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LIVE FROM THE HEADLINES

Judge Rules Malvo's Statement Can Be Used; UC Berkeley Bans Students From China, Hong Kong; PFC Lynch Suffers From Amnesia

Aired May 6, 2003 - 19:00   ET

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

(BEGIN VIDEOTAPE)
ANNOUNCER: Admissible in court. A judge rules that the words of teenage sniper suspect Lee Boyd Malvo may be used against him. Does this make it an open and shut case?

The University of California at Berkeley bans students from China and other SARS affected areas in Asia.

UNIDENTIFIED MALE: I don't think it's a good way to stop the disease. SARS even in Canada, in big cities in Canada. Are we stop taking Canadians from coming to our country?

ANNOUNCER: Is the decision a safe bet, or will it just contribute to the SARS hysteria?

Doctors report that former POW Jessica Lynch is suffering from amnesia after her traumatic injuries and capture.

UNIDENTIFIED MALE: Every day, you know, is a better day for her and knowing that she's better and she's on the road to recovery is just great for her and us.

ANNOUNCER: Is her memory forever gone? How can it be retrieved?

LIVE FROM THE HEADLINES with Paula Zahn in New York.

(END VIDEOTAPE)

PAULA ZAHN, HOST: Good evening and welcome on this Tuesday night, May 6. Glad to have you with us.

Also coming up this hour, new videotape -- videotape, that is, obtained by CNN showing the 9/11 hijackers celebrating in Germany in 1999. Among them an alleged al Qaeda member who got away from U.S. forces. Mike Boettcher will have that story in just a moment.

Also ahead, is it the biggest heist in history? Almost $1 billion gone. Did Saddam Hussein's son crack open what he saw as the family piggy bank before the day bombs fell on Baghdad?

But first we begin with a new look at question that some people started asking each before the fall of Baghdad.

Is Iran next? New reports about the Iranian nuclear program are fueling speculation the U.S. and Iran could be on a collision course. National security correspondent David Ensor has been looking into this possibility.

(BEGIN VIDEOTAPE)

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT (voice-over): Iran denies it will build nuclear weapons using materials from its newly-revealed plants near Natanz and Iraq, an argument it made Tuesday behind closed doors before the U.N.'s International Atomic Energy Agency in Vienna. It is a claim many experts fear is false.

ROB SOBHANI, GEORGETOWN UNIVERSITY: God help us if Iran gets its hands on a nuclear weapon.

ENSOR: With the IAEA to decide next month whether to declare Iran in violation of the nonproliferation treaty it signed, a senior Bush administration official argued to Russian officials in Moscow Monday that Iran is racing towards the bomb.

Russia should stop its energy assistance for Iran, John Bolton said, and help the U.S. try to stop them.

JOHN BOLTON, UNDERSECRETARY OF STATE: The overall clandestine way in which Iran has carried out much of this activity demonstrate why we believe that it's part of a nuclear weapons related program.

ENSOR: The U.S. Central Intelligence Agency estimates Iran could have nuclear weapons in about seven years, by 2010. Some analysts say it could be much sooner, in 24 to 36 months. And, they argue, doing what the Israelis once did in 1981 to an Iraqi nuclear facility, bombing it should be considered.

REUEL MARC GERECHI, AMERICAN ENTERPRISE INSTITUTE: I think you only have one option, you either punt or you go after the facilities. And you've got to make up your mind which way to go. I can make arguments either way.

I am inclined to go after the facilities, but it's not an easy task by any means and you have to be prepared for certain potential for blowback from doing that.

GARY SICK, MIDDLE EAST INSTITUTE: I think it's a very bad idea.

ENSOR: With U.S. forces now in neighboring Iraq, Turkey, Turkmenistan and Afghanistan, attacking the Iranian facilities before they come online would be easy says Iran expert Gary Sick, but foolish.

SICK: The reaction with Iran, which is so intensely nationalistic, you would have even the people who are friendly with the United States now or who think that that is the road to the future, you would have them all falling on the side against the United States and organizing, mobilizing against the United States.

(END VIDEOTAPE) ENSOR: Instead, argues Gary Sick and others, the Bush administration should swallow hard and sit down with Iran for talks designed to improve relations and to try to convince them to stop the drive towards the bomb, but sitting down with the ayatollah's representative? It might be a good strategic move. It would probably not be good domestic politics in this country, Paula.

ZAHN: That's for sure. David Ensor, thanks so much.

Back in Iraq this is a major hunt going on. Someone withdrew about $1 billion from Iraq Central Bank just hours before the U.S. bombed Baghdad. Witnesses report seeing three or four trucks rolling up to the bank early on in the morning, then men in black loading money bags into the trucks.

An adviser from the U.S. Treasury Department learned of the withdrawal from Iraqi banking officials.

(BEGIN VIDEO CLIP)

GEORGE MULLINAX, U.S. TREASURY DEPT.: I remember the exact words from the central bank official was that officials or persons representing Saddam Hussein arrived at bank early one morning and began removing currency.

(END VIDEO CLIP)

ZAHN: Unnamed Iraqi officials are quoted in news reports saying that Saddam Hussein's son Qusay may have been involved in the withdrawal, but U.S. officials say they can't confirm that. Investigators are now searching for that money.

The other search going to in Iraq, of course, is for weapons. The war was fought, in part, to get rid of that country's banned weapons of mass destruction, but so far the U.S. has yet to find any of them.

Senior Pentagon correspondent Jamie McIntyre looked at what the has been found and how the U.S. may be redefining success.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): (no audio) The key claim made by Secretary of State Colin Powell to the United Nations before the war, that Iraq had put biological weapons laboratories on wheels.

COLIN POWELL, SECRETARY OF STATE: We know that Iraq has at least seven of these mobile biological agent factories.

MCINTYRE: Sources say one of two trucks turned over to the U.S. military in late April closely matches drawings of a mobile biolab shown by Powell in February, right down to some of the fermenting vats depicted inside.

No bioagents were found. Officials suggest that may be because the truck had been scrubbed clean with a caustic agent.

Frustrated so far in its search for WMD, sources say the Pentagon plans to point to the truck as evidence that, at the very least, Iraq maintained the means to produce germ warfare each as U.N. inspections continued.

Asked about what the discovery proves, President Bush said he'd leave that to the experts.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One thing we know is that he had a weapons program. We also know he spent years trying to hide the weapons program and over time the truth will come out.

MCINTYRE: Privately, some Pentagon officials are saying the U.S. no longer expects to find weaponized chemicals or germs in Iraq, especially since they were not used on the battlefield as expected.

The search now is concentrating on finding raw materials, the germs and nerve gas that would go inside the weapons.

And publicly, some U.S. officials appear to be lowering the bar, subtly suggesting it may be enough to prove Iraq simply had banned weapons in the recent past.

POWELL: Even if we don't find weapons we can find out what happened to that material.

(END VIDEOTAPE)

MCINTYRE: So how much time does the U.S. have to find a smoking gun? One senior Pentagon official figures about two months. If the U.S. hasn't found Iraq's banned weapons by then, by this summer, he says, it will be very hard to keep saying be patient -- Paula.

ZAHN: Yet another timeline to keep track of. Jamie McIntyre, thanks so much.

Now we're going to check other some of the other stories making headlines across America tonight.

His hat is in the ring. Senator Bob Graham is joining eight other Democrats in making a run for the White House in 2004. Graham announced his candidacy in Florida today. He is the ranking Democrat on the Senate Intelligence Committee.

By the way, Graham, a former Florida governor, has never lost a political race.

Silver Star crash. All 10 cars derailed when the Amtrak train collided with a lumber truck in southwestern Georgia. The driver was killed, the train engineer was critically injured. Forty passengers on the Silver Star were also injured. The train was traveling from New York to Miami. An investigation is on.

Eye on the economy. Now the federal reserve will leave interest rates unchanged. Federal policy makers announced today the rate will stay at 1.25 percent, which is 41-year low, but the fed says it may lower the rate in the future if the economy grows weaker.

Residents in the Midwest are starting to dig out and clean up after this weekend's devastating tornadoes. Pierce City, Missouri, was hit hard by the storms. Six people who had been missing have been found alive and well. That's obviously very good news for a town whose shocked residents were getting their first look at the damage today and David Mattingly is there.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): It was a simple every day decision, with a profound outcome. Debbie Aust opted to dine out Sunday evening. If she hadn't she would have been home when the tornado hit Pierce City.

DEBBI AUST, PIERCE CITY RESIDENT: I was just dumbfounded because it's everything here. It's -- Our living across the street. All of our vehicles, everything, it was just shock.

MATTINGLY: The storm ripped the second story off the house and dropped it on the living room. The 18 wheeler belonging to Debbie's husband David was also blown over.

Even now, two days later, the idea of what could have been is overwhelming.

DAVID AUST, PIECE CITY RESIDENT: I'm just glad we're alive. That's all I can care. We can replace everything I've lost, but all my family's safe. That's all that matters.

MATTINGLY: This was the first chance for many residents to salvage what they can out of buildings that are more than unlivable, many are dangerous.

LORRAINE YOUNG, PIERCE CITY RESIDENT: Well, I've been waiting for about two and a half hours and I'm still going.

MATTINGLY: Property owners were forced to wait while authorities worried about more injuries. Before anyone can go inside a building, structural engineers from the state of Missouri checked each building for hazardous conditions.

UNIDENTIFIED MALE: Holes in the floor, debris that could fall from above, not allow them into areas that could be unsafe for entrapment.

MATTINGLY: Rescue personnel wearing hard hats escort property owners inside to grab what they need.

YOUNG: We have to get to the house somewhere.

MATTINGLY: Lorraine Young couldn't wait to clear out her booth at a flea market and get on with her life.

YOUNG: I've lived here all my life. Why ruin it now?

MATTINGLY: But the sense of loss in this community remains great. The loss to local heritage. The economic devastation and the personal losses of things that cannot be replaced.

Debbie fears her little dog, who was home alone at the time of the tornado, perished somewhere in the rubble.

(on camera): You said you were done with crying.

AUST: Yes, I can't cry anymore.

MATTINGLY: Why not? What do you mean?

AUST: I don't know. I just -- It's all gone, there's nothing to do about it now. Nothing. What can you do? Nothing. Absolutely nothing.

MATTINGLY (voice-over): And with such a variety of losses, can this town regain the old time charm that made it a tourist attraction?

