Thursday, December 11, 2003

White House Restricts Iraq Reconstruction Contract To Noncoalition Members; Pentagon Believe Halliburton Overcharged For Gas In Iraq; Rockets Fired At U.S. Green Zone In Baghdad

White House Restricts Iraq Reconstruction Contract To Noncoalition Members; Pentagon Believe Halliburton Overcharged For Gas In Iraq; Rockets Fired At U.S. Green Zone In Baghdad
Aired December 11, 2003 - 22:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

AARON BROWN, CNN ANCHOR: Good evening again everyone.We should call our top two stories tonight your tax dollars at work. In one the administration may be softening its position on awarding contracts to companies from countries that did not support the war in Iraq. We'll let John King explain the details.But it's now beginning to feel a bit like a negotiation is going on. At stake, billions of your tax dollars and who should profit from Iraqi reconstruction. Your tax dollars have already been awarded to Halliburton and today the giant Texas company was slapped around a bit by the Pentagon.It seems the Pentagon believes Halliburton may be overcharging for gas, trying to overcharge for food services but not to worry. It was only a few tens of millions of dollars. It would be easier to be outraged if all this came as some sort of surprise but, as they say, tens of millions close enough for government work.We start things off at the White House, our Senior White House Correspondent with the watch, John King, John a headline.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Aaron, the president defended his policy about reconstruction contracts today saying it makes sense to him that those who shed the blood in the war should get the money from these major contracts but there was a hint of compromise, the president's spokesman saying if those war opponents now are willing to forgive Iraq's huge international debts "perhaps the circumstances could change" -- Aaron.

BROWN: John, thank you. We'll get to you at the top tonight. On to the Pentagon and questions about the cost of a gallon of gas in Iraq, Jamie McIntyre there for us, Jamie the headline.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, those Pentagon auditors are taking a look at what Halliburton paid for gas that it imported into Iraq and passed on to U.S. taxpayers. They think the overcharge is about $61 million but they say it wasn't Halliburton that might have gotten the extra money but a Kuwaiti company.

BROWN: Jamie, thank you.Next to Baghdad, explosions in the night, Nic Robertson with the duty, Nic a headline.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Aaron, the first attack on -- the first missile attack on coalition headquarters in over a month had coalition officials diving for cover while earlier in the day the third suicide attack against a U.S. base killed one soldier and injured 14 others. That's the third suicide attack in three days -- Aaron.

BROWN: Nic, thank you.And finally to Massachusetts, one of 50 states and by my counting that's all of them now hit with the flu, CNN's Dan Lothian covering developments there, Dan a headline.

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF: Well, Aaron, the CDC says the flu outbreak is spreading. Now an 18-year-old college has died and there's a shortage of the flu vaccine. It may not be a pretty picture but the federal government says it's not an epidemic -- Aaron.

BROWN: Dan, thank you. We'll get back to you and the rest shortly.Also ahead on the program tonight, terror of a homegrown variety, a Texas man with a huge arsenal, including the making of a cyanide bomb.Later, desperate measures and sometimes deadly consequences children trying to sneak into this country from Mexico to join their families.And, of course, a visit from the rooster ends the evening, a check of your paper, well maybe not literally your paper but tomorrow morning's papers just the same, all that and more in the hour ahead.We begin tonight with the cost of doing business in Iraq. Agree or disagree with the policy in the first place the choice of who rebuilds Iraq and how comes with certain benefits but it also comes with a price tag in dollars and diplomacy, both spotlighted today.The diplomatic side first and CNN's John King.

(BEGIN VIDEOTAPE)

KING (voice-over): The president says he doesn't understand all the fuss.

BUSH: It's very simple. Our people risk their lives. Coalition, friendly coalition folks "risk their lives" and therefore the contracting is going to reflect that and that's what the U.S. taxpayers expect.

KING: But the decision to steer nearly $20 billion in Iraq reconstruction money to companies from the United States and key war allies reopened the diplomatic divide between Washington and major war opponents like France, Russia, and Germany.

KOFI ANNAN, U.N. SECRETARY-GENERAL: I would not characterize the decision taken yesterday as unifying.

KING: The president's political opponents call it more failed diplomacy.

SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: I think it borders on the stupid. It is counterproductive. It is the exact opposite of what we should be doing in order to bring other countries into the table.

KING: But at this year-end cabinet meeting Mr. Bush not only defended the policy but scoffed when asked about French and German suggestions his approach violates international law.

BUSH: International law, I better call my lawyer.

KING: Still, the timing is awkward to say the least. The dust- up comes just as special Bush envoy James Baker heads to Paris, Moscow and Berlin asking leaders to forgive or at least reduce huge Iraqi debts from the days of Saddam Hussein.

IVO DAALDER, BROOKINGS INSTITUTION: If I were Mr. Baker I would have gone into the Oval Office and told the president I'm going back to Houston until you find a way to cooperate with these guys.

