Skip to main content /TRANSCRIPTS


Hatch, Edwards Discuss War on Terror; Dreier, Rangel Debate Measures to Police Corporate Responsibility; Interview With Louis Farrakhan

Aired July 14, 2002 - 12:00   ET


WOLF BLITZER, HOST: It's noon in Washington, 9 a.m. in Los Angeles, 6 p.m. in Paris and 8 p.m. in Moscow. Wherever you're watching from around the world, thanks for joining us for "LATE EDITION." We'll talk with two key United States lawmakers about al Qaeda and the war on terror in just a few minutes. But first, this news alert.


BLITZER: The U.S. Senator Majority Leader Tom Daschle, by the way, says he expects an accounting reform bill to be approved in the U.S. Senate this week.

Meanwhile, there is growing concern here in the United States that the al Qaeda network still has terror sleeper cells operating in this country. Joining us now to talk about that and much more are two key members of the U.S. Senate Intelligence Committee: Republican Orrin Hatch of Utah and Democrat John Edwards of North Carolina.

Senators, welcome back to "LATE EDITION."

Well, Senator Hatch, let me begin with you, this report that al Qaeda still has sleeper cells here in the United States in the Pacific Northwest, Oregon, Washington state, is that true?

SEN. ORRIN HATCH (R), UTAH: Well, I'm not going to go into the details, but it's been known for quite a while that we have quite a number of terrorist cells throughout our country and we have to do everything in our power to be able to rein them in, make sure that we can bring them before the courts of law and, of course, that means we've got to get our courts of law filled with judges. We have 93 current vacancies in the federal courts today.

But, yes, we do have some problems in this country. But I have to tell you, you don't hear of the good results. The intelligence community, the law enforcement communities are doing terrific work in this country and have done an awful lot to contain some of these problems that do exist.

BLITZER: Are you suggesting that some operations that may have been in the works have been destroyed or defeated without any publicity -- we don't know about that? HATCH: Well, there is not question that we have had some really terrific results. There have been, you know -- I think there have been better than 80 people convicted in courts of law in this country -- and there are -- you know, of all those who have been detained. And there are 129 at least that are -- against whom I think they've had indictments. And then there are a number -- a few other hundreds that they're looking at very seriously. So they're doing a terrific job.

Can you solve every problem? The answer to that is we hope so. But the answer really is, no, you can't. You've got to do the best you can. And I'm very proud of all of the people who have worked so hard to try and keep us safe in this country.

BLITZER: We had put up on the screen four cities, Senator Edwards, that CNN had been reporting from a law enforcement source, Seattle, Detroit, Chicago and Atlanta, potential sleeper cells out there -- al Qaeda sleeper cells.

I want you to listen to what the attorney general, John Ashcroft, said earlier this week when he testified before the House Select Homeland Security Committee. Listen to this.


JOHN ASHCROFT, U.S. ATTORNEY GENERAL: We are not under any illusions. There remain sleeper terrorists and their supporters in the United States who have not yet been identified in a way that will allow us to take preemptive action against them.


BLITZER: How credible is this threat? And how worried should the American public be?

SEN. JOHN EDWARDS (D), NORTH CAROLINA: Well, we'd start with, where are we on the war on terrorism, Wolf? I think the issue is, we have an ongoing war and our focus needs to be just as strong and we need to remain just as focused as we were on September the 12th.

I mean, we know that there are terrorist cells located all over this country. We've seen what's happening overseas, the deterioration in the security situation within Afghanistan, the assassination of a vice president, attacks -- probably terrorist attacks within Pakistan. And the question is, are we doing absolutely everything in our power to identify these cells, get inside them, infiltrate them, monitor them, make sure that we are doing everything for these cells domestically that can be done to protect the American people.

And I might add, we still don't have bin Laden. And we still don't have a lot of the top levels of the al Qaeda leaders.

BLITZER: So is everything being done, though? You raised the question and suggesting perhaps everything is not being done.

EDWARDS: Well, I'm not satisfied that we're doing everything we can do. I think that Director Mueller is moving the FBI in the right direction. He's a good man trying to do the right thing. But there are clearly a lot of improvements that need to be made. And we know these sleeper cells that you're asking about, that Senator Hatch just talked about briefly -- do we know where these cells are, number one? Have we infiltrated them? Do we know everything they're planning and plotting?

I mean, that's where we need to be concerned about domestically.

At the same time, we need to stay focused on what's happening in Afghanistan, what's happening in Pakistan. The big picture is the more important thing, Wolf, both domestically and internationally, to stay focused on what we need to do to win this war on terrorism.

BLITZER: Well, specifically, what else should Director Mueller and the FBI doing that they're not doing right now?

EDWARDS: Well, number one, we need to get -- to the extent we can, we need to get human penetration of these cells within this country so that we know in fact what's going on within those cells.

Second, we need to do everything in our power to monitor whatever activity they're engaged in.

Third, whatever information that is gathered from that activity, we need to make sure that that information is transferred and communicated to all the people who need to know it, local law enforcement, the other elements of the intelligence community.

BLITZER: Senator Hatch, you get the same briefings that Senator Edwards gets as a member of the Intelligence Committee. Are you agree with him?

HATCH: Remember, we passed the 1996 Anti-Terrorism Bill, which was a Hatch-Dole bill. We tried to get a number of features into that bill that I think could very well have gotten us to a point where we might have interdicted these people.

After 9/11, we did -- then did pass...

BLITZER: But you're saying after '96, they just didn't do the job they were supposed to?

HATCH: Well, we had too many liberals arguing that you couldn't do this because -- you couldn't do some of the things that we felt had to be done to protect us because of civil liberties concerns. And naturally, we were concerned about civil liberties, too. But when we did the USA Patriot Act this last year...

BLITZER: After 9/11.

HATCH: ... after 9/11, we cured an awful lot of those problems.

But there's still one problem that isn't cured and it's one that rises continually. And that is, under the Foreign Intelligence Surveillance Act, can you really go in and get a warrant to wiretap a suspected terrorist under current law? And the answer to that is in many cases you can't, because you have to be able to prove, or at least have probable cause, that the person you're trying to wiretap is either an agent of a foreign government or affiliated with al Qaeda or one of the other known terrorist organizations.

And unless you can show that, even though you have strong suspicions, you probably would be very loath to go to the FISA court to ask for that type of warrant authority.

The USA Patriot Act has really helped us a lot, and I commend everybody on the committee for working on it like we did and getting it done.

BLITZER: But you're saying that there's still a loophole there, there's still a hole there that has to be filled.

HATCH: And it's a serious one, and it's serious to both sides. Because on the one side, those on the left think that it may be -- and some on the far right, the two extremes both believe that civil liberties should take precedence, and we all think that. But not when you have pretty good knowledge that these people may be terrorists or known terrorists and may commit problems -- commit actions against the United States.

BLITZER: Senator Edwards, what do you say?

EDWARDS: Well, I think the director of the FBI actually believes we've made progress in this area, partly, I might add, as a result of some of the work that Senator Hatch and others have done on the Judiciary Committee, on the Patriot Act, on the intelligence legislation which both of us were involved in which was passed earlier in the year. We broadened the extent to which this kind of surveillance could be done and gave the FBI and the CIA more authority to do it. I think that was right. It was the correct thing to do, and now we need to make sure that what's -- what can be done is, in fact, being done.

What over the years -- and Senator Hatch made reference to this -- over the years we've gotten away from using human intelligence. It is extraordinarily difficult to know what's happening within these terrorist cells, both domestically and overseas, if you don't have people inside them who can tell you what, in fact, is happening.

BLITZER: And that often means -- and we'll move on -- dealing with unsavory characters who might be turned and become human intelligence sources. But...

HATCH: Again, some on the left have argued against that because of dealing with unsavory people, but those are the people you've got to deal with. They're the only ones that can get inside.


BLITZER: It's almost like dealing with the mob here in the United States.

HATCH: That's right. You have to get inside the terrorist cells. And so we're going to have to deal with people we might not ordinarily think are very savory.

BLITZER: It's not pleasant to have to deal with killers and thugs, but that's in the nature of the business, you might have to do that.

EDWARDS: Those are the kind of people we're going to have to have to get inside these terrorist organizations. I think they'd recognize if Senator Hatch or I tried to infiltrate the organization.

BLITZER: I think you're right.

Sulaiman Abu Gheith, who's a top spokesman for al Qaeda, he's making all sorts of statements all over the place now, saying that they're make a comeback, they're regrouping, Osama bin Laden's just fine. He told the Algerian newspaper al-Yom, this past week, was published, "Our military and intelligence networks are assessing and monitoring new U.S. targets that we'll strike in a period of time which is not long. Our suicide militants are ready and impatient to carry out attacks against U.S. and Jewish targets inside America and abroad."

Should the U.S. be taking those kinds of threats seriously?

HATCH: Sure, they should. Sure, we should. But we're nailing them all over the word.

But, when you start talking about people who are willing to give their own lives to murder other people, that's a new element that we're not used to. And we've got to get used to it, and we've got to be able to stop -- not used to it in the sense of being able to interdict it and to stop it for the well-being of our people in this country.

BLITZER: Senator Edwards, you mentioned earlier that there's some frustration because Osama bin Laden is still at large. A new CNN/USA Today/Gallup poll released this week asked who is winning the war against terrorism. The United States, 39 percent. But look at this: terrorists are winning, 16 percent, and neither side, 43 percent. In other words, 59 percent, a majority, believe that the United States is not necessarily winning this war on terrorism.

EDWARDS: Well, I think, right after September 11 and then several months thereafter, we took some good, strong, dramatic steps in winning the war on terrorism and going after these terrorists in an offensive way. The key now, Wolf, is not to lose that focus.

There's a lot of debate inside Washington about reorganizing government bureaucracies, about creating a Department of Homeland Security, and that's a legitimate debate. Some of those reforms need to occur. We have some differences on both sides of the aisle about the best way to do that, and differences with the administration, but the most critical part of that discussion is to not let that distract us from the ongoing offensive effort to win this war on terrorism, both here, in Pakistan, in Afghanistan, in other places around the world that -- where we need to be offensive in our efforts. BLITZER: You get the final word in this segment, Senator Hatch. Until Osama bin Laden is either captured or killed, the American people, do you believe, will remain worried that the United States is not necessarily winning the war?

HATCH: Well, we don't know whether Osama bin Laden is already dead or not. But we do know that we've put a real dent into his programs and into al Qaeda. And we've got to continue to do it.

Like I say, we've had a lot of convictions, we have a lot of people who are under indictment, and we have a lot of investigations being on. Our intelligence community's heightened like -- it's a heightened awareness like never before. So is our law enforcement community. We've been making some very effective changes.

Can you be absolutely sure that we won't have some other terrorist activities in this country? The answer to that is no. But we're doing everything we possibly can to get it done.

Can we improve? Yes, we can improve, and we need to continue to fight to do so. But we also need to let law enforcement and the intelligence community get together and get it done without congressional interference in the sense of stopping it or slowing it down or interfering in ways that really make it impossible to do.

BLITZER: All right, Senators, stand by. We're going to take a quick break. We have a lot more to talk about, including corporate responsibility, corruption, greed. Our conversation with Senators Hatch and Edwards and your phone calls, when "LATE EDITION" continues.


BLITZER: Welcome back to LATE EDITION. We're continuing our conversation with Republican Senator Orrin Hatch of Utah and Democratic Senator John Edwards of North Carolina.

Senator Edwards, do you have confidence in the way President Bush is dealing with this issue of corporate responsibility amid all of these scandals that have unfolded in recent weeks?

EDWARDS: Well, I think the problem is the president because of his history, because of his relationships, because of the history and relationships of the people around him in his administration, there's a lot -- there are a lot of people in this country believe he sees things through the eyes of the CEO's of corporate America instead of through the eyes of ordinary investors, ordinary Americans. And so I think he has to prove to the American people that he, in fact, is willing to do what needs to be done to restore confidence in this market.

BLITZER: But didn't he try to do that on Tuesday when he was on Wall Street?

EDWARDS: Yes, and I think the best test of how successful that was is what happened to the market over the rest of the week and that incredible drop in the market, I think, almost 700 points this week is the extent of the drop of the market.

BLITZER: You can't blame President Bush for that?

EDWARDS: No, no, I don't blame him for that, but I think what the market was looking for, is they were looking for a strong, clear statement that he was going to take the steps necessary to clean up these problems in corporate America, and as a result restore confidence.

And by the way, Wolf, I don't think this is just a corporate confidence issue, I think it's an issue that relates to the entire economy. I mean not just what's happening in corporate America today but does the president have a clear plan to bring out of this economic downturn that we're in.

We have problems with corporate corruption. We have the lowest level of consumer confidence we've had since September. We've had the most dramatic drop in the market since September. I mean, all these things -- we have a budget deficit which the White House just announced of $165 billion over the next year, a dramatic turn from surpluses. I mean it's not just cleaning up corporate America, it's also does he have a plan to deal with this problem with the economy?

BLITZER: He may have a political problem, too, Senator Hatch. Look at this CNN/USA Today/Gallup poll. Is President Bush more interested in ordinary Americans? Forty-seven percent; large corporations 46 percent. Almost half of the country thinks he's more interested in large corporations than ordinary Americans.

HATCH: Well, it depends how you ask the question. I mean, I think all of us are interested in large corporations because that's part of the motivation for our economy to grow.

But, you know, President Bush, I don't know that he could have given a much stronger speech than he gave. I get a little tired of some of the people calling for the resignation of Pitt.

Look, I remember when Ted Kennedy's father was put over the Securities and Exchange Commission. He knew where all the bodies were buried and he did a terrific job. Pitt's the same way.

BLITZER: You're talking about Harvey Pitt, the chairman of the Securities and Exchange Commission.

HATCH: Harvey Pitt, the chairman of the Securities and Exchange Commission knows where all the bodies are buried. He understands the accounting difficulties. He'll be a great asset there. And frankly, to expect somebody who doesn't have some experience with corporate American or with accounting or with accounting principles to do that job would be a real mistake.

BLITZER: But you know that your Republican colleague Senator McCain is leading the fight calling on Chairman Pitt to resign.

HATCH: Well, I think that's easy to make that argument, but it's a much better argument, our view that this is a man of integrity, has always shown that. Has had extensive experience with the SEC. Is tough as nails. Understands where the bodies are buried. And I think is likely to do a good job and he's been put there by President Bush.

Now, look, every time you have any difficult in the business world, especially the big business world, some try to blame Republicans. The fact is -- the fact of the matter is is that both parties are about treated equally by the Fortune 500.

BLITZER: In terms of campaign donations.

HATCH: Campaign donations. In terms of support. In terms of backing. So I think it's ridiculous for either side to say, "Well, one side is big corporate America and the other side isn't." Both have to be concerned.

But one other thing: You know, this economy is an interesting economy. It has a 3 percent productivity growth which is better than it was in the '80s. And I have to tell you we have only a 5.6 percent unemployment; although some would say that's high, it isn't high in theoretical terms and actually practical terms. And this economy is going along very well.

But every day you have a scare. Every day you have members of Congress going out and bad-mouthing what's going on and, frankly, people are afraid. And then you have the six, seven or eight or nine companies that have done wrong and people have lost their pensions and we're all outraged about that.

