REP. DENNIS HASTERT (R-IL), SPEAKER: Well, you know, I've been on the road, and I have tried to follow this as much as possible.

But this is what happens when you let the whole political campaign go into these ancillary groups. I mean, the -- the Feingold bill took the power away from parties to set up political agendas.

And now we have George Soros on one side and you have swift boat guys on another. They're not really connected to the candidates themselves. It's really hard to string them in.

BLITZER: But who's right on this matter from the political standpoint: John McCain, who's a good Republican, who says, "You know what? This is dishonorable, dishonest, and the president should disassociate himself from these ads."

Who's right on that -- on that specific issue?

HASTERT: Well, you know, first of all I don't think the president has associated himself with the ads.

As a matter of fact, you can't do it according to the campaign law we have right now. You can't coordinate. You can't touch. You can't talk to these people. And even to tell them to pull the thing off would be against the law.

BLITZER: So you can't even do that...

HASTERT: No.

BLITZER: ... because there has to be absolutely no coordination. Because what the Kerry campaign is now charging is that a major violation of the law of the land.

If in fact Karl Rove, the top political strategist at the White House, were in some way coordinating with some of these Texas multimillionaires who are funding these ads, that would be a major violation of the law, and these people could go to jail. Is that right?

HASTERT: That's correct. I think there's problems on both sides. You see interlocking directorates, if you will, in all the other 527s that are out there, too. I think it's a real problem.

BLITZER: It seems to be getting ugly on so many other aspects, as well, and this could affect races for the House of Representatives, which is, of course, a great concern to you as well.

I want you to listen to what Senator Tom Harkin, Democrat of Iowa, said earlier today in explaining his remarks earlier in the week about the vice president, Dick Cheney.

(BEGIN VIDEO CLIP)

SEN. TOM HARKIN (D), IOWA: My point is that is he should then not be in a position of criticizing John Kerry and going after John Kerry, who did serve and who did risk his life and was ready to give his life in combat. Dick Cheney shouldn't be doing that.

(END VIDEO CLIP)

BLITZER: What do you make of this whole uproar over military service, lack of military service, John Kerry? Do you want it to all sort of cease right now in.

HASTERT: You know what? I think we just should back off. A lot of people have made issues out of this thing. I think everybody serves in his own way, one way or another.

John Kerry has a record. He ought to stand on that record. It ought to be exposed. So does George Bush. And I think let's let it drop at that.

The problem is the rhetoric has gone over the top. I think the American people really want to understand what these candidates are do -- are going to do, what their vision is, what they're going to do for the American people. And this bantering back and forth, I think is -- people get awful tired of it.

BLITZER: I think you're probably right on that, Mr. Speaker.

Let's talk a little bit about your new book. You can tell our viewers what the purpose of this book is.

I'll read to you a quote, though, from the book. You write, among other things, you write this. "I have to recruit the best possible conditions for Congress and make sure they have the financial and other resources they need to run or, if they've already run in Congress, to make sure they have enough to stave off potential challengers."

Is that one of the most important things you have to do? In other words, find -- put together the right players on the team?

HASTERT: Well, I have two roles. First of all, as a speaker, I have to make sure we move legislation to the House that's important to the American people. But the other side, I need to find candidates and make sure that they have the wherewithal to get their message out so that we do have a team that we can move our agenda.

BLITZER: Being a wrestling coach, a high school wrestling coach, how did that prepare you for becoming speaker of the House?

HASTERT: Well, you know, it's interesting. People ask me a lot of questions around coaching.

All I said as a coach, I tried to put my best people up front, bring the rest of the team around, and kind of step back myself because I never thought that the coach had to be in the headlines. As a matter of fact, the coach is in the headlines, there's something wrong with the team.

So we've got a lot of talented people. I want to keep them coming.

BLITZER: I was a high school wrestler, a very bad high school wrestler. But I did do it, and I think it helped prepare me for something. I'm not exactly sure what.

Mr. Speaker, thanks very much for joining us, spending a few moments with us. The name of the book, "Speaker: Lessons from 40 Years of Coaching and Politics." Thanks very much.

HASTERT: Thanks, Wolf.

BLITZER: Swift boat controversy. John Kerry's war record under attack. Who's behind it? And is it fair game? Two retired U.S. military officers, they're standing by to debate this issue.

New Jersey's governor went public. But tens of thousands are still living secret lives. We'll hear their experiences.

And trouble in the air for another member of Congress told he's on the terror watch list.

(COMMERCIAL BREAK)

BLITZER: New Jersey's governor, James McGreevey, is now the highest-ranking American elected official to publicly acknowledge he's gay. Experts say he's almost certainly not the only one who's led a secret life.

CNN's Brian Todd is joining us now to pick up this part of the story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we're told this is more widespread than we've ever known. There's no way to get a truly accurate count. But for those living double sexual lives the dilemmas are very emotional and complicated. (BEGIN VIDEOTAPE)

TODD (voice-over): A public admission of a very private matter.

GOV. JAMES MCGREEVEY (D), NEW JERSEY: Throughout my life, I have grappled with my own identity.

TODD: When Governor James McGreevey came out of his closet, his wife at his side, revealing a double life, John Craig saw a very familiar story. Craig runs a telephone counseling service called the Voice Roundtable, a confidential voice message sounding board for men living their own double lives.

JOHN CRAIG, VOICE ROUNDTABLE: In the world that they live in, they identify as heterosexual. But within the group they acknowledge that they have a bisexual orientation and have attractions both to men and women.

John Craig.

TODD: The complications begin there, and can extend virtually anywhere. Of his two to three dozen clients, all male, some are still in love with their wives.

One caller says, quote, "I have been together with my wife for 27 years. We have two children. And basically she's known about this part of me for about 25 of those 27 years."

Then there are callers like this: "My wife does not know. I think it would threaten her. Other people do know in my life, and it feels good to have that support."

For others, perhaps an even more delicate dilemma.

CRAIG: Those who have not revealed this to their children will get a lot of insights from hearing the stories of other men who have revealed this to their children.

TODD: The common thread is that, at least when they start out in Craig's groups, everyone is hiding their orientation from someone and needs to sound it out.

Experts agree there is no way to calculate how many people are in this situation. By its very nature this is a very secretive subculture, navigating the grayest of areas.

But for many, the predicament is clear. In some three-dozen states you can still be fired from your job for being gay. Craig, himself bisexual, says some of his clients have a lot to lose professionally.

CRAIG: Many of these men are quite leadership oriented in their communities. They wanted to be at the head of the church, at the head of their business, at the head of their civic organization. And so they have hidden these feelings. TODD: Craig says he doesn't so much offer advice to clients but rather gives comparisons, a chance to think and reach their own decisions.

One of Craig's original clients, who's also a psychoanalyst, tells us many of these men are not confused about that sexuality, just over what to do about it.

(END VIDEOTAPE)

TODD: What about women in the same predicament? John Craig says he is just starting to offer counseling to gay and bisexual women who are living those double lives and says there are many more of them out there than we would believe -- Wolf.

BLITZER: I'm sure there are. Thanks very much, Brian Todd for that report.

The battle for the presidency continuing. But are the political ads hitting too hard? New harsh words from a veterans' group against John Kerry just released today. Who's behind the attacks? And why won't President Bush specifically denounce these ads?

Joining us next, representatives from both campaigns.

Plus, is superstar Michael Jackson trying to make a move overseas?

And tribute and tribulations, the memorial to Princess Diana that has become a royal mess.

(COMMERCIAL BREAK)

BLITZER: As we've been reporting, late word today from the John Kerry campaign. It's filing a formal complaint with the Federal Elections Commission alleging that the swift boat veterans group is in violation of campaign laws. It says the group, and I'm quoting now, "is running inaccurate ads in illegal coordination," that's the end quote, with the Republican National Committee and the Bush-Cheney campaign.