KING: Canada also is excluded from major contracts, though Prime Minister Jean Chretien says Mr. Bush told him Thursday that was a mistake.

JEAN CHRETIEN, CANADIAN PRIME MINISTER: He was telling me to basically not to worry.KING: The White House says Mr. Bush made no promises but did note Canada's pledge to offer money for Iraq's reconstruction.

(END VIDEOTAPE)

KING: Slashing Iraq's $120 billion international debt is now the most urgent White House focus and perhaps now a bargaining chip in this bitter contract dispute. The White House today suggesting that if those war opponents are willing to forgive or at least reduce Iraq's big debt perhaps, Aaron, things could change the contract rules among them.

BROWN: Has Mr. -- because I would really like to hear that conversation, has Mr. Baker weighed in at all on this?

KING: We have not heard from him publicly at all. He did meet with the president earlier this week about his coming mission to those key capitals overseas. Whether he raised the issue of the timing of this contract dispute and whether it perhaps, as some would say, complicated his already delicate diplomacy he hasn't said so publicly and, in fact, at the request of the White House at the Baker Institute all people say they are told to talk to us not at all. 

BROWN: And there was a story this morning that the president personally was fuming at the timing of the release of the Pentagon memo on all of this, confirm, reject, what do you know?

KING: A little bit in the middle, fuming became awkward by the end of the day. The White House approved this policy. They knew it was in the works. They knew the Pentagon was about to release it. They're not exactly thrilled with the timing because it does complicate Secretary Baker's diplomacy, does exacerbate some of the tensions. They wish it wasn't so or in your face, some aides would say, but they say the president can't be fuming about it because he authorized it. It is his policy. The Pentagon, of course, answers to the White House.

BROWN: John, thank you very much, Senior White House Correspondent John King tonight.On to the price of gas now in Baghdad, about 15 cents a gallon, 15 cents a gallon when it's available which isn't all that often conditions being what they are.The job of fixing Iraq's oil infrastructure falls to Halliburton, the company Vice President Cheney once ran. Halliburton got this contract without having to bid on it. Under the terms of the deal a subsidiary of the company is shipping gas in from Kuwait for an average price of around $2.64 a gallon, which even if they checked the oil and do the windshield sounds a little bit steep and the auditors at the Pentagon agree.Here's CNN's Jamie McIntyre.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): The Pentagon says it was a routine review that turned up the potential overcharge by a Halliburton subsidiary, awarded a no-bid contract in March to rebuild Iraq's oil industry.Pentagon auditors concluded Kellogg, Brown and Root potentially overcharged the U.S. government $61 million for gas from Kuwait imported into Iraq but there is no allegation Halliburton unduly profited from the overpriced gas.The audit questions if Halliburton paid above market rates to a Kuwaiti subcontractor, $2.27 per gallon compared to another supplier who got gas at $1.18 per gallon from Turkey.Halliburton argues the higher cost was due to having to negotiate a short term contract at a time when there weren't enough trucks in Kuwait to deliver the fuel. Trucks had to be brought in and shipping in a war zone pushed up transportation and security costs as well.A statement from the company insisted those costs were pass- through costs and that Halliburton only recovers a few cents on the dollar. Congressional critics who accuse the company of price gouging don't believe it.

SEN. RON WYDEN (D), OREGON: There have been indications for some months now that taxpayers' interests aren't protected. I'm glad that the Defense Department is finally coming to ask some tough questions but I think they should have been raising these issues many months ago.

MCINTYRE: The Pentagon's comptroller Dov Zakheim insists his auditors have been hard-nosed saying in a statement: "Contractor improprieties and/or contract mischarging will neither be condoned nor allowed to continue."

(END VIDEOTAPE)

MCINTYRE: Now those auditors found another potential overcharge from Halliburton, $67 million too much for dining halls in Iraq but they say that appears to be a billing error and are willing to say it might have been an honest mistake. Needless to say they're not paying that bill.Democratic presidential hopefuls were quick to jump on the issue. Howard Dean called Halliburton a special interest contributor that is overcharging U.S. taxpayers while Dick Gephardt called Halliburton the former employer of Dick Cheney, which he said is bilking the taxpayers -- Aaron.BROWN: Well whatever it is they're doing or however it is it came to pass is there going to be an attempt to try and recover any of this money?

MCINTYRE: Absolutely. That's what's going on now is essentially there's a review of the contract. Halliburton will have to come back and try to justify this extra $61 million. If the U.S. government doesn't believe it's legitimate they will disallow it and Halliburton will be forced to eat the money. They could possibly go back to the Kuwaiti company that sold them the gas and try to get it from them but that seems unlikely.