Federal disaster relief is on the way. The first checks will pay for cleanup, shoring up damaged buildings and, if the town council decides, demolition, but there is no money guaranteed at this time for restoration.

David Mattingly, CNN, Pierce City, Missouri.

(END VIDEOTAPE)

ZAHN: And more tornadoes and severe weather are being reported from Kansas to Georgia today and that dangerous forecast is not likely to change for awhile. Let's see why.

Time to check in with meteorologist Jacqui Jeras, who joins us from CNN weather center. Good evening, Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Good evening, Paula. Well, we've had 11 new tornado reports for today and now we've got about a dozen tornado warnings in effect and two I want to mention because tornadoes have been spotted.

In Sequoia County in east central Oklahoma, we have a funnel cloud reported there. You want to be taking cover now.

And also in the South Carolina and Berkeley and Dorchester counties, the public reported a tornado at the top of the hour near Somerville. So still a very dangerous situation.

Most of our warnings at this time are across Missouri. You can see all of these individual thunderstorms. There are warnings on each and every one of them and these watches are being extended out off to the east and we'll be including much of the tristate region, parts of Indiana into western Kentucky and southern Illinois. Tornado watches through 8 p.m. across northern Georgia and across much of South Carolina. So no relief is in sight. In fact, a very active pattern.

One other concern, Paula, is that the rainfall has been very heavy. Doppler radar estimating about nine inches of rain in parts of southeastern, Tennessee.

ZAHN: Something they certainly don't need right now. Thanks, Jacqui.

A dramatic ending moments ago to a daring journey to freedom off the Florida keys, four Cuban men were attempting to raft to Florida. As the Coast Guard closed in on them, they say the men jumped off the raft and jumped into the water. Three of them swam the last two and a half hours surrounded by Coast Guard boats. Finally, they walked across the rocky beach and onto the shore at Key Largo. The fourth man finally gave up. He was taken into custody by the Coast Guard.

Still to come tonight, sniper suspect Lee Boyd Malvo. A judge rules today that parts of his alleged confession can be used in court.

(BEGIN VIDEO CLIP)

MARK PETROVICH, MALVO ATTORNEY: We felt that the constitutional violations were clear and were blatant and we respectfully disagree with her ruling.

(END VIDEO CLIP)

ZAHN: So what will this mean in court? Jeanne Meserve is live from Washington with that story.

Also tonight, downwardly mobile from the executive suite to the caddy shack, Chris Huntington tonight with the story of an American worker.

And then a little bit later on, caution or overreaction? Is it fair for colleges and universities to not admit students from countries where SARS is a problem? That story and more as LIVE FROM THE HEADLINES continues.

(COMMERCIAL BREAK)

ZAHN: Welcome back.

A judge's ruling in Virginia today is expected to have a major impact in the trial of sniper suspect Lee Boyd Malvo. The trial isn't expected to begin until November, but already the teen's defense team says the ruling is a serious blow.

Jeanne Meserve has been following the story today.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT (voice-over): Lee Boyd Malvo made his statements to investigators voluntarily, Judge Jane Maro Rouch writes, and neither his right to an attorney nor his write to remain silent were violated in the key portion of the interrogation. She concludes that Malvo's statement "do I get to talk to my attorneys" was not a request for counsel.

It is a significant setback for Malvo's defense team.

PETROVICH: He felt that the constitutional violations were clear and were blatant and we respectfully disagree with her ruling in that.

MESERVE: Prosecutor Robert Horan on the other hand, is clearly relishing the opportunity to play for a jury audiotape of Malvo talking about his own alleged crimes.

ROBERT HORAN, VIRGINIA PROSECUTOR: It's pretty -- pretty convincing stuff, I think.

MESERVE: According to sources, documents and court testimony, during the portion of the interrogation that has been ruled admissible, Malvo allegedly admits involvement in the following. The attempted shooting of a child outside an Aspen Hill, Maryland, craft store on October 2; the fatal shooting of James "Sonny" Buchanan in Rockville, Maryland, the next day; the October 7 wounding of a student at a Maryland middle school; the October 9 shooting of Dean Harold Myers at a Manassas, Virginia, gas station; the October 14 shooting of FBI analyst Linda Franklin; and the October 22 shooting of bus driver Conrad Johnson.

Malvo was described by his interrogators as laughing about some of the crimes.

Defense attorneys tried to find a silver lining in the judge's ruling.

PETROVICH: The analysis of the statements we'll indicate that there are clear inaccuracies, seeming lies that are difficult to explain and actually create more questions than -- than they answer.

MESERVE: Under Virginia law the judge does not have the last word in this matter. The jury will also consider whether the statement was freely given.

MARVIN MILLER, VIRGINIA DEFENSE ATTORNEY: And so the voluntariness of the statement is to be decided by the jury. And they can ascribe the weight to it that they feel is appropriate.

(END VIDEOTAPE)

MESERVE: The judge did exclude portions of the interview conducted before Malvo was advised of his right to remain silent and offered an attorney, but his most damaging statements came afterwards -- Paula.

ZAHN: Jeanne Meserve, thanks so much.

At the heart of the argument over Malvo's alleged confession is its timing. He was interrogated by police after federal charges were dropped against him, but before he was transferred to the custody of Virginia authorities.

Our legal analyst, Jeffrey Toobin joins me to discuss the legal issues surrounding this ruling.

Good evening, Jeffrey. Now I know you're a former prosecutor, sometimes you don't think highly of defense attorneys but let me ask you this.

JEFFREY TOOBIN, CNN LEGAL ANALYST: OK.

ZAHN: Is there any defense attorney you can think of that would be able to win this case?

TOOBIN: Let's put it this way, Mark Geragos and Scott Peterson, he has an easy case compared to this. I mean this is one of the most difficult cases to defend that I can even imagine.

First of all, you have this car that is set up like a...

ZAHN: Killing machine.

TOOBIN: Killing machine and you have the fact that, you know, the bullets match. You have the fact that the killings all stopped as soon as these two were arrested.

Now you have a confession, a chilling, horrible confession where he's laughing as he's talking about shooting at kids.

You know, I think you can talk about how he's a 17-year-old. He didn't understand the implications, maybe he was brain washed, but I mean, this is one of the toughest cases to defend that I have ever seen.

ZAHN: There is something we learned from the government's submission that helps better understand what Malvo was thinking when he talked about seeing a young child on the parking lot, leading the child, according to this confession, with a gun. The child mistaking the whirl of a bullet for a bee, swats his head, he misses him and said, quote, "I might have parted his hair."

TOOBIN: Sounds very remorseful, doesn't it? It is so chilling to think that a 17-year-old could talk this way. This was mass, mass murder. There are not a lot of people out there who have killed as many people as these two are accused of killing. And the chilling, you know, absence of any sort of remorse, absence of any recognition of the seriousness of the crime, it is something that is really almost unprecedented in what I've seen in the criminal justice system.

ZAHN: Were you surprised, though, by the judge's ruling?

TOOBIN: Not really. I mean, I think what the prosecutors did here, I think it was pretty close to the line. There was something a little sleazy about taking a...

ZAHN: About what? TOOBIN: Well, here you are with a situation; they have lawyers in Maryland. They're moved to Virginia and suddenly the prosecutors take another bite at the apple because he doesn't have a lawyer in Virginia and I can see some judges being repelled by that. Somehow that doesn't seem like fair play.

ZAHN: You say sleazy, but not illegal.

TOOBIN: But not illegal. And I think what really decided it for the judge was the fact that they did give him his Miranda warnings. This was not the third degree. They didn't beat him up. They didn't force him to talk. There's no harassment. This interview is on tape. They were able to hear, you know, the kind of interchange between the prosecutors and police and Malvo and they said, look.

And the judge said, you know, this is obviously relevant, important evidence. I am not going to keep this from the jury. I am not going to have a trial that's sort of a sham with this very important evidence kept away. And I can understand why the judge decided the way he did -- she did.

ZAHN: Certainly been interesting to follow.

TOOBIN: Lots of luck to these defense attorneys.

ZAHN: How many members of this defense team will be in place at the end of this trial?

TOOBIN: It's -- It is a brutally tough defense.

ZAHN: Jeffrey Toobin, it's always good see you. Thanks for dropping by.

I want to update you now on that church poisoning mystery in New Sweden, Maine. The death of the prime suspect has now been ruled a suicide. That was what was suspected. Daniel Bondeson shot himself on Friday.

Now he is suspected of lacing the church coffee last week, poisoning 16 people, one of them fatally. Authorities say he left a suicide note with important information about the case. They say he may not have acted alone.

Still to come tonight, two plans, two very different effects on your wallet. Jonathan Karl on what the Democratic and Republican economic plans might mean to you.

Also tonight, from full time to part-time, millions of Americans with a job and paycheck they haven't had since high school.

And a little bit later on, a homecoming marked by tears, hugs and welcome home banners. The USS Abraham Lincoln back in port this Tuesday night. And what a celebration it was.

(COMMERCIAL BREAK) ZAHN: White House budget director Mitch Daniels says he plans to resign. Daniels is the last original member of the president's economic team. He's expected to run for governor of Indiana.

His announcement comes as President Bush's pressing Congress on a tax cut, but White House spokesman Ari Fleischer expects Congress to act before Daniels departs next month.

The president has been arguing that a big tax cut is needed to revive the economy, but Democrats say there is a better way. While the president continued his campaign for $726 billion tax cut today, telling a business group his plan would create one million jobs by November of 2004.

Well, Democrats for their part presented their own economic plan. It calls for a more modest tax cut. Senate minority leader Tom Daschle says the Democratic plan would be less expensive and focus more on working families.

We've asked congressional correspondent Jonathan Karl to help crunch the numbers tonight for us. Jonathan, what did you find, good evening?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Paula, right now the hardest numbers to crunch are the numbers of votes. Because you've got a number of competing plans out here, not just the president's plan, but several Democrat plans, several Republican plans and right now none of them seems to have enough votes to pass the Congress.

(BEGIN VIDEOTAPE)

BUSH: We need aggressive action out of the United States Congress now!

KARL (voice-over): But far from agreeing on the president's tax plan, Congress is deeply divided on how to get the economy going again.

Senate Republicans have one plan, a temporary elimination of the tax on dividends.

SEN. DON NICKLES (R), OKLAHOMA: We're trying to put as much positive, economic punch as we can in the tax bill.

KARL: Democrats have a different plan to give workers some extra money .

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: It provides $300 for each adult, $300 each for the first two children.