That's just the latest in this political battle between John Kerry and a group of former Vietnam veterans supported by some Republicans. And even as John Kerry calls on President Bush to disavow the first swift boat ad, a second one has now been released.

(BEGIN VIDEOTAPE)

U.S. SENATOR JOHN KERRY (D-MA): They had personally raped, cut off ears, cut off heads.

JOE PONDER, SWIFT BOAT VETERANS FOR TRUTH: The accusations that John Kerry made against the veterans who served in Vietnam was just devastating.

KERRY: ... randomly shot at civilians... PONDER: And it hurt me more than any physical wounds I had.

BLITZER: The new ad by the so-called "Swift Boat Veterans for Truth" gets to the heart of their anger at John Kerry, his 1971 Senate testimony, on alleged U.S. war crimes in Vietnam. Veterans who are now critical of Kerry make no bones about the fact that they were outraged by his anti-war activities after returning from Vietnam.

UNIDENTIFIED MALE: He dishonored his country and, more importantly, the people he served with. He just sold them out.

BLITZER: The Kerry campaign is condemning the new ad, saying quote, "This Republican front group for Bush is out of credibility after being caught in lie after lie, day after day."

KERRY: You were aware of you've been one of the strongest critics of this war for the longest time.

BLITZER: The ad does not include Kerry telling senators that the war crimes charges he outlined were based on the testimony of over 150 Vietnam veterans.

KERRY: Of course, this group isn't interested in the truth. They're not telling the truth.

BLITZER: A day after Kerry personally responded to the Swift Boat Veterans for Truth, he did not discuss the controversy, focusing instead on domestic issues. But a new poll may help explain why he decided to fight back. The Annenberg survey found 57 percent of Americans say they have seen the original swift boat ad or heard talk about it.

VAN ODELL, SWIFT BOAT VETERANS FOR TRUTH: John Kerry lied to get his bronze star. I know. I was there. I saw what happened.

BLITZER: Those who are aware of the ad are split on whether it's believable. Of all of those surveyed, 59 percent say they think Kerry did earn all of his war medals. 21 percent say he did not earn them. 20 percent are unsure.

KERRY: They're funded by hundreds of thousands of dollars from a Republican contributor out of Texas.

BLITZER: The Kerry camp continues to press its charge that the Swift Boat Veterans for Truth is a front for the Bush campaign. The New York Times today reports what it describes as a web of connections between the group behind the ad and the Bush family, high-profile Texas political figures and the president's top political strategist, Karl Rove. Apparently picking up on that, the Kerry camp today charged, quote, "Karl Rove's attack squad of convincing the swift boat veterans to lie." The swift boat group denies any direct contact with the RNC, the Bush White House, or any Republican group.

LARRY THURLOW, SWIFT BOAT VETERANS FOR TRUTH: I have had absolutely no contact with any of them, nor do I plan to, nor can they tell me to not take part in the swift boat group's campaign. SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I do think that Senator Kerry losing his cool should not be an excuse for him to lash out at the president with false and baseless attacks.

(END VIDEOTAPE)

BLITZER: And just now we're getting in some reaction from the Bush-Cheney campaign on the decision by the Kerry campaign to go ahead and file a formal complaint with the FEC on these ads. Taylor Griffin from the Bush campaign telling CNN, "John Kerry knows that his allegation is frivolous and false. However, we welcome this focus on coordination with 527s." 527s being those independent campaign contributing groups, the Republican campaign insisting they have plenty of questions about the Democratic Party's use of these campaigns, as well.

Let's get some more information now on this whole controversy. Is President Bush, for example, offering silent support to the people responsible for these controversial ads? I'm joined now by two guests, Retired U.S. Air Force General Tony McPeak. He's in Portland, Oregon. He supports John Kerry. And Retired U.S. Army Lieutenant Colonel Joe Repya. He's in Minneapolis. He supports the president.

Let me ask the general first, what do you make of this whole uproar right now? Do you see the fingerprints of the White House and the Bush-Cheney campaign directly behind these controversial ads?

GEN. TONY MCPEAK, U.S. AIR FORCE (RET.): Yes, I do, Wolf. First of all, because there's a pattern of this kind of conduct. I mean, John McCain knows all about it. This is what happened to him in the South Carolina primary. Max Cleland knows all about it. This happened to him in the George senatorial campaign. And this, what The New York Times called the "web of connections," this whole set of intimate relationships exists. And you can read the wiring diagram for this organization in The New York Times. So it seems to me, yes, the White House is doing the same thing they've done before and they found somebody to do their dirty work for them. I'm saddened by it, quite frankly.

BLITZER: Colonel Repya, I want you to respond.

JOE REPYA, U.S. ARMY (RET.): Well, I totally disagree with the general, respectfully, sir. Senator Kerry knows that the charges are totally false. He knows that over $62 million has been spent attacking the president by 527 groups alleging that the president is poisoning pregnant women, that the president is doing -- injuring our workers, that the president is condoning torture. And yet he's been totally silent on it. And the president has constantly come forward and said that he is against any 527 group and has asked Senator Kerry to stand with him and ask that all soft money, 527 groups, be quieted.

BLITZER: All right. We're not going to get into the whole debate over the whole issue of the 527s, because there are clearly controversies on both sides of the political aisle. Let's get to the whole issue, the thrust of the debate over Vietnam right now. And I'll go back to you, General McPeak. I suspect that most of these Vietnam veterans, and you're a Vietnam veteran, are not so much angry at John Kerry for what he did during the four and a half months he served in Vietnam, but for what he did when he came back and he accused these Vietnam vets of committing atrocities, war crimes, if you will, while they served in Vietnam. That's a very serious allegation. And it's the heart of this new ad that was released today by the Swift Boat Veterans for Truth.

MCPEAK: Well, Wolf, I haven't seen the new one. But it doesn't sound that way when their first one came up. What they said was that Kerry did not perform well under combat conditions. And that whole line has been pretty well disproven. I mean, most of these guys -- and again, this saddens me because these are good guys. These are Navy veterans. They may have lost a step, and they're clearly being used here by more sinister political forces. But I'm very sad that they have made these allegations against Kerry's performance, which is clearly something we ought to honor.

BLITZER: Colonel Repya, do you feel you're being used by these sinister forces?

REPYA: You know, I'm not buying into these sinister forces or grassy knolls at all. I'm not being used by anyone. I have said all along, as a Vietnam veteran, I was a combat rifle platoon leader with the 101st, that John Kerry served his country honorably. What bothers me is the horrible record John Kerry has in 19 years in the office that he has held and his voting record against national defense, his voting report against pay raises for the military, his voting record against intelligence funding. And that, more than anything, has convinced me that he's not the caliber of an individual I want to be my commander-in-chief.

BLITZER: All right, I'm going to go back to General McPeak in a second to say why he believes John Kerry would be an excellent commander-in-chief. But Colonel Repya, should the president do what John McCain has done and denounce those ads?

REPYA: You know, I would love to see John Kerry and the president both come before the camera together and ask all 527 groups to cease all activity. But, you know, like I said, $62 million, the Michael Moores, the Terry McAuliffes, the hate groups, Moveon.org, has been putting ads, just terrible ads, out against the president, and that hasn't seemed to bother the Kerry campaign at all.

BLITZER: So because John Kerry isn't doing that, even though he has denounced some of those ads, you don't think the president should disassociate himself directly from these ads?

REPYA: I think the president already has. He said he's against all soft money. What more do you -- possibly can he do?

BLITZER: The president, based on what I know, says John Kerry's service was noble but he hasn't specifically denounced these ads. As you point out, he's denounced all of these ads coming from these shadowy 527 groups. REPYA: As they should be.

BLITZER: Tell our viewers why you believe John Kerry would be an excellent commander-in-chief.