BROWN: Jamie, thank you, Jamie McIntyre at the Pentagon tonight.There's certainly no arguing Halliburton's assertion that there is a war going on in Iraq. We had more proof of that tonight. We go back to CNN's Nic Robertson in Baghdad -- Nic.

ROBERTSON: Aaron, it was a little after midnight, four explosions were heard in the center of the city. Smoke was then seen to be rising from the Green Zone. This is the coalition's headquarters, the sprawling former presidential palace compound in the center of Baghdad.Shortly after the impact sirens sounded. According to sources within the compound when the explosions were heard people dived for cover under tables. According to coalition officials, however, they say there were no injuries. They report that two missiles struck within the vicinity of the Green Zone and they say that one building within that zone was damaged slightly.This is the first attack in over a month of this type against the Green Zone. A little over a month ago there were several nights of mortar attacks against the base. It is heavily fortified but this missile attack the first in over a month.A little earlier in the day it was the third suicide bombing in three days against U.S. troops. The 82nd Airborne's headquarters in Ramadi was the target. Suicide bombers detonated their vehicle full of explosives right outside the gates killing one soldier. Fourteen others were wounded. We understand 11 of those soldiers have been returned to duty, three of them still receiving medical treatment -- Aaron.

BROWN: Correct me on something here if I'm wrong that this is the second day in a row or maybe the second time in three days that American bases have been targeted.

ROBERTSON: Indeed. In terms of suicide bombings there was a suicide bombing at Mosul two days ago, a suicide bombing in Baquba two days ago and then this suicide bombing today in Ramadi. In terms of the coalition headquarters this was a direct attack but it's the first one on the coalition's headquarters in just over a month -- Aaron.

BROWN: Nic, thank you very much, Nic Robertson in Baghdad this morning.One other incident in Baghdad sadly involves two friends of this program. Michael Weisskopf, Senior Correspondent for "Time" magazine and photographer James Nachtwey they were wounded along with two soldiers when a grenade was thrown into the Humvee they were riding in. Both are said to be in stable condition, both awaiting transfer out of the region to a military hospital in Landstuhl, Germany. They have and we'll acknowledge a bias here, they're friends, to doing remarkable work in Iraq. These are some of Nachtwey's recent photographs. They say it about as well as anything we've seen just what it feels like to be a soldier or a child or a grandmother in Iraq these days.The view is personal as is all the best war photography up close something we talked with Nachtwey about the last time he was on the program.

(BEGIN VIDEOTAPE)

BROWN: Mostly it seems to me you shoot a lot of wars. You've been in a lot of bad places. What is it about war that you find attractive to work in?

JAMES NACHTWEY, PHOTOJOURNALIST: I think it's the -- it's an area that needs the most understanding and needs the most awareness and it needs public opinion to come to bear and that's why I photographed many conflicts but also other critical social issues.

(END VIDEOTAPE) 

BROWN: He is a quintessential war photographer. Again he and Michael Weisskopf injured today in Iraq while on assignment for "Time" magazine.Ahead on NEWSNIGHT, questions about the conviction of some members of an alleged terror sleeper cell in Detroit. Also terror of the homegrown kind, a Texas man with an arsenal that included a cyanide bomb.And later the flu continues to spread and not just little kids and old people.This is NEWSNIGHT from New York.

(COMMERCIAL BREAK)

BROWN: Lucky breaks have cracked many a criminal case and here is one of them, a counterterrorism case in this country that has been part of the president's daily intelligence briefings we're told.A man in a Texas town has now pleaded guilty to possessing a dangerous chemical weapon the question were he and his common law wife homegrown terrorists plotting a deadly attack in this country and were they working alone?Here's CNN's Ed Lavandera.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN DALLAS BUREAU CHIEF (voice-over): In northeast Texas, the town of Tyler was an ideal hiding place for William Krar. He and his common law wife worked out of this storage facility just outside of town. Teresa Staples owns the space. She thought the couple made money selling odds and ends.

TERESA STAPLES, STORAGE OWNER: And they worked her most of the day but what we saw them unloading was clothing, swimsuits, garden tools.

LAVANDERA: So, when authorities showed up last April and searched Krar's storage unit what was found shocked everyone.

BRIT FEATHERSTON, ASST. U.S. ATTORNEY: This was a huge, absolutely a huge arsenal of military-style weapons.

LAVANDERA: There were hundreds of weapons. The inventory list of what was found is extensive but the most startling discovery was the combination of high grade sodium cyanide, acid and gunpowder. Mixed together it becomes a lethal chemical bomb capable of killing everyone inside a 30,000-square-foot building. Authorities suspect Krar might have been part of a criminal scheme to violently attack the U.S. government.

FEATHERSTON: We have yet to figure out the actual destination of any of the bombs or any of the devices. You know I don't think you possess these weapons for a defensive reason.