BLITZER: I want to just pick up the issue of Harvey Pitt. You voted, together with 99 other I think, members of the U.S. Senate, to confirm him, his nomination. Do you think he should step down?

EDWARDS: Let me say just a word about what Senator Hatch just said and then I'll answer that question, Wolf.

I think you'd have a hard time convincing the thousands and thousands of people in this country who have lost their jobs. I've talked to a lot of people over the last few weeks who are having to continue to work, planning to retire, because they've lost the bulk of their pensions during this drop in the stock market. Young people who are coming out of college who can't get jobs.

We have to look at this through the eyes of real people, not Washington, D.C., economists. I mean, people are struggling. People are suffering. And they want to see us have a clear plan of what needs to be done to get the government back on the path to fiscal discipline and to do what needs to be done to restore confidence in the markets.

As to Harvey Pitt, I think the problem with him is he comes -- like a lot of the members of the Bush administration, comes from the perspective of CEOs of big corporate America. You know, he has a strong connection with the accounting industry. And we know about his meetings with members of the accounting industry.

Here's how I view his position. I think we ought to hold him to a high standard. We ought to hold him to a tough standard. He's got an investigation of Halliburton going on during the time that Vice President Cheney was in charge of Halliburton. He ought to be made to do that investigation vigorously and diligently.

But I think we ought to give him a chance to see if he'll do what he's responsible for doing. My test is performance, not just what his ties have been in the past.

Which by the way, I think should be exactly the test as to President Bush. Will he be willing to look in the eyes of the people who helped to put him in office, the CEOs of corporate America, and say, "This is what needs to be done; I'm willing to do it no matter what because it's in the best interests of ordinary Americans"?

BLITZER: But some Democrats say it's unrealistic to assume that Harvey Pitt, as chairman of the SEC, can effectively and fairly go ahead and investigation Halliburton and Dick Cheney's role there, since Dick Cheney helped put him in the job.

EDWARDS: Well, I think we're going to find out the answer to that question. I mean, Mr. Pitt...

BLITZER: And you're willing to give him the benefit of the doubt?

EDWARDS: I am. I think Mr. Pitt can show us whether he is willing to vigorously investigate Halliburton, even though the vice president was in charge of that company during the time that these things occurred.

BLITZER: And you think that that's realistic to assume he can do the job?

HATCH: I don't think there is any question about it.

You know, but just to correct a couple of things. Millions and millions of people from all walks of life put President Bush in as president of the United States. It wasn't corporate America that did it. In fact, that's a very small segment of our society.

But let me just say this, what do we do, blame Arthur Levitt? Because these things all occurred during his tenure. I wouldn't blame him. He was a very shrewd, very sharp head of the Securities and Exchange Commission.

Pitt appears to be every bit as shrewd, every bit as sharp and much tougher. And Levitt was not considered a pushover by anybody. In fact, he was constantly under some fire by the Clinton administration.

And you know, when did all these things occur? Did they occur in President Bush's administration? The end result, the catching of them is occurring, but they occurred years and years ago.

And some of these corporate leaders have been doing wrong. But there are literally thousands of good corporate responsible people out there who are doing what's right, living with good accounting rules, following the law and doing the things they should. And we shouldn't condemn the whole country because of these few bad people who really ought to go to jail.

BLITZER: By the way, the American public doesn't think that's necessarily the case.


BLITZER: In this CNN/Time magazine poll that's out this weekend, the current accounting scandals, are they an indication of a pattern of deception -- a big-scale pattern of deception? Seventy-two percent say yes. Isolated incidents; only 20 percent say these are isolated incidents.

HATCH: Well, I don't disagree with those people. A matter of fact, I think it depends on how the questions are asked, but the fact is I think the American people realize there are a lot of good people in business, there are a lot of honest people out there. And we shouldn't condemn the whole country just because we have some really bad apples at the top of corporate America.

BLITZER: Should President Bush give the green light to the SEC and Harvey Pitt to release all of the documents from Harken Energy, his company a decade ago that was involved in some dispute with the SEC at that point?

EDWARDS: Yes. This president ran on the idea that he was going to restore integrity to the White House, that he would be forthright with the American people. He has an opportunity now to prove that. And all he as to do -- the best antidote to all of this discussion, this debate going on about Harken and the president's involvement in Harken is sunlight.

Let's put all this information out there, put it before the American people. And most importantly, put it behind us so we can get on to dealing with this corporate corruption and restoring people's confidence in the economy.

BLITZER: I believe that was advice you once gave Bill Clinton when he was president of the United States too.

HATCH: I don't have any problem with that. But that occurred 12 years ago. It was thoroughly vetted during the presidential -- I know, I was running for president there as a backup to President Bush really. The fact -- to then Governor Bush. But the fact is, all of that was raised. It was all knocked down.

And you know, but whatever it takes. I think the president ought to comply and help here. I don't think there's any question about that.

But look, when are we going to say that things that have gone on decades ago, or 10 years or more ago, should always be dredged up, just because there might be some political advantage to dredging it up? I...

BLITZER: So there should be a statute of limitations, in terms of times...

HATCH: Well, I think there's a time when you say, especially since all those things were vetted, and all were discussed, all were used against him during the political campaign, but now we should suddenly bring them all back again, in order to...

BLITZER: So the Cheney element...

HATCH: ... in order to try and make him look like he's part of these crooks up there on Wall Street.

BLITZER: But the Cheney-Halliburton was more recently, so you don't necessarily think that that should just be forgotten?

HATCH: I don't have any problem with that, but I do understand, having at one time worked in business, that there are all kinds of ways that you can do accounting, and sometimes every corporate leader would like to have accounting that shows the company in the best light. And it's up to those auditors to say, "No, we can't do that."

EDWARDS: But the president has an opportunity, Wolf. We have a strong piece of legislation that will restore confidence in corporate America on the floor of the United States Senate, which the two of us both support. The president has not embraced that legislation. And that would be an opportunity for him to send a clear signal to the American people, clear, unequivocal, "I'm going to do what's necessary to make sure that people (UNINTELLIGIBLE) are protected."

BLITZER: It passed 17-4 in the Senate Banking Committee that Senator Sarbanes chairs.

HATCH: Well, I don't have any problem with that. I think -- one last word, I think Paul Sarbanes has done an exceptional job, and so has Phil Gramm. They've been working together, even though they've had their conflicts, but that's what makes things work sometimes.

John and I work together very well, but sometimes we differ. And when we do, we work it out. We just fight each other, work it out until we can get things going. And that's not bad.

But I've got to pay tribute to Senator Sarbanes. I think he's done a very, very good job.

EDWARDS: I agree with that.

BLITZER: All right. On that positive note, we'll leave it.


BLITZER: Senator Hatch, Senator Edwards, thanks for joining us.

EDWARDS: Glad to be with you.

BLITZER: Appreciate it very much.

When we return, we'll switch gears: Outrage over the videotaped arrest of a teenager in California. Did police cross the line? We'll get perspective from the former L.A. County district attorney, Ira Reiner, the NAACP leader, Nelson Rivers, and the former head of Washington, D.C.'s Fraternal Order of Police, Gary Hankins. LATE EDITION will be right back.



RON BANKS, INGLEWOOD CALIFORNIA POLICE CHIEF: We in no way condone or encourage excessive or improper use of force by our officers, but the constitutional principals of due process for anyone under investigation should always be safeguarded.


BLITZER: Inglewood California Police Chief Ron Banks asking the public and the media for patience as the investigation into the arrest of 16-year-old Donovan Jackson proceeds. Officer Jeremy Morse, the officer who was videotaped hitting Jackson has been placed on administrative leave with pay. Another officer also now says he struck Jackson before the videotape began to roll. We'll talk with Morse's attorney later in this program, John Barnett.

But joining us now from Los Angeles is that county's former district attorney, Ira Reiner, in Atlanta, Nelson Rivers, the field director for the NAACP and here in Washington, the former president of the Washington, D.C., Fraternal Order of Police, Gary Hankins. Gentlemen, thanks to all of you for coming here.

And Ira Reiner, let me begin with you. And as we speak, I'll show our viewers that controversial videotape. I'm sure most people here in the United States, probably around the world, have seen it. Is there any justification for what we're seeing right now?

IRA REINER, FORMER LOS ANGELES COUNTY DISTRICT ATTORNEY: Wolf, force may be used to restrain -- necessary and reasonable force. But force may never be used to punish. Once a prisoner or an arrestee has been fully restrained and they are no longer a threat to anyone, at that moment all of the force has to shut down.

I understand it's very difficult after you've been involved in a physical confrontation to immediately shut it down. But that's what a police officer has to do. They all know that. They've all been trained to do that, and it is unprofessional after you have your prisoner handcuffed and fully restrained then to let your anger and temper play out by what we've seen here by slamming him into the hood unnecessarily and certainly by trying to punch him in the face with a closed fist unnecessarily.

BLITZER: Gary Hankins, are you prepared to agree with Ira?

GARY HANKINS, FORMER PRESIDENT, WASHINGTON, D.C. FRATERNAL ORDER OF POLICE: I agree with the legal principles and the instructions that we get that there is a continuum of force and only that force necessary to restrain an individual can be properly applied. But I think that we also have to take into account that there are things happening in the field that go far beyond this simple statement.

For instance, this gentleman just said that the man was handcuffed so he should have been at least under control. There was an officer killed in Florida not too many years ago. He was putting a handcuffed prisoner into the scout car, the gentleman laid back on the seat and kicked the officer in the chest with both feet so hard that he killed him. So there is never a white bright line that says, "OK, now this is over." You can be injured even by people who are restrained and you have to be careful about that.

The last time that the FBI had a full year of statistics in the year 2000, they collect statistics, 56,000 police officers were seriously assaulted in this country and 13 percent of those assaults occurred in California. Officers are assaulted routinely. When we...

BLITZER: We'll pick up that point, but I want to bring in Nelson Rivers into this discussion. You've heard -- you just heard Gary Hankins make the case that there is time for this kind of force to be used in trying to subdue a suspect. The attorney for Jeremy Morse, the police officer who's seen slamming the suspect down on the hood and punching him in the face, John Barnett, he was on CNN earlier this week. He'll be on this program later today. He justified what his client did. Now, I want you to listen precisely to what he said.


JOHN BARNETT, JEREMY MORSE'S ATTORNEY: He took action which required that he be punched and that the facts will show that the use of force was restrained given all of the circumstances.


BLITZER: And Mr. Barnett went on to say that even though the suspect's hands were handcuffed behind his back, at one point he used his fingers to grab him in the groin which he said caused pain and that justified slugging him in the face as we all saw. Does that make any sense to you?

NELSON RIVERS, NAACP FIELD DIRECTOR: Not a bit. It's outrageous, in fact, for his attorney to suggest such a thing. It reminds us so much about what was said about Rodney King after he was almost killed on videotape. They said that he moved like an animal. He deserved this kind of beating. Anybody watching this videotape know -- has to know it's excessive force. That's not necessary. That's punishment. That's vengeance. That's hitting someone in anger.

They picked him up and slammed him on top of the car. They pushed his head down. They punched him in the face when he's lying down. Four or five officers standing around him. How is this young man a threat? If he was a threat any time and we have disputing evidence on that, but he's not a threat now and he's being brutalized. That's outrageous.

Police officers should not want to stand behind that kind of behavior. In fact, police officers should lead the call to outlaw this kind of behavior and to say once and for all this is unacceptable by professional law enforcement officers. We cannot and we will not allow this to go unchallenged and for him to suggest that this is justifiable is outrageous and ridiculous.

BLITZER: Ira Reiner, does that argument that John Barnett, the attorney for Officer Jeremy Morse, makes, does that make any sense? Obviously we couldn't see what the suspect's hands were doing behind his back, but is there a legitimate case, a legitimate justification there for smashing him in the face?

REINER: Wolf, I think that question is probably best answered by responding to Mr. Hankins' comment earlier, that even after a suspect has been handcuffed, they still may pose a danger to the arresting officers. And although in theory of course that's true, but that is not the case here. The officer, yes, has a right to be careful, even though the arrestee has been handcuffed, but by slamming him into the hood, he's not being careful, he's punishing. By punching him in the face, he is not being careful, he is punishing him.

And what we have here is a clear case of unprofessional conduct by he officer. And I can say this, and I'm sure Mr. Hankins will have to agree to this: There is no police department in the United States, upon looking at this film and showing it to trainees and other officers, would say that it is anything other than unprofessional.

I'm not talking about criminal. That is something that you need to look at all of the facts, and they're not all available to us now, before a decision can be made as to whether it rises to the level of criminal conduct by the officer. Perhaps it does, perhaps not. But it is clearly, from what we have seen, unarguably unprofessional behavior by the officer.

BLITZER: Gary Hankins, I want to pick up that point, and I want to read to you what Commander Jim McMurray of the -- the head of the LAPD Internal Affairs Division told the Los Angeles Times on Wednesday. He said this: "It's clearly a policy of ours, just like we don't shoot moving cars, we don't hit handcuffed suspects."

HANKINS: And I'm sure that that's the case. The continuum of force policy that's been adopted nearly universally around this country requires that you only use that force necessary to restrain and protect, and that does not appear to be what occurred here.

On the other hand, I think that we should look to what we don't do for police officers. We talk about the need for them to behave professionally, but officers are assaulted at a rate far exceeding anything else, any other occupation sees. But we don't try to treat that. When an officer is a subject of assault -- and in some patrol service areas or beats officers may be assaulted monthly, or even weekly -- we don't provide them assistance with what happens when those kinds of things occur to you day in and day out.

We can't ignore that officers are human beings. I think that there was a time when people thought these things were racial. And now that minorities make up a large component of the police departments, they realize, this is human nature, this isn't racial in nature. BLITZER: All right. Well, we're going to pick that point up with Nelson Rivers. We have to take a quick break. Mr. Rivers, when we come back, we'll pick up the whole issue, is there a racist issue involved in these kinds of allegations of police brutality? Our conversation with our guests will continue. They'll also be taking your phone calls, right after this.


BLITZER: Welcome back to LATE EDITION.

We're talking about the highly explosive videotaped arrest in Inglewood, California, with the former Los Angeles County district attorney, Ira Reiner, the NAACP field director, Nelson Rivers, and the former D.C. Fraternal Order of Police president, Gary Hankins.

Mr. Rivers, I want you to listen to what Martin Luther King III said Friday at a protest in Inglewood, California -- he's now the director of the Southern Christian Leadership Conference -- on the whole issue of race on allegations of police brutality.


MARTIN LUTHER KING III, DIRECTOR, SOUTHERN CHRISTIAN LEADERSHIP CONFERENCE: This is not a black or white issue. This is a right and a wrong issue. And the issue of police brutality and misconduct is wrong, no matter who conducts it.


BLITZER: The upshot from what he's saying -- appears to be saying is that he doesn't see racism, per se, as an issue here. Do you?

RIVERS: Well, I think Martin was talking about the fact that there may have been an African-American officer involved as well. And of course, that may suggest that regardless of race of the officers involved it was still abuse. It was still outrageous conduct. And we agree with him.