MCPEAK: Well just to correct the record, Wolf, as you noted, John Kerry has denounced a couple of ads that he said went too far in comparing the president unfavorably, in one case with Hitler, as I recall. So it is not accurate, as Joe has said there in Minnesota, to say that Kerry has not done that. He's distanced himself. And I think it would be very valuable for the president to openly denounce these not-so-swift boat veterans. But he hasn't done that and clearly he can't. I mean, the connections are too intimate there.

BLITZER: Well, the connections are going to be investigated now by the FEC, now that this complaint has been filed. We'll soon find out. Maybe not so soon, necessarily, what the result is. I want thank both of you for joining us, Colonel Repya, Tony McPeak, thanks very much to both of you for joining us.

MCPEAK: Thank you, Wolf.

BLITZER: And to our viewers, here's your chance to weigh in on the story. Our Web question of the day is this: Do you think the Swift Boat Veterans for Truth are acting independently? You can vote right now. Go to cnn.com/Wolf. We'll have results for you later in this broadcast.

Another senior Democrat says he's been hassled at airports in a terrorism watch list mix-up. Congressman John Lewis says he's faced months of boarding and baggage problems, and he's formally complained to the Department of Homeland Security. He came forward a day after Senator Edward Kennedy reported similar problems. Their names clearly getting mixed up with other names.

Kerry's counterattack: Will the swift boat controversy hurt his chances in November? Our Carlos Watson standing by. He has the inside edge. That's coming up.

Plus, a possible move for Michael Jackson? Details of a pop star's search for a brand new home in another country.

And on a quest to grab eight Olympic medals, did Michael Phelps get the job done today? An update, that's coming up ahead. First though, a quick look at some other news making headlines around the world.

(BEGIN VIDEO CLIP)

BLITZER: Fifteen North Korean defectors sneaked into the South Korean consulate in Beijing, China, yesterday. The group included six children. They joined more than 100 other North Koreans already in the compound who are asking for asylum.

It's the summertime smog season in Hong Kong. The poor air quality has forced some residents indoors. A few boats have even collided in the harbor.

Park officials in London have reopened the Princess Diana memorial fountain after closing it for three weeks. Only, now, visitors can't get in the water. Several people were injured when they slipped on wet stones when the fountain initially opened.

Thousands of visitors and pilgrims participated in a festival in Tibet. The ceremonies included the unveiling of a portrait of Buddha on the mountain above one of the largest Buddhist monasteries in the world. And that's our look around the world.

(COMMERCIAL BREAK)

BLITZER: The search of Michael Jackson's ranch in the spotlight at his pretrial hearing. Defense lawyers say the 15-hour search involves dozens of officers. They also say it was unjustified and too broad. They're trying to limit the evidence prosecutors can use in Jackson's child molestation trial scheduled to start in January.

Meanwhile, Jackson himself is speaking about -- speaking out about rumors and characterizations he calls hurtful. CNN'S Sibila Vargas is in our Los Angeles bureau. She's joining us now with more on that part of the story -- Sibila?

SIBILA VARGAS, CNN CORRESPONDENT: That's right, Wolf. Michael Jackson is fighting mad and he just can't take it anymore. The gloved one is making his frustrations known in a statement released on his Web site.

(BEGIN VIDEO CLIP)

VARGAS: It's the first time Jackson has been able to talk since the court placed a gag order on the self-proclaimed King of Pop. In the two-paragraph statement approved by the judge, Jackson addresses some of the rumors that have recently made headlines. He says, quote, "I personally have suffered through many painful lies and references to me as Wacko Jacko, as well as the latest untruth about me fathering quadruplets. This is intolerable and must stop."

MICHAEL JACKSON, SINGER: This is my life.

VARGAS: The statement also makes reference to a recent VH-1 special, "Man in the Mirror," which Jackson says, quote, "in no way represents who we are as a family." Jackson goes on to defend his family saying, "My success on stage can be attributed to the love and support of my family off stage. My brothers and I are brothers first. We started out together and we will always be together."

And back together and all dressed in white, Jackson's siblings joined their brother Michael when he appeared in court on Monday. And the latest buzz has the Jackson family shopping for a home in Liechtenstein. According to reports, a friend of the family helped Jackson's brother, Jermaine, search for a family home in the mountains. A family spokesperson is not ruling out any possibilities.

DEBORAH OPRI, JACKSON FAMILY SPOKESWOMAN: The Jackson family is a dynasty. I wouldn't be surprised that they're looking for any sort of investment anywhere, anytime.

(END VIDEO CLIP)

VARGAS: And Liechtenstein, for those of us who need a little refresher, is an Alpine principality nestled between Switzerland and Austria. Wolf, back to you.

WOLF: A lovely little place, indeed. Thanks very much Sibila for that report.

Comparing the current candidate to those in the past, will John Kerry be perceived as a Dukakis or a Clinton? Carlos Watson has the inside edge.

Plus, is swimming phenom Michael Phelps calling it quits in Athens? An update on his quest for golden glory.

(COMMERCIAL BREAK)

BLITZER: Time now to check in with our political analysis Carlos Watson and his regular feature "The Inside Edge." Carlos joining us today from New York.

Carlos, this whole Vietnam issue, John Kerry counterpunching the way he did yesterday. What do you make of it?

CARLOS WATSON, CNN CORRESPONDENT: I think it's going to be a big question whether or not he can counterpunch, not only in the national news, but frankly, Wolf, in the local news. So not only what we cover here on CNN, but in the Cincinnati Enquirer, one of the local papers, in the Tennesseans and in local TV stations, and places like St. Louis. If he's able to penetrate his message in those markets, then he'll be more like Bill Clinton, who successfully counterpunched both in '92 and '96, instead of like Dukakis in '88 or, I would argue, Bob Dole in '96 or even Al Gore in 2000. It's a very big and important question that will determine his success going forward.

BLITZER: If he can fight or if isn't able to fight. Let's talk about oil prices. You heard Mary Snow on this program earlier, getting close to $50 a barrel. I remember when it was $10-$12 a barrel, and that wasn't so long ago in some parts of the '90s. Is this is going to have, in your assessment, some sort of political impact on this campaign?

WATSON: Well, I think it will. What's interesting, Wolf, is that when voters are asked in surveys how many of them are paying attention to rising oil prices and gas prices, more than 50 percent are saying, "Yes, I'm paying attention to that." Absolutely fascinating that they're staying tuned, not only because of what it may mean at the pump but significantly, Wolf, two other effects to think about.

What if this ends up being a really bad winter in places like Wisconsin, Iowa, and Minnesota, all swing states where the president hopes to break through but instead he's got high heating bills for seniors and other families? That could certainly hurt him. Also, of course, high oil prices could cause the economy to show down, and you can hear more about layoffs. In fact, we've already heard about a couple of layoffs over the last several weeks. So I would pay attention to these oil prices for their political impact over the next couple of weeks.

BLITZER: You've also been paying close attention to a key -- a few key Senate races. What are you seeing?

WATSON: Great news for the Republicans. Or I should maybe temper that and say, at least, good news. Several months ago, it looked like the Democrats had a strong chance of taking back the U.S. Senate which right now, in many ways, is 52-48, if you count Jim Jeffords with the Democrats and you count Zell Miller with the Republicans. But in terms of the eight open seats, Republicans are lining up strong challengers where there's no incumbent, and even in states that are considered toss-ups in the presidential contest, Ohio, Pennsylvania, Missouri, there the Republican incumbents are still looking good and challengers aren't anywhere close. So a lot of good news for the Republicans when they look at the Senate in fall elects.

BLITZER: Carlos Watson with "The Inside Edge" for us. Thanks, Carlos, very much.

WATSON: Good to join you.

BLITZER: And a wrap of today's Olympic action. That's coming up just ahead.

(COMMERCIAL BREAK)

BLITZER: Here's how your weighing in on our Web question of the day. "Do you think the swift Boat Veterans for Truth are acting independently?" 43 percent of you say yes, 57 percent of you say no. Remember, though, this is not a scientific poll.