LAVANDERA (on camera): Federal authorities admit that they might never have caught on to William Krar had it not been for a case of a mistaken delivery. According to this affidavit, Krar sent a package to New Jersey full of fake IDs. Well the box never made it to the right person. Instead, it ended up in Staten Island, New York where someone else opened up the package and found a note inside that said "hope this package gets to you OK. We would hate to have this fall into the wrong hands." Well that person called police.(voice-over): The man who was supposed to get that package in New Jersey has been arrested and so has Krar's common law wife. Court records suggest these three were White supremacists and associated with anti-government groups. Krar's attorney says there's no proof the 60-year-old man was part of a sinister conspiracy and that he owned many of the weapons legally.

TONDA CURRY, KRAR'S ATTORNEY: I don't believe they will ever find any plot to do anything destructive, terroristic or anything like that to the United States.

LAVANDERA: Authorities aren't so sure. One of the documents Krar was found traveling with was this paper with instructions on how to elude authorities.

FEATHERSTON: You don't know what's going through these peoples' minds. We wish we did know what was going through their minds because that would probably make all of us feel a little bit better.

LAVANDERA: Krar has pleaded guilty to possessing a chemical weapon but as he sits in this Tyler jail he's not talking and his intentions are still a mystery.Ed Lavandera CNN, Tyler, Texas.

(END VIDEOTAPE)

BROWN: There is a basic rule of American justice, a simple rule at that. If the prosecution has evidence the accused is innocent or might be innocent it must give the accused that evidence. It can't hide it. In the first post 9/11 terror case to reach a jury the government broke that rule and now a judge must decide what, if anything, should be done about it; reporting for us tonight CNN's Kelli Arena.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): They were described as a terrorist sleeper cell in the government's first post 9/11 terror trial. Two of the men were found guilty in June of terrorism-related charges mostly due to testimony from this man, Yousef Hmimssa who lived in this house with some of the defendants. Defense attorneys say those convictions should be reversed. Because of a gag order the attorney general would not discuss the case specifically.

JOHN ASHCROFT, ATTORNEY GENERAL: There are always going to be circumstances that will result in inquiry and discussion in the process of adjudication and those should rightfully be decided in the courts.

ARENA: At issue a letter the prosecution did not turn over to the defense until last month well after the trial. It was written by an imprisoned drug gang leader who says that he was in the jail cell next to Hmimssa. In it the gang leader claims that Hmimssa told him that he "lied to the FBI how he fooled the Secret Service agent on his case." Sources say justice officials are very concerned about what the judge will decide and say they admit the prosecution made a mistake.

PAUL BUTLER, GEORGE WASHINGTON UNIVERSITY: It the government has information that leads to a belief that the defendants might be innocent there's an obligation that it share that information with the defendant. The government didn't do that here and that may mean a new trial is in order.ARENA: The lead prosecutor in the case who has since been replaced testified before a Senate subcommittee this past September and had this to say about Hmimssa's testimony.

RICHARD CONVERTINO, ASSISTANT U.S. ATTORNEY: The information that Mr. Hmimssa told us had to most definitely be corroborated and accepted by the jury in order to be believable to a point where they would vote to convict the defendants.

ARENA (on camera): Sources say the government will argue the suggestion Hmimssa lied was never corroborated and so therefore the convictions should stand.Kelli Arena, CNN, Washington.

(END VIDEOTAPE)

BROWN: Coming up on NEWSNIGHT the spreading illness as the flu outbreak spreads. Is it really that bad and how much do you need to worry about it? Take a break first, around the world this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: Officially it's not an epidemic yet but the flu season, which started early and is spreading and it is nasty. Today the CDC said the flu has now hit all 50 states. In almost half the country the outbreak is what the CDC considers widespread and the worst, we are told, is not over. The very young and the very old are among the most vulnerable when it comes to flu but we were reminded today they are not the only ones at risk.Here's CNN's Dan Lothian.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): America's flu outbreak now on campus in Worcester, Massachusetts with fatal consequences. Eighteen-year-old freshman Jeffery Donohue, seemingly healthy, woke up in his dorm room with a cough and in a matter of days was dead.

PETER CHIULLI, FRESHMAN: I mean he looked sick but I didn't think it was that bad.

LOTHIAN: Across the country, and especially out west, now 24 state with widespread problems. Health officials say the so-called Fujian (ph) strain representing three-quarters of all cases has been linked to the deaths of 13 children. The CDC says cause for concern but no reason to panic.

DR. JULIE GERBERDING, CDC DIRECTOR: (AUDIO GAP).

LOTHIAN: In Colorado people lined up to get the flu shot, like Olivia Ramirez (ph) getting added protection for her newborn baby but the vaccine is in short supply. That's why the federal government has bought an extra 250,000 doses. Along with that the CDC is dispensing advice.

GERBERDING: There are some very specific steps that we can all take this year. One of those is to be sure that we stay home when we're sick because this will help reduce transmission of any respiratory illness that we might have to others.