KARL: The two parties are miles apart, but the Republican and Democratic plans actually have something in common. Both are temporary and neither has the votes to pass.

The Republican version would cut the dividend tax for just three years. Moderate Republicans, like Olympia Snowe, say that's just a way to hide the real cost of the tax cut.

SEN. OLYMPIA SNOWE (R), MAINE: I think it's a give and take approach that would not be regarded seriously and certainly would be viewed as a gimmick.

KARL: Amazingly, the author of the Republican plan agrees.

SEN. CHUCK GRASSLEY (R), IOWA: She's absolutely right. It's a gimmick from the standpoint that the best tax policy would be to have the 10-year tax policy that you can't under reconciliation, but there's also the anxiety they we all have to recognize because there are not jobs being created.

KARL: Without the support of the moderate Republicans, though, Grassley's plan won't fly.

The Democratic plan has each less support.

Meanwhile, over in the House, GOP leaders are charging forward with yet another plan. A proposal to cut capital gains taxes that may pass in the House but probably doesn't have a prayer of passing in the Senate.

(END VIDEOTAPE)

KARL: Facing an uphill battle here in Congress, the president plans to continue to make his case directly to the people. On Monday he's expected to tout his economic plan in Nebraska, which just happens to be the home of Senator Ben Nelson, one of the very few Democrats here in the Senate that the White House hopes could be convinced to vote at the end of day in favor of a tax cut, something along the lines of what the president is looking for -- Paula.

ZAHN: So Jonathan, we can tell by our e-mails, there are a lot of frustrated people out there trying to cut through the details on both the Republican and the Democratic plan.

Are you able to tell us tonight who the plans will help, who they will hurt?

KARL: Well, it's a very tough thing to work out. I mean, right now you have two totally different approaches, the Republicans -- and there are several different Republican plans -- aim the centerpiece of their plan is towards the dividend tax cut.

Now the idea there is that this provides a direct boost to the economy. Much of the benefits of that go to wealthier people because those are people that own stock, but the Republicans argue that this also gives the stock market a boost, it will create more jobs and that helps out everybody.

The Democrats, on the other hand, really target their money, their tax plan, and it's not so much a tax plan as it's a tax and spending plan, directly toward lower and middle income workers. They will get a tax credit. All workers would get the tax credit. But Republicans say that's just really a way of writing another check to people. It's a temporary thing. It will not provide a direct economic boost to really get the economy going.

So two very different approaches, two different philosophies on government. Right now, as I said, the interesting thing is although everybody is up here saying something has to be done to get the economy going, neither plan has the support to get through. So who knows where we'll be at the end of the day. But they do want to get something done by Memorial Day.

ZAHN: Keep us posted. Thanks, Jonathan.

The current U.S. unemployment rate is at 6 percent, but that number doesn't include a group sometimes called the underemployed. Those are workers who have taken new jobs paying much less than the jobs that they once held. Chris Huntington has the story of a man who's gone from the fast lane to the fairway.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Fore!

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): It's a Friday afternoon and a group of executives have knocked off early to get in a quick round of golf. One of these men has 25 years experience in accounting and investor relations. But he's not an executive anymore, he's the caddy.

RICH HANTKE, GOLF CADDY: Don't cut it too much left, all right?

HUNTINGTON: Rich Hantke used to earn a six figure income running investor relations at a high tech telecommunications firm but he was laid off last October and has not been able to find work in that field since. So he's working the links to fill a gap.

HANTKE: Less than firm, you're going to probably be just a tad outside.

You know, the caddying is beautiful because of the flex, you know, the time flexibility involved. You know, I can still do my search for my, continue my career, if you will, but it also, it definitely helps in terms of helping make ends meet.

HUNTINGTON (on camera): It's a long way from the executive suite to the caddy shack. But Rich Hantke's solution for helping to make ends meet after he's been laid off is hardly unique. Millions of Americans in the last couple of years have been forced to take jobs and paychecks that they haven't seen since high school.

(voice-over): Economist Jared Bernstein keeps track of these downwardly mobile workers and he says they have a lot of company.

JARED BERNSTEIN, ECONOMIC POLICY INSTITUTE: I noted that there's a couple million more people working involuntarily part-time. They prefer to work full-time, but they can't find it. They found a job, but it's not the job they want.

HUNTINGTON: Bernstein points out that the percentage of so- called underemployed American workers is the highest in more than seven years, above 10 percent. But Bernstein says the bigger threat to the economy is falling pay. BERNSTEIN: Actually, we are now beginning to see fairly widespread real wage losses throughout the economy.

HANTKE: I left your note over there. What?

HUNTINGTON: Rich Hantke knows all about earning less. Out of work for seven months with his oldest son now looking at colleges, he's been forced to face the facts.

HANTKE: The reality is, you know, we're a two income family. The house and everything where we live is geared around, you know, two incomes. So you can't go indefinitely on one income.

HUNTINGTON (on camera): For now, that second income won't come from climbing the corporate ladder, but from walking the fairways.

Chris Huntington, CNN, New York.

(END VIDEOTAPE)

ZAHN: We wish him luck in his job search.

Still to come this evening, potential summer school students at U.C. Berkeley might actually get turned away, but it has nothing to do with their grades.

Also tonight former POW Jessica Lynch might have amnesia. We're going to talk with a psychiatrist to learn whether she'll ever remember any of the details of her captivity and her capture. That story in a moment.

A look at closing numbers as we leave you here from Wall Street.

(COMMERCIAL BREAK)

ZAHN: Hundreds of students in Asia are scrambling to make other plans this summer after they were told they are not welcome at the University of California Berkeley. The school is turning away them because of the SARS epidemic. Willie Monroe of affiliate KGO has the details.

(BEGIN VIDEOTAPE)

WILLIE MONROE, KGO-TV CORRESPONDENT (voice-over): The restriction effects new students from China, Taiwan, Singapore and Hong Kong, areas particularly hard hit by SARS.

MARIE FELDE, U.C. BERKELEY SPOKESWOMAN: Because we're not in a position to take care of large numbers of students if they have symptoms when they get here. MONROE: About 600 students will be affected. Some were scheduled to start classes May 27. But the campus wide SARS task force advised banning those students from coming to Berkeley this summer.

DR. TOMAS ARAGON, U.C. SARS TASK FORCE: Any of them that comes down with any respiratory symptoms basically are going to be treated like a suspected SARS case just based on the recommendations from the Centers for Disease Control. And that means voluntary, that means isolation, making sure that we have an appropriate place to put them.

MONROE: The CDC recommends limiting exposure and monitoring potential SARS patients for 10 days. The university says it just doesn't have that capability.

FELDE: We don't want to invite students here if we're not able to provide the kind of health care and the kind of services that they're going to need.

MONROE: Some students say the decision is a little bit of over reaction.

TONY AU, U.C. BERKELEY STUDENT: I don't think it's a good way to stop the disease. There are SARS even in Canada, in big cities in Canada. Are we stopping Canadians, too, from coming to our country?

ANDREW CHOU, U.C. BERKELEY STUDENT: I don't particularly believe that it's bad. I mean it's good to be safe just because, you know, the epidemic is, in those countries it's strong.

XAVIER SERRATO, U.C. BERKELEY STUDENT: I feel until we really know what is going on with the SARS and what it's really doing, then I guess, as much as I would like for that not to happen, I feel for now it's kind of the most important thing.

MONROE: The summer school ban represents an escalation of the university's response to SARS. Students like Tina Zhang won't be studying in Asia this summer because those programs have already been canceled.

TINA ZHANG, U.C. BERKELEY STUDENT: Well, I thought that was a little more extreme, but I guess it's just for the good of the people here, you know, so I can understand why they're doing it, but maybe it's not really necessary.

(END VIDEOTAPE)

ZAHN: In a moment we'll be talking with a professor who says the school's decision is discriminatory and arbitrary.

First though, we're going to hear more about the policy from Tomas Aragon, a member of the University SARS Task Force and director for its Center for Infectious Disease Preparedness. Good to see you, sir. Thanks so much for joining us tonight.

ARAGON: Hello. ZAHN: How do you respond to critics of this decision who say it does discriminate against students and that it is arbitrary?

ARAGON: I think it's important for people to realize how we came to this decision. The SARS Task Force started meeting about six weeks ago and we started going through all the issues that we would have to address as a campus to prepare for the possibility of having SARS coming to U.C. Berkeley.

One of the things we realized as we studied the guidelines that was promulgated by the CDC is that the amount of efforts that would have to be put forth to prepare for somebody coming -- developing SARS at U.C. Berkeley would require a lot of resources, a lot of person time.

If somebody came from an affected region and came down with any respiratory symptoms in addition to isolating them, we would have to provide them with education, medical care. The CDC guidelines recommends that if you're unable to provide appropriate isolation that that person should be hospitalized.

It's important for the university to put in place the systems to be able to handle this for the university. As we started looking at the big picture, we started realizing that this was really going to take some time.

We want to have the procedures in place so that we can, again, welcome students from all parts of the world. We felt that because summer school is going to start in just two weeks that we weren't going to have all of these in place and that we would not be prepared to handle the influx of over 500 students from that region. If even a small percentage of them developed symptom, we don't have the resources to deal with that this summer.

ZAHN: Let me move on to some of the other concerns, that even your own faculty members have. And we're going to put up on the screen something that Professor Hwang (ph) wrote and he said, "I also think this decision will have far-reaching and adverse impact on other colleges and university across the nation and contribute further to the climate of hysteria."

Are you worried about a domino effect here?

ARAGON: I would say, yes, of course, we are worried. I think the most important message -- the most important message that we would have for other universities: to really be prepared to take care of people that do come.

And I think the reason why we're responding this way is that we're putting a lot of effort to make sure that we have our systems in place to take care of students. We're going to have a lot of students that are coming back from summer vacation, new incoming students. All these students are welcomed back. This policy only -- this policy is only in effect for those students who are going to attend summer school, from China, Hong Kong and Taiwan, but none of the other affected regions. We are basically using the countries or areas of the world that are affected by the CDC travel advisory that's recommending nonessential travel be canceled or postponed to those areas. We are hoping, as the situation changes, we'll change our policy as well.

ZAHN: Dr. Aragon, we appreciate you explaining your side of the story. Now we're going to move on to the other side.

