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Karl Rove Back Before Grand Jury; New Voice of the White House; Who's to Blame For Sky-High Gas Prices?

Aired April 26, 2006 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Good evening, everyone.
President Bush has a new face and a new voice at the White House, but the same old problems including Karl Rove, one of the most powerful men in the country, back in court.


ANNOUNCER: Look who's talking again. Karl Rove back before a grand jury, still under a legal cloud.

Who's to blame for sky-high gasoline prices? You may not like the answer.

And they're at it again, taking a bill to pay for Katrina and Iraq and larding it up with billions of dollars in pork.

UNIDENTIFIED MALE: What does that have to do with Katrina?

UNIDENTIFIED MALE: Absolutely nothing.

ANNOUNCER: Get this: Some lawmakers aren't the slightest bit sorry, but we're "Keeping Them Honest."


ANNOUNCER: Across the country and around the world, this is ANDERSON COOPER 360.

Live from the CNN Broadcast Center in New York, here's Anderson Cooper.

COOPER: Thanks for joining us.

We begin tonight with Karl Rove, the president's top political adviser, in court today again. Some call him Karl Rove brain. He's credited with two election victories and is hard at work on pulling off a third this fall. That would get harder, of course, if he's indicted in connection with the outing of a CIA officer, which is why his appearance in court is such a big deal -- so, all the angles on Karl Rove's legal troubles, not the target of a criminal investigation, but not quite in the clear either.

Also, the political implications for a president and a party already getting battered in the polls. And that shuffle at the White House, the one that cut back Rove's access to the president, was it done in anticipation of an indictment?

We begin with CNN's chief national correspondent, John King.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): Into federal court and the grand jury room for the fifth time, Karl Rove hoping one more round of questions will clear him of wrongdoing in the CIA leak investigation.

Special prosecutor Patrick Fitzgerald and his team had no comment as they left the courthouse. And Rove said nothing about his three hours of testimony. In a statement, his attorney said Rove testified voluntarily and unconditionally, and that the special counsel has advised Mr. Rove that he is not a target of the investigation. Mr. Fitzgerald has affirmed that he has made no decision concerning charges.

But Rove's conduct remains a subject of the investigation. And lawyers like Lee Blalack, familiar with such politically-charged cases, called another grand jury appearance a calculated risk.

LEE BLALACK, ATTORNEY: It would be unusual for me to imagine Mr. Rove agreeing to go before the grand jury for a fifth time, if they didn't think that -- that there was a reasonable likelihood that that testimony would ultimately persuade the prosecutors or the grand jury to close the investigation.

KING: The biggest outstanding issue, why Rove did not initially tell the grand jury back in February 2004 about a key conversation with "TIME" magazine's Matt Cooper. Eight months later, in October 2004, Rove told prosecutors he found an e-mail reminding him of the Cooper conversation and that he had simply forgotten about it. How he came to remember is one of the case's many intriguing twists.

Rove attorney Robert Luskin ordered the e-mail search after having drinks with TIME reporter Viveca Novak. She told him Rove was a Cooper source and gave her account of the conversation to prosecutors back in December.

Rove has rarely discussed the case. This was with CNN at the 2004 Republican Convention.


KARL ROVE, SENIOR ADVISER TO PRESIDENT BUSH: I didn't know her name and didn't leak her name.


KING: Note that he did not flatly rule out more general conversations with reporters, which the White House had done earlier in defending Rove and now indicted former vice presidential aide Scooter Libby.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I spoke with those individuals, as I pointed out, and those individuals assured me they were not involved in this.

KING: Those assurances turned out hollow, and sources say the president long ago voiced his displeasure to Rove. Rove lost his policy portfolio in the recent White House staff shake-up. Aides say that shift was not connected to the investigation. And associates say the man Mr. Bush calls the architect is still very much a West Wing force.

VIN WEBER, FORMER GOP CONGRESSMAN: Over the last six years of this administration, Karl Rove, because of his importance to the president and his importance to the administration, has pretty much been able to do what he wants to do. And I think that that's going to largely continue to be the case.


KING: Now, sources close to Rove say he voices confidence he will soon be cleared of any wrongdoing, but the fact that he was called before the grand jury again, not just to a private meeting with the prosecutor, is viewed, Anderson, by even some of Karl Rove's closest friends an ominous sign.

COOPER: Interesting. John, stick around. We are going to talk to you more about this in just a moment.

Whatever happens next to Karl Rove or the administration, you will be hearing about it from a new face. If you're a cable news watcher, it's a familiar one, perhaps, Tony Snow of FOX News. He's jumping into a White House that is, to say the least, in trouble. And he should know.