LOTHIAN: Back on campus at Worcester State College students get guidance from the school's website.

LARRY TONY LOPEZ, STUDENT GOVERNMENT LEADER: You kind of get a little bit more nervous but I mean you can get sick just from going to the mall.

LOTHIAN: Donohue's death has not yet been linked to the Fujian strain but a new reality here, the notion that just the elderly, young, or chronically ill are at risk now dispelled by the death of an 18-year-old.

CHIULLI: He was a great kid. He made everyone laugh. I mean a fun-loving kid and he just didn't deserve it. That's for sure.

(END VIDEOTAPE)

LOTHIAN: According to the CDC, each year some 36,000 Americans die from complications of the flu and as we've been mentioning while those at highest risk are those who are old or very young or those who have medical problems the CDC says it is not unprecedented to see a healthy teenager also die -- Aaron.BROWN: What did he did, I mean this actually quite literally, what did he die of, the flu itself I don't think kills you, does it? 

LOTHIAN: No, it doesn't. It's usually some sort of complication that occurs from the flu and that is one of the questions that we did pose to medical officials there in Worcester today and they said it's still too early. They're conducting tests but don't have those conclusions yet.

BROWN: Dan, thank you very much, Dan Lothian.As Dan mentioned, literally 30,000-plus people every year die from the flu and so there is a need here it seems to us to try and put some context in what's going on.So joining us from Baltimore tonight, Dr. Kevin Ferentz who's an associate professor at the Department of Family Medicine, the University of Maryland Medical School and, as I said, he's in Baltimore.Answer if you can, not specifically about this young man in Massachusetts, but when flu kills what is it that kills?

DR. KEVIN FERENTZ, UNIVERSITY OF MARYLAND MEDICAL SCHOOL: It usually is a secondary infection. Very often when people get influenza they'll go on to get pneumonia and that's probably the main reason why people would die of the flu.

BROWN: And pneumonia still kills. You can't knock that down with the eight gazillion antibiotics that are out there?

FERENTZ: Well, unfortunately there are some bacteria that are still resistant to antibiotics and, of course, the flu is a virus and sometimes the pneumonia that occurs is actually a viral pneumonia. It just becomes an overwhelming pneumonia.

BROWN: Do you have a feel for I guess how big, let me just do this really simply, how big a deal do we have here because sometimes we, media, newspapers, television get caught up in a story. People are talking about it. We start talking about it. It all sort of explodes on us. Are we in the midst of something unusually bad?

FERENTZ: Well, it sure doesn't look like that to me. I mean what I've been reading and I was on the CDC website today it really doesn't look yet like this is anything terribly out of the ordinary. What's different is it's early. It's an early flu season but we don't know how long it's going to last. We don't know how severe it's going to be. There doesn't appear to be anything strange about this virus that's going to make it a much worse flu season. So, there's a lot of unknowns but there really is no cause for panic at this point.

BROWN: What determines the length of the flu season?

FERENTZ: It's kind of unknown. That's one of the great unknowns out there. Every year is different, Aaron.

BROWN: And so, the fact that this one started in, I guess early December, late November, whatever it was, is just circumstance. Why is it that, every year, it seems to be a different strain of flu? 

FERENTZ: Because the flu virus mutates every year. It changes. And we have to try to predict in America what virus is going to hit us. And we base that upon what flus have been around the world the year before. Sometimes they get it right. In fact, most years, they get it right. This year, the virus was a little bit different. So this particular strain was not in the flu vaccine this year. But the strain that's going around is very similar to one of the strains that was in the vaccine. And even though it may not be 100 percent effective, it really should still decrease the effects of the flu. 

BROWN: Somewhere along the way, I believed I knew that flu shots were for the elderly and for the very young, but not for, let's say, a healthy 55-year-old. Did something change? 

FERENTZ: Well, the flu shots are primarily for people at risk of dying from influenza. And that's still very much people over 65 and the very young, kids from six months to 2 years of age. And while the recommendation is for people 50 and over to get the flu shot, as well as little kids, women who are going to be in their second or third trimester of pregnancy should get a flu shot in the flu season and then anybody with medical conditions that would put them at increased risk of dying of the flu, so younger people with heart disease, younger people with lung disease. So kids with asthma should get a flu shot, people with diabetes. 

BROWN: A couple of quick other things. 

FERENTZ: Sure.BROWN: We heard that, if you feel like you have it, you shouldn't be going to work or going to school. And we'll set that aside for tonight. 

FERENTZ: Yes. 

BROWN: What other things can you do or should you do if you feel the flu coming on? 

FERENTZ: Basically, rest, stay in bed, all the things that your mother told you about. Drink plenty of fluids and try not to expose yourself to other people when you're coughing. And wash your hands a lot, because we tend to cough or sneeze into our hands. And then we'll shake hands with someone. They'll rub their nose. They'll rub their eye. And you can transmit the flu virus that way. But it is mostly sort of quarantining yourself. 