Joining us right now is Ling Chi Wang, a professor of Asian- American studies at Berkeley who is so opposed to this idea he actually wrote a letter to the chancellor asking him to reconsider the ban on these students. Professor Wang, I don't know if you could just hear what Dr. Aragon was saying, but basically he is saying the school was following some very specific guidelines set forth by the CDC and they simply aren't prepared to handle the possibility of students coming on campus who are infected. They're just not ready yet. Do you buy that?

PROF. LING CHI WANG, UC BERKELEY: Not at all. In fact, I read the same guidelines from both CDC and the World Health Organization, and those guidelines suggest that there is no cause for panic.

I think the decision has been unfortunate, untimely, very sweeping and very arbitrary. I think people should know that we -- Berkeley operates five different summer sessions. The first one begins on May 27, the second one on June 9, the third one on June 27, the fourth one on July 7 and the last one, July 28. As long as we follow guidelines, as long as these people coming have at least 10 to 14 days of quarantine, and then they showed up -- and to prove that they have no -- they test negative, then there's no reason why they should not be allowed.

So there's plenty of time for these people, who are already admitted to Berkeley, to be able to go through the self-quarantine period and to be able to get into the school at a time when the school opens.

What is very strange is that every day, thousands of Americans and Asians are coming back and forth between those same countries, by the way, which -- China, Hong Kong, Singapore and Taiwan -- they're coming in and they're going about doing their businesses, whether they're tourists, diplomats, business people or students, and suddenly Berkeley is doing this. You know, this there are 4,000 colleges and universities across the country, and I don't know whether those presidents of those 4,000 colleges are now wondering whether they should follow Chancellor Berdahl's decision or they're wondering if Chancellor Berdahl had overreacted, and I hope they will agree with me that actually the chancellor had overreacted. You know...

ZAHN: Professor, are you suggesting here that they're being discriminated against simply because of their race?

WANG: No. I'm not suggesting that, but I think the chancellor's decision will contribute to a hysteria which is -- which will cause other people to wonder, gee, you know, since these people are all Asians, and you know, I wonder if these Asians that are around me -- and by the way, Berkeley is 43 percent or so Asian-Americans undergraduate -- it's contributing to a kind of fear and apprehension, and the climate is really not very conducive for normal academic life on the campus, and I'm afraid that it may even affect the other campuses across the country.

ZAHN: Well, it's certainly something that's being widely debated tonight. Professor Ling Chi Wang, thank you very much for your perspective. Appreciate it.

And still to come here this evening, former POW Jessica Lynch, her capture in Iraq and why she can't even remember it. And then, a little bit later on, a homecoming to remember. The USS Abraham Lincoln back home in Seattle on this Tuesday night. We'll take you to some of the family celebrations.

(COMMERCIAL BREAK)

ZAHN: Welcome back. We may never know what happened to Private Jessica Lynch during her nine days in captivity in Iraq. The Army says she cannot remember the ambush in which she was taken prisoner, or even what happened after that. Lynch remains at Walter Reed Medical Center more than a month after her rescue, and today her family updated her condition.

(BEGIN VIDEO CLIP)

SPC. GREGORY LYNCH JR., JESSICA LYNCH'S BROTHER: My sister is doing real well every day, you know, is a better day for her, and the family themselves, they're supporting her 100 percent. Knowing that she's better and she's on the road to recovery is just great for her and us.

(END VIDEO CLIP)

ZAHN: Experts say Lynch's type of memory loss, possibly amnesia, is not uncommon or unexpected for trauma survivors. Trisha Meili is better known as the Central Park jogger, raped, beaten, left for dead. She remembers none of the attack or in fact what led to it. This is how she explained what happened to her to Larry King.

(BEGIN VIDEO CLIP)

TRISHA MEILI, CENTRAL PARK JOGGER: Like a camera, the picture is taken, and that's almost like the short-term memory. So there's a picture there, but the long-term memory for it to become long-term memory, it has to be chemically processed onto your brain. Because of the battering in my head, that process didn't happen. So it's as if the film never got developed. The pictures were taken, but they're not there.

(END VIDEO CLIP)

ZAHN: For more about what might have happened in this case, let's bring in Dr. Susan Vaughan, professor of clinical psychiatry at Columbia University. Good to see you. Welcome.

DR. SUSAN VAUGHAN, COLUMBIA UNIVERSITY: Thank you for having me. ZAHN: Tell me a little bit about what you suspect happened in Jessica Lynch's case.

VAUGHAN: Well, there are two main factors that I think might account for her memory loss. The first is that we know she had a head injury because we know that she had a laceration on her head, which implies some kind of trauma which can prevent you from actually encoding memories, and the second thing is that she also suffered massive psychological trauma, I think, being ambushed, being in a firefight, being captured. You know, all of this those things are things that you might anticipate causing massive release of stress hormones and preventing the encoding of a memory in the first place.

ZAHN: Were you surprised that government officials had hoped to get any information from her at all about her captivity?

VAUGHAN: I think it's certainly not surprising that she has amnesia for the events, both because of the head trauma and because of the psychological trauma. I think that it's not unreasonable to hope that down the road you might actually be able to get some information from her, but I think to be able to expect to get it at this early date is something that it's not going to be clear probably for several months, what if anything, she might remember about this.

ZAHN: And what is it that happens over a period of time that would allow her to recover some of this memory, much of which I'm sure she'd like to suppress forever?

VAUGHAN: Well, that's an important point. I think that from a clinical perspective, it may not be at all in her best interest to recover any memory. It may be a very good thing that she has memory loss for the events, and it may actually speed her physical recovery and her mental well-being to never recover the memories.

On the other hand, if you're interested in war crimes prosecution and you want her to get those memories back, what you're up against is both the recovery of the brain physically and hoping that the circuitry works better as inflammation goes down from the head trauma and things of that nature, and also hoping that perhaps if she's in a different psychological environment, the need she might have to suppress memories or repress memories of this kind will be less. So it may be less threatening to her in the safety of her own living room to think about what happened, and she may actually begin to recover memories from being in a more familiar and safe surrounding.

ZAHN: So what is it that she will be up against in the months to come? Obviously, investigators very hopeful that maybe down the road she'll provide them some information that will be key to what you say might be ultimately end in war crimes prosecution. Are there certain techniques that will be used? Or any sort of medical scenarios that you would envision to try to coax some of those memories out of here?

VAUGHAN: Coaxing memories out of her is going to turn out to be a bad idea, not only for her clinically, but also if you want the memories to be accurate. We know that the more you push someone and interrogate them about things that they don't have a memory of, the more -- and depending on how suggestible they are as a person, and people have a wide range of how suggestible they are, children being very suggestible, and people just having a range in general of how suggestible they are, people may -- she may actually end up remembering things that aren't quite right or that aren't really true, just under the pressure of having people question her about it.

It's really a situation in which letting the memories that are going to come back over time come back is going to be the most effective way of handling it. It is going to prevent her from -- it's going to prevent the creation of false memories, and it also will probably be better for her.

ZAHN: Well, I guess it strikes me that anybody watching this case would realize the government officials really have been honoring her dignity. Because they made it very clear they didn't pose any of these questions at all very early on in this process, as she was transferred home.

VAUGHAN: Well, and I think it's both because she's a hero and they want the best for their soldiers. It's also the smartest tactic in terms of being sure that the memories you might get back later are accurate and useful to you.

ZAHN: Well, that was very helpful to our understanding of amnesia. Thank you so much, Dr. Vaughan.

VAUGHAN: Thank you for having me.

ZAHN: Appreciate you dropping by.

Still to come tonight, new video of the 9/11 hijackers, video of them at a wedding years before the 9/11 hijackings. We're going to have that story when we come back.

(COMMERCIAL BREAK)

ZAHN: An extraordinary find today that could reveal some new information about the 9/11 hijackers. Two of them are seen on a German wedding video shot back in 1999, along with other suspected plotters. National correspondent Mike Boettcher joins us from Atlanta with details tonight. Good evening, Mike.

MIKE BOETTCHER, CNN NATIONAL CORRESPONDENT: Well, good evening, Paula. I've been looking at the video for the past hour. It's very interesting. German authorities believe it's very interesting, too, because they believe it is the nucleus of that infamous Hamburg cell.

Now, let's take a look at the video and take a look at some of the top players who are in there. In the middle is Saeed Bahaji (ph), who was believed by German authorities to be one of the plotters of the 9/11 attack. He left Germany days before 9/11 and fled to Pakistan. He is still at large.

To the left is Ramzi Binalshibh, a major figure in al Qaeda then. He was in charge of logistics, and at this point it is believed he was part of the plotting for the 9/11 attacks. He was captured exactly a year after those attacks in Karachi, Pakistan.

Now, we have a second video of another hijacker, and that is Marwan Al-Shehhi on the right standing up, chanting a song. He has a beard. When he came to the United States, that beard was shaved before 9/11 so that he could fit in more, according to U.S. authorities, but he is also there, and we have other pictures of other people in that wedding ceremony, that occurred in October of 1999 in Hamburg, Germany.

Also in there is, as I said, Marwan Al-Shehhi and Ziad Jarrah -- excuse me, Ziad Jarrah, who was in United Flight 93 that crashed into a field in Pennsylvania. Also believed to be in the video is Mahmoud Al-Kanzani (ph), who was a financier, according to some of the investigators in the 9/11 attacks. He denies any involvement in those attacks, but there are lawyers for the families and German authorities who believe he was involved. So there are a lot of people in there, Paula, who are very key to the investigation. German authorities have had this tape for quite some time. The families' lawyers now have had it for quite some time, and now it's in the public domain, and we are analyzing it -- Paula.

ZAHN: So let me ask you this, ultimately, what role do you think this tape will play in the investigation now that some folks have had months to look at it and digest it?

BOETTCHER: Well, I think it will give us a great insight into the anatomy of the cell, the associations, the personal relationships, that these people were indeed together, and we know that some of those people were directly involved in the hijackings. And you can tell by the rhetoric in the room, too, that something was up.

Let me read you one quote, Paula, from that particular wedding ceremony, and this was read by Ramzi Binalshibh. He says: "We are still in Arabic class, and at the end of class there will be a test, and the test is the meal, God willing. There will be those who pass and those who fail." Presumably, he was referring to the 9/11 attacks, so there's a lot of information in there that will be and has been of great benefit to German and American authorities.

ZAHN: That sort of makes your skin crawl when you hear this stuff for the first time. You've had a chance to sit there in an edit room and look at this. Does this just make you physically sick to see this and imagine what they're saying to each other?