The first week of Olympic action is wrapping up. Here's a look at today's highlights. But you want to wait for tonight's televised coverage, this is a good time to hit the mute button. Right now, swimming's golden boy was atop the medal podium again. Michael Phelps won his fifth gold medal with a breathtaking finish the 100-meter butterfly. And after swimming 14 races in seven days, Phelps says today's race will be his last. He ceded his place in tomorrow's 400- meter medley to teammate Ian Crocker. In today's race, Phelps came from behind to out touch Crocker by four one-hundredths of a second. Crocker finished ahead of the Ukrainian bronze medalist by just seven one-hundredths of a second. That's pretty close.

It was an even closer finish, get this, in the 50-meter freestyle sprint. Three-time Olympian Gary Hall took gold by finishing the race in just -- under 22 seconds, only nine one-hundredths of a second separated first from third.

The United States added its medal count with a gold by Matt Emmons in the 50-meter rifle prone competition. Emmons was using a borrowed gun. He says his was sabotaged earlier in the year. The heavily favored U.S. women's soccer team continues the quest for gold. In the quarterfinal game, the Americans broke a tie in the 59th minute to edge Japan 2-1. It sets up a semifinal showdown with powerhouse Germany on Monday.

A reminder: We're on weekdays 5 p.m. Eastern, as well as noon Eastern. Please tune in Sunday for "LATE EDITION," the last word in Sunday talk. Among my guests this Sunday, Representatives Jane Harman and Chris Cox. They'll be joining us Sunday, noon eastern.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington. LOU DOBBS TONIGHT starts 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 August 20, 2004 - 17:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST: Happening now. John Kerry's campaign ready to file a suit with the FEC, complaining about those swift war veteran ads against him. There's breaking news. We'll have details.
Also, an American journalist held hostage in Iraq, one step closer to being released?

Stand by for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Najaf: who's in control? A shrine is shrouded in smoke and confusion.

Attack ads. This time it's Kerry's anti-war record.

UNIDENTIFIED MALE: The accusations that John Kerry made against the veterans who served in Vietnam was just devastating.

BLITZER: Who's supplying that swift boat group with ammunition?

Double lies.

GOV. JIM MCGREEVEY (D), NEW JERSEY: Throughout my life, I have grappled with my own identity.

BLITZER: A governor is out of the closet. We'll get an inside look at those who are still struggling.

Far from Neverland: As a court looks into events at his California ranch, will Michael Jackson find a new home in the Alps of Liechtenstein?

ANNOUNCER: This is WOLF BLITZER REPORTS for Friday, August 20, 2004.

(END VIDEOTAPE)

BLITZER: It's not over until it's over. In the war-torn city of Najaf, it's been a day of continuing conflict and conflicting claims.

Despite a final ultimatum, a ring of steel on the ground and a pounding from the air, fighters loyal to the rebel Shiite cleric Muqtada al-Sadr are still apparently in control of the sacred Imam Ali mosque. But are they finally ready to hand over the keys?

Let's get the very latest. CNN's Matthew Chance on the ground for us in Najaf -- Matthew.

MATTHEW CHANCE, CNN CORRESPONDENT: Wolf, thanks.

In the last two hours it's been confirmed by U.S. military officials that they have suspended offensive operations in Najaf, in their words, to make way for political negotiations to take place to try and bring to an end this long-running standoff between U.S. forces and those of Muqtada al-Sadr and his Mehdi Army militia.

And the governor of Najaf has been on this military base on the northern outskirts of Najaf within the last few hours. He's been telling reporters that he believes that members of that militia are now leaving the mosque.

He says Iraqi police are stationed around the city, have arrested at least 50 Mehdi Army fighters, attempting to leave the city as a result of perhaps, he said, of the pressure that's been placed on them by the constant and ferocious barrage by U.S. forces over the past few weeks.

U.S. officials say that a delegation from the Iraqi interim government is still expected in Najaf to try and bring to some kind of conclusion this standoff with the Mehdi Army, although no time frame has yet been given for that delegation to actually arrive in Najaf.

Nor do we understand at this point who would be actually included in the delegation, although it's said to have been or said to be a high-level one.

We do have confirmation, though, from representatives of the highest religious cleric here in the Shia Islam in Iraq, the Grand Ayatollah al-Sistani, that they're saying that they are in negotiations with the representatives of Muqtada al-Sadr to receive the keys of the Imam Ali mosque.

If that happens, they say, if they get those keys, the Mehdi Army will be outside of the mosque and left to fight their battle on the streets of Najaf. The Imam Ali shrine will be locked up, safe, as they say, from any combat zone. So that would bring to an end one very controversial aspect of this battle in Najaf, Wolf.

BLITZER: Matthew Chance in Najaf for us. Matthew, thanks very much. We'll check back with you as developments unfold.

Two more U.S. troops died today in Iraq. The soldiers from the Army's 1st Infantry Division were killed when a roadside bomb exploded next to their patrol in Samarra, just north of Baghdad.

That brings the number of troops killed since the start of the war to 957, including 715 listed as hostile deaths.

There's a new development in the case of the hostage journalist, Micah Garen, and it may be positive development. For that, let's turn to our State Department correspondent, Andrea Koppel -- Andrea.

ANDREA KOPPEL, CNN CORRESPONDENT: Wolf, one week to the day after Micah Garen and his Iraqi translator went missing in the southern Iraqi city of Nasiriyah, a flurry of activity.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): In the second videotape broadcast this week on the Arabic language network Al Jazeera, Micah Garen says he is an American journalist in Iraq and is being treated well.

Garen also communicates a message from his captors, the Martyrs Brigade, a previously unknown group which asked the American people to end the fighting in Najaf, where American and Iraqi troops are battling forces loyal to Iraqi Shiite cleric Muqtada al-Sadr.

On Wednesday, the Martyrs Brigade had threatened to kill Garen unless forces withdrew within 48 hours.

But in another videotape broadcast on Al Jazeera Friday, Aws al- Khafaji, al-Sadr's office manager in Nasiriyah, appealed to Garen's captors to release the 36-year-old journalist because, in his words, of all of the good things Garen has done in making sure the voice of truth goes out.

Another al-Sadr aide told CNN that he had been, quote, "assured" Garen would be released Friday or Saturday.

The journalist advocacy group Reporters Without Borders welcomed the news.

LUCIE MORILLON, REPORTERS WITHOUT BORDERS: But we want to be careful because we Reporters Without Borders have a lot of experience of these kind of cases, unfortunately. And we know that new developments can happen at any time.

(END VIDEOTAPE)

KOPPEL: Now one reason to be a little bit -- with -- that this is more than just wishful thinking about Garen's possible release, Wolf, the same al-Sadr aide who is involved in trying to negotiate Garen's release was also involved in negotiating the successful release of another journalist, a British journalist just last week. He'd been kidnapped, and this al-Sadr aide was involved in that case, as well -- Wolf.

BLITZER: Andrea, one final question before I let you go. The State Department, that's the building you cover right there, do they say they have any clout, any ability to intervene and help out in this kind of a situation?

KOPPEL: No. In fact, one senior State Department official I spoke with today said that the U.S. really is trying to not just be on the sidelines here but keep a rather lower profile.

They are working directly with the Iraqi government and with the Italian military, which patrols the southern part of Iraq in Nasiriyah, where Garen and his translator went missing last week.

But the State Department itself is really allowing the Iraqis and, in particular, Muqtada al-Sadr's aides, to take the lead in this case -- Wolf.

BLITZER: All right. Andrea Koppel with that story. Let's hope for the very best on Micah Garen. Appreciate it very much.

Let's get some breaking news now from CNN's political unit.

The Kerry campaign is telling reporters in Florida they're filing a legal complaint with the Federal Election Commission against the Swift Boat Veterans for Truth group. This group is putting out television ads against John Kerry's war record.