BROWN: And just -- do you have any -- in looking at the CDC stuff that is out there and just, I guess, intuitively, do you have a feel for whether this is peaking or is it there's just not enough data to know?

FERENTZ: It is kind of too early to know. I did read one report about a county in Connecticut that got hit very badly last week. And now 85 percent of the kids from one high school that were out are now back at school. So it would seem that, in that location, maybe it is peaking. So it really is too early to say, but, again, the panic is totally unwarranted. 

BROWN: As it generally is in life. Thank you, Doc. Nice job tonight. 

FERENTZ: Thank you. BROWN: Appreciate it very much. 

FERENTZ: My pleasure. BROWN: A few quick business notes before we go to break. We'll start with the markets today, because it took a couple tries, but the Dow Jones industrials finally did it today, closing above the 10000 mark for the first time in a year and a half. It was a rally across the board, as they say downtown, the Dow up eight-tenths of a percent, the Nasdaq up nearly 2 percent. And the S&P rose about 1 percent, which also sets an 18-month high. Another hopeful note: Mortgage rates broke a string of gains and fell for the week, a sign that the market, at least, believes interest rates will remain low for a while. And one more item. In case you're wondering, gray is the new green. According to DuPont Automotive's yearly service of car colors, dark gray is moving up in popularity, compared to last year. Green -- go figure -- has fallen off the charts. And silver remains the king of car colors. Still to come on NEWSNIGHT: Is the Bush administration changing its tune on immigration? Also tonight, the story of some children willing to risk it all to get into this country. This is NEWSNIGHT. 

(COMMERCIAL BREAK) 

BROWN: Whatever else Cabinet secretaries do, it can be argued, the one thing they never should do is make news, at least not by getting beyond the message of the administration they serve, certainly not by wading into an issue, immigration in this case, that also happens to be a political mine field. In Miami, Tom Ridge, the secretary of homeland security, made some news. Here's CNN's Susan Candiotti. 

(BEGIN VIDEOTAPE) 

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): An administration official tells CNN the White House was not happy when Homeland Security Secretary Tom Ridge said it was time to grant not citizenship, but some kind of legal status to up to 12 million illegal aliens. 

TOM RIDGE, HOMELAND SECURITY SECRETARY: Sooner rather than later, we need to deal with the reality that these men, women and families are here, many contributing -- most contributing to their community, paying taxes, paying into Social Security. And we have to legalize their status.

CANDIOTTI: At a White House briefing, a spokesman was quick to point out, Ridge was not talking about a blanket amnesty. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: This is a matter that really is under review at this point. We continue to look at it. There's some proposals that have been put forth by members of Congress. 

CANDIOTTI: Ridge made the comments at a town hall Tuesday meeting in Miami. (on camera): What irked the White House, according to an administration official, was Ridge's timing. The administration is still formulating a policy and wants to be the one to front it, especially with the reelection campaign about to kick into high gear. (voice-over): It could be a hot issue next year, especially among a much-sought after Hispanic voting bloc and pressure from Mexico to ease immigration restrictions. 

K.B. FORBES, CONSEJO DE LATINOS UNIDOS: There are no policies. It is blowing in the wind. And the Bush administration has been, see no evil, speak no evil, hear no evil. 

CANDIOTTI: Republican Congressman Tom Tancredo chairs an immigration reform caucus. 

REP. TOM TANCREDO (R), COLORADO: This just drives me crazy, this idea that, oh, we've got 13 million people in here; the best way to actually deal with it is to just say that they all are legal and to essentially abandon the border. It's ridiculous. 

CANDIOTTI: While no one is talking about abandoning the border, what policy the Bush administration policy may have in mind remains to seen, one sure to cause a stir on the campaign trail, especially in key border states.Susan Candiotti, CNN, Miami. 

(END VIDEOTAPE) 

BROWN: Behind every policy debate, of course, are people. And tonight, a look tonight at some of the children caught in this one. Many are traveling alone, trying to reach mothers and fathers, sisters and brothers already in this country. Smuggling kids across the border has become a big business to some, and a growing business. But many kids separated from their families do not make it across. We visited a shelter on the border, the Mexican side, one of many, where the children who get caught wait in limbo, planning their next step. 

(BEGIN VIDEOTAPE) 

BROWN (voice-over): They wait in line to call their loved ones, the lucky ones, who have already made it to the other side. These boys desperately want to go to Alabama and Oklahoma, where their brothers are. 

UNIDENTIFIED MALE (through translator): Because I want to work and I am poor. I want to work. My father is poor.

BROWN: Caught this time, they say they'll keep on trying until they make it. 

UNIDENTIFIED MALE (through translator): Twice, I tried to cross into the U.S. and didn't make it. Immigration got me and sent me back. I'll try to cross again.