But let's be real about this. As an African-American male myself and working with the NAACP branches across the country, including our branch there in Inglewood, we hear it all the time. We know racial profiling does exist, that African-American males are stopped more than anyone else. We're stopped often for no reason at all, other than the fact that we are black in the wrong place at the wrong time.

And so, racial profiling is a factor in what we're dealing with here in this instance. We've had testimony from others about why they were stopped in the first place and how much force was used and would the same amount of force been used with a white teenager in the same situation. I, kind of, doubt it, based on the history in this country and what we've been exposed to.

But also, Mr. Hankins seemed to suggest that there is some rationale or logic to what we saw played out on the videotape. That's unacceptable. We want to applaud the mayor of Inglewood for calling for the officer to be punished and also saying unequivocally that it was unacceptable by him as the leader of that city.

The truth of the matter is, we find racial profiling has a lot to do why African-American males are stopped in the first place. And then the violence that goes with it is even compounded by the fact that oftentimes white officers take out their anger and frustration on those in custody who happen to be of color.

BLITZER: All right. Let's ask Mr. Hankins to respond.

HANKINS: Well, it's interesting because we've had an opportunity now to study the number of times black officers, Hispanic officers or white officers are involved. When I joined the Metropolitan Police Department in 1970, the overwhelming majority of the department was white. Today the majority is black. And interestingly, we have not seen a difference in the number of civilian complaints against Hispanic officers, black officers or white officers.

We have also seen the Justice Department Civil Rights Office going into communities where they believe there may be a problem and collecting statistics. And the idea of racial profiling is not being as upheld by the statistics that are being collected.

In nearby Montgomery County, just outside Washington in Maryland, has their collective statistics there on case-by-case, they are finding that the perception is not being supported by the facts.

BLITZER: Mr. Reiner, let me bring you in because you're an expert in this area. Is this an issue involving race? Or is it just coincidental, in this particular case, that the suspect is an African- American and the police officer, Jeremy Morse, is white?

REINER: Well, Wolf, to know whether or not it was racially motivated, you have to crawl inside the officer's mind, and we don't have the information for that. You don't have to get to the question of race here. The question is whether the officer conducted himself professionally or not irrespective of the race of the particular arrestee.

Now, Mr. Hankins makes a point. And that is that officers are human beings, well, of course, and that it is very difficult after a physical confrontation to immediately shut it down. The emotions are running very strong. The adrenaline is probably pumping out the ears.

Most of us could not do that after there has been a physical confrontation, to shut it down immediately. But that's what a police officer has to do. It's professional to do it. It is unprofessional not to do it.

And when you look at this videotape, I think you can say this and I don't think it admits to contradiction, that if this tape is shown to any training class of police recruits showing them how they may or may not act, this would not be shown as an ambiguous incident that would invite class discussion. It would be shown as a clear illustration of unprofessional conduct on the part of the officer. BLITZER: There may be a more ambiguous statement, Oklahoma City, we're going to roll that in the next segment. But let's take a caller right now from Massachusetts.

Please go ahead with your question.

CALLER: Hi, I would like to know what's going to happen to the officers.

BLITZER: All right. Well, let's ask Ira Reiner, first of all, what's going to happen to the officer in this particular case, Jeremy Morse?

REINER: Well, Wolf, the point that I made a moment ago, maybe I should elaborate on and that is, there are two issues here and that is the department discipline, which goes to the question of whether the officer conducted himself properly, as I have said, professionally and the department discipline can go all the way up to and include dismissal, firing.

Then there is the criminal end. And by the way, as to that part, I think the evidence from the tape is conclusive -- that he was acting unprofessionally and what is open is the level of discipline, which can be less than dismissal but could include firing.

The second question as to whether it rises to the level of a criminal act so that it's to be prosecuted by the district attorney. In order to make that judgment, you need to have more information than is available from that tape. You need all of the information of the acts that preceded it.

BLITZER: All right.

REINER: That is what the district attorney is involved in and their investigation now before the L.A. County grand jury.

BLITZER: Mr. Rivers, before we take a break, you heard the police chief in Inglewood, California, Ron Banks, say, "Look, let due process go forward, let there be an investigation. Don't make up your minds based on a few seconds of a videotape that that may or may not show the whole situation."

The police chief, as you know, in Inglewood, California, he's an African-American. Why not listen to his advice?

RIVERS: Well, we do listen to his advice. The NAACP simply wants justice. The challenge is and the problem is, we have bad history in this regard. Rodney King got the worst beating ever videotaped and the jury still came back and exonerated the officers. That was not justice and so what we want is justice.

Just because the chief says justice will prevail doesn't mean it will. We don't have much history to depend on to guide us in this regard so the NAACP is not declaring anyone guilty or innocent. What we're asking for is that justice be served and if it's justice that this officer be punished for what he did, then he ought to receive that. It would be an injustice for no one to be punished for what we see on this videotape and that's what we're concerned about.

BLITZER: So just to be precise, Mr. Rivers, you're not saying that right now Officer Morse should be fired before there's a full- scale investigation?

RIVERS: Exactly. We're not saying that. What we're saying is that justice ought to be served. A thorough investigation ought to be done. And when the investigation is complete, the results ought to be made public so the public can be reassured or assured that justice was done. And right now we don't have that kind of assurance.

BLITZER: All right. We're going to take another quick break, but much more of our conversation including more phone calls still coming up. Stay with us.


BLITZER: Welcome back to LATE EDITION.

Gary Hankins, there was another videotape that was released this week, in Oklahoma City. A police officer arresting two individuals, a woman alleged to be a prostitute, in a car -- in a truck. The other, the driver, in this particular case, refused to comply with police as he is taken out of the car, and the police officer, as we'll see on this videotape, begins to try to put a handcuff around him.

And as we show this tape, this is a very different case. Is the police officer using appropriate restraining power in this particular case, once this individual allegedly doesn't comply, and apparently he's also trying to swallow some packet of marijuana, to conceal evidence -- that's the allegation that the police have made?

HANKINS: I think that, in this case, the officer is attempting to use a minimum amount of force necessary to make the arrest, and to recover the evidence. The subject begins to comply, and I think we ought to first see how much larger the subject is than the officer. Then, as the officer tries to get him to put his hand behind him, he refuses. The officer then tries to spin him down, to get him on the ground, so they can handcuff him, and the subject refuses.

When you're in this kind of a situation, viewing it at home on a Sunday morning, it's interesting. But when you're in the middle of it, and you're a lone officer dealing with someone much larger than you are, it's a very frightening thing. You discover that you're not able to control this person, that he is much larger than you, and you know, from training and unfortunate experience, that many officers are killed with their own weapons.

BLITZER: And we see, he's spraying now with pepper spray.

Ira Reiner, as you see this very different case in Oklahoma City than what was in Inglewood, what goes through your mind?

REINER: Well, I'll tell you what goes through my mind. Here is an example of an officer who is not acting in an unprofessional manner. He is -- as was pointed out by Mr. Hankins, that he's dealing with someone who's quite large, someone who will -- who's resisting, and he's using whatever is necessary and reasonable to overcome that resistance.

When you compare that with the Jackson case, look, that was not a biggy, as things go, in terms of the stress for an officer. You have six officers, you have an unarmed, skinny 16-year-old kid, and if you can't shut it down after you've done that, then what are you going to do when you're faced with a true stressful situation?

BLITZER: All right.

Nelson Rivers, is the officer behaving responsibly in Oklahoma City?

RIVERS: I can't really tell. It doesn't look, from all the blows and the striking, and of course the blows are continuing even right now, where is the resistance? Where is this -- the so-called big man causing the problem? He's been on the ground for quite a while now. He's been getting hit quite a bit.

So it's the eyes of the beholder, one again.

Those of us who have been down this road a lot, who've been abused, who've had folk to attack us because -- for no good reason other than what we think may be our race, and watching this, this does not seem to be professional. Are you suggesting that this is professional? This man has been on the ground for a long time, and he's still being hit. That's not the message police officers ought to want to send.

BLITZER: All right.

RIVERS: That's not the kind of image you ought to want, as a police officer, if you're a professional. And that's a problem, a significant problem.

Also this issue of whether this is isolated in Inglewood. Mr. Hankins suggests that this may be just an isolated incident. But the truth of the matter is, we receive complaints all across the country all the time about this kind of behavior. Racial profiling escalates into this kind of occurrence, and this kind of violence by police officers.

The NAACP is concerned about this in Inglewood. We plan to have a public hearing about this, under the leadership of our branch out there, Ms. Gwendolyn Smith and our regional director, Frank Berry, to find out from the public, how do they feel about it, not just what officers say about it...

BLITZER: All right.

RIVERS: ... what do the people feel about it who are victimized by this kind of behavior.

BLITZER: Unfortunately we have to leave it right there. An important subject, a subject we will continue to explore. Nelson Rivers, Ira Reiner, Gary Hankins, thanks to all three of you for joining us on LATE EDITION.

REINER: Thank you.

HANKINS: Thank you.

BLITZER: And coming up in the next hour of our program, two leading members of the United States Congress square off over the White House's responsibility in corporate scandals. Is there a responsibility? What should the White House be doing?

Then some perspective from three financial experts on what it will take to turn things around.

Stay with us.


BLITZER: This is "LATE EDITION," the last word in Sunday talk.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My administration will do everything in our power to end the days of cooking the books, shading the truth and breaking our laws.


BLITZER: President Bush lays down the law on corporate responsibility. But can the administration police the business world? And which party will pay the political price? We'll ask two top members of the U.S. Congress, Democrat Charlie Rangel and Republican David Dreier.


BUSH: Business pages of American newspapers should not read like a scandal sheet.


BLITZER: But they do, so what should you do now with your money? We'll ask our panel of financial experts.

An American visits Iraq. We'll talk with Nation of Islam leader Louis Farrakhan about his trip.

And Bruce Morton analyzes anger in middle-class America.

Welcome back to "LATE EDITION." We'll get to our exclusive interview with Louis Farrakhan and the congressional view of the corporate scandals in just a few moments. But first, here is CNN's Fredricka Whitfield in Atlanta with a news alert.

(NEWSBREAK) BLITZER: We're joined now by two veteran members of the United States Congress who never hold back when they're on LATE EDITION. Here in Washington, serving his 11th term, is Republican Congressman David Dreier of California. He is the chairman of the House Rules Committee.

And in New York, the dean of that state's congressional delegation, in his 16th term, Congressman Charlie Rangel. He's the top Democrat on the powerful House Ways and Means Committee.

Congressmen, always great to have both of you on the program.


How are you doing, Charlie?

REP. CHARLIE RANGEL (D), NEW YORK: Good to be back.

OK, David.

BLITZER: Thank you very much. And later, Charlie Rangel, you can say happy 50th birthday to David Dreier. But not now, only later at the end of the segment.

Congressman Rangel, do you think, based on what you know right now, that George W. Bush is doing a good job in dealing with these issues of corporate responsibility?

RANGEL: He hasn't yet begun. It's one thing to rhetorically state a position to be against what is bad and what is evil. But it's another thing to get investor's confidence restored.

The Republican Party, the president's administration has fought against government regulation as something that was just evil. And the private sector could do no wrong.

I think for openers, the president and the vice president ought to put the records out in terms of what they have done and not done as it relates to corporate wrongdoing. I'm not making an accusation, but it would seem to me that they should not be under any type of investigation.

And Republicans have to come forward and say, "What are you doing to repair the shattered dreams of the investors?" Not one person has gone to jail, but not one nickel has been restored to those pension plans that have been depleted.

BLITZER: All right. Let's let Representative Dreier to respond.

DREIER: Well, Charlie, I will tell you from the get-go, it's true that the Republican Party is the party of freedom and free markets, and we don't look at regulation as the immediate panacea. But we have strongly supported, and this administration has strongly supported, oversight and moving ahead with legislation, which we passed out of the House, with 119 of your Democratic colleagues joining with us Republicans, in bringing about reform of the accounting process. And so, we know that it needs to be done.

Earlier this morning, we've had strong statements from a wide range of people, former chairmen of the Securities and Exchange Commission Arthur Levitt, Richard Breeden. We've seen statements from Harvey Pitt, the present chairman of the Securities and Exchange Commission.

This administration is strongly committed -- and I will tell you, I've known the president for nearly a quarter-century, and he is angry about this issues, and he has stepped forward, and he will be supporting -- and I will tell you, Charlie, he's going to sign the legislation that I hope you will vote for, as 119 of your Democratic colleagues did on April 24 at the end of the day.

BLITZER: All right. Let me bring back Congressman Rangel and show you some poll numbers that just out in our latest CNN/Time magazine poll released this weekend.

One question, "Who do you trust more to handle the current accounting scandals?" Democrats, 44 percent; Republicans, 33 percent. But look at this: "Who's more responsible for the current accounting scandals?" Bush, 33 percent; Clinton, 40 percent.

Before the Democrats, Congressman Rangel, start salivate and seeing a campaign issue, I guess they're going to have to take closer look at what the American public sees right now.

RANGEL: I don't really think so. The last I heard, Bill Clinton's not running for reelection, and neither is governor now President Bush.

The truth remains that the reason the public is so skeptical of the direction which the Republican Party is going that is they have thought that everything the government's been involved in should be turned over to the private sector. Especially...


RANGEL: Please give me break, happy birthday give me a break, be courteous -- the Social Security system, they talk about privatization. The Medicare prescription drug system, they say, turn it over to the pharmaceuticals. The Medicare system, turn it over to the health maintenance organizations.

And so now you see that when the people ask who do you trust, they need oversight. For eight years with the Contract For America, as Republicans called it, they have broken down the public sector and built up the private sector without any regulation or any direction, and it's going to take more than a speech or jail sentences to get those dreams back on course that's been shattered.

DREIER: Charlie, I'll tell you, you are so far off-base in your characterization of what it is that we as Republicans want to do. We recognize that there is a very serious problem with Social Security. If we don't, in the next couple of decades, make sure that we bring about reform of Social Security, it will be broke. Those of us who are baby boomers are in fact not going to see anything from Social Security, if we don't take action. What that action will consist of remains to be seen and your committee and I and other of our colleagues in the House will be working on that. When it comes to this question of saying we just turn everything over and we don't want to have any adequate oversight, that is just plain wrong.

In the area of Medicare we want to bring about reform there. You know we've passed a prescription drug bill that will ensure that seniors have access to affordable prescription drugs and we're not doing that just at the direction of some industry. We're doing that to benefit the consumers.

And so we are on the right track. Only you all have done, Charlie, is chose to criticize us. You're part of that permanent partisan minority that's out there.

RANGEL: You talk about Social Security. You talk about Social Security, we've been begging, screaming trying to petition you to show the American people just how far you intend to privatize Social Security. You have a bill. We won't bring it out to the floor. Why do you say that we have to wait until after the election to see this wonderful privatization Social Security plan that you and Dick Armey have?

DREIER: Charlie...

RANGEL: Why are you waiting? Why can't we hear...

DREIER: You're not describing -- Charlie, you're not describing anything in the Congress. What you're describing is the Moynihan commission which was chaired by our former colleague, the Democratic senator from your state who lead the charge calling for that. We are going to look closely at that and then, when that commission's recommendations come forward, we'll ask.