Yesterday John Kerry came out against the campaign, telling them to denounce the ad, saying the Bush campaign is a front for this group.

The campaign alleges the swift boat veterans are violating the law by running inaccurate ads in illegal coordination with the Republican National Committee and the Bush/Cheney campaign.

We're going to have some more details coming up on this developing story. But once again, we are reporting the Kerry campaign ready to file a formal complaint with the FEC, the Federal Election Commission, charging the Bush/Cheney campaign with being behind -- illegally being behind these swift boat veterans ads that are airing on television right now.

More on that coming up.

Let's get back to Iraq now. There were some fresh attacks on the oil infrastructure of that country earlier today, the continuing violence there sending tremors through world oil markets and analysts saying the soaring prices are likely to be felt by American consumers.

More now from CNN's Mary Snow. She's joining us from New York -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, oil prices eased from record highs today. The decline is not expected to last. Many anticipate that oil prices could reach $50 a barrel, a new milestone.

And there are real concerns about the impact on the overall economy and the impact on consumers.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Traders described the tone as jittery, headlines out of Iraq being the latest trigger moving the market. Crude futures eased during the day, after coming close to hitting $50 a barrel, a new milestone.

ERIC BOLLING, ENERGY TRADER: I think it's mostly psychological. Like I said, the demand picture brought us up from $25 area up to the $45 area. And the last few dollars of it was pretty much kind of a snowball effect, people jumping in the markets.

SNOW: Besides tightening supplies, there's also growing demand, especially from China, which has seen demand rise 40 percent this year. And there's real concern how all these higher oil prices will impact the economy.

LAKSHMAN ACSHUTHAN, ECONOMIC CYCLE RESEARCH HISTORIAN: Already we've seen that it's been slowing down consumer spending. And that has been going on for a few months now. That's not going to change. I think as long as oil prices remain high, you're going to see the consumer having less disposable income. The economy will be a little bit softer as a result.

SNOW: Gasoline prices for one are expected to go back up after declining in recent weeks, and home heating oil is another concern.

PETER BEUTEL, ANALYST: Consumers are in for a big shock this winter. They're going to be paying $350 to as much as $600 more to heat their homes this winter season.

(END VIDEOTAPE)

SNOW: Now while gasoline prices are expected to rise, analysts don't expect to see a steep increase. One analyst projecting five- cent increase from where prices are now. That's mainly having to do with the fact that the summer's coming to an end and the driving season is closing out -- Wolf.

BLITZER: All right. Mary Snow, an important story for all of our viewers to watch. Thanks, Mary, very much.

In the war on terror, the Justice Department today announced the arrests of two alleged moneymen for the Palestinian group Hamas and the indictment of a Syrian-based Hamas leader.

The trio allegedly used American bank accounts to launder millions of dollars for Hamas, which has been designated a terrorist organization by the U.S. State Department.

We continue to monitor a breaking story. John Kerry's campaign taking legal action right now against the Swift Boat Veterans for Truth. It comes as that group comes out with the newest ad, attacking John Kerry's Vietnam record.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I do think that Senator Kerry losing his cool should not be an excuse for him to lash out at the president with false and baseless attacks.

(END VIDEO CLIP)

BLITZER: New shots fired in the swift boat war and strong statements from both campaigns. We'll hear from both sides.

A secret life revealed: why Governor McGreevey's situation may not be as rare as many think.

Plus, will it be the new Neverland? The next location Michael Jackson could call home. Plus the one nickname he doesn't want to be called.

(COMMERCIAL BREAK)

BLITZER: We've been following a developing story, a potentially significant story on the entire flap surrounding the Swift Boat Veterans for Truth, the ads that they're running against John Kerry criticizing his fighting during the Vietnam War.

Let's bring in our congressional correspondent, Ed Henry.

The Kerry campaign making a decision now to file a formal complaint with the FEC?

ED HENRY, CNN CORRESPONDENT: Right. They're taking this to the Federal Election Commission, Wolf. There's a lot of criticism among Democratic strategists that the Kerry campaign has not moved aggressively enough to try to fight back against the Swift Boat Vets for Truth. They feel that these ads have been damaging the campaign.

There's a new poll out, just came out in the last 24 hours, suggesting that Senator Kerry is losing ground among military veterans. Obviously, Democrats now feeling that the campaign has to get more aggressive.

A statement from the Kerry campaign says that this is, quote, "a front group funded by Bush allies that is trying to smear John Kerry. The newest ad takes Kerry's testimony out of context, editing what he said to distort the facts. He testified as a 27-year-old Vietnam veteran. He opposed a war that, at that point, cost over 44,000 lives of the 58,245 names that are on the Vietnam memorial wall."

That is the statement, and what they are referring to there is that this new ad by the Swift Boat Veterans for Truth focuses on the 1971 testimony before the Senate Foreign Relations Committee that Senator Kerry, at that point, he was head of Vietnam War Veterans Against the War.

He had come home after earning those medals that have become a source of controversy that were the focus of the first ad by the swift boat veterans. Now the second ad is taking a look at his testimony to the Senate in 1971.

As you remember, Wolf, in that testimony Senator Kerry, at that point just a 27-year-old veteran, coming home to America, was expressing his outrage about the war.

But also some very strong statements in that testimony, in which Senator Kerry repeated allegations that various military veterans had committed atrocities. That has frustrated a lot of veterans who say that Senator Kerry should not have attacked his fellow veterans, Wolf.

BLITZER: All right. We're going to have much more on this story coming up. It's interesting. When I interviewed Tad Devine from the Kerry campaign a couple of hours ago, I asked him, "Will you file a complaint?" He said they had no plans to do so.

Now they are going forward and filing this formal complaint with the FEC. Much more on this coming up.

Ed Henry, thanks very much.

Here to talk a little bit more about all of this, some more about politics and other issues, the speaker of the House of Representatives, Dennis Hastert, Republican of Illinois. He's also the author of a brand new book, entitled, "Speaker: Lessons from 40 Years of Coaching and Politics." He's joining us live from Denver.

Mr. Speaker, the coaching refers to when you were a wrestling coach back in Illinois. We'll get to that later.

But what do you make of this current dustup over the Swift Boat Veterans for Truth, the Kerry campaign now going to go ahead and file a formal complaint with the FEC?

REP. DENNIS HASTERT (R-IL), SPEAKER: Well, you know, I've been on the road, and I have tried to follow this as much as possible.

But this is what happens when you let the whole political campaign go into these ancillary groups. I mean, the -- the Feingold bill took the power away from parties to set up political agendas.

And now we have George Soros on one side and you have swift boat guys on another. They're not really connected to the candidates themselves. It's really hard to string them in.

BLITZER: But who's right on this matter from the political standpoint: John McCain, who's a good Republican, who says, "You know what? This is dishonorable, dishonest, and the president should disassociate himself from these ads."

Who's right on that -- on that specific issue?

HASTERT: Well, you know, first of all I don't think the president has associated himself with the ads.

As a matter of fact, you can't do it according to the campaign law we have right now. You can't coordinate. You can't touch. You can't talk to these people. And even to tell them to pull the thing off would be against the law.

BLITZER: So you can't even do that...

HASTERT: No.

BLITZER: ... because there has to be absolutely no coordination. Because what the Kerry campaign is now charging is that a major violation of the law of the land.

If in fact Karl Rove, the top political strategist at the White House, were in some way coordinating with some of these Texas multimillionaires who are funding these ads, that would be a major violation of the law, and these people could go to jail. Is that right?

HASTERT: That's correct. I think there's problems on both sides. You see interlocking directorates, if you will, in all the other 527s that are out there, too. I think it's a real problem.

BLITZER: It seems to be getting ugly on so many other aspects, as well, and this could affect races for the House of Representatives, which is, of course, a great concern to you as well.