BROWN: For now, they wait at this shelter in Nogales, Mexico, where minors stay if they're caught crossing the border, more than 1,000 already this year. 

FERNANDO GUERRERO, SHELTER DIRECTOR (through translator): It has increased a lot. We're talking about four years ago 22, 23, 30 kids per month. Now we have 150 to 200 per month. 

BROWN: The Border Patrol around Tucson has arrested more than 13,000 children this year alone. Many are traveling without their parents, their lives placed in the hands of smugglers who are charging up to $2,000 a head. And those family members who have made it and are now working in the U.S. often foot the bill. 

ANDY ADAME, TUCSON BORDER PATROL: As it becomes harder to cross the border, we see that a lot of parents are crossing by themselves, but are sending for their children, instead of returning themselves into Mexico to cross them. And that's where they fall into many dangers. 

BROWN: A record 150 people have died in Arizona this year, six of them children. This is Lileana (ph). She is 5 and there is only one place in the world she wants to be. 

UNIDENTIFIED FEMALE (through translator): The other side with my mom. 

BROWN: Her parents made it to Los Angeles and then paid a smuggler to take Lileana across the desert, traveling with a group she had never met. Lileana says she was scared, but she also says she wants to try again, hopefully with someone she knows. 

UNIDENTIFIED FEMALE (through translator): I'll go there with my uncle.

BROWN: Shelter director Fernando Guerrero is frustrated over what he sees as a resolving door of children willing to try the deadly trek again and again. 

GUERRERO (through translator): Definitely, most of the times, when they try to cross again, we will see them here. We see them here three or even four times. 

BROWN: That's because the dangers of the desert mean little to these children. All they know is that a dusty road and another try are all that separates them from a brother or a job or a family or a mother. 

(END VIDEOTAPE) 

BROWN: After the break, we'll talk with James Ziglar, the former head of the Immigration Service. This is NEWSNIGHT. 

(COMMERCIAL BREAK) 

BROWN: Segment seven continues. More on the knotty question of immigration and national security and politics. And they're all in play here. James Ziglar is the former commissioner of the Immigration and Naturalization Service. Currently, he's a visiting professor at George Washington University School of Law. Good to have you with us. Maybe this is just frighteningly simplistic, but why does the country have to deal with this? You've got these people in the country. They're clearly here. They're working. By and large, they're working. Why do we have to change their status into anything? 

JAMES ZIGLAR, FORMER INS COMMISSIONER: Well, the reality is that you have somewhere between eight and 11 million people who are here in undocumented status, i.e., they're illegal.That fact alone indicates to me that you've got a problem with your immigration system, as well as with your enforcement. The reason we need to deal with it is because what we have in front of us are 11 million people, let's say, that we don't know who they are officially, also that we have an underground that necessarily engages in fraud and that sort of thing, and is frankly subject to blackmail, extortion and that sort of thing. And we're creating an underclass in this country which has its own set of cultural, social problems, something that the president recognized in his efforts prior to September 11 to work out an arrangement with President Fox. 

BROWN: I was going to say, the president, because, I assume, or at least in part, because he was the governor of a border state, seemed pretty sensitive to trying to fashion some sort of deal. And then, bang, 9/11 came and the whole political landscape, if not the national security landscape, changed. 

ZIGLAR: Well, that's true. I believe that the president still is very sensitive to this issue. And I think he has a very practical, realistic point of view on it. Obviously, the politics of it make it difficult at this point to be out there out front on it. But I do believe that the president is committed in the long term to fixing this problem and to bringing some justice into it. 

BROWN: Talk about what a fix might look like. 

ZIGLAR: Well, I don't think there is going to be one big fix.What I think is that we're going to see incremental changes coming along. For example, Senator Craig, Senator Hagel, Senator Kennedy, Congressman Berman have proposed some changes to fix the agricultural worker area. Congressman Flake, Congressman Kolbe and Senator McCain have another proposal that is a bit wider, but that would grant some sort of legal status to people who are here, but not give them an advantage over people who have come here legally. It would create, in a sense, a punishment, but yet it would give them a legal status and it would ultimately give them a path to being here permanently, if they live by the rules. 

BROWN: The punishment being what exactly? They're not being sent back. They're allowed to keep working and living in this society. What's the punishment? 

ZIGLAR: Well, the punishment would in that case, in that bill, would be a fine that they would have to pay. Plus, they would have to get at the back of the line in order to get a permanent legal status. So those people who came in legally would go to the front of the line. Those people that came here illegally would pay that fine and would get at the back of the line, if you will. 

BROWN: Do you think this is a case where the government or people within the government, everybody sort of recognizes this is a problem, and then, in some respects, is pretty far ahead of the population in terms of the issue itself?