BOETTCHER: Yes. You look at a video two years before, and know they had an idea -- an idea two years before. Many people died in New York City, and you can't help but think that, Paula. And that's why the lawyers for the families believe this is a very important tape in proving the case for the families, and it will be and has been, as I said, very important for authorities when, for example, they do eventually arrest Bahaji (ph), if they do. And in future cases, this would be a very key video. It could be.

Also it's believed that Mohammed Atta is in that room. I did not see him in the video, but it's believed he's in a room. He was in a wedding photograph, we were told. ZAHN: Mike Boettcher, we're going to have to leave it there tonight. Thank you for that fascinating and horrifying look at that videotape. Appreciate it.

We're going to go straight back to another part of the newsroom, where Arthel Neville is standing by for the headlines at the top of the hour.

(NEWSBREAK)

(COMMERCIAL BREAK)

ANNOUNCER: Wal-Mart banishes bawdy magazines from its shelves that the chain deems too racy for its shoppers. But critics ask, Who put the retail giant in charge of the country's morals?

(BEGIN VIDEO CLIP)

BUSH: I've submitted a good strong plan.

(END VIDEO CLIP)

ANNOUNCER: The president is on the road pushing his economic plan, while back in Washington, Democrats offer their idea.

(BEGIN VIDEO CLIP)

DASCHLE: Our plan cuts taxes for every working American.

(END VIDEO CLIP)

ANNOUNCER: Which strategy will work best for the nation's pocketbook? An order from a feared dictator. Several semi trucks loaded with cash, and nearly $1 billion missing from Iraq's central bank. Did Saddam pull off the heist of the century? LIVE FROM THE HEADLINES with Paula Zahn in New York.

ZAHN: Glad to have you with us tonight. Also during this half hour, we're going to take you through the day's events in the order they happened. In addition to the stories we just highlighted, you're going to see some of the happiest of homecomings and find out about an important ruling in the Washington sniper case.

Also, like millions of people across the southern U.S., we'll cast an anxious eye at the sky looking for tornadoes. More warnings tonight. We will also glance down at the incredible destruction the storms have already caused.

An organized crime wave may have hit Iraq in the midst of the U.S.-led war in Iraq. The hunt for looted Iraqi artifacts starts our Timeline today. At 4:00 AM, Interpol holds a conference in France on how to recover that stolen art. At the meeting, U.S. Attorney General John Ashcroft said that investigators think organized criminal groups were involved in stealing antiquities. Ashcroft says the FBI will continue working with the international police agency and experts on Mesopotamian culture to track down the 200,000 missing pieces. (BEGIN VIDEO CLIP)

JOHN ASHCROFT, ATTORNEY GENERAL: From the evidence that has emerged, there is a strong case to be made that the looting and theft of the artifacts was perpetrated by organized criminal groups, criminals who knew precisely what they were looking for. Although the criminals who committed the thefts may have transported the objects beyond Iraq's borders, they should know that they have not escaped the reach of justice.

(END VIDEO CLIP)

ZAHN: Art is in the eyes of the beholder. And certainly, most don't consider this art, and Wal-Mart doesn't want to display it anymore, either, pulling magazines off the shelf, as the timeline hits 6:00 AM. The chain says it will no longer sell three men's magazines, "Maxim," "Stuff" and "FHM." The retailer says the magazines are too racy for Wal-Mart customers. A company spokeswoman told "The New York Times" the decision was made after hearing from Wal-Mart customers and employees. The covers of the three publications often feature women that don't have a whole lot of clothes on in the pictures.

What's right? What's wrong? Morality promoter Bill Bennett gives up gambling. Wal-Mart bans magazines but keeps other products some people don't like on the shelves. That and more on our special report on "Morality in America" at 8:30.

Meanwhile, Amtrak's Silver Star jumps the tracks about halfway through the 7:00 AM hour after smashing into a lumber truck. The crash in northern Georgia killed the truck driver. The train's engineer is also critically injured. Dozens of people are hurt. Three passengers are still hospitalized. All 10 cars of the train derailed. Amtrak says preliminary reports indicate the road crossing is marked by standard X-shaped railroad warning signs.

Well, it looks like Saddam Hussein and his family may have made a very large withdrawal from Iraq's central bank just before the bombs started falling. Karl Penhaul reports the State Department suspects that nearly $1 billion is now missing.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): American troops guard the ruins of Iraq's central bank.

UNIDENTIFIED MALE: OK, we've got a combination and the key.

PENHAUL: Its underground vaults are sealed, but a fortune is missing, the biggest heist in history, or a dictator and his family cracking open what they say as their personal piggy bank the day before bombs began to fall on Baghdad.

GEORGE MULLINAX, TREASURY DEPARTMENT ADVISER: As I remember, the exact words from the central bank official was that officials or persons representing Saddam Hussein arrived at the bank early one morning and began removing currency. PENHAUL: The total taken?

MULLINAX: In excess of $900 million.

PENHAUL: Unnamed Iraqi officials quoted in news reports say Saddam's youngest son, Qusay, and his entourage rolled up to the bank the day before the outbreak of war. Storekeepers in the area remember seeing something suspicious. "I saw trucks coming under the bridge," he says, "18-wheeler trucks. They were all covered and looked different from the kind we usually see in the street."

Others are too frightened to speak on camera. They're still not sure Saddam and his sons have gone for good. They argue intensely about precise details, but they say at least three trucks pulled up and five black Mercedes sedans. They say men dressed in black took several hours to load up the money bags.

(on camera): But the missing millions from Iraq's central bank is not the only problem. U.S. Treasury Department officials calculate at least another $400 million was looted during the war and its aftermath from smaller government-run bank branches across the country.

(voice-over): Assar Gilba Salim (ph) has come to check on her life's savings in a deposit box of gold jewelry passed down through generations. A bank employee at this branch is lowered into the safe through this hole drilled by the thieves. Only the debris of a well- planned robbery remains.

"I was so scared when I saw the damage inside and the holes in the floor," she says. "I tried to go in and save my possessions, but I couldn't make myself do it because I was shivering." She just wants to know how she'll get by, now that her nest egg is gone. She hasn't time to worry about what Saddam and his sons might be doing with their billion-dollar bounty. Karl Penhaul, CNN, Baghdad.

(END VIDEOTAPE)

ZAHN: And we're going to move on to some other news now, parts of what D.C. sniper suspect Lee Boyd Malvo told police can be used during his trial. That report came out in the 10:00 o'clock hour, but parts of Malvo's alleged confession are tossed out.

Jeanne Meserve is standing by with some details on today's developments in the case. Hi, Jeanne.

MESERVE: Hi, Paula. The judge's conclusions today are a huge setback for Malvo's defense team. Judge Jane Marum Roush writes that the bulk of Malvo's interrogation, the part in which he allegedly admits involvement in a number of the sniper shootings, will be admissible at his trial. In November, Malvo was questioned for six hours by Fairfax County homicide detective June Boyle (ph) and FBI special agent Brad Garret.

Judge Roush writes, "Malvo maintains that he invoked his 5th Amendment right to counsel on November 7 when he asked Boyle and Garret, `Do I get to see my attorneys?' I find that Malvo's question was not a clear and unambiguous invocation of his right to counsel." And Rough writes, "Malvo gave his statement voluntarily after being advised of his right to remain silent and offered a lawyer four times."

Malvo's attorney tried to put a positive spin on the day's developments.

(BEGIN VIDEO CLIP)

PETROVICH: This certainly, in some ways, has a detrimental effect to the case. On the other hand, there are aspects of the statements that we believe actually help us. And in fact, at the appropriate time, an analysis of the statements will indicate that there are clear inaccuracies, seeming lies that are difficult to explain and, actually, create more questions than they answer.

(END VIDEO CLIP)

MESERVE: But Fairfax County prosecutor Robert Horan is clearly relishing the idea of letting a jury hear an audiotape of Malvo allegedly admitting to his crimes and said he has his theories as to why Malvo chose to talk.

(BEGIN VIDEO CLIP)

ROBERT HORAN, PROSECUTOR: People talk for a wide variety of reasons, and I'll leave it for the trial as to why it was done in this case. But I've had cases where people did it because they just wanted to get it off their chest. I've had cases where people admitted it because they were proud of it. They were glad they did it. I've had cases where people wanted to explain themselves. This is how I did it, and this is why I did it.

(END VIDEO CLIP)

MESERVE: Now, the judge chose to exclude from the trial the part of the interview done before Malvo had been read his Miranda rights and offered an attorney. But prosecutor Horan said that part of the interview was mostly small talk, and he had no intention of entering it as evidence anyway -- Paula.

ZAHN: Fascinating to watch. Jeanne Meserve, thanks so much.

And LIVE FROM THE HEADLINES will continue with a presidential call for action on his plan to cut taxes.

(BEGIN VIDEO CLIP)

BUSH: The United States Congress must not only listen to your voice but listen to the voice of somebody looking for work. We need aggressive action out of the United States Congress now!

(END VIDEO CLIP)

ZAHN: And some very happy homecomings when families welcome back sailors who've been gone from home for a very long time.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DASCHLE: The centerpiece of our plan is a tax cut for middle- class families in the form of a wage credit. It provides $300 for each adult, $300 each for the first two children.

(END VIDEO CLIP)

ZAHN: In Washington today, it seemed like just about everybody wanted to give money away to taxpayers, but there is no consensus on how much money, for how long, and in whose pockets that money goes to. You just heard from Senator Tom Daschle, highlighting the Senate Democrats' new tax plan. We pick up our timeline during the 10:00 o'clock hour, when President Bush argues for doing things his way.

Here's senior White House correspondent John King with those details. Hi, John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Hello to you, Paula. Well, the president thinks even his Republican allies in Congress are proposing tax cuts that are too small, so you can bet very safely that the White House thinks that Democratic proposal put out by Senator Daschle is way too small. The president's challenge now -- he's at 70 percent approval rating after the military victory in Iraq. But he's having a very difficult time translating that into winning as big a tax cut as he would like from the Congress.

You see the president here speaking at the U.S. Chamber of Commerce headquarters this morning. It is the second day in a row the president has appealed for help. He's trying to get at least $550 billion in tax cuts out of the Congress. That is still a tough sell. Remember, the president initially wanted more than $700 billion in tax cuts. The president urging the business groups represented at this meeting today to pick up the phone and call the Congress. He says Congress needs to pass a big tax cut and pass it now.