I want you to listen to what Senator Tom Harkin, Democrat of Iowa, said earlier today in explaining his remarks earlier in the week about the vice president, Dick Cheney.

(BEGIN VIDEO CLIP)

SEN. TOM HARKIN (D), IOWA: My point is that is he should then not be in a position of criticizing John Kerry and going after John Kerry, who did serve and who did risk his life and was ready to give his life in combat. Dick Cheney shouldn't be doing that.

(END VIDEO CLIP)

BLITZER: What do you make of this whole uproar over military service, lack of military service, John Kerry? Do you want it to all sort of cease right now in.

HASTERT: You know what? I think we just should back off. A lot of people have made issues out of this thing. I think everybody serves in his own way, one way or another.

John Kerry has a record. He ought to stand on that record. It ought to be exposed. So does George Bush. And I think let's let it drop at that.

The problem is the rhetoric has gone over the top. I think the American people really want to understand what these candidates are do -- are going to do, what their vision is, what they're going to do for the American people. And this bantering back and forth, I think is -- people get awful tired of it.

BLITZER: I think you're probably right on that, Mr. Speaker.

Let's talk a little bit about your new book. You can tell our viewers what the purpose of this book is.

I'll read to you a quote, though, from the book. You write, among other things, you write this. "I have to recruit the best possible conditions for Congress and make sure they have the financial and other resources they need to run or, if they've already run in Congress, to make sure they have enough to stave off potential challengers."

Is that one of the most important things you have to do? In other words, find -- put together the right players on the team?

HASTERT: Well, I have two roles. First of all, as a speaker, I have to make sure we move legislation to the House that's important to the American people. But the other side, I need to find candidates and make sure that they have the wherewithal to get their message out so that we do have a team that we can move our agenda.

BLITZER: Being a wrestling coach, a high school wrestling coach, how did that prepare you for becoming speaker of the House?

HASTERT: Well, you know, it's interesting. People ask me a lot of questions around coaching.

All I said as a coach, I tried to put my best people up front, bring the rest of the team around, and kind of step back myself because I never thought that the coach had to be in the headlines. As a matter of fact, the coach is in the headlines, there's something wrong with the team.

So we've got a lot of talented people. I want to keep them coming.

BLITZER: I was a high school wrestler, a very bad high school wrestler. But I did do it, and I think it helped prepare me for something. I'm not exactly sure what.

Mr. Speaker, thanks very much for joining us, spending a few moments with us. The name of the book, "Speaker: Lessons from 40 Years of Coaching and Politics." Thanks very much.

HASTERT: Thanks, Wolf.

BLITZER: Swift boat controversy. John Kerry's war record under attack. Who's behind it? And is it fair game? Two retired U.S. military officers, they're standing by to debate this issue.

New Jersey's governor went public. But tens of thousands are still living secret lives. We'll hear their experiences.

And trouble in the air for another member of Congress told he's on the terror watch list.

(COMMERCIAL BREAK)

BLITZER: New Jersey's governor, James McGreevey, is now the highest-ranking American elected official to publicly acknowledge he's gay. Experts say he's almost certainly not the only one who's led a secret life.

CNN's Brian Todd is joining us now to pick up this part of the story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we're told this is more widespread than we've ever known. There's no way to get a truly accurate count. But for those living double sexual lives the dilemmas are very emotional and complicated. (BEGIN VIDEOTAPE)

TODD (voice-over): A public admission of a very private matter.

GOV. JAMES MCGREEVEY (D), NEW JERSEY: Throughout my life, I have grappled with my own identity.

TODD: When Governor James McGreevey came out of his closet, his wife at his side, revealing a double life, John Craig saw a very familiar story. Craig runs a telephone counseling service called the Voice Roundtable, a confidential voice message sounding board for men living their own double lives.

JOHN CRAIG, VOICE ROUNDTABLE: In the world that they live in, they identify as heterosexual. But within the group they acknowledge that they have a bisexual orientation and have attractions both to men and women.

John Craig.

TODD: The complications begin there, and can extend virtually anywhere. Of his two to three dozen clients, all male, some are still in love with their wives.

One caller says, quote, "I have been together with my wife for 27 years. We have two children. And basically she's known about this part of me for about 25 of those 27 years."

Then there are callers like this: "My wife does not know. I think it would threaten her. Other people do know in my life, and it feels good to have that support."

For others, perhaps an even more delicate dilemma.

CRAIG: Those who have not revealed this to their children will get a lot of insights from hearing the stories of other men who have revealed this to their children.

TODD: The common thread is that, at least when they start out in Craig's groups, everyone is hiding their orientation from someone and needs to sound it out.

Experts agree there is no way to calculate how many people are in this situation. By its very nature this is a very secretive subculture, navigating the grayest of areas.

But for many, the predicament is clear. In some three-dozen states you can still be fired from your job for being gay. Craig, himself bisexual, says some of his clients have a lot to lose professionally.

CRAIG: Many of these men are quite leadership oriented in their communities. They wanted to be at the head of the church, at the head of their business, at the head of their civic organization. And so they have hidden these feelings. TODD: Craig says he doesn't so much offer advice to clients but rather gives comparisons, a chance to think and reach their own decisions.

One of Craig's original clients, who's also a psychoanalyst, tells us many of these men are not confused about that sexuality, just over what to do about it.

(END VIDEOTAPE)

TODD: What about women in the same predicament? John Craig says he is just starting to offer counseling to gay and bisexual women who are living those double lives and says there are many more of them out there than we would believe -- Wolf.

BLITZER: I'm sure there are. Thanks very much, Brian Todd for that report.

The battle for the presidency continuing. But are the political ads hitting too hard? New harsh words from a veterans' group against John Kerry just released today. Who's behind the attacks? And why won't President Bush specifically denounce these ads?

Joining us next, representatives from both campaigns.

Plus, is superstar Michael Jackson trying to make a move overseas?

And tribute and tribulations, the memorial to Princess Diana that has become a royal mess.

(COMMERCIAL BREAK)

BLITZER: As we've been reporting, late word today from the John Kerry campaign. It's filing a formal complaint with the Federal Elections Commission alleging that the swift boat veterans group is in violation of campaign laws. It says the group, and I'm quoting now, "is running inaccurate ads in illegal coordination," that's the end quote, with the Republican National Committee and the Bush-Cheney campaign.

That's just the latest in this political battle between John Kerry and a group of former Vietnam veterans supported by some Republicans. And even as John Kerry calls on President Bush to disavow the first swift boat ad, a second one has now been released.

(BEGIN VIDEOTAPE)

U.S. SENATOR JOHN KERRY (D-MA): They had personally raped, cut off ears, cut off heads.

JOE PONDER, SWIFT BOAT VETERANS FOR TRUTH: The accusations that John Kerry made against the veterans who served in Vietnam was just devastating.

KERRY: ... randomly shot at civilians... PONDER: And it hurt me more than any physical wounds I had.

BLITZER: The new ad by the so-called "Swift Boat Veterans for Truth" gets to the heart of their anger at John Kerry, his 1971 Senate testimony, on alleged U.S. war crimes in Vietnam. Veterans who are now critical of Kerry make no bones about the fact that they were outraged by his anti-war activities after returning from Vietnam.

UNIDENTIFIED MALE: He dishonored his country and, more importantly, the people he served with. He just sold them out.

BLITZER: The Kerry campaign is condemning the new ad, saying quote, "This Republican front group for Bush is out of credibility after being caught in lie after lie, day after day."

KERRY: You were aware of you've been one of the strongest critics of this war for the longest time.

BLITZER: The ad does not include Kerry telling senators that the war crimes charges he outlined were based on the testimony of over 150 Vietnam veterans.

KERRY: Of course, this group isn't interested in the truth. They're not telling the truth.

BLITZER: A day after Kerry personally responded to the Swift Boat Veterans for Truth, he did not discuss the controversy, focusing instead on domestic issues. But a new poll may help explain why he decided to fight back. The Annenberg survey found 57 percent of Americans say they have seen the original swift boat ad or heard talk about it.