He has been a critic, as the president himself acknowledged today, and as CNN's Candy Crowley reports.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My job is to make decisions. And his job is to help explain those decisions to the press corps and the American people.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Good thing Tony Snow's not just another pretty face.

TONY SNOW, WHITE HOUSE PRESS SECRETARY-DESIGNATE: These are times that are going to be very challenging. We have got a lot of...

CROWLEY: He's a wordsmith. He says them on TV. He wrote them for the first President Bush. He's written them about this President Bush.

Last September, on a chief executive who has never used his veto: "No president has looked this impotent this long when it comes to defending presidential powers and prerogatives."

With a spokesman like that, who needs the press corps?

BUSH: I asked him about those comments.


BUSH: And he said, you should have heard what I said about the other guy.


BUSH: I like his perspective.

CROWLEY: Last December, on not living up to conservative convictions: "The Republican Party in Washington is in trouble, not because it's overrun by crooks, but because it's packed with cowards."

In the beauty and the curse that is cyberspace, it didn't take Democrats long to cherry-pick their way through all those words and e- pass them to reporters. Snow comes at the president from the right, last month on big government; "A Republican president and a Republican Congress have lost control of the federal budget and cannot resist the temptation to stop rating the public fisc."

In an administration seen as inbred and in desperate need of traction, they are selling this as street creds for the new guy.

JULIE MASON, "THE HOUSTON CHRONICLE": Already, the White House is spinning this as a positive: Well, we need fresh blood and new opinions, and this guy has them. But some of the things he has said about the president have been harsh. It will be interesting to see how it plays in the grassroots.

CROWLEY: Take November '05, on not standing up to liberal Democrats: "The newly passive George Bush has become something of an embarrassment."

As he moves on to the White House payroll, Snow's first challenge will be to speak for the president, while holding on to his own credibility.

HOWARD KURTZ, HOST, "RELIABLE SOURCES": Tony Snow will have to convince the press that he has not just drunk the Kool-Aid and is now agreeing with the very policies he criticized when he was a columnist and radio host.

CROWLEY: And so it begins, the era of Tony Snow, White House spokesman.

SNOW: But I -- one of the reasons I took the job is not only because I believe in the president, because, believe it or not, I want to work with you.

CROWLEY: Asked if he's free to keep telling the president the sorts of things he used to say, Snow replied, "Probably not in those exact words" -- once a wordsmith, always a wordsmith.

Candy Crowley, CNN, Washington.


COOPER: Yes. We will see how long the honeymoon lasts.

A lot to talk about with our Washington reporters, part of the best political team in the business, John King, John Roberts and Suzanne Malveaux.

Suzanne, you spoke with Tony Snow today. Did he say anybody about those negative comments that he has made in the past or, really, how he is going to proceed, moving forward?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Anderson, he started off kind of joking about it at first, saying, you know, the only thing that's more embarrassing than some of the things he's written is his musical abilities in his band. You know, he plays flute, guitar in a local rock band.

But he got a lot more serious later. Essentially, he told us that, look, he said: I'm not here to drink the Kool-Aid. I take this very seriously.

And then he went on to say, look, he believes the president deserves the best counsel, the best advice. It's part of his job to actually do that. And, so, when he disagrees with the president, he is going to make his views known and say that. But, you know, the bottom line here is whether or not that really is going to make very much of a difference.


John Roberts, I mean, you have covered this White House certainly a lot. You know, it's all fine to say, I'm not drinking the Kool-Aid and I'm going to talk back, but the reality is, he's speaking for the president.


I mean, right now, he's saying all the right things. And I think that there's some hope within the press corps that he's going to do the right thing. He's seen as an independent thinker. He's -- he's not in the mold of a staffer. He comes from journalism, so, he understands the needs, wants and desires of the White House press corps.

But he's going to find out very quickly that a lot of what he said in the past is going to get thrown back in his face more times than he would -- he would like it to. And, you know, when you call the president's energy bill a clunker, you know, it's difficult to stand up and say, well, it was a good idea at any time in your life after that.

I think he's going to find quickly that he's gone from pundit to pinata, and that may affect his relations with the press somewhat.

COOPER: John King, I mean, what is this White House relations with the press? How -- how have they deteriorated in the last year or two?

KING: Well, they have deteriorated quite significantly.

This was a president and a vice president who said emphatically, Saddam Hussein had chemical and biological weapons and was working on a nuclear program. They said the intelligence supported that. Now, the -- most of the intelligence did, but there were disputes in the intelligence community that they never discussed publicly.