BLITZER: Let me interrupt, Congressman Dreier. Are you saying now that the Bush proposal and the Republican proposal during the last election to allow Social Security recipients to invest part of their Social Security money in the stock market in the private investments, that that has gone away given the collapse of the markets over these past few months?

DREIER: No, no, not at all. Not at all.

What I'm saying is, that as we look at the priority issues that we're going to be dealing with between now and Congress's adjournment this fall before the election, we're dealing with the issues of corporate responsibility. We want to get this legislation that passed out of both the House and the Senate through. We're dealing with the issue of prescription drugs. We've got out appropriations work that we want to get done. We want to establish a Department of Homeland Security. We've got these priorities.

We know that the commission -- the Moynihan commission has come forward and made its proposal and we're going to deal with it. I personally happen to believe that investors -- that those who are looking for retirement should be able to put some of their own dollars aside...

BLITZER: Even though the markets have slipped the way they have?

DREIER: Let me just tell you something. I believe that giving people choices with some safeguards -- I don't believe that people should be investing in penny stocks. But I do believe that there should be three different options. And I think people could pass them on to their heirs. I think those are the kinds of things that have been proposed.

And they use this term "privatization" to describe it. But the fact of the matter is, it's choice for those who are looking for retirement.

BLITZER: Is anybody pushing that right now, Congressman Rangel, this privatization, the so-called allowing Social Security recipients to use a small portion of their money and invest it in the stock market? Anybody pushing that, as far as you can tell, right now?

RANGEL: I think the Republicans are shameless. What used to be a Bush Republican plan has now become a retired Senator Moynihan plan. They won't want that plan to see the light of day. So they sit on it and they say, "We are still studying it." Well, in November, the...

DREIER: Charlie, who chaired the commission -- who chaired the commission that made that recommendation?

RANGEL: He's retired. Listen, listen...

DREIER: He was the chairman of the commission, Charlie.

RANGEL: We have an election in November. The American people will study what you intend to do to Social Security and the report's going to be issued at the polls.

BLITZER: All right. Let's take a quick break. We have a lot more to talk about. This conversation is only just beginning with Congressman Rangel and Dreier. They'll also be taking your phone calls, so call us.

LATE EDITION will be right back.



SEN. JOHN MCCAIN (R), ARIZONA: The first principle of free markets, transparency and trust, have been the first victims of crony capitalism.


BLITZER: Republican Senator John McCain with tough words for corporate America.

Welcome back to "LATE EDITION." We're continuing our conversation with Republican Congressman David Dreier of California and Democratic Congressman Charlie Rangel of New York.

You disagree, I take it, Congressman Dreier, with Senator McCain, that the chairman of the SEC, Harvey Pitt, should resign?

DREIER: I totally disagree, and I will tell you, I was very impressed this morning to see Paul Sarbanes, the chairman of the Banking Committee, make a statement that he believed the president supports Harvey Pitt, and Harvey Pitt said he's not going to resign, and so let's move ahead.

Arthur Levitt I thought was very good this morning, who was, as you know, the chairman of the Securities and Exchange Commission, President Clinton's appointee, when he said that Harvey Pitt is qualified to serve, and he said, just as Arthur Levitt, who served as the chairman of the American Stock Exchange, didn't recuse himself, he said Harvey Pitt should not be recusing himself on these questions.

BLITZER: What about that, Congressman Rangel, do you have confidence in Harvey Pitt as chairman of the Securities and Exchange Commission?

RANGEL: I don't think Harvey Pitt is the problem, it's the atmosphere that has been created by the president, by the Republican over the years. You can get rid of Harvey Pitt tomorrow, and you're still going to have the problem.

They've been talking about pulling up the tax code by the roots, and they've been putting more fertilizer in the tax code. It's twice the size it was during the time of Clinton, and they are encouraging...

DREIER: I think we cut taxes earlier this year. We cut taxes this year, Charlie. I just want you to know we cut taxes.

RANGEL: Please, please, happy birthday, be quiet.

They're encouraging taxpayers to leave the United States and go to Bermuda. We've had the -- Secretary O'Neill said that the code is so bad, the corporate taxes are so high that people can avoid them.

And so changing the SEC director's not the problem. What we should do is talk about how are we going to take care of these people who lost their lifetime pensions.


DREIER: Absolutely. I totally agree with you on that.

RANGEL: That's what we should be doing, not dealing with Pitt and giving speeches.

BLITZER: All right. Let me pick up that exact point, Congressman Dreier. Dick Gephardt, the Democratic leader in the House, you won't be surprised to hear, totally agrees with Charlie Rangel. Listen to what Dick Gephardt said earlier this week, on Thursday. (BEGIN VIDEO CLIP)

REP. RICHARD GEPHARDT (D-MO), HOUSE MINORITY LEADER: Who, no matter how they voted, is trying to fix the problem now? Who's trying to move it in the right direction?

And I suggest that you're going to find there's one group on Capitol Hill that's always lagging behind, and that's House Republicans.


DREIER: I mean, that's just silly. Again, on April 24, in response to the president's call for action in March, we, out of the House, passed sweeping legislation, the Comprehensive Accounting and Auditing Reform Act, and the Senate, by a 93-0 vote, passed the Sarbanes bill, which has been much discussed in the last few days, and I believe we're going to come to a joint House-Senate conference, and have a very good package that the president will be able to sign.

We not only have not been behind -- Dick Gephardt is so wrong on this, and Charlie's so wrong -- we in the House, House Republicans, have led the charge, and it was the United States Senate...

BLITZER: All right.

DREIER: ... that didn't act until this past week.

BLITZER: Let's take a phone call. We have a phone call. Please go ahead with your question.

CALLER: Hi. Yes, I'm calling from Tallahassee, Florida, and I'm wondering what the representatives have to say about the connection between Cheney and Halliburton and this whole breakdown of the -- you know, the social contract with corporations and the policing of...

BLITZER: All right. Let's bring in Charlie Rangel.

Just for our viewers around the world who may not be familiar, Dick Cheney, before he became vice president, was the chairman and CEO of the Halliburton energy company, based in Texas. It's now under investigation for some accounting procedures while he was chairman and CEO by the SEC.

What's your response to that, Congressman?

RANGEL: Wolf, I've been defending my president and my country against unwarranted charges by the World Trade Organization, by a bunch of European foreigners, and I have to tell you, it's embarrassing to find out that my president and vice president are under investigation by the Securities and Exchange Commission. It would seem to me that all they have to do is to put the portfolios on the desk, give us a week to look through it, either a private, independent organization, and get this behind us.

To say that I don't know what happened, as the president has said, and to say that you're innocent until proven guilty does not create the atmosphere for investor confidence.

DREIER: Charlie, you're my pal, but once again, a gross mischaracterization of exactly what's happened. We know that it was 12 years ago that the SEC said there was no instance of wrongdoing. So don't mention the president in saying that the SEC is investigating him. They're not. When it comes to...

RANGEL: Why don't you just say the statute of limitation...

DREIER: You just said that...

RANGEL: ... and say that the statute of limitation is expired and so we can't look into it?

DREIER: Charlie, if you -- Charlie, if you -- the SEC has clearly sent a letter in which they stated there was no instance of wrongdoing in the case of Harken.

Now, let me say this, as far as the vice president is concerned, I believe that the vice president is known by the American people and around the world as one of the most reputable human beings. And I believe also...

RANGEL: They don't even know where he is.

DREIER: Oh, Charlie, come on. Let me just say, I know exactly where he is. And he's right here and he's doing his job.

RANGEL: OK, well, share it with the American people.

DREIER: He's on the job. But let me just say this -- let me just say this...

RANGEL: Where does he stay?

DREIER: Charlie, Charlie, let's not get into that one.

RANGEL: OK. That's a secret. Homeland security, I'm with you.

DREIER: Let me just say that what we need to do is we -- Charlie, Charlie, Charlie, let me just say on the Halliburton case, the chairman of the Securities and Exchange Commission, Harvey Pitt, has made it very clear that he will go after any wrongdoing and no one is free of scrutiny here.

And so I believe that we're right on target, and he said that this morning, Charlie.

RANGEL: Well, if Harvey Pitt -- if Harvey Pitt exonerates the president and the vice president and they appointed him, I'm with you. Happy birthday.

BLITZER: All right, before I let both of you go, I want to quickly switch gears, and first of all ask both of you the question, guns in the cockpit as a last line of defense. There was a vote in the House of Representatives. Congressman Rangel, I believe you voted against that, but correct me if I'm wrong.

RANGEL: I voted for a study -- a two-year study to see what the industry would want, whether it would work. The Republicans and the National Rifle Association, they overrode the position taken by the Democrats. And now everyone can pack a pistol. I hope they feel secure.

DREIER: Charlie, you're just plain wrong once again. The ranking Democrat on the Transportation Committee, Jim Oberstar, came before our Rules Committee and he talked about the fact that he has changed his view. He believes that we need, obviously, to intensify the security around cockpits.

But until that period of time, letting people know who might pose a threat out there that there is a possibility that one of the pilots may, in fact, be armed does, in fact, serve as a deterrent. And we had an overwhelming vote in support of that in the House of Representatives. And I believe that it's the right thing to do.

BLITZER: Even though the Bush administration still disagrees -- the president disagrees with you.

RANGEL: Another NRA...

DREIER: I think President Bush will end up being supportive of it at the end of the day.

BLITZER: So he'll flip-flop on this?

DREIER: Well, I don't know if I'd call it a flip-flop. What he'll end up doing is is he'll end up supporting -- we have a very strong vote in the House of Representatives. And I don't think the president will choose to veto it.

BLITZER: Right now, the secretary of transportation keeps saying no.

DREIER: The secretary of transportation is opposed to it. I've talked to him. But I will tell you that I believe at the end of the day, this very balanced approach that has been taken in a bipartisan way will, in fact, prevail.

BLITZER: All right. We'll see.

RANGEL: They get one Democrat and they call it bipartisan.

DREIER: No, no, no, Charlie. We had 119 on the accounting reform. And we had an overwhelming number on this baby. We just want you, Charlie.

BLITZER: Congressman Rangel, you can say happy 50th birthday to Congressman Dreier right now.

DREIER: But Charlie, you didn't come bowling with Wolf and me. RANGEL: You look a lot younger, but happy 50th birthday.

DREIER: Thanks, Charlie, really appreciate it.

BLITZER: He's in his -- he's well in his 50s right now.

Thanks to both of you for joining us.

DREIER: Always good to be with you.

BLITZER: Up next, an American visits Iraq. My interview -- an exclusive interview with the Nation of Islam leader, Louis Farrakhan. Why did he go?

"LATE EDITION" will be right back.


BLITZER: Welcome back to "LATE EDITION."

Nation of Islam leader Louis Farrakhan just visited Iraq for several days. Earlier today, I spoke exclusively with Minister Farrakhan from the capital of Zimbabwe, Harare.


BLITZER: Minister Farrakhan, thanks for joining us. Tell our viewers in the United States and around the world why you went to Baghdad.

LOUIS FARRAKHAN, NATION OF ISLAM: First, Wolf, we saw the carnage going on on the West Bank and in Israel and we wanted to go to see if we could do something to stop the carnage, and aid in the process for peace.

We also heard our president say that it was the policy of his administration to unseat Saddam Hussein, and even giving instructions that he should be assassinated. This concerned us greatly.

So we went to the Middle East to encourage Muslim leaders to speak with one voice and persuade if they could President Bush not to do this, because I believe personally even if America won such a war, America would lose great capital politically in the world by such an action.

BLITZER: You met with high-ranking Iraqi officials, but apparently you didn't get a chance to meet with President Saddam Hussein. Why wouldn't he meet with you?

FARRAKHAN: Oh, I didn't question that. Sometimes, Wolf, when you meet the vice president you're really meeting the president. If you meet his ministers of government, and they all are saying to you the things that he would probably say had you met with him, I felt perfectly contented that by meeting with most of the ministers of his government and meeting with his vice president that, in fact, I met with him, and I knew his aim and purpose and his feeling from what I heard from his ministers and his vice president.

BLITZER: But you know many are now saying that Saddam Hussein snubbed you by not receiving you personally.

FARRAKHAN: I can't control what people say. I don't think that I was snubbed. I was treated, actually, as a head of state. Members of government met me and my party when we arrived. We had a police and secret service escort to our hotel. We were escorted everywhere we went with three or four motorcycles, police escort.

So I was treated as if I were a head of state. So I don't feel that I, nor those in my party, were snubbed. We felt that we were treated with great honor and great respect.

BLITZER: As you know, Minister, as part of the cease-fire agreement in 1991 ending the Gulf War, the Iraqi leader agreed to international weapons inspections of his potential use of weapons of mass destruction. It's now been almost four years since he kicked those inspectors out. The U.S. and the rest of the world is anxious to see those inspectors come back in. Did you raise that issue and tell the Iraqi leadership that if they don't comply there could be a war?

FARRAKHAN: Sir, while we were there, there was a German man who was a member of the UNSCOM team, a Mr. von Sponeck, and he went and visited some of those sites and, according to the news that we heard just a few days ago, he said that there were no weapons of mass destruction. This is part of the negotiation that was going on in Vienna with the foreign minister and Secretary General Kofi Annan when we went into the area.

But, of course, we would urge them to open their country to inspection, but what they want is an end to sanctions. If they opened up to inspectors and you found no weapon of mass destruction, will the sanctions end? That is the question that they want answered, and we want it answered as well.

BLITZER: But the first obligation, isn't it, sir, is that the Iraqis must comply with the U.N. resolutions, the cease-fire agreement allowing unfettered access to weapons of mass destruction potential in Iraq.

FARRAKHAN: Over seven years of these inspectors being in Iraq, looking for weapons of mass destruction and finding none, whatever they found they were shown by the Iraqi government.

I'm not here as a defender of Iraq in that way. What I am a defender of is the principle of justice and fairness. Iraq has suffered, since 1991, the loss of 1.6 million of its citizens. The United States and the United Kingdom, without U.N. permission, established no-fly zones in the north and south of Iraq, and have bombed Iraq at will for the last 11 years. It is time for this to end.

And I think, the more that this goes on, the more the world turns toward Saddam Hussein and against the United States of America, the U.N., and its policies.

BLITZER: But couldn't it end, as the Bush administration insists, simply by Saddam Hussein complying with the U.N. resolutions and the weapons inspection teams?

FARRAKHAN: I have heard members of the Bush administration say that whether he allowed weapons inspectors or not, they wanted a regime change, and they were going to pursue that. And that is our petition to President Bush, to the government of the United States of America, that this is not showing America as the number one, leading superpower in the world, that you should take the might of your armed forces and use it against the government and people of Iraq just to get rid of a man that you say or call a dictator.

This is not your business. This is the business of the Iraqi people. If they don't want Saddam Hussein, let them put him out or take him down. But it is not the right of the American government to interfere in the sovereign affairs of another nation.

It's Saddam Hussein today. Where does it end? Is it Gadhafi tomorrow, Assad in Syria the day after, Fidel Castro the day after that? Anyone that doesn't agree with America or America disagrees with, do you have the right to assassinate such a leader, overthrow such a leader? Not in today's climate.