VAN ODELL, SWIFT BOAT VETERANS FOR TRUTH: John Kerry lied to get his bronze star. I know. I was there. I saw what happened.

BLITZER: Those who are aware of the ad are split on whether it's believable. Of all of those surveyed, 59 percent say they think Kerry did earn all of his war medals. 21 percent say he did not earn them. 20 percent are unsure.

KERRY: They're funded by hundreds of thousands of dollars from a Republican contributor out of Texas.

BLITZER: The Kerry camp continues to press its charge that the Swift Boat Veterans for Truth is a front for the Bush campaign. The New York Times today reports what it describes as a web of connections between the group behind the ad and the Bush family, high-profile Texas political figures and the president's top political strategist, Karl Rove. Apparently picking up on that, the Kerry camp today charged, quote, "Karl Rove's attack squad of convincing the swift boat veterans to lie." The swift boat group denies any direct contact with the RNC, the Bush White House, or any Republican group.

LARRY THURLOW, SWIFT BOAT VETERANS FOR TRUTH: I have had absolutely no contact with any of them, nor do I plan to, nor can they tell me to not take part in the swift boat group's campaign. SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I do think that Senator Kerry losing his cool should not be an excuse for him to lash out at the president with false and baseless attacks.

(END VIDEOTAPE)

BLITZER: And just now we're getting in some reaction from the Bush-Cheney campaign on the decision by the Kerry campaign to go ahead and file a formal complaint with the FEC on these ads. Taylor Griffin from the Bush campaign telling CNN, "John Kerry knows that his allegation is frivolous and false. However, we welcome this focus on coordination with 527s." 527s being those independent campaign contributing groups, the Republican campaign insisting they have plenty of questions about the Democratic Party's use of these campaigns, as well.

Let's get some more information now on this whole controversy. Is President Bush, for example, offering silent support to the people responsible for these controversial ads? I'm joined now by two guests, Retired U.S. Air Force General Tony McPeak. He's in Portland, Oregon. He supports John Kerry. And Retired U.S. Army Lieutenant Colonel Joe Repya. He's in Minneapolis. He supports the president.

Let me ask the general first, what do you make of this whole uproar right now? Do you see the fingerprints of the White House and the Bush-Cheney campaign directly behind these controversial ads?

GEN. TONY MCPEAK, U.S. AIR FORCE (RET.): Yes, I do, Wolf. First of all, because there's a pattern of this kind of conduct. I mean, John McCain knows all about it. This is what happened to him in the South Carolina primary. Max Cleland knows all about it. This happened to him in the George senatorial campaign. And this, what The New York Times called the "web of connections," this whole set of intimate relationships exists. And you can read the wiring diagram for this organization in The New York Times. So it seems to me, yes, the White House is doing the same thing they've done before and they found somebody to do their dirty work for them. I'm saddened by it, quite frankly.

BLITZER: Colonel Repya, I want you to respond.

JOE REPYA, U.S. ARMY (RET.): Well, I totally disagree with the general, respectfully, sir. Senator Kerry knows that the charges are totally false. He knows that over $62 million has been spent attacking the president by 527 groups alleging that the president is poisoning pregnant women, that the president is doing -- injuring our workers, that the president is condoning torture. And yet he's been totally silent on it. And the president has constantly come forward and said that he is against any 527 group and has asked Senator Kerry to stand with him and ask that all soft money, 527 groups, be quieted.

BLITZER: All right. We're not going to get into the whole debate over the whole issue of the 527s, because there are clearly controversies on both sides of the political aisle. Let's get to the whole issue, the thrust of the debate over Vietnam right now. And I'll go back to you, General McPeak. I suspect that most of these Vietnam veterans, and you're a Vietnam veteran, are not so much angry at John Kerry for what he did during the four and a half months he served in Vietnam, but for what he did when he came back and he accused these Vietnam vets of committing atrocities, war crimes, if you will, while they served in Vietnam. That's a very serious allegation. And it's the heart of this new ad that was released today by the Swift Boat Veterans for Truth.

MCPEAK: Well, Wolf, I haven't seen the new one. But it doesn't sound that way when their first one came up. What they said was that Kerry did not perform well under combat conditions. And that whole line has been pretty well disproven. I mean, most of these guys -- and again, this saddens me because these are good guys. These are Navy veterans. They may have lost a step, and they're clearly being used here by more sinister political forces. But I'm very sad that they have made these allegations against Kerry's performance, which is clearly something we ought to honor.

BLITZER: Colonel Repya, do you feel you're being used by these sinister forces?

REPYA: You know, I'm not buying into these sinister forces or grassy knolls at all. I'm not being used by anyone. I have said all along, as a Vietnam veteran, I was a combat rifle platoon leader with the 101st, that John Kerry served his country honorably. What bothers me is the horrible record John Kerry has in 19 years in the office that he has held and his voting record against national defense, his voting report against pay raises for the military, his voting record against intelligence funding. And that, more than anything, has convinced me that he's not the caliber of an individual I want to be my commander-in-chief.

BLITZER: All right, I'm going to go back to General McPeak in a second to say why he believes John Kerry would be an excellent commander-in-chief. But Colonel Repya, should the president do what John McCain has done and denounce those ads?

REPYA: You know, I would love to see John Kerry and the president both come before the camera together and ask all 527 groups to cease all activity. But, you know, like I said, $62 million, the Michael Moores, the Terry McAuliffes, the hate groups, Moveon.org, has been putting ads, just terrible ads, out against the president, and that hasn't seemed to bother the Kerry campaign at all.

BLITZER: So because John Kerry isn't doing that, even though he has denounced some of those ads, you don't think the president should disassociate himself directly from these ads?

REPYA: I think the president already has. He said he's against all soft money. What more do you -- possibly can he do?

BLITZER: The president, based on what I know, says John Kerry's service was noble but he hasn't specifically denounced these ads. As you point out, he's denounced all of these ads coming from these shadowy 527 groups. REPYA: As they should be.

BLITZER: Tell our viewers why you believe John Kerry would be an excellent commander-in-chief.

MCPEAK: Well just to correct the record, Wolf, as you noted, John Kerry has denounced a couple of ads that he said went too far in comparing the president unfavorably, in one case with Hitler, as I recall. So it is not accurate, as Joe has said there in Minnesota, to say that Kerry has not done that. He's distanced himself. And I think it would be very valuable for the president to openly denounce these not-so-swift boat veterans. But he hasn't done that and clearly he can't. I mean, the connections are too intimate there.

BLITZER: Well, the connections are going to be investigated now by the FEC, now that this complaint has been filed. We'll soon find out. Maybe not so soon, necessarily, what the result is. I want thank both of you for joining us, Colonel Repya, Tony McPeak, thanks very much to both of you for joining us.

MCPEAK: Thank you, Wolf.

BLITZER: And to our viewers, here's your chance to weigh in on the story. Our Web question of the day is this: Do you think the Swift Boat Veterans for Truth are acting independently? You can vote right now. Go to cnn.com/Wolf. We'll have results for you later in this broadcast.

Another senior Democrat says he's been hassled at airports in a terrorism watch list mix-up. Congressman John Lewis says he's faced months of boarding and baggage problems, and he's formally complained to the Department of Homeland Security. He came forward a day after Senator Edward Kennedy reported similar problems. Their names clearly getting mixed up with other names.

Kerry's counterattack: Will the swift boat controversy hurt his chances in November? Our Carlos Watson standing by. He has the inside edge. That's coming up.

Plus, a possible move for Michael Jackson? Details of a pop star's search for a brand new home in another country.

And on a quest to grab eight Olympic medals, did Michael Phelps get the job done today? An update, that's coming up ahead. First though, a quick look at some other news making headlines around the world.