ZIGLAR: Oh, I'm not sure that that's the case. I think there are elements in the population that are very interested in this. And some have very strong views. I think the population in general, probably, in the aggregate, they say, well, this is a really bad thing and I don't want to be part of it. But when they get right down to it and they see what generally is the impact in their community, they have a somewhat different view of it. The fact is that these folks are part and parcel of our social fabric,. They're certainly part of our labor force and a critical part of our labor force. And, frankly, if you were to try to remove eight to 11 million people out of our labor force, we would have a tremendous economic problem. 

BROWN: Yes.In the end, do you think that the politics surrounding particularly the Hispanic vote in the country will drive a solution? 

ZIGLAR: Oh, I think the politics are important.But I think that it's much more than that. I think the social issues that we have, the underclass, the underground, the security issue and not knowing who's here, I think that's a much bigger driver. The politics are important. They always are important. But I don't think that will be the driver for it. 

BROWN: Mr. Ziglar, good to have you with us tonight. Thank you for your time. 

ZIGLAR: Thank you very much. 

BROWN: Thank you. We'll check morning papers after the break.

(COMMERCIAL BREAK) 

(ROOSTER CROWING) 

BROWN: I am so not ready to do this segment, but I'm trying, ladies and gentlemen. OK. Time to check morning papers from around the country and around the hemisphere, OK?We'll begin with "USA Today." If you're traveling, you'll find this under your doorstep or whatever you call it in a hotel. I guess you wouldn't call it a doorstep, but maybe you do. It is Friday tomorrow. And they lead with sports. "This Year's Heisman May Make Fans Gasp." Well, it will me, since I haven't followed this at all. "Saturday's Ceremony Ushers in More Debate and Suspense Than Usual. Winner Might Produce a First or Just Controversy." And there are four finalists, including Eli Manning, is the one guy I had actually heard of in this group. Also, I like this story. "Push is on For a Larger Military. Congress Moves After Years of Downsizing." I guess, when you have got two wars going, you have got to think about that. The flu made the front page of "USA Today" as well.Speaking of in the hemisphere, "The Ottawa Sun." "Au Revoir." Jean Chretien's final day in officer, the prime minister of Canada leaving office. I remember going up to Canada to do the story a long time ago now, it seems like, when he was swept into power. That doesn't sound quite right. He was elected. "The Boston Herald."It sounded like it was a takeover."Flu Fever. Virus Spreads Quickly Across the State and the Nation." That's the way they lead, but I like this story. "The Dynamic Duo." Simon are Garfunkel are like 62 now, I think, both of them, playing up in Boston. They've been touring the country, and something like $50 million worth of tickets sold. But I didn't get to see them. Paul Simon is one of my heroes in life. "Richmond Times-Dispatch" leads with the flu. "Flu Widespread in Two Dozen States." That's their lead. But this story is the one that caught my eye. "Two Men Charged Under Spam Law. Virginia Calls it the Nation's First Felony Case Over Junk E-Mail." Does anybody get any real e-mail any more or is it all junk? You know, all those funny letters. What is that about? "The Philadelphia Inquirer." "Insurers to Cover Nasal Flu Vaccine." That's their lead on the flu. "Bush Defends Policy on Iraq Contracts." "'Men and women from our country risked their lives,'" he said. Another official said of the decision, 'It was a train wreck.'" I guess the administration is of two minds on that. Thirty seconds, is that what you said?

UNIDENTIFIED MALE: Yes. 

BROWN: Thank you. 

UNIDENTIFIED MALE: "Miami Herald." "Six Cubans Guilty of Hijacking." This case was extensively followed in the Miami area, as you would imagine. "Protest Violence Paralyzes Much of Haiti." Is there a sadder place in this hemisphere than Haiti? Maybe there is, but I can't think of it.Ten seconds and I can't find the you know what. Here we go. "The Chicago Sun-Times." The weather tomorrow, "refrigerator." Going to be cold. "Bad Guy Gacy Type Charged in Three Deaths" is the lead story. That's "The Sun-Times."We'll wrap up the day, the top story, and preview tomorrow after the break. 

(COMMERCIAL BREAK)

BROWN: Before we go, a quick recap of our top story, the diplomatic dust-up over barring countries that opposed the war from getting contracts to rebuild Iraq. A few small signs today there might be some give in the White House position. And a Pentagon audit says a subsidiary of Halliburton may have overbilled the U.S. government to the tune of $61 million for gasoline trucked into Iraq. Tomorrow on this program, the government warns us about mercury in tuna, yet intends to relax the standards for mercury emissions from power plants. How can that be? That and more tomorrow on NEWSNIGHT. "LOU DOBBS TONIGHT" is next.Good night for all of us. END

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.comNoncoalition Members; Pentagon Believe Halliburton Overcharged For Gas In Iraq; Rockets Fired At U.S. Green Zone In Baghdad>