This is the wrong approach of our government, and I wish that our president had better advice, that he would make friends in the Arab and Muslim world, and not increase the distrust and the hatred that presently exists.

BLITZER: Minister Farrakhan, we only have a few seconds before the satellite goes down. Who paid for -- who sponsored your trip to Iraq?

FARRAKHAN: My trip was sponsored by the Call Society, which is a religious society in Libya, and they are the ones that are responsible for my journey.

BLITZER: And how are you feeling? Because we know you were suffering from, I believe, cancer not that long ago.

FARRAKHAN: Well, sir, I would feel so much better if the government of the United States of America would not seek to make Saddam Hussein a trophy for the reelection of President Bush.

BLITZER: All right.

FARRAKHAN: Saddam Hussein is not responsible for the collapse of Enron and thousands of...

BLITZER: All right. Minister Farrakhan, unfortunately the satellite is about to go down. We have to leave it right there.

FARRAKHAN: ... American citizens losing their life savings (UNINTELLIGIBLE). BLITZER: I want to thank you so much for joining us. Unfortunately the satellite is going down. Thanks for joining us today, and we'll have you back.


BLITZER: And what should you be doing with your hard-earned money? We'll get some insight on Wall Street worries, from former Clinton Labor Secretary Robert Reich, former Reagan Budget Director Jim Miller, and New York financial analyst Joe Battipaglia. LATE EDITION will be right back.



SEN. CHRISTOPHER DODD (D), CONNECTICUT: Some have suggested, as the president did, that this is just about cooking the books. This wasn't just cooking the books. This was marinating them, sauteeing and garnishing. This is a recipe for financial disaster.


BLITZER: Democratic Senator Chris Dodd commenting on President Bush's speech on Wall Street this past week.

Welcome back to LATE EDITION. We are joined now by three guests. In Boston, the former Clinton labor secretary, Robert Reich; in New York, Joe Battipaglia, the chief investment officer with Ryan, Beck & Company; and here in Washington, former Reagan budget director, Jim Miller.

Gentlemen, welcome to "LATE EDITION."

And Robert Reich, let me begin with you. A lot of nervous investors out there right now. What is your advice to them, buy, sell or, sort of, hold and stay on the sidelines?

ROBERT REICH, LABOR SECRETARY, CLINTON ADMINISTRATION: Well, Wolf, I would say first of all, don't panic. There is no reason to assume that every corporate balance sheet is wrong. Basically, hold on -- hold on to your mutual fund, your 401(k) fund. You might want to consider refinancing your home. Interest rates are very low, this is a good time. But there are not that many alternative investment vehicles.

Now, if you are a high flyer, if you have invested in a very risky way, you might want to think about diversifying into stocks and companies that are headquartered in another country, like Europe. But basically for most people, I would just hold fast.

BLITZER: All right.

What about that, Jim Miller?

JIM MILLER, BUDGET DIRECTOR, REAGAN ADMINISTRATION: Well, I think Bob Reich is largely correct. I think people ought to put their money in a very diversified mutual fund. And I think that's a good investment, because the economy is very strong, profits show a tendency to rebound, the inflation rate is very low, supporting very high price/earnings ratios, and I think if we can get past this concern over the credibility of these reports, I think the stock market will rebound quite nicely.

BLITZER: You give this kind of advice, Joe, to people for a living. What is your advice right now?

JOE BATTIPAGLIA, CHIEF INVESTMENT OFFICER, RYAN, BECK & CO.: The thing to do is take a personal balance sheet and look at your real estate holdings, your stock holdings, your certificates of deposit, and layer on top of that what you want to do with your life from this point forward, how much risk you're willing to take. And if you feel that you've got the right diversification and you're not too far down the risk chain as far as what you can take, then you would leave your investments as they are.

However, if you feel that you are too far extended, or you have a higher income need now than you thought, then it's time to readjust your portfolio and look for opportunities. For example, the real estate market has been very strong. If you have other properties, this might be the time to sell them. If you are in the bond market, there are certain corporate bonds that offer returns that are higher than treasuries, while these companies have credit qualities that will withstand the test of time.

So in this way, you can take advantage of the market opportunity and being rationale at a time when most are irrational.

BLITZER: But, Joe, a lot of viewers out there, a lot of investors -- I know, I get a ton of e-mail, they invested in a some of those high-tech companies, whether Intel or some of these other companies that we've been reading a lot about in the news lately. We've seen those prices, those stock prices go way down. Do you hold on to those stocks at these low prices right now, hope they'll come back up? Or cash in and take your loss and move on?

BATTIPAGLIA: Well, the way to do that, Wolf, is also to look at the here and now and identify where these companies stand in the scheme of things. Are they leaders in their field? Is that field growing or collapsing? When the U.S. economy begins and continues a strong recovery over a period of time, will they prosper? And if they stand up to that test, then you'd want to stay with those stocks. Indeed, you may want to buy more of them at these prices.

It's true that some of the smaller competitors may disappear. Some of the companies that have trouble in a competitive environment will stay low as far as prices are concerned. But leadership companies will prevail, as they have in previous crisis and reward those investors who have the patience, and the stomach, on a short- term basis, to weather the storm.

BLITZER: Bob Reich, when President Bush spoke on Wall Street on Tuesday, he made one point. And I want to play that excerpt from the speech right now and get your reaction to this. Listen -- he made a lot of points, but this is one point that he made that I want to talk about. Listen to this.


BUSH: Ultimately, the ethics of American business depend on the conscience of America's business leaders.


BLITZER: If you read the polls, as I know you do, Bob Reich, a lot of Americans don't have a lot of confidence right now in the conscience of business leaders.

REICH: No, absolutely not, Wolf. And the ethics of American business do not now, and they never have, depended purely on the conscience of business leaders; they depend upon a structure of regulation. And we have got caught up over the last 10, 15, 20 years in this cycle of deregulation, a frenzy that assumes that anything goes and if you allow the market to do whatever the market wants to do, you can have larger economy and larger economic growth. That's simply not the case.

What we know now, we should have known before is that markets depend on careful oversight. Otherwise, people are going to cut corners, they are going to play fast and loose with the rules. And basically, we are now going to have to go far beyond what President Bush wanted or suggested last Tuesday, and that is make real structural reforms with regard to accounting, boards of directors and how we do business.

BLITZER: Jim Miller, you're a good Republican.


BLITZER: Do you believe more regulation, which Secretary Reich is proposing, is that the way to go?

MILLER: I think we need to have transparency and we do have to have oversight. But what disappoints me is that some of the fundamental reasons for some of the things that we observe are not being addressed.

Our tax code is so complicated. Some of these mechanisms that are questionable are caused because firms try to avoid taxes legally. And the question, and the -- at the -- there's no bright line in some of these things. As the president said, some of this is very complicated and it's not clear and transparent as it should be.

We have a limit on the deductibility that's -- flowing from 1993 legislation, a limit on the deductibility of corporate salaries above $1 million. That forces people to move to options as a way of rewarding CEOs. And we have laws that have been reformed that make it harder for stockholders to police the firms. We need to strengthen the independence of the independent directors.

BLITZER: I want to talk about those compensation packages for these CEOs in a second. But let's take a caller from Florida.

Go ahead with your question, please.

CALLER: Yes, this is Robert Irons (ph), calling from Daytona Beach, Florida. I hear an awful lot about what President Bush wants to do for the future of these problems. What about the people who have lost their investments now and are continuing to lose their investments as we speak?

BLITZER: All right, let me bring in Joe and get him to respond to that. I don't think there's a whole lot that the president could do necessarily is there -- am I wrong, Joe?

BATTIPAGLIA: Others will speak to that as far as what the political system will do, relative to this where there's hardship cause. But the remedies for companies that go bankrupt and suffer are in the court system, and those suits have lined up very quickly for bond holders and stockholders and we'll have to wait for the adjudication of that process. Anything more sweeping than that is a function for Congress to consider.

BLITZER: Well, what about that, Bob Reich? Should Congress and the president start giving some of these investors their hard-earned dollars back? Can the government afford to do that right now?

REICH: Wolf, there's nothing more important for the president to do than restore investor confidence, to get ahead of this parade and to make sure that investors don't hear the kind of exhortation backed with relatively little that they heard on Tuesday.

Congress, Republicans in Congress already understand that they've got to get ahead of this parade. There is nothing more important than investor confidence and let's face it, investors -- if the market is any gauge of investor confidence and I don't know a better gauge, investors are quite worried and they are lacking confidence right now.

BLITZER: Jim Miller, the president did make another point, he made a lot of points, and I want you to listen to what he said specifically about some of those big CEOs, those chairmen, those corporate officers who don't necessarily do the right thing, listen to this.


BUSH: Corporate officers who benefit from false accounting statements should forfeit all money gained by their fraud.


BLITZER: Good idea?

MILLER: Well, I think so. We need to distinguish between two kinds of losses, where the market simply -- there was a bubble or where it didn't support or the firms didn't meet expectations; those investors are really out, they invested money, they took the risk. Where there is fraud and corruption, those are the places where there is remedy, as Joe was saying in the courts, and I fully expect these class action lawsuits to do a lot, the SEC to do a lot, the president's new task force do a lot.

But I don't think people are going to get, you know, a hundred cents on a dollar even in those cases of fraud because so much was the caused because of fraudulent and misleading reports.

BLITZER: Let's take another caller from Florida, go ahead Florida.

CALLER: I'm wondering are we headed for another depression?

BLITZER: Joe, you want to handle that?

BATTIPAGLIA: No, not at all. Fortunately the U.S. economy is the world's largest. It's very diverse and has a long history of having success and in fact, some of the industries are counter- cyclical to others, so on balance, we end up in a very good place. In the history of America through panics, both domestic and international, has been to come out of it sooner than one thinks and go on to a stronger level.

So the fundamentals of our economy are such that we are not in any financial jeopardy as far as dealing through these scandals. And even the market fright that we've had and the losses over the last 2- 1/2 years, which have been staggering on first blush, when considered against the real estate gains and the bond market gains over the same period time, which are assets Americans hold, the wealth of the nation is still at a record level and that allows us to get through these difficult periods.

BLITZER: Well, is there a number there, Joe -- because $6 trillion is the number that's bandied about in the last couple, three years about how much loss in equity in the stock markets -- how much is the real estate market, the bond market gone up to take away from that $6 trillion decline?

BATTIPAGLIA: As best we can figure it about half of it has been in gains in the bond market and in real estate. So we went from a peak of national wealth of about $43 trillion as best we can figure it, net of debt, to $40 trillion which is twice where it was 10 years ago.

So is America better today than it was 10 years ago? Is capitalism still moving the ball forward? The answer is yes, even though we've taken a direct hit on the stock side.

BLITZER: Do you agree with that, Bob Reich?

REICH: Well if I may, I agree basically with it but let's keep in mind that there's been a tremendous change in one respect over the last 10 to 15 years, and that is that now half of American families own shares of stock, mostly in 401(k)s. But as their portfolios dramatically decline, it is going to inevitably, it already has had an effect on consumer confidence, and it has been consumer spending that's basically kept this economy going over the last few years. If consumer confidence continues to decline, we could see this recession or at least this recovery be postponed another year.

BLITZER: You know there was a spectacle that we all saw during testimony this past week, some corporate executives from a WorldCom came up to Capitol Hill, they were subpoenaed to testify. Look at their responses when they were asked to give some specific answers.


SCOTT SULLIVAN, FORMER WORLDCOM CEO: I respectfully will not answer questions based upon my Fifth Amendment right.

BERNARD EBBERS, FORMER WORLDCOM CEO: I've been instructed by my counsel not to testify based on my Fifth Amendment constitutional rights.


BLITZER: That, of course, is their constitutional right, Jim Miller, but what kind of confidence, what kind of message does that send to shareholders and investors out there when they see that?

MILLER: Well, I don't think we should take issue with their exercising their constitutional rights, and we don't know whether they're guilty or innocent. I think we ought to let the courts take care of that.

But, you know, let me go back to the point you raised just a moment ago. It's the great paradox of the year 2002 that the economy is quite strong, the economy is expanding rapidly, productivity is increasing very rapidly, but yet the stock market is down. When we get those two in synch, then we have the creation of enormous wealth coming in the next decade, I believe.

We need to take care of these problems. We need to have more strength in the independent directors. We need to, as Mr. Pitt required, have the CEOs sign these financial statements. These other things, in the short run, can make a big difference, to restore the confidence, to get those two tracking together.

BLITZER: All right.

REICH: Jim, I think we have to go -- respectfully, I think we have to go way beyond that. We've got to make sure that accountants are not selling management consulting services at the same time to the companies they advise. We've got to make sure that options are on -- are disclosed as costs on company balance sheets. We've got to make sure that we get rid of these shenanigans where companies go off to Bermuda and have their headquarters and avoid all profits altogether.

Corporate executives should be able not to sell their shares of stock until...


REICH: There are a lot of things that need to be done, Jim, and let's not just...


BATTIPAGLIA: Wolf, let me weigh in here.

BLITZER: OK, go ahead, Joe.

BATTIPAGLIA: Yes, and that is to say that, unlike previous problems we've had in the economy, like the S&L crisis, or insider trading, this is a multifold initiative that has to be addressed. And that's what's causing the market such trouble, because markets move faster than events and our reaction to events, particularly when it relates to policy. And that's the dilemma we have. And I'm hopeful that this summer Congress can get it, bring it together in a comprehensive package that makes sense for the president to sign.

BLITZER: All right.

BATTIPAGLIA: Meanwhile, though, managements can come in the second-quarter results that they speak to, next week, and speak out in earnest against these practices, so that they're not taking the Fifth at some later point in front of Congress.

This is an important couple of weeks for investor confidence, in my view.

BLITZER: All right. We'll be watching these -- millions of investors out there in the United States and around the world will be watching all of these things going on.

I want to thank all three of our guests, Joe Battipaglia, Jim Miller and Robert Reich. Thanks to all of you for joining us.

Coming up next, your letters to LATE EDITION, plus Bruce Morton's essay.


BRUCE MORTON, CNN CORRESPONDENT: Between 1981 and 2000, the wages of ordinary workers doubled, but the wages of the 10 most highly paid CEOs went up by 4,300 percent.


BLITZER: Is unbridled capitalism losing the confidence of middle-class America? Stay with us.


BLITZER: And now Bruce Morton on where middle-class America stands in the midst of the corporate scandals.


MORTON (voice-over): America is a middle-class country and it's a well off middle. David Brooks of the "Weekly Standard" wrote recently that families headed by college graduates make more than $70,000 a year and that if you make $75,000 you make more than 95 percent of the people on the planet.

Yes, but we're aren't as equal as we used to be.

Kevin Phillips writes, in Wealth & Democracy, that between 1981 and 2000 the wages of ordinary workers doubled, but the wages of the 10 most highly paid CEOs went up by 4,300 percent; 43 times more than for us average folk. Or to put it another way, in 1999, Bill Gates' assets were 1.4 million times greater than the assets of the median U.S. household.

On a sports metaphor, the average baseball player now makes more than $2 million a year. Those chosen for the All-Star Game make more than that, but they couldn't be bothered to finish the game this year. What's the average fan to make of that?