(BEGIN VIDEO CLIP)

BLITZER: Fifteen North Korean defectors sneaked into the South Korean consulate in Beijing, China, yesterday. The group included six children. They joined more than 100 other North Koreans already in the compound who are asking for asylum.

It's the summertime smog season in Hong Kong. The poor air quality has forced some residents indoors. A few boats have even collided in the harbor.

Park officials in London have reopened the Princess Diana memorial fountain after closing it for three weeks. Only, now, visitors can't get in the water. Several people were injured when they slipped on wet stones when the fountain initially opened.

Thousands of visitors and pilgrims participated in a festival in Tibet. The ceremonies included the unveiling of a portrait of Buddha on the mountain above one of the largest Buddhist monasteries in the world. And that's our look around the world.

(COMMERCIAL BREAK)

BLITZER: The search of Michael Jackson's ranch in the spotlight at his pretrial hearing. Defense lawyers say the 15-hour search involves dozens of officers. They also say it was unjustified and too broad. They're trying to limit the evidence prosecutors can use in Jackson's child molestation trial scheduled to start in January.

Meanwhile, Jackson himself is speaking about -- speaking out about rumors and characterizations he calls hurtful. CNN'S Sibila Vargas is in our Los Angeles bureau. She's joining us now with more on that part of the story -- Sibila?

SIBILA VARGAS, CNN CORRESPONDENT: That's right, Wolf. Michael Jackson is fighting mad and he just can't take it anymore. The gloved one is making his frustrations known in a statement released on his Web site.

(BEGIN VIDEO CLIP)

VARGAS: It's the first time Jackson has been able to talk since the court placed a gag order on the self-proclaimed King of Pop. In the two-paragraph statement approved by the judge, Jackson addresses some of the rumors that have recently made headlines. He says, quote, "I personally have suffered through many painful lies and references to me as Wacko Jacko, as well as the latest untruth about me fathering quadruplets. This is intolerable and must stop."

MICHAEL JACKSON, SINGER: This is my life.

VARGAS: The statement also makes reference to a recent VH-1 special, "Man in the Mirror," which Jackson says, quote, "in no way represents who we are as a family." Jackson goes on to defend his family saying, "My success on stage can be attributed to the love and support of my family off stage. My brothers and I are brothers first. We started out together and we will always be together."

And back together and all dressed in white, Jackson's siblings joined their brother Michael when he appeared in court on Monday. And the latest buzz has the Jackson family shopping for a home in Liechtenstein. According to reports, a friend of the family helped Jackson's brother, Jermaine, search for a family home in the mountains. A family spokesperson is not ruling out any possibilities.

DEBORAH OPRI, JACKSON FAMILY SPOKESWOMAN: The Jackson family is a dynasty. I wouldn't be surprised that they're looking for any sort of investment anywhere, anytime.

(END VIDEO CLIP)

VARGAS: And Liechtenstein, for those of us who need a little refresher, is an Alpine principality nestled between Switzerland and Austria. Wolf, back to you.

WOLF: A lovely little place, indeed. Thanks very much Sibila for that report.

Comparing the current candidate to those in the past, will John Kerry be perceived as a Dukakis or a Clinton? Carlos Watson has the inside edge.

Plus, is swimming phenom Michael Phelps calling it quits in Athens? An update on his quest for golden glory.

(COMMERCIAL BREAK)

BLITZER: Time now to check in with our political analysis Carlos Watson and his regular feature "The Inside Edge." Carlos joining us today from New York.

Carlos, this whole Vietnam issue, John Kerry counterpunching the way he did yesterday. What do you make of it?

CARLOS WATSON, CNN CORRESPONDENT: I think it's going to be a big question whether or not he can counterpunch, not only in the national news, but frankly, Wolf, in the local news. So not only what we cover here on CNN, but in the Cincinnati Enquirer, one of the local papers, in the Tennesseans and in local TV stations, and places like St. Louis. If he's able to penetrate his message in those markets, then he'll be more like Bill Clinton, who successfully counterpunched both in '92 and '96, instead of like Dukakis in '88 or, I would argue, Bob Dole in '96 or even Al Gore in 2000. It's a very big and important question that will determine his success going forward.

BLITZER: If he can fight or if isn't able to fight. Let's talk about oil prices. You heard Mary Snow on this program earlier, getting close to $50 a barrel. I remember when it was $10-$12 a barrel, and that wasn't so long ago in some parts of the '90s. Is this is going to have, in your assessment, some sort of political impact on this campaign?

WATSON: Well, I think it will. What's interesting, Wolf, is that when voters are asked in surveys how many of them are paying attention to rising oil prices and gas prices, more than 50 percent are saying, "Yes, I'm paying attention to that." Absolutely fascinating that they're staying tuned, not only because of what it may mean at the pump but significantly, Wolf, two other effects to think about.

What if this ends up being a really bad winter in places like Wisconsin, Iowa, and Minnesota, all swing states where the president hopes to break through but instead he's got high heating bills for seniors and other families? That could certainly hurt him. Also, of course, high oil prices could cause the economy to show down, and you can hear more about layoffs. In fact, we've already heard about a couple of layoffs over the last several weeks. So I would pay attention to these oil prices for their political impact over the next couple of weeks.

BLITZER: You've also been paying close attention to a key -- a few key Senate races. What are you seeing?

WATSON: Great news for the Republicans. Or I should maybe temper that and say, at least, good news. Several months ago, it looked like the Democrats had a strong chance of taking back the U.S. Senate which right now, in many ways, is 52-48, if you count Jim Jeffords with the Democrats and you count Zell Miller with the Republicans. But in terms of the eight open seats, Republicans are lining up strong challengers where there's no incumbent, and even in states that are considered toss-ups in the presidential contest, Ohio, Pennsylvania, Missouri, there the Republican incumbents are still looking good and challengers aren't anywhere close. So a lot of good news for the Republicans when they look at the Senate in fall elects.

BLITZER: Carlos Watson with "The Inside Edge" for us. Thanks, Carlos, very much.

WATSON: Good to join you.

BLITZER: And a wrap of today's Olympic action. That's coming up just ahead.

(COMMERCIAL BREAK)

BLITZER: Here's how your weighing in on our Web question of the day. "Do you think the swift Boat Veterans for Truth are acting independently?" 43 percent of you say yes, 57 percent of you say no. Remember, though, this is not a scientific poll.

The first week of Olympic action is wrapping up. Here's a look at today's highlights. But you want to wait for tonight's televised coverage, this is a good time to hit the mute button. Right now, swimming's golden boy was atop the medal podium again. Michael Phelps won his fifth gold medal with a breathtaking finish the 100-meter butterfly. And after swimming 14 races in seven days, Phelps says today's race will be his last. He ceded his place in tomorrow's 400- meter medley to teammate Ian Crocker. In today's race, Phelps came from behind to out touch Crocker by four one-hundredths of a second. Crocker finished ahead of the Ukrainian bronze medalist by just seven one-hundredths of a second. That's pretty close.

It was an even closer finish, get this, in the 50-meter freestyle sprint. Three-time Olympian Gary Hall took gold by finishing the race in just -- under 22 seconds, only nine one-hundredths of a second separated first from third.

The United States added its medal count with a gold by Matt Emmons in the 50-meter rifle prone competition. Emmons was using a borrowed gun. He says his was sabotaged earlier in the year. The heavily favored U.S. women's soccer team continues the quest for gold. In the quarterfinal game, the Americans broke a tie in the 59th minute to edge Japan 2-1. It sets up a semifinal showdown with powerhouse Germany on Monday.

A reminder: We're on weekdays 5 p.m. Eastern, as well as noon Eastern. Please tune in Sunday for "LATE EDITION," the last word in Sunday talk. Among my guests this Sunday, Representatives Jane Harman and Chris Cox. They'll be joining us Sunday, noon eastern.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington. LOU DOBBS TONIGHT starts right now.

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