(BEGIN VIDEO CLIP)

BUSH: Congress needs to hear from you. We need tax relief that creates the greatest number of jobs. The goal is to create a million new jobs by the end of next year. I've submitted a good, strong plan that will help meet that goal.

(END VIDEO CLIP)

KING: Now, a key House committee has passed a tax cut. It's $550 billion over 10 years. The Senate Finance Committee is trying to adopt $350 billion over 10 years. The White House wants to get at least $550 billion. Paula, this legislation will essentially be written once the House and the Senate pass their competing versions and send it into a conference committee. The White House is hoping the president has the political muscle to get the number up a bit. That will be the defining test of the next month or two. And of course, the debate over the economy will carry over past this tax cut debate into next year's presidential election -- Paula.

ZAHN: Well, it certainly wasn't all wine and roses on Capitol Hill today. Also, I know you want to talk a little bit about the Senate's senior Democrat, Senator Robert Byrd, blasting the president for he called "flamboyant showmanship." What's that all about?

KING: Well, you have Senator Byrd in the Senate, Congressman Henry Waxman and another Democrat in the House, all saying that the president's trip out to the USS Abraham Lincoln last Thursday was nothing more than a political stunt. The White House conceding today that the aircraft carrier was running ahead of schedule and that the president could have made it out in a helicopter. Instead, he made history, the first president to land on a carrier using a Navy jet.

The White House is defending all this. It says the president is commander-in-chief, that he planned to land in a jet. And even though the carrier then was close enough for the helicopter to make it, the former pilot now president wanted to go in on that jet. What the Democrats are saying is that they want to know how much all this cost because they view it as a political appearance, not a policy appearance by the president. Here at the White House they're dismissing these allegations as partisan politics. They readily concede here in the Republican Bush White House that when Bill Clinton was president, Republicans in Congress did much the same thing, questioning almost every trip by the former president and a Democrat. Call it politics, Paula.

ZAHN: Sure. Partisan politics or simple jealousy. I mean, everybody knew that the power, the picture of the incumbency.

KING: Democrats cringed at those pictures, many calling us during the day, asking even if the Republicans had brought a campaign ad crew on the deck of the carrier to film it for an ad.

ZAHN: John King, thanks so much.

Another member of the Bush administration's economic team is calling it quits. During the 11:00 o'clock hour, it was announced that budget director Mitch Daniels has given 30 days' notice and will go home to Indiana, where he's considering running for governor there. In his quest to hold down federal spending, Daniels has stood up to lawmakers from both parties. The president's spokesman says Daniels will be missed but will stay busy until he leaves.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE SPOKESMAN: During his next 30 days, Mitch will continue to do his work to help the president make progress on his economic plan. As I indicated, the House and Senate are both moving this week on the economic plan, and I anticipate it may very well be done, thanks to the help of Mitch Daniels.

(END VIDEO CLIP)

ZAHN: And an hour after we learned that Mitch Daniels was going, we watched another Democrat enter the race for president. At noon Eastern time, Senator Bob Graham threw his name into the hat. He was so busy waving to supporters, he didn't quite get up the stairs maybe as gracefully as he had wanted to. But Graham, a moderate, is a former -- considered a moderate by some in his party -- is a former governor and former chairman of the Senate Intelligence Committee. Since entering politics in 1966, he's never lost an election. Considering he's from Florida, that could get some Democrats' attention.

Something else that will get the Democrats' attention happened a few hours later, when former U.S. senator Gary Hart announced he has decided not to enter the presidential race after a -- months of flirtation with that prospect.

Now we move on to the 1:00 o'clock hour. Plenty of hugs and kisses to go around. That's when the aircraft carrier USS Abraham Lincoln finally arrived at its home port of Everett, Washington. Frank Buckley was on the carrier as it came in.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN CORRESPONDENT: What you just heard right now, when the lines go over, they say moored shift colors. And what happened was, that means that they're technically moored, the lines have got to cross, and the colors, the flag has gone up here at the aft end of the ship. They've come down from the island, from the mast area. So that's what's happening.

Here on the deck, this flight deck, you can see they're manning the rails. It's such a spectacular sight. This is the flight deck, where there are more than 12,000 takeoffs and traps during this nearly 10-month-long deployment, mishap-free. And now it's all the sailors on the deck preparing to go home.

I want to take you over here and show you what they're seeing from their perspective. And look down there at all those thousands of people. They're all here for these sailors, an emotional sight for a lot of these guys. And now individual stories of great joy that they're about to experience when these brows (ph) go across, five of them. That's the plank, or the bridge, as we would call it. But they're called brows. They'll go down. And then you'll see the first kiss. Folks will go off if they want a chance to have the first kiss.

This is the new dad line that right now is getting off the ship. It's a long line. A hundred and fifty sailors are new dads on this deployment. And the roses that they have -- we saw them come aboard in San Diego. In this case, they brought them aboard in San Diego in these big boxes, and then they put them into refrigeration on board here. And then the sailors can buy some roses and take them off. And as you can see, many of them are, in fact, taking advantage of that. And now on the shore, some of those emotional reunions.

(END VIDEOTAPE)

ZAHN: Emotional reunions with cameras trained as close on your face as you can get. Probably not the most comfortable way to try to have an intimate moment with someone you haven't seen for many, many months.

Right after this break, an update in the church poisoning case in Maine, what officials say happened to the leading suspect. That and more after this quick break.

(COMMERCIAL BREAK)

Images of Jessica Lynch there, kind of hard to forget. The brother of Jessica Lynch calls his sister his hero, and he says the day she came home was a great day for the entire Lynch family. In the 2:00 o'clock hour of the timeline, Army Specialist Gregory Lynch talked about his sister. He says she still hasn't talked to her family about the time she spent as a prisoner of war in Iraq. She is still recovering from her injuries, serious ones, at Walter Reed Army Medical Center in Washington. Gregory Lynch, stationed at Fort Bragg in North Carolina, says his parents visit her every day.

(BEGIN VIDEO CLIP)

SPC. GREGORY LYNCH, JR., JESSICA LYNCH'S BROTHER: My sister is doing real well. Every day, you know, is a better day for her and the family themselves. They're supporting her 100 percent. And knowing that she's better and she's on the road to recovery is just great for her and us.

(END VIDEO CLIP)

ZAHN: We're happy to hear she's doing so well.

An hour later in today's timeline, an official ruling on the cause of death of the principal suspect in those arsenic poisonings in Maine. The state medical examiner's office says the gunshot wound to Daniel Bondeson's chest was self-inflicted. Bondeson is the main suspect in the coffee-lacing incident at Gustav Adolf Lutheran Church in East Sweden, Maine. A 78-year-old church member died, 15 others became ill. Investigators found a suicide note with some information they say will be critical to this investigation.

We're going to conclude our timeline with a look at the weather system that has been battering the Southeast. Here are the highest- risk areas of the nation at this hour. Tornadoes, heavy rainfall, large hail, some of it golf-ball-size, reported in parts of Alabama, Kentucky, Tennessee and Georgia. One tornado destroyed 32 homes, caused 20 injuries in Henderson County, Tennessee. They're still cleaning up, of course, after storms earlier this week in Kansas and Missouri.

And Ed Lavandera now joins us from Pierce City, Missouri, in the middle of yet another storm system. Good evening, Ed.

ED LAVANDERA, CNN CORRESPONDENT: Hi, Paula. Well, here this afternoon, another late round of severe weather coming through the southwestern part of Missouri. We've been listening to radio reports here in this area for the last couple of hours, and there are warnings going out and indications -- or warnings for people to take more cover in the areas near Springfield. And we're working to confirm some of those reports at this hour. So we'll be in touch with those kinds of details.

But here in Pierce City, this is the downtown area that you see behind me that was leveled by the tornado that struck here on Sunday. And the news -- the main news coming out of here today is the city officials learning that they will be able to receive federal emergency aid from FEMA. FEMA moving in and will be setting up a mobile office here, and there will be federal assistance money coming into this area rather quickly to help begin -- to help start paying for some of the clean-up process.

Now, a lot of what downtown -- city officials here need to figure out is which buildings in this downtown area will be salvaged and which buildings will need to be demolished. We've been speaking with engineers here throughout the day, and there are some real concerns about just the safety of a lot of these buildings. Business owners were allowed to go inside some of these buildings and try to recover what they could today, but that was the extent of it. So that will continue. Many residents in this area having done the same, as well.

And one sad note to pass along. The death toll in this county here where Pierce City is has gone up to five. It was discovered that a 20-month-old baby was also killed by this tornado on Sunday, and that was just officially reported to the coroner's office today. So the death toll in this county now stands at five -- Paula.

ZAHN: Ed, I don't know if you can hear me through the sound of the train coming through town, but -- I guess, even just looking at the backdrop where you're standing tonight, it's just so obvious how intermittent that damage was.

LAVANDERA: Well, you know, this is -- if you look -- (UNINTELLIGIBLE)

ZAHN: The weather obviously not cooperating, some heavy rain falling there, reports of hail not far from where Ed is standing. So we'll let him go seek some comfort there.

We're going to take a short break here. When we come back, "Morality in America": one of America's most vocal moralizers and the world's biggest retailer. How are they advancing or hurting the nation's morals? Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: Conservative moralist Bill Bennett vows his gambling days are over. Was Bennett, who reportedly wagered millions, saying one thing and betting on another?

Wal-Mart bans certain men's magazines for what it says is content too racy for its shoppers. But the retail giant continues to sell guns and ammo. Is Wal-Mart a moral watchdog, or is the bottom line the bottom line?

Does America hold common morals? What are they? And do we really need them? Tonight on LIVE FROM THE HEADLINES, "Morality in America." ZAHN: Gambling, sex, hypocrisy, all part of the running debate over morality in America. As for the gambling, Bill Bennett said it himself. He broke no laws. But Bennett in the past has criticized America's morals. even when crime was falling. So if morality in America is not just about the law, what exactly is it that makes Bennett's high-stakes gambling and his words such a problem for so many people?

Well, we asked senior political analyst Bill Schneider for a quick briefing on morality in America.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): Americans get the distinction between private behavior and public morality. That's what saved Bill Clinton. Most Americans believed Clinton lied under oath. But most thought he should stay in office because what he did was private. People believed it had no bearing on his ability to serve. After all, they knew Clinton was not a saint. He never claimed to be.

Actually, neither did Bill Bennett.

BILL BENNETT, AUTHOR, "THE BOOK OF VIRTUES": I wrote "The Book of Virtues." But "The Book of Virtues" is not an autobiography.