And that's, sort of, the point of Americans reaction to Enron and WorldCom and all the rest. These guys got huge salaries -- one reportedly rented a jet from his company for a $1 a month -- and as if that weren't enough, they had to cheat.

Pundits have been wondering about the political fallout. Polls so far don't show people taking out their anger on the president. He gets lower marks on how he handles the economy than he does in other areas. But hey, the economy isn't doing very well, so that's no surprise.

One thing that may happen is that people will be less anxious to invest which would depress the stock market even more; that foreign businesses would stash their wealth in yen or euros, not dollars, that could hurt too.

Politically the likeliest reaction is, "Let's get these guys and put them in the slam," which is why Congress is in such a rush to pass bills that can be called crackdowns or tough measures.

If the voters don't see the bad guys getting theirs, they're liable to decide some new blood might help the Congress act and vote some of the ins out.

(on camera): That could help the Democrats, they're often seen in polls as the party more concerned with the average man, but in a Congress this closely divided, it's hard to be sure.

(voice-over): And Ted Williams died. What he always wanted, he said, was to be the best hitter baseball had ever had, not the best paid, but the best. We'll miss that.

I'm Bruce Morton.


BLITZER: Thank you very much, Bruce.

Now time for your letters to LATE EDITION. Bonnie writes us this: "I'm a stay at home mom and my husband drives a truck. Yeah, the stock market is down and we lost $195,000 in our 401(k) in the last 18 months, but this hasn't changed our opinion of George W. Bush. We would still vote for him again and again."

Greg says: "I've lost so much money in my 401(k) in the last two years that I pray for the return of Clinton, Monica Lewinsky, Ken Starr and a soaring Dow. I can't afford to have George W. Bush in office for another 30 months. At this rate, I won't be able to retire until I'm the age of 75."

It's time now to say goodbye to our international viewers. Thanks very much for watching.

In the next hour of "LATE EDITION," we'll hear from the attorney of one of the police officers in that videotaped arrest in California. Stay with us.


BLITZER: This is "LATE EDITION," the last word in Sunday talk.


BARNETT: He used appropriate force for the situation.


BLITZER: A California police officer is caught on videotape. Do the police and public have different ideas about the definition of necessary force? We'll discuss the issue with the officer's attorney, John Barnett, Court TV's Lisa Bloom and defense attorney Roy Black.


LARRY KLAYMAN, JUDICIAL WATCH: Where there's smoke, there's fire.


BLITZER: A legal watchdog group sues the vice president. We'll talk to Larry Klayman about his civil action, and get perspective on both the president and the vice president's financial past from our legal panel.

Then, fast-paced talk, Sunday style.


JONAH GOLDBERG, NATIONAL REVIEW ONLINE: Everything that we want to do in the Middle East, everything we want to do in the world goes through Baghdad.

JULIANNE MALVEAUX, SYNDICATED COLUMNIST: I think there is an arrogance in telling people who they should select as their leaders. PETER BEINART, NEW REPUBLIC: Although this is very expensive, it would be affordable, if we had not passed the tax cut.

ROBERT GEORGE, NEW YORK POST: This is the exact problem that you have, though, with the entitlement culture.


BLITZER: LATE EDITION's Final Round. You've got questions, they've got answers.

Welcome back to "LATE EDITION." We'll get some legal insight into the Inglewood, California, police incident in just a moment, but first here's CNN's Fredricka Whitfield in Atlanta with a news alert.


BLITZER: Joining us now to discuss the legal implications of the videotaped arrest in Inglewood, California are three guests. In Anaheim, California, is John Barnett. He's the attorney for Officer Jeremy Morse; he's one of the officers involved in the arrest. In New York is the civil rights attorney and Court TV's Lisa Bloom. And in Miami, criminal defense attorney Roy Black. Good to have all of you on our program.

And, John Barnett, let me begin with you. Go ahead. We've all seen the videotape by now. Make the case for your client, Officer Morse.

BARNETT: Well, really, this is a pretty simple case. If you look at the tape carefully, you see that my client seeks to walk the subject to the car -- to his police car, and the subject's legs go limp. He then has two choices: dropping to the ground, or put him on the police unit. And so he chooses to put him on the police unit. That's what he does.

And I know a lot of people have criticized that conduct, but if you look carefully, you'll see that he does not try to ram his head into the unit, but he puts him on his chest, and I think, sort of, the proof of all of this is that there's no injuries. Yesterday, his attorney was asked whether or not he suffered any injuries as a result of that, and he did not respond to that question.

And I think another way we can look at this is, after that happened, he was not so harmed that it prevented him from grabbing my client's testicles.

So I think that, if you look at the case, put everything into context, you'll see that this is a fairly simple case of the appropriate use of force.

BLITZER: Roy Black, Mr. Barnett is suggesting that, even with his hands cuffed behind his back, he used his fingers to grab Officer Morse in the groin, and that resulted in the fist -- Morse fist going into the face of the 16-year-old suspect. Are you convinced that he's got justification for using that kind of force? ROY BLACK, CRIMINAL DEFENSE ATTORNEY: Well, Wolf, let's face it, the videotape is graphic, and it's very disturbing to watch. There may be explanations for this that will have to come out in the court proceedings, but let's not overlook the fact that it looks like it's an unlawful use of force, and it's pretty graphic, and it's going to disturb most people in America.

However, a lot of police actions do that. I think that we should perhaps reserve some judgment, to allow this to play out in court, to find out all the circumstances.

But, putting that aside, let's face it. If you had to decide solely upon that tape, you would say it's an unjustified use of force.

BLITZER: Lisa, what do you say?

LISA BLOOM, COURT TV: Well, I've got to tell you, Wolf. Only an attorney would say this is putting the young man's chest on the police unit. Anyone looking at that tape can tell, we are slamming a young man's face against the car, and to say that that would cause no injuries flies in the face of everything we know about police beatings, from Rodney King, who is still suffering damages to this day, to Amadou Diallo, Abner Louima, and all of the young black men who have suffered at the hands of police over the last 10 years.

We've watched a lot of the cases on Court TV. And when police cross the line into acting out their rage, venting rage on suspects, turning suspects into victims, police can go to jail for that.

BLITZER: All right, Mr. Barnett, what do you say?

BARNETT: Well, what I say is this, that it has not been denied by the subject in this case that he grabbed my client's testicles. What he said is, "I don't remember." And in terms of whether or not there was any injury as a result of that, he was -- his attorney was asked that yesterday and did not respond.

And so I think that it's one thing to say, "Well, it looks like he might be injured." But we should look to what the facts really are. And the facts are that there is no indication, no even complaint that he was injured by that conduct.

BLOOM: Well, Wolf, in the federal civil rights complaint, which I've read, that Donovan Jackson filed, he does strongly deny that. He calls it a fabrication.

BLITZER: Mr. Barnett?

BARNETT: Yes, but this complaint is a boilerplate complaint. I mean, I printed it out and took a look at it. That comes right out of a form book. It doesn't give you any of the facts of the case. So I wouldn't rely too much on the complaint.

BLOOM: Well, he calls the allegations that he attacked the police officer a fabrication. That's not boilerplate. That's specifically going to the facts of this case. And I think any decent American, looking at that tape, has to be sickened. Yes, we should have an investigation. Yes, we should look at other facts, not just that videotape. But let's not lose sight of the revulsion that I think any decent American, black or white, should feel in seeing that videotape.

BLITZER: Mr. Barnett, Mr. Barnett, there's talk that there's another videotape that we haven't seen yet, a videotape from the gas station where this incident occurred. Are you, A, privy to that? Have you seen that? Have you been told about that?

BARNETT: There is another tape. I've not seen it.

BLITZER: And do you -- but you believe that that videotape, which presumably would show the entire incident, would exonerate your client, Officer Morse?

BARNETT: I'm informed that it does.

BLITZER: Tell us what you're informed. Why do you say that?

BARNETT: Well, I have been told that their is another video that captures earlier activities and none of that is inconsistent with my client's account.

BLITZER: Well, what does your client say? What happened earlier before the videotape that we've all seen shows?

BARNETT: Well, I'm not going to say what my client has said to me. My client came upon the scene and was assisting other officers in dealing with the subject who would not comply, who refused to be searched and who was taken into custody. During that event, my client suffered a cut above his ear and scratches along his throat area.

BLITZER: What about that, Roy Black? If the entire incident does show some attack against Officer Morse and perhaps some other of the officers, would that make a difference for those of us looking at this incident?

BLACK: I really don't think so, Wolf, because the question is, what happens after the young man is handcuffed?

Remember, he's now under the control of the officers. His hands are cuffed behind him. What happened before I don't think has that much relationship. The question is, is he still a threat while he's handcuffed?

Now, some people can be. The question is, under these circumstances does that young man look like he is a real threat to the police officers? And if you look at the video, just looking at it through your regular eyes, you really don't see a threat there.

BLITZER: Is this -- is that the case, Mr. Barnett? And I want to bring Lisa back in a second. But is that the case? To the plain eye, it looks like unnecessary force. BARNETT: Well, I agree with Roy that after he's cuffed, what happened before simply doesn't justify any use of force. What I am saying is what you do not see on the video is that subject grabbing my client's testicles. And I think that that has gone unrebutted. There is several statements by this young man's family saying that he doesn't remember anything from the time he got taken down to the ground to the time he was in the police unit. And several members of his family have said they have talked to him and he has no memory. In other words, he does not remember. And that is different than saying, "I deny everything."

BLITZER: Well, Lisa, I want to bring you back in. But one of the family members, the friends of Donovan Jackson says that if, in fact, with his hands behind his back he did touch the groin area of Officer Morse, that was inadvertent; that was not a deliberate act. So that's their argument in saying that if he did, it was not meant to be resistance.

BARNETT: You know what, it really...

BLOOM: Well, I wonder at what point Mr. Barnett is claiming this testicle grabbing incident happened. Was it after his face is slammed into the police car? Is it after he's being punched? Is it before both of those incidents?

And we have to keep in mind, Wolf, this young man is not being arrested for anything. He is not accused of any wrongdoing.

His father was pulled over for a registration violation. He was just walking out of a gas station. He has no criminal history. He's not accused of any violence. So the police took essentially a non- violent situation and escalated it unnecessarily.

BLITZER: Mr. Barnett?

BARNETT: Well, in answer to your question, Lisa, he is -- he grabs my clients testicles just prior to being punched. He's punched because he grabs my client's testicles. And whether it was done on purpose or whether it was done by accident, the effect is exactly the same. And I don't think any...

BLOOM: So why is his face slammed down on the police car then?

BARNETT: Well, we differ on that. You can have whatever interpretation you wish and America can decide what they see.

BLITZER: Roy Black, there was another bizarre twist in this whole story, as you well know and many of our viewers know, that the photographer, the shooter of this videotape himself was later picked up and arrested by police. He was screaming as he went into a car outside the CNN bureau in Los Angeles. We've seen -- we saw some of the still pictures taken from surveillance cameras at the scene. He was arrested on earlier charges, nothing related to this videotape, though there are a lot of suspicious people out there who think he's going to be punished because he shot this videotape of the police officer hitting the 16-year-old suspect. BLACK: Well, Wolf, the main question is how come CNN didn't get that on video?

But putting that aside for a minute, the interesting thing is he was calling into this -- to a radio station and the prosecutor promises him he won't be arrested, and then, of course, as soon as he shows up, he's arrested. So needless to say there's a lot of suspicion, albeit there is an earlier case in which he avoided a jail sentence so it's very hard for the police to say, "We're not going to arrest him," because there's a warrant outstanding, but it certainly doesn't look good to people.

BLITZER: What is it -- how does it look to you, Lisa?

BLOOM: Well, it doesn't look good that the only person currently under arrest in connection with this incident is the guy who had the video camera, Wolf, and you know, I wonder, half facetiously, if we should arm all of our inner-city residents with video cameras. People have been complaining for 35 years about police abuse of minority communities and it seems that only when it's captured on videotape does anyone believe them.

BLITZER: Mr. Barnett, I'll give you the last word. Do you have any expectation the other videotape from the gas station will be released any time soon?

BARNETT: I don't know about that because I don't have control of that video.

BLITZER: All right. Do you want to just say anything about this arrest of the shooter, the photographer who took the video of your client, Officer Morse, restraining or hitting, depending on your perspective, the suspect?

BARNETT: See, I don't think it matters. The tape is what it is and who took it really doesn't matter and there's not really going to be a foundational problem with that tape. So I don't think whether he was arrested or not arrested is going to change anything in this case.

BLITZER: All right, Mr. Barnett, I want to thank you very much for joining us.

Roy Black, Lisa Bloom, please stand by we want you to continue a separate conversation.

Just ahead the vice president Dick Cheney and the energy company he once headed are being sued for alleged fraud. Could this be the Republican version that some Democrats say of Whitewater? We'll talk with the head of the organization who filed the lawsuit, Larry Klayman, when LATE EDITION returns.


BLITZER: Welcome back to LATE EDITION. We're continuing our conversation with Lisa Bloom of Court TV, the criminal defense attorney Roy Black, and joining us here in Washington, Larry Klayman; he's head of Judicial Watch, which is suing Vice President Dick Cheney and the Halliburton Energy Company for alleged fraud while the vice president was the firm's CEO.

Thanks to all of you once again for joining us.

Larry Klayman, go ahead. Quickly make your case against the vice president.

KLAYMAN: Well, Wolf, the president said last Tuesday, "Let the chips fall where they may." He says everybody that's accountable has to be held accountable, and Vice President Cheney's refused to answer questions about his role with Halliburton. In fact, on CNN's "Moneyline" web site, at, there was a poll: 95 percent of the American people -- people who read that web site are mostly conservative, mostly white, mostly Wall Streeters -- want him to advance questions. There's something here, Wolf.

BLITZER: But the SEC's investigating. Why do you need to file a separate lawsuit?

KLAYMAN: Well, first of all, government agencies rarely find the high, powerful and mighty guilty of anything. They let them off the hook. We saw Harvey Pitt on another show this morning. He's so grateful for getting a job as SEC commissioner, you can't expect him to look very deeply into that.

But what we're saying is this, is that this company, Halliburton, which in 1995 pled guilty, it pled guilty to doing business with a terrorist state...

BLITZER: That was before Cheney was the CEO.

KLAYMAN: Libya. It's a company that's gotten into trouble before, so it's not inconceivable...

BLITZER: But in '95 Dick Cheney had nothing to do with...

KLAYMAN: He was not, you're correct.


KLAYMAN: But it's a company that has had difficulty.

What they did is, they took disputed contracts, cost-plus contracts, before the monies were even known as to whether they'd be profitable or not on those contracts, they booked them as profits. It had the effect of overstating profits, to the investing public, upon which my clients relied, and it wasn't disclosed...

BLITZER: You can't blame Dick Cheney for that, though.

KLAYMAN: Well, I'll tell you why I can. He's CEO. Harry Truman had a sign on his desk...

BLITZER: But he wasn't CEO in '95.

KLAYMAN: He was CEO when the problems occurred with Halliburton, he certainly was.

BLITZER: Subsequent problems, but not that problem.

KLAYMAN: I'm not blaming him for the Libya matter, I'm blaming him for the accounting problem. I'm simply saying, this company is not without fault over the years.