As you just saw, McClellan went into the room one day and said, Karl Rove and Scooter Libby assured him that they had no conversations at all with reporters about Valerie Plame in the CIA leak investigation. Well, that turned out not to be true.

This president, his administration, facing credibility questions right now -- that means Tony Snow gets no honeymoon. On day one, he has to defend an unpopular war in Iraq. He's going to have to defend high gas prices. He's going to have to defend tension and friction within the Republican Party in a very critical election year, and the list is longer and longer and longer.

COOPER: And, John Roberts, I mean, of all the things to have to share this announcement day with, having Karl Rove in court is probably not what the communication officer of the White House had hoped for. He's a subject of interest now, which mean, I mean, he -- he may or may not be indicted.

It -- it would be a major blow to this president and this White House if he does, indeed, become a target.

ROBERTS: Yes, I'm sure that Tony Snow was thankful that he's not taking over until the -- the second week of May.

But I think that -- first of all, let me preface this by saying there's nothing at all to indicate that Karl Rove would be indicted. But should that happen, I don't know that it's something that Republicans could survive in this election year. I don't know if they can take another blow like this, a scandal the size of -- of Karl Rove being indicted, and not to mention losing him from the political landscape.

I would think that there's a good chance that, if that were to happen, that Republicans would stand a good chance of losing the House and Senate in the November elections.

COOPER: Suzanne, there has certainly been some public speculation that Rove's recent reassignment was, in some way, done ahead of whatever may happen in court. What does the White House say about that? Any truth to that?

MALVEAUX: Well, you know, Anderson, there's no indication of that at the White House.

I mean, this has been a political headache for this administration and somewhat of a P.R. headache as well. But, clearly, when you talk to people here, they say one of the reasons, of course, Josh Bolten made that decision was so that Karl Rove could really focus on what he's good at. That's winning elections, of course.

And that's their main focus here. It's their main concern, is that they don't have a lot of time to deal with this. They want to make sure they keep the majorities in the House and the Senate. And it's one of the reasons why Tony Snow is such a good fit, because he really does reassure the conservative base that, look, I'm giving a clear, articulate message of the president's agenda from this podium. Stick with the president. Show up at the polls, and help us win those elections.

COOPER: Yes, well, Tony Snow's honeymoon certainly will not last very long. That, we can all probably agree on.

John Roberts, John King, Suzanne Malveaux, thanks.

Another White House worry, gas prices -- they continue, of course, to rise. And Americans are looking for somebody to blame, oil companies, overseas threats. Even the president has had the finger pointed at him. Who should get the blame? Well, you might not like the answer. We will have that ahead.

Plus, a surprise visit to Iraq by Secretaries Rumsfeld and Rice, amid word that more troops may soon be coming home. But is that decision based on tactics or politics?

And take a look at this.


UNIDENTIFIED MALE: The DNA that was tested and compared to Father Robinson, he's not (INAUDIBLE)



COOPER: It's not the priest's DNA, a blow to the prosecution, trying to prove that this priest murdered a nun. We will have more on today's damaging expert testimony in an Ohio courtroom -- when 360 continues.


COOPER: A lot of pain at that pump.

We have been hearing a lot about gas prices, of course, and with good reason. AAA says, today, the average price of a gallon of regular is $2.92. Many of you paying more. I paid, I think, like $3.40 a couple days ago. During the summer, of course, prices usually soar even higher. Recent poll numbers suggest, the gas pains are dragging down President Bush's approval rating, a lot of people pointing the finger at him, but it is a complicated issue.

And, so, where should you point the finger to?

We have CNN's Tom Foreman to investigate. (BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Who is to blame for the price of gas, at a record high and apparently getting higher?


FOREMAN: Who is to blame for $50, $60, $100 bills at the pump?

UNIDENTIFIED MALE: I'm wondering when it's going to stop.

UNIDENTIFIED MALE: It's getting very ridiculous.

UNIDENTIFIED MALE: Somebody else is getting richer. It's not us.

FOREMAN: Not us either, say American oil companies, which sell the gas they make from crude oil. For the first quarter of the year, the top three companies are expected to report $16 billion in earnings.

But industry spokes-folks say, blame high pump prices on international companies jacking up the price for that crude they draw from the ground. Those companies can do that because people who invest in oil, who buy that crude, are worried about future supplies, and they're willing to pay.