SCHNEIDER: But Bennett has often made the claim that private behavior is inseparable from public morality, especially when he talked about Bill Clinton.

BENNETT: People will say, well, 21-year-old intern, 50-year-old commander in chief, lying about it, it doesn't bother me as long as things are going well for me. Well, that's a problem.

SCHNEIDER: Clinton's accusers got in trouble when their private behavior was revealed to be less than perfect, men like House Judiciary Committee Henry Hyde and speaker-elect Bob Livingston. Those sitting in judgment of Clinton were exposed as hypocrites. Bennett sits in judgment of American culture.

BENNETT: The moral decline in Washington is not only in Washington. It's outside the Beltway, too. We have been lowered down, folks.

SCHNEIDER: Hypocrite, his critics charge.

PAUL BEGALA, CO-HOST, "CROSSFIRE": But for him to stand up there and lecture us about what songs we should hear, what movies we should see, who our president should date, when he's out there losing $8 million, he's a hypocrite.

SCHNEIDER: Bennett has called contemporary America a culture with a strong strand of instant gratification, in other words, no impulse control. But his own gambling problem is precisely a failure of impulse control. One writer says, in "The New York Times": "If he pays his taxes and abides by the law, we should keep our noses out of his personal life," to which many Americans would reply, fine. And he should keep his nose out of ours.

(END VIDEOTAPE)

SCHNEIDER: It all comes back to the Bible, doesn't it? Judge not, lest ye be judged -- Paula.

ZAHN: Very interesting thing to cite and to remind us all of. Bill Schneider, thanks so much.

Bennett not only wrote "The Book of Virtues," but he also wrote "The Book of Virtues For Young People" and "The Moral Compass." Does that make Bennett a hypocrite? And what makes gambling immoral in some people's eyes and not in others? The risk? It's hard to define what gambling is bad without dragging in its possible other effects.

So we're going to go drag in contributor Michael Smerconish, also a radio talk show host and attorney from Philadelphia. And we have with us tonight James McManus, who wrote that op-ed piece in today's "New York Times" defending Bennett. He's also author of "Positively Fifth Street: Murderers, Cheetahs, and Binion's World Series of Poker." He joins us from Chicago.

Glad to have both of you with us tonight.

MICHAEL SMERCONISH, CNN CONTRIBUTOR: Hey, Paula.

ZAHN: I'm going to start with you, Michael, tonight.

William Bennett says he's calling it quits. He says that gambling is not necessarily the example he wishes to set, although he has never said that it has been a moral issue for him. What do you make of what he said. Is it hypocritical?

SMERCONISH: Well, I think that it is hypocritical.

I note that there are many people on the left who are gleeful about Bill Bennett's misstep. I am neither on the left nor am I gleeful. I happen to like this guy. But he made a huge error. You can't be preaching on one hand, writing books like "The Book of Virtues," accepting $50,000 for speaking engagements to talk about morality, and then going across the street to a casino and, with a $500 pull of a lever, enjoying yourself to the tune of $8 million over a decade. It's hypocritical.

ZAHN: James, do you see any problem with the amount of money Mr. Bennett gambled and apparently lost? We don't know how much he won over the years. Or was the issue that he made money off the lecture circuits talking about morality and some of that money went into gambling?

JAMES MCMANUS, AUTHOR, "POSITIVELY FIFTH STREET": Actually, I don't have a problem with the amount. His playing for $8 million over the course of a decade is very, very different from risking it or possibly losing it.

Also, he seems to get very well-paid for his speeches. He makes a lot of money on his books. If he's playing within his means, if he's paying his taxes, if he's taking care of his family, then I have no problem whatsoever. I regret that he's playing such an unfortunate form of poker as blackjack and video poker. I think he should try his hand at the World Series, as he suggested that he would like to do. I hope he takes his -- I hope he comes out of retirement and keeps playing poker.

ZAHN: Yes, the way he sounded in one of those statements we read earlier today, it doesn't sound like the World Series is in his future.

But, James, I want to share with you something else that Mr. Bennett said. He has likened gambling to drinking. He said -- quote -- "If you can't handle it, don't do it." But we're going to put up on the screen now some statistics to have you look at along with us, figures from his own Empower America, which basically showed that 2.5 million adults are pathological gamblers and another three million are classified as problem gamblers. So how is it that Mr. Bennett never mentioned gambling when he talked about vices?

MCMANUS: I can't answer that question. I think that -- I don't know that we want to live in a world where people are not allowed to talk about one issue because they're slightly out of line, somewhat hypocritical in another sphere.

I think that he is, in a sense, surrendering to gotcha journalism. He's been behaving as a legitimate citizen. And if he wants to relax on the weekends by playing high-stakes poker, I say, more power to him. And I certainly don't want to defend his politics or the way he behaved during the Clinton-Lewinsky situation. I just want to say that he has got the right to talk about more or less anything he what he wants to talk about as long as he's a law-abiding citizen.

ZAHN: Michael, do you see any nugget of truth in that, that he surrendered, as in James' words, to gotcha journalism here?

SMERCONISH: Oh, I think that people have been lying in wait for Bill Bennett for quite some time, which is all the more reason that this was a colossal error on his part.

He should have known that, with a misstep like this -- and it's not just one incident -- it's at least a decade worth of gambling -- that the press would be there. Live by the sword, die by the sword. And that's what tripped him up. Every casino that I've ever been in, Paula, has one of those signs that says: Bet with your head, not over it.

At $8 million in losses -- that's not what he cycled -- that's what they said he lost -- he's betting over his head. Let's call it out. The man has a gambling problem. And that's unfortunate. I don't begrudge him if he plays some blackjack for $100 or a few hundred dollars in a weekend. But at this level, it's really an illness. And I think that he needs some treatment.

ZAHN: So, Michael, that's what you're saying. If this much money weren't involved, then we wouldn't be talking about it as much?

SMERCONISH: I had radio listeners this week, Paula, who would say to me, well, everything is relative to one's net worth. What if it were Bill Gates? And I would say, well, no, it's Bill Bennett, and you cannot convince me that $8 million is a drop in the bucket to this individual, no matter how much he's making on the lecture circuit these days.

ZAHN: James, I'll give you 15 seconds for a closing thought about what any of this tells us about the state of morality in America and how we view these issues.

MCMANUS: I would remind everyone that Walt Whitman wrote: "Do I contradict myself? Well, then, I contradict myself."

It's not the end of the world. He should be alert to these ironies in the future. But I certainly do not encourage him to stop speaking his mind. I encourage him to keep playing. And if he wants to run for president, poker shows he's got presidential timber.

(LAUGHTER)

ZAHN: Michael, that got you to laugh tonight.

SMERCONISH: You have got to know when to hold them and when to fold them. It's time for Bill Bennett to fold them. I think that's the bottom line.

ZAHN: Michael Smerconish and James McManus, thank you for both of your perspectives tonight.

SMERCONISH: Thank you.

ZAHN: When we come back: a familiar issue of morality, sex. But is it really a moral issue that led Wal-Mart to pull sexy magazines from the stands?

We're going to have a debate on that straight out of the break.

(COMMERCIAL BREAK)

ZAHN: Wal-Mart, the world's biggest retailer and a huge source of much of its entertainment culture, from music to movies to magazines, is dropping some magazines from its stands and raising some moral issues in the process.

But, as Andy Serwer reports tonight, that may just be a cover story.

(BEGIN VIDEOTAPE)

ANDY SERWER, CNN CORRESPONDENT (voice-over): If you want to read "Stuff," "FHM" or "Maxim," three magazines catering to guy in their 20s, well, you'll have to shop somewhere other than Wal-Mart.

The retail giant announced yesterday it won't carry them on its racks anymore. Why? Wal-Mart considers them too racy. A spokesman from Wal-Mart told CNN: "Initially, we carried the magazines in response to customer demand. But we have had customers around the country that have consistently been telling us they're uncomfortable with us carrying these magazines. In this case, we had to balance the interests of two different customer sets. And last week, we made the decision to stop selling these magazines. It was a judgment call on our part."

The magazine's content, the publisher says, has not changed since Wal-Mart started carrying it and it is not legally pornography: "We are dismayed at the double standard Wal-Mart has set. The front covers and contents of "Maxim" and "Stuff" are no more provocative than those other men's magazines, such as "GQ," "Esquire," "Details" and "Rolling Stone" and usually less provocative than the covers and contents many women's magazines.

In the past, Wal-Mart, the biggest company in the world with sales of $246 billion last year, has refused to sell products it judged too suggestive for its customers. Yesterday, Wal-Mart received the label "Christian merchant" from Kingdom Ventures, which recently launched a campaign aimed at providing direct marketing channels to tens of millions of church members. The president of Kingdom Ventures said in a press release: "Wal-Mart has been unilaterally pre-approved into our program because of its strong track record in promoting Christian products."

So what's going on here? Is giving in to customers who are offended by racy pictures a form of censorship? And what drives Wal- Mart to do this: morality or good business? Unless, of course, in today's America, towing the line on morality is good business.

Andy Serwer, CNN, New York.

(END VIDEOTAPE)

ZAHN: No one is arguing that Wal-Mart should be forced to carry any magazine. If "Maxim" simply sold less than other magazines Wal- Mart carries, it's doubtful there would be debate at all.

But there is a debate, which is why we have "New York Post" columnist Robert George with us tonight here in New York City. And joining us from San Francisco: radio talk show host Bernie Ward.

Welcome to both of you.

ROBERT GEORGE, "NEW YORK POST": Good to be here, Paula. Thank you.

BERNIE WARD, RADIO TALK SHOW HOST: Thanks, Paula.

ZAHN: So, Bernie, why are you so opposed to this decision by Wal-Mart?

WARD: Oh, I guess I'm a posed on about four levels.

No. 1, they carry all kinds of other magazines. If you have looked at "Cosmopolitan," if you have looked at "Vogue," "Vanity Fair" and so on, if you go through them, there's plenty of nudity. There's plenty of racy -- the subjects are just completely out there. So the idea that "FHM" or "Maxim" are somehow racier than anybody else I find quite interesting.

ZAHN: But wait, wait, wait, wait, wait. Before you go any further, don't you think women are shown in a slightly different light in magazines like "Vogue" and in "Vanity Fair" than they are shown in these men's magazines?