And the fact is, is that there's a videotape -- he did a promotional videotape for the accountants, Arthur Andersen, because he's tried to slough it off on Andersen, and, in that videotape, he says, "I take advice, this is an innovative accounting company, I thank them for their advice."

So he is responsible.

BLITZER: All right. Roy Black, did Larry Klayman convince you?

BLACK: No, I don't think so. There may be some improprieties there, but once again we are now suffering from that misguided opinion of Jones v. Clinton, where the Supreme Court said that a private citizen could sue the president or vice president or government officials while they're still in office. This is a real problem now. Larry is going to tie up the vice president in all kinds of litigation for the next several years, and he's not going to be performing for the American people.

I think that lawsuits like this perhaps could proceed against Halliburton, but I don't think it should proceed against the vice president for the same reasons of the disastrous results that happened after the Supreme Court opinion in Jones v. Clinton about what happened with President Clinton.

BLITZER: The White House says this is a -- I don't know the exact word, but they said basically frivolous, without merit.

Lisa, is this a frivolous lawsuit?

BLOOM: Well, it's hard to tell until the facts come out. But I'll tell you, Wolf, it's a strange day when a nice liberal civil rights lawyer like myself agrees with Judicial Watch, but that strange day has come. I think that it's wonderful that conservatives see that lawsuits can be used as a vehicle by the powerless against the powerful to get disclosure, to get information and discovery, and ultimately to get justice against the big guys, if that's what the evidence warrants.

KLAYMAN: Wolf, and I'm surprised to hear Roy Black say it, because he's a criminal defense lawyer, and he's usually on the side of the little guy, and I admire him for what he's done there down in Miami. I'm from Miami myself.

But what really strikes me as strange is that you're saying someone's above the law, that they're not held accountable. And the fact is that the vice president has to answer questions about Halliburton, just like he has to answer questions about his task force, his energy task force. A judge last Thursday issued an 84-page opinion -- you can see it on our web site at -- saying his Justice Department -- the Bush Justice Department lied to the court about separation of powers and about executive power, and that he has to open up his task force to discovery because we need to know what's going on, you can't have secrecy.

BLITZER: Well, Roy, but...

BLACK: But, Larry,...

BLITZER: ... that's an important point that Larry just made. Should the president and the vice president be above the law, immune from these kinds of lawsuits that all of us, other people are, of course, subject to?

BLACK: No, Wolf, they should not. However, they should be during the course of their term in office.

The problem is, look what happened with Clinton. Once we allowed that lawsuit to go forward, who knows how much of his time as president of the United States was spent defending that case? How much time is going to be spent by the vice president...

BLOOM: But, Roy, this is different.

BLACK: ... defending this case?

It should be -- at least as to the vice president, it should be stayed until his term of office is finished. Otherwise, we give people the opportunity, for various partisan reasons, to sue the president and vice president and tie them up in court.

BLITZER: Let's let Lisa -- go ahead, Lisa.

BLOOM: This is different because we're talking about the retirement and the savings of thousands of people. And if misconduct has gone on and people lose their retirement, have it completely wiped out, we need to know now. We don't want to wait four years for people to get justice.

BLACK: Well, there's nobody's retirement account has been effected by Halliburton. I don't know where you come off coming up with that kind of an idea.

BLOOM: Well, we're talking -- we're talking about the misconduct...

BLACK: There is no national emergency over that corporation.

BLOOM: We're talking about the misconduct of corporate CEO that has affected thousands of people and is continuing to affect thousands of people. And I say shine the light, let the accounting practices come to light and let the American people know what's going on at the highest levels of every company, even if Dick Cheney or other high- ranking officials are involved. It's time that we know.

BLACK: And Lisa, Dick Cheney wasn't running Enron or WorldCom. KLAYMAN: Roy, you know, and the only reason, Roy -- Roy, the only reason Mr. Clinton's time is tied up is because he lied about his role with Monica Lewinski. If he had come clean early on, it wouldn't have been tied up, it would have been over quickly. So let...

BLACK: I know, but Larry, we elected him to be president. We didn't elect him to be a defendant in a lawsuit.

KLAYMAN: Well, he can take a deposition for six hours and lay it out and then it's over. Then it's over.

BLITZER: But, Roy Black, the argument that you're making was before that Supreme Court decision, Jones v. Clinton. It's moot right now since the Supreme Court has ruled that individual citizens can sue a sitting president.

BLACK: Well, yes, before the lawsuit, it was that there would be an immunity during the course of their term in office, and that's what the lower courts ruled. The Supreme Court reversed that and said, "No, no, because it's so important and it's not going to take up much of the president's time, it'll be nothing to him, we'll allow this to go ahead."

And of course, now I think if it was represented to them, they'll probably change their minds.

KLAYMAN: I don't think so. You know, there's an irony here, Wolf. The White House comes forward -- on behalf of the president, Ari Fleischer and says, "This is a meritless lawsuit." Historically, president's don't comment on private litigation. The president's now intervening in private litigation. And if, in fact, you shouldn't occupy the time of the office of the president with litigation, why is the president commenting and trying to influence the SEC, his Justice Department and our court with the great weight of the office saying there's nothing there?

BLITZER: Do you want to respond to that? Do you have a response to that, Roy Black?

BLACK: Well, of course, the president is going to make a response because these are politically charged issues. What's happening is that people, probably for good reason, want to show a lot of the statements he made are hypocritical and it's embarrassing. All the things that happened with Harken, which happened with Dick Cheney, certainly these things are embarrassing. And there's a political component to it.

KLAYMAN: Roy, you can hardly say that...

BLOOM: Well, you know, Wolf...

BLITZER: One second. One at a time. Let's let Larry first and then Lisa.

KLAYMAN: I don't think anybody can make that charge with Judicial Watch. We are nonpartisan. We've always been that way. But people have called us conservative. Now, what politically motivated aspect would it have coming from a conservative group? I mean, that's bizarre.

We're here for the law -- for the rule of law. And when someone holds himself up, and the president says, "Dick Cheney's immune from the law," then obviously we're going to take an interest. And we want the full truth to come out to the American people.


BLOOM: And if this lawsuit truly is frivolous, we have ways of getting rid of it very quickly. There'll be a motion to dismiss, within a month the case would be over.

But nobody is above the law in this country. One of the great things about the American system is whether you're a priest, whether you're a police officer, whether you're a CEO, president or vice president, you are answerable under the law. And I think that's an important American value.

BLACK: You know, Lisa, I am shocked that you say a civil lawsuit can be resolved in a month or two with a motion to dismiss. You know that's totally untrue.

BLOOM: If it's frivolous. That is not true. Frivolous lawsuits are dismissed all the time.

BLACK: They take discovery, take depositions. They'll issue subpoenas. Things will go on. Look what happened with Jones v. Clinton. How long did that go on for?

BLOOM: And apparently there was sufficient evidence for that case to go forward.

KLAYMAN: It wasn't frivolous, Roy.

BLOOM: All the way to summary judgment where it was ultimately dismissed on a motion for summary judgment, never went to trial.

BLITZER: All right, we are -- unfortunately, we are all out of time.

A quick question to Larry Klayman before I let you go. You're going after Dick Cheney. I notice you're not going directly after the president of the United States and the problems he may have had with Harken Energy.

KLAYMAN: Well, we're looking into that. We're going to look into it. And if there's something there, we will proceed, because, again, no one is immune from prosecution. But let's see how the facts develop. Let's see if the statute of limitations has run yet. And we'll take a look at it. Government agencies won't do the job, we have to do it, Wolf.

BLITZER: You were a thorn in the side of the Clinton administration. Now you're a thorn in the side of the Bush administration. You're an equal opportunity thorn.

KLAYMAN: Exactly. Maybe I'll change my name.

BLITZER: Larry Klayman, thanks for joining us.

KLAYMAN: Thank you.

BLITZER: Lisa, thank you very much.

BLOOM: Thanks, Wolf.

BLITZER: Roy, pleasure always having you on the program as well.

BLACK: Thank you, Wolf.

BLITZER: Coming up next, the Final Round: Our panel sounds off on the major news of the week. Our Final Round, right after Fredricka Whitfield and a news alert.


BLITZER: Welcome back. Time now for our Final Round. Joining me, Julianne Malveaux, the syndicated columnist, Peter Beinart of "The New Republic," Jonah Goldberg of the "National Review Online," and Robert George of "The New York Post."

We begin with our quote of the week which comes from President Bush. He warned corporate America to clean up its act during a speech on Wall Street.


BUSH: The ethics of American business depend on the conscience of America's business leaders. We need men and women of character who know the difference between ambition and destructive greed, between justified risk and irresponsibility, between enterprise and fraud.


BLITZER: Peter, can we expect the Bush administration to follow up the tough words with tough action?

BEINART: No, we can't and here's why. We actually have a very good, a very good case study in this. Bush made some tough statements after Enron as well, if you'll remember. And then once it went off the front page, his administration behind the scenes, along with the congressional Republicans, fought efforts to increase significantly money for the SEC, they fought efforts to bar accounting firms who do the consulting work for the companies they also audit, so we actually have been through the cycle before. When it's on the front page, Bush is good. When it's off the front page he's terrible.

GEORGE: Oh, I think the big problem is that this isn't going to be going off the front page. I mean, when you've got the stock market in just complete and total meltdown this is going to be something that's go with us for a long time. Obviously the Democrats are going to make sure it's not going to go off the front page.

I think the administration actually is going to do the right thing just because there's so much focus on it. This is just really a train that's rolling down the tracks. I mean, Bush all but endorsed the Sarbanes bill this week and, you know, I think they're going to follow through with it. And even Harvey Pitt has so much of a light shining on him, he can't do anything but enforce it.

BLITZER: The speculation, Julianne, is that the president if the Sarbanes legislation in effect comes to his desk, he'll sign it and as a result in your opinion he would be doing the right thing.

MALVEAUX: The Sarbanes legislation actually could be stronger. I think that the Democrats haven't been as harsh on this either as they can be.

Dr. Martin Luther King had a quote that's relevant here. He said, "The law may not make you love me but it can keep you from lynching me."

After you give this speech, this hardball speech and then you come up with puff balls, it's like saying, "We don't want to do the law."

I was so tired of this man talking about character. Well, we know what these are, these are characters who have been stealing from the American people and what we got is an oversight commission that does not have the right to do any prosecution. This is really retrain the American people and what I'm missing here is the Democrats who are progressive, who really have talked before about redistribution, to come down a lot harder on this.


GOLDBERG: Well, I do agree, I'm surprised how quiet the Democrats are. I think we can all agree on that. Some of us more happy about it than others. But, in terms of Bush, I think Robert has it basically right is that this is, sort of, baked into the cake at this point and Bush couldn't go soft on this even if he wanted to that now the political stakes are that high.

BEINART: In his speech he said he wanted to increase SEC funding by a $100 million. That's only a third of what the House Republicans said they wanted. It was astonishing to me.

GOLDBERG: Yes, but at the same time. First of all, something pointed out about the Sarbanes speech versus what the Bush administration wants. I mean one of the reasons why the, sort of, political class in Washington is so much in favor of the Sarbanes legislation is because the Sarbanes legislation basically doesn't touch CEOs. It goes after the accounting industry. Bush's proposals have a lot more to do with CEOs and corporate reform. Sarbanes is going solely after the accountants which is easier target.

BLITZER: All right, let's move on and talk about this. Some Congressional Democrats and at least one Republican are calling on the SEC chairman, Harvey Pitt, to resign citing his close relationship with companies that he now wants to investigate.

Earlier today Pitt strongly defended himself saying he has no intention of stepping down.


HARVEY PITT, CHAIRMAN, SEC: I'm the right person for the job and the American public expects me to be there pitching in for them and making sure that they get a fair deal.


BLITZER: Julianne, is Harvey Pitt being scapegoated?

MALVEAUX: Not at all. This guy, $20 million more right now, $100 million more next year. That's not nearly enough money as Peter said. It's a third of what the Republicans want but he doesn't have enough people and he basically said in his "Meet The Press" interview that he's going along with the president. His compromised but not only is he compromised, he's not critical. I don't think he's being scapegoated at all.

Two weeks ago I would have said he was. After hearing him on "Meet The Press" this morning, it is time for him to go. He's not going to do anything smart.

BLITZER: All right.

GEORGE: The fact is, even if Bush decided to can Harvey Pitt tomorrow, Bush is going to have to point a successor. So the same charges could be made about whoever the president puts in there.

Sarbanes actually had it right when he said on "Meet the Press," "Look, you need a strong, complete SEC right now. If you replace Harvey Pitt, it's going to be like -- be another year before they all get completely up to speed."

BLITZER: But, Peter, Harvey Pitt, worked for many years as a young attorney at the SEC. He knows the accounting industry. He knows Wall Street. Isn't this precisely the guy, unanimously confirmed by the U.S. Senate, to try to get the job done?

BEINART: No. Let me give you an analogy here. If we had a head of the INS who had been a lobbyist for Saudi Arabia and came in in his first weeks on the job and said he wanted a kindler and gentler INS toward immigrants from the Middle East, I highly doubt that Robert and Jonah would now be saying, "Well, you know this is good because he knows the system from the inside."

No, the truth is, if you want a new tone, you choose someone who doesn't have a history of being in bed with the bad guys.

BLITZER: All right, Jonah, what do you say?

GOLDBERG: Well, if Peter is saying that the perception is more important than the reality and that therefore... BEINART: The perception inside the SEC too.

MALVEAUX: Well, but that's alarming reality. He supported the fact that the president wanted to cut jobs. He said on "Meet the Press" today, "Well, we won't lose any of the jobs that we haven't filled." That means that there are cuts by attrition at a time when we can't afford them.

GOLDBERG: OK. But there are different issues here. There is the -- there is what I think is the grossly unfair demonization of Pitt that is going on, slightly reminiscent of Ken Starr, which says that his -- if you disagree with his policies, if you say -- I mean, John McCain this morning got up and basically said on "Meet the Press" that Harvey Pitt was corrupt because he disagreed with him about expensing stock options.

It is conceivable that Harvey Pitt is actually doing what he believes is right and is the right policy, including staffing the SEC, without being a tool and a corrupt crony of the accounting industry.

BEINART: But he was their lobbyist, Jonah. He worked for them.

GOLDBERG: OK. And your dashboard saint of accounting...

MALVEAUX: But Jonah, all that's happening is that you...

GOLDBERG: ... reform, Arthur Levitt, was the head of the American Stock Exchange.

MALVEAUX: Oh, please, please.

GOLDBERG: These guys, by definition come out of these businesses.

BEINART: Yes, but when he comes in and then he says, "I want to be kindler and gentler," on the same industry that he had lobbied for, come on, how naive are we going to be here?

GOLDBERG: He didn't say kindler and gentler.

MALVEAUX: Jonah, you cannot understate the staffing issue at all, because the staffing issue is about the way that you're able to enforce these laws. You can't understate the fact the SEC will lose at least 60 employees under the old Bush laws, the old Bush budget, that the $20 million does not restore all of them. So you're saying that you want new regulation but less people to enforce? Come on.

BLITZER: Amid all of this -- amid all of this, President Bush is facing questions about his sale of some stock when he was a board member of the Harken Energy company. While Vice President Dick Cheney, as we all now know, is being accused of actual fraud when he was the CEO of Halliburton Oil.