WARD: I've seen ads in "Vogue" with a woman with a dog with his nose between her legs. I've seen ads and covers in fashion magazines suggesting everything from incest to bestiality. I haven't seen that, by the way, in "FHM," "Maxim" and others. In fact, I see the women's magazines, the fashion magazines, pushing the envelope far more than any of these magazines have ever done. This is soft at best.

(CROSSTALK)

ZAHN: All right, that's point one. Hang on. I'll let you get to all four points. Let's let Robert jump in here.

GEORGE: Well, I think the case there is that Wal-Mart should just look at it on a case-by-case basis.

I happen to agree with him. There have been a number of things in "Vogue" or "Cosmo" that might be considered offensive. And if they feel that it's time to pull them, let them. They should do it on a case-by-case basis, since they're a private organization.

ZAHN: Point No. 2?

WARD: Well, last Monday, a number of women filed a lawsuit to make it the largest class-action suit in the country claiming that Wal-Mart managers forced them to go to Hooters, strip clubs, and other places to have their meetings, that they refused to pay women the same as they pay men. And, in fact, one manager said: You can't get the same amount as men. You don't have the same equipment as a man.

They are facing a huge lawsuit over the fact that the majority of their employees are women, yet less than 30 percent of them are managers and their pay is at least 5 percent different from men. So if they're so great about values...

(CROSSTALK)

ZAHN: Hang on. Hang on. Hang on. We don't have time to get into that debate tonight. But stick to the much narrower issue of these magazines.

(CROSSTALK)

ZAHN: Certainly, you can just subscribe to them. You can buy them any number of places other than Wal-Mart.

WARD: Right, but they're talking about this in terms of values. Wal-Mart tries to put out this image that it's this place with lots of morality and lots of values. And yet the reality is just the opposite for it as a cooperation.

So they cover themselves, they make themselves -- they take this little thing with "FHM" and "Maxim," while they continue to carry other magazines that are just as bad. And then, as a corporate entity, they act as predatory and as nasty as any business in the world. It's all about public image.

GEORGE: Well, it is about public image, but it just means that their values are different -- their values are different from your values.

WARD: No, no, no.

GEORGE: Their values may very well be different from my values as well. But they can make that particular decision.

WARD: Well, that's right. But they can't cover it over and make it say somehow this is a response or this is somehow a value; we want our customers to get what they want. We're a store that's concerned about the values of the people that work here.

That's not a true statement. This is a corporation that has absolutely no concern about the values of its workers. Or, in that case, if you look at the magazines they kept, you're hard-pressed to figure out how they got rid of these and kept the others.

GEORGE: I think they're interested more in the values of their customers, as opposed to the values necessarily of their employees.

WARD: Yes, I would say that that's quite true. Therefore, this whole movement, the Christian movement -- and they've gotten these awards before for the fact that they told rappers that they had to change the way that they do rap music, they had to change the covers of C.D.s.

GEORGE: It's called capitalism. It's called capitalism. You respond to what your customers want. If you don't, you end up going out of business, right?

WARD: That's right. And, therefore, it's our obligation to show the hypocrisy of it. It's our obligation to say to women, why would you shop at Wal-Mart if they treat women so badly? It's not about whether they take "FHM" out. It's whether they treat women badly in general. And those are the values that we should talk about.

GEORGE: So you're saying that you should tell women that they shouldn't shop at Wal Martha, but they should go down to, oh, I don't know, 7-Eleven and pick up the "FHM" and "Stuff" or something?

WARD: If 7-Eleven was willing to pay better than minimum wage and not make their women managers go to Hooters, yes, I would say that that's a pretty good thing to say to women.

GEORGE: But those are two separate issues.

ZAHN: Oh, absolutely.

Let's come back to, once again, the issue that is raised about how any store makes a decision, how they make the judgment whether a magazine should go or not.

WARD: Well, again, they make the decision based on what they think is in their best P.R. And, in this case, obviously, they didn't get rid of these magazines because they're too racy, because they carry plenty of others that are just as racy.

They got rid of these because of the high profile, because they're popular with young men more than young women. And, therefore, this is an easier hit to take than it would be if they got rid of some of the other ones, and because they have a corporate attitude that says: We're daddy and we're going to tell you what we're going to serve and you can come here or you can come here or not.

And that's perfectly fine, as long as everybody knows what the playing field is.

(CROSSTALK)

ZAHN: And let me just ask you this for a final question. Do you have any problem with the store making the presumption of what they think is right for you and what isn't? As a customer, does that bug you? You may agree with it on this issue or these particular magazines being revoked.

GEORGE: If I don't find something in a given store, I'll go somewhere else. I mean, I think we all make those kind of decisions. I mean, years ago, before I was writing for "The New York Post," I worked in a bookstore. And there was no way we could carry every single book or every single magazine. We made particular judgment calls. And we would then say, we don't carry that one, but we would suggest other places where they can find it.

ZAHN: OK, now, you've got to answer this honestly. Do either one of you ever routinely go out and buy copies of these magazines we're talking about here tonight?

GEORGE: No, I just look through them in the stands.

(LAUGHTER)

WARD: I don't have to, because I hang around with enough people that do, so I can glance at them if I wish. But I would rather look at the fashion magazines. They're much more sexy.

GEORGE: And they're slightly of my age range at this point, I think.

ZAHN: I know. We were just talking about, when you look at some of the folks in the magazines, you understand why it appeals to readers between the ages of what, 18 and...

GEORGE: Oh, I would say 15 to 25 or so.

WARD: It appeals to readers for whom gravity has not taken hold yet.

(LAUGHTER)

ZAHN: All right, showing how old we all are this evening.

Robert George, Bernie Ward, thank you very much for joining us tonight.

WARD: Thank you, Paula.

ZAHN: When we come back: From CEOs to senators, what exactly is morality in America? Well, who better to ask than a comedy writer?

We'll be right back with his take.

(COMMERCIAL BREAK)

ZAHN: So what exactly is morality? It used to be whatever religious leaders said it was. Well, these days, people are more likely to try to figure things out themselves. That does not mean, however, that every moral problem has a solution, which is why Randy Cohen is able to make a living writing "The New York Times"' "Ethicist" column, some of which are collected in his book "The Good, the Bad and the Difference."

And Randy Cohen joins us tonight.

Welcome. Good to see you.

Let's start off with how an ethicist views this Bill Bennett debate.

RANDY COHEN, "THE NEW YORK TIMES": Well, there may be people in America who are so cold-hearted that they can't enjoy the downfall of a pious scold, but I'm not one of them. This has been one of the happiest days of my life.

ZAHN: Wipe that smile off your face, Randy.

COHEN: Well, it's delightful to see someone who makes a career out of hectoring other people, out of wagging his finger at them, be held up to the same standards he applies to others.

ZAHN: Well, do you think gambling is immoral?

COHEN: I think hypocrisy is embarrassing.

One of the interesting things about Bennett's code of ethics is that he rejects the defense, the "I'm not hurting anyone" defense. He condemns homosexuality, even when what two adults wants to do in private -- you could say, this hurts no one. He thinks marijuana smokers should be put in jail, even though they say, well, I hurt no one by smoking marijuana. When the same standard is applied to his gambling, he says: I hurt no one. Now, who can't enjoy that kind of hypocrisy?

ZAHN: Well, now he says he's going to quit gambling and that he recognized that he wasn't, he says, setting the example that he wanted to.

COHEN: If he thought gambling was OK, which was his initial defense, there's nothing wrong with gambling, why should he quit? So is not his quitting a confession of wrongdoing? And how could you not enjoy that? How could you not grin

(CROSSTALK)

ZAHN: You should ask him that question.

Let's move on to some sports stories posing some ethical questions. A story we covered last night is that the University of Iowa coach, who admitted -- well, actually, there were pictures captured of him drinking with college coeds. And he ended up resigning. And in the resignation, I still think he still walked away with $1 million, a long contract. What will be the impact of that? Does it mean anything?

COHEN: Well, yes, I think it does.

I think it's interesting that, if he committed transgressions that require him to be fired, to be expelled from the university community, then why are they giving him $1 million? And if he didn't do anything that was so wrong, if he didn't do anything that would require his leaving, well, why is he leaving? I think it's very sad.

There are often practical reasons why organizations or individuals make these kind of off-the-record settlements, rather than fighting something out. But it's a disservice to the community, I think. We don't get to see justice served. Perhaps he ought not leave. Perhaps he ought to leave. But how will we ever know? It reeks of under-the-table, behind-closed-doors deals. And I think that's disappointing in a university which is supposed to educate in the fullest sense.

It's not a trade school. It's to teach students how to live. I'm not so sure this is a great lesson.

ZAHN: What is to be learned from what happened to Martha Stewart? You have made it very clear that America revels in bringing down people that we once applauded and heralded.

COHEN: Oh, no, only shallow people like me. I'm sure there are those who are morally superior to me...

ZAHN: But it is a bit of a blood sport in this country, is it not, with taking down , taking down...

COHEN: No, I think not. I think Mr. Bennett will survive with his fortune intact. Ms. Stewart will go on with her fortune intact. It's certainly better to be rich and powerful if sometimes embarrassing than it is to be poor and obscure. Not such a blood sport, really. Do you think something truly awful will happen to any of them?

ZAHN: It's hard to say. But there certainly is a certain sense of satisfaction that a large -- no one has done a study on this -- but I'm sure that a large number of Americans gets when somebody fouls up.

COHEN: Not just someone, though, and not just fouls up. It's the spectacle of hypocrisy. It's the fire-and-brimstone preacher caught doing exactly what he condemned us for doing. That's the sort of wonderful thing. How can you not enjoy that?

ZAHN: And is there any hypocrisy in your life that you would like to talk about tonight, Randy Cohen?

COHEN: I've had it written into my contract that I need not be any more virtuous than anyone else.

ZAHN: That's probably a pretty smart thing to put in there.

COHEN: I think that's one of the reasons that Mr. Bennett finds himself in so much trouble. It's not simply that he discusses ethics. It's the tone with which he discusses it. And it's very much a finger-wagging tone. It's very much a scolding tone.

He calls for moral censure from the community for people who do wrong. And now he's receiving it. I, of course, try to present myself with slightly more humility, but then perhaps I need to.

ZAHN: And we look for your work in "The Ethicist" column in "The New York Times." Thank you very much for dropping by.

COHEN: I enjoyed it.

ZAHN: Good of you to join us.

And we want to thank you all for tuning in to CNN tonight. Stay with us for "LARRY KING LIVE." He is up next, right after this short break.

Hope to see you again tomorrow night. Until then, have a good night.

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