Today, Democratic Senator Joe Lieberman warned that a major scandal could be brewing.


SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: Whereas the president's disclosure so far on Harken Energy has been inadequate, the vice president's disclosures regarding Halliburton have been nonexistent. And I just think that the longer this goes on, the worse it's going to be for the administration.


BLITZER: Robert, some Democrats are saying that this is actually worse than Whitewater. Is it?

GEORGE: I don't think it's worse than Whitewater. But I think it is going to be a longstanding headache for the administration. National Review Online, Byron York actually, had a very good piece explaining why, you know, Bush isn't guilty of insider trading and so forth.

However, the administration, in a sense, gave the press a sword when the president, in a sense, changed his story explaining why he was late in filing these various forms 10 years ago. And a change in story for the press is like a drop of blood to a piranha. It just starts the feeding frenzy and I think it's going to keep going.

BLITZER: This was 12 years ago. It's been investigated by the SEC. It's been reviewed. He got a clean bill of health. Why is it coming up again now?

BEINART: Well, I actually think it's coming up again because the press always focuses more on scandal and less on policy. And I actually think that's a mistake here. I mean, maybe something will come out. Actually, probably more likely on Halliburton.

But right now it's not an important story to me. The important story, the real scandal is the policy. It's the Bush administration on the policy. And I think it's unfortunate that the press and the Democrats like to focus more on these old scandals than on the real scandal, the policy.

MALVEAUX: But, Peter, the reason why the Democrats are focusing on this a bit is because of what happened with Whitewater. How many tens of millions....

BLITZER: So it's just payback? Is it payback then?

MALVEAUX: What is was Whitewater is it was pre-presidential questionable behavior that went into the administration. So something that Clinton did in 1986, we started looking at in 1992 and spent tens of millions of dollars looking at it. Ended up not finding out anything.

Democrats are rightfully a bit ticked about that. This is the same kind of thing. Now whether it's an exact parallel or not, I'm not sure. But it's the same kind of thing. Even more than that, it raises questions about Mr. Bush's ability to be unbiased about what's happening in corporate America now. BLITZER: Jonah, is this the politics of payback?

GOLDBERG: Well, if Julianne's explanation is correct, then it sounds like it.

Look, I never got into the weeds on Whitewater. I admit it was a strange story to begin with. But I do think one of the critical differences is that the story of Whitewater was about what Bill Clinton as a government official did, or was accused of doing, improperly as a government official, and whether or not he did anything wrong, what looked like severe layers of cover-up about it. Now, cover-ups are even more chum in the water to fish than the real thing.

GEORGE: And there is cover-ups here.

GOLDBERG: And there may be. And that's one of the reasons why I think Bush should come out with it.

MALVEAUX: They're lying.

GOLDBERG: But I have to tell you, one of the things I am astounded by is this charge of hypocrisy about Bush and Harken, you know, it's getting to the point where I cannot distinguish the difference between political hypocrisy and political courage. Everyone wanted him to be like Teddy Roosevelt in this speech. Well, Teddy Roosevelt was far more of a hypocrite. You know, he was considered a traitor to his class. John McCain takes money from all sorts of people that he wants to outlaw.


BLITZER: All right. We're going to have to leave it right there because we have to take a commercial break.

When we come back, we'll have a lot more to talk about. We'll talk about some other issues of the week, including that videotaped arrest in Inglewood, California, that grabbed headlines. Did the cops go too far?

Our Final Round will be right back.


BLITZER: Welcome back to our Final Round.

That videotaped arrest of 16-year-old Donovan Jackson has triggered outrage in the city of Inglewood, California, and is renewing debate about excessive police force.

Julianne, is there any action -- is there any reason that what the police officer did in this particular case, as far as you're concerned, could be justified?

MALVEAUX: None whatsoever. I mean, when you look at...

BLITZER: Even if he was grabbing him in the groin?

MALVEAUX: Wait a minute. If you've got someone with their hands behind their back and you're over them, I mean, maybe you did grab back in reaction, after you've been punched how many times, or head thrown on the hood of a police car. This is absolutely reprehensible.

BLITZER: Are you willing to give the police officer at least the benefit of the doubt, let him make his case?

MALVEAUX: No. Frankly, he is entitled by law as a citizen to be considered innocent until proven guilty, but we have some very damning evidence here, and I for one am tired of young African-American men being roughed up and beat and killed by police officers.

In addition, let's be real clear about something. This young man was developmentally disabled. There have been some interviews in the L.A. Times that have talked about the fact that he may not even have understood some of the orders that were given to him.

I think that, if you've got somebody handcuffed, there is a line to be drawn, you do not have the right to...


BLITZER: All right. We got an e-mail. I'm going to let you respond to Julianne and the e-mail, Robert.

"If that idiot had just gotten up and cooperated, this wouldn't be news. Why don't people teach their children to respect police? Isn't that the core of the problem?"

GEORGE: We don't know, on either side -- we don't know fully what the complete details were. We thought we had all of the information in the Rodney King situation, and we didn't actually, and that's why there was a -- why the court initially freed the cops involved there.

MALVEAUX: No, that's why they changed the venue and got them a (UNINTELLIGIBLE) jury.

GEORGE: So I would say, why don't we wait until the full story is out before we once again once again make a rush to judgment?

Hey, look, if everything that we saw on the videotape is everything that's there, fine, the cop should be out of there and thrown in jail. But otherwise let's wait.


BEINART: Yes, I would agree with that, and in some ways I think we perhaps talk a little bit too much about race, and not enough about police training and discipline. It seems to me, you know, not all of the police officers here are white. At least one was Hispanic, one was African-American. And I think in some ways one of the less, kind of, dramatic topics that we really need to talk about more is, what kind of training are these officers getting about how to restrain their anger when they are in very, very difficult confrontation situations, but it's absolutely wrong for them to hit back.

BLITZER: Inglewood, California, not only was one of the police officers African-American and another Hispanic, the mayor is African- American, the police chief is African-American. Does that make any difference at all?

GOLDBERG: Well, I think it certainly runs again some of the story lines that we had in the past, when you had all-white police forces and all-white city governments, and it made it a lot easier and maybe a lot more appropriate to charge institutional racism and so forth. It's a lot more difficult, it seems to me, when you have African-Americans running the system, to say that the system is necessarily racist in the same way.

And in terms of this video, look, if it is as it appears on the video, it's terrible. I do think that the fact that the guy is developmentally challenged is conceivably an argument in the cop's favor, and simply in the sense that it may have been one of the reasons why the cop was so confused about what was going on.

BLITZER: Let's move on and talk about another very important story this week. In South Africa, an HIV-positive character is being added to the children's program "Sesame Street." The show says it has no plans to incorporate a similar character here in the United States. And the Republican congressman, Billy Tauzin, has written a letter to PBS saying such a character for children here in the U.S. would be inappropriate.

Jonah, do preschoolers need to know about HIV and AIDS?

GOLDBERG: I think in South Africa they probably do. HIV and AIDS is a much different public policy issue in South Africa than it is in the United States. It's a much different cultural context, and, if you've ever watched "Sesame Streets" from around the world, these are incredibly culturally loaded shows, that speak to the vernacular and the culture of the countries that they're in. It may make total sense, and I'm not about to second-guess "Sesame Street" on this at least, about it being appropriate in South Africa.

Do I think it's appropriate here? Probably not, no.

BLITZER: What do you think, Julianne?

MALVEAUX: I don't think there's any harm in it, I think the issue is, getting young people comfortable with issues of disease.

My problem with Congressman Tauzin is a letter that he wrote Pat Mitchell at PBS, really talks about the funding. So it's basically attempting to stifle creativity, in the name of the funding, and ask her if she know about this when she testified a week or so ago before Congress about a funding issue. And I think that's inappropriate.

GEORGE: No, well, I think it's legitimate if it's public dollars going to something that somebody who is in a sense in charge of seeing how our dollars are spent writes a letter. I don't think there's anything wrong with that. GOLDBERG: If there were a racist Muppet, everyone would agree Congress should clamp down and say there should be no racist Muppets.


GOLDBERG: So, there is a role for the Congress to interfere.

BEINART: To get behind.

GOLDBERG: Exactly. No racist Muppets.


MALVEAUX: Just, cops, hey, Jonah?

BEINART: One of the good signs here is that the South African government, which has been really criminally negligent in its dealing with its AIDS epidemic, is actually finally getting serious.

BEINART: Billy Tauzin, I wish he would get serious about his record in laying the groundwork for the corporate fraud and scandals that we're seeing now. Because that man has one of the worst records on the accounting industry of anyone in Congress. That's what he should be talking about.

GEORGE: Obviously if we had the Count from Sesame Street we wouldn't have some of these accounting problems.

BLITZER: Counting numbers.


BLITZER: All right, we have to take another quick break. Our Lighting Round is just ahead, stay with us.


BLITZER: Time now for our Lightening Round. Lots of speculation that the Republican Senator John McCain has been siding with Democrats a lot over the years could make another try for the White House as an independent or perhaps even a Democrat.

Earlier today McCain was questioned about his political plans.


TIM RUSSERT, "MEET THE PRESS": Would you ever run as a Democrat for president?


RUSSERT: Would you ever run as a independent?

MCCAIN: I envision no scenario.

(END VIDEO CLIP) BLITZER: Peter, that second answer was a little bit -- left a little bit of an opening there.

BEINART: Yes, I think he followed it up by saying no, but you know, this is actually an article that originated in The New Republic and although he's saying no now, it makes a certain amount of sense. On the fundamental divide between Democrats and Republicans, do you believe in more government intervention into the economy or less, McCain has switched sides.

If the Democrats could show they were credibly supportive of military intervention overseas, they'd be no reason for him not to.


GOLDBERG: It's a wonderful theory and it was a great article, but it makes no sense. He's not going to do it. He's not going to run as a Democrat. Democrats won't have him. I mean, they'll spit him back out. And as an independent, it just won't happen.

MALVEAUX: On women's issues, on civil rights, on any number of other social issues, he's not with the Democrats. He may be with the Democrats on fiscal issues -- no, Democrats won't want him.

GEORGE: I would say, and you heard it here first, that it is likely that McCain will actually challenge Bush in the primaries in 2004. He won't win, but he could cause him a lot of embarrassment in New Hampshire and possibly upset him in New Hampshire.

GOLDBERG: We heard it here first that it's likely?

GEORGE: No, as a Republican, I think...

BLITZER: He's not leaving the party.


MALVEAUX: ... doing the independent slow dance for awhile, anyway.

BLITZER: All right, let's talk about the Federal Reserve chairman, Alan Greenspan. He testifies before the Senate Banking Committee this week. With stocks in a five-year low, can Greenspan stop the slide, Jonah?

GOLDBERG: Well, he couldn't stop the slide when it was going up with his irrational exuberance speech; I was there for that. I don't think he can necessarily stop it from going down. The market is going to correct itself when it needs to correct itself.

BLITZER: There's a limit to what he could do even though he's Alan Greenspan.

MALVEAUX: Well, you know, gone are the days when with a wink and a nod he can send out signals to people. The fact is that the market may well have been over-valued according to him and now it's correcting, as Jonah says, I hate to agree with him. But the market is correcting. If 8,600 is too low -- or is too high, whatever, whatever it is it will correct itself.

But he can't do very much. He doesn't have the tools to do it. Right now even changing interest rates won't matter.

BLITZER: Pretty painful correction for a lot of us.

GEORGE: Oh, absolutely. The people were wrong to think that he was Superman when the market was at 1,100 -- 11,000, excuse me and they're wrong to think that he's going to be able to turn it around now.

BEINART: Yes, but he can remind people that the economy is not the stock market. The economy is actually doing a lot better than the stock market and consumer spending is still pretty high. So he should have a note of kind of leavening here.

BLITZER: Britain plans to decriminalize marijuana use, joining most other nations in Europe. Should the United States do the same thing, Robert?

GEORGE: I don't know, but I think I'm going to take a trip over to Britain just to gather the necessary...

BLITZER: Do some research -- do some reporting on that issue.

GEORGE: Necessary evidence. You know, it's something to look at. It's not going to happen here. There is a bipartisan consensus against legalization of drugs even of marijuana here and I don't see it happening any time soon.

BLITZER: I heard a caller on C-SPAN this morning when I was driving in say, go ahead, legalize marijuana, tax it, that will eliminate all the deficit.


MALVEAUX: I don't think that pot use is that widespread.

BLITZER: You'd be surprised out there.

MALVEAUX: Well, I might be. Who knows? What I would say, though, is that marijuana smoking is a victimless crime and the drug war has proven to be a very biased war. I think it would be a great thing to do to decriminalize it, but I don't think it's going to happen.

GOLDBERG: I work for a magazine, "National Review," which came out against the drug war a long time ago and is for decriminalizing all the drugs. I'm against what my magazine's own policy is, but I do think decriminalizing marijuana makes sense. I think it distracts from a lot of the drug war which does make sense and it is more or less part of the culture.

BLITZER: A lot of people are jailed right now because of marijuana.

BEINART: Yes, I actually think that they're more interesting thing here is how much the drug war is being undermined by the massive new focus that we're asking our law enforcement agencies to deal on terrorism and white-collar crime. My concern is not de facto -- de jure changes, it's a de facto lack of crackdown on all drugs.

BLITZER: All right, let's move on. The NBA superstar Allen Iverson is in trouble with the law. He's accused of threatening two men while flashing a gun.

Meanwhile the shoe company Reebok, which has a multi-million dollar contract with Iverson, is standing by their man. Is this corporate responsibility, Julianne?

MALVEAUX: Well, if rogue cops get to be innocent until proven guilty, so does Allen Iverson. The fact is we haven't heard all the -- we haven't heard everything, and even more than that, this is just too easy. I would wonder if those witnesses are telling the whole truth.

GEORGE: Yes, I tend to agree with Julianne here. Wait until all the facts are in before you -- you know, before you either yank his endorsement contracts or throw him out of the league.

BLITZER: That's the American way.

BEINART: Yes, you know, I hope against hope that Allen Iverson will really get his act straight. He's not only a great basketball player, he's a courageous, gutsy basketball -- he's a remarkable basketball player and he's shown flashes of being actually quite an impressive human being except that he goes off and screws up like this. I really hope he can get it together.

BLITZER: It's almost like a Greek tragedy.

GOLDBERG: Yes, look, rogue cops do get to wait for a trial, and so does Allen Iverson, but rogue cops shouldn't get sneaker contracts. And I don't think necessarily that...

GEORGE: Another good slogan.

GOLDBERG: Yes. Look, I mean, Reebok and a lot of these sneaker companies have associated themselves with, you know, a thug culture from time to time. Maybe Iverson is entirely innocent, but it's not necessarily the best image for a sneaker company.

BLITZER: All right. We're going to leave it right there. Thank you very much to our Final Rounders.

That's your "LATE EDITION" for Sunday, July 14. Please tune in again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk. Please be sure to join me Monday through Friday, 5 p.m. Eastern for "Wolf Blitzer Reports."

For now, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington.


Debate Measures to Police Corporate Responsibility; Interview With Louis Farrakhan>



Back to the top