RAYOLA DOUGHER, AMERICAN PETROLEUM INSTITUTE: Fundamentally, we're seeing the forces of supply and demand internationally pushing those prices up, and a lot of political instability in some oil-rich areas that are tipping it right over the top, and -- and pushing it ever, ever higher. And it's translating to higher prices.

FOREMAN: Blame it on China and India, economists and political experts say. Their exploding economies are sucking up oil.

DAVID SANDLOW, BROOKINGS INSTITUTION: Oil is a global market. And, so, when other countries start using oil, and certainly approaching the levels we will, it's going to have a big impact on prices.

FOREMAN: Blame it on lack of innovation, environmental groups say. For 30 years, we have talked about alternative-fuel vehicles, but industry and government have generally been slow to support them, and consumers, too.

NATHANIEL GREENE, NATURAL RESOURCES DEFENSE COUNCIL: I think the most important thing they can do is not get caught up in the blame game and really look for some long-term solutions.

FOREMAN: Right now, for many, the short-term solution is avoiding blame or even contact with this volatile issue. ExxonMobil sent this memo to gas stations, saying, if news crews want pictures of customers buying golden gas, tell them, for safety reasons, ExxonMobil does not allow filming on our stations' properties. I tried to call the woman who wrote that memo. UNIDENTIFIED FEMALE: Hello. You have reached the office of Corrine Coy (ph).

FOREMAN: No luck. Well, the oil industry has its own ideas about whom to blame.

DOUGHER: Half the blame goes to consumers.

FOREMAN: That's the demand part of supply and demand, they say. And, as long as drivers will pay $3 a gallon for gas, that's what it will cost.

Tom Foreman, CNN, Washington.


COOPER: So, this week, four of the nation's top oil companies are releasing their first-quarter profits of the year. As for how much they're making, here's the raw data.

Today, ConocoPhillips announced profits of $3.29 billion -- that's with a B. That's a 13 percent surge from a year earlier. Chevron will announce its earnings Friday. Some analysts expect those to be around $4 billion. Tuesday, BP announced profits of $5.26 billion, which beat forecasts. And, as Tom just mentioned, the biggest company in the bunch, ExxonMobil, is expected to announce earnings tomorrow of around 9 b-b-b-billion dollars.

In a moment, hybrid cars and the people who hate them. Yes, that's right, Larry David. I said hate them. It's a Prius backlash. We will tell you why.

But, first, Erica Hill from Headline News joins us with some of the other stories we're following -- Erica.

ERICA HILL, HEADLINE NEWS CORRESPONDENT: Larry's coming at you. That could be an episode of "Curb Your Enthusiasm."

COOPER: No, he...


COOPER: I think he drives a Prius in that show.

HILL: He does. He absolutely does.

COOPER: And I think in real life, too.

HILL: Yes. He and his wife are big environmentalists.

COOPER: Well, they better watch out. Well, it's an interesting story.

HILL: Oh. A.C. is on their case.

(LAUGHTER) HILL: All right.

You take those skyrocketing gas prices we talk a lot about, the huge oil company profits you just mentioned, Anderson, what do you get? Well, a little Senate investigation. The Senate Finance Committee said today it's looking into whether major oil gas and companies have been bending federal tax rules -- the committee asking the IRS for the tax returns of the 15 largest companies.

In Florida, lawmakers agreed today to replace the state's military-style juvenile boot camp system with a new program that prohibits physical contact between guards and children. The program will focus on self-esteem and follow-up care, and youngsters will have a hot line number available to make complaints about any unnecessary abuse. The decision follows months of outrage over the death in January of a 14-year-old inmate whose beating by guards was caught on videotape.

Outside Los Angeles, a five-hour standoff at a bank ends peacefully with the arrest of an apparent would-be robber. You see him there, in his underwear -- yes, not clear really what happened to his clothes. He managed to get inside the bank before it opened this morning, but a quick-thinking bank employee then managed to lock him inside, leaving him no way out.

And, in Chicago, au revoir, fois gras -- the City Council approving a measure banning restaurants from selling the goose liver delicacy. It involves force-feeding geese, which is a practice many consider inhumane.

COOPER: You know, Erica, you were away for a couple days. And -- and while we have great people fill in for you, I -- it always makes me sad when you're away.


COOPER: And I wanted to express to you how much I love having you and how much you mean to me.

And I couldn't really find the words, and then I found somebody who could express those words.



PAULA ABDUL, CO-JUDGE: You move me. You celebrate what this competition is all about.

And, you know, I spent the day yesterday watching the tapes of when you -- when everyone first started. And you have moved me from the beginning. But you are this handsome, evolved performer...


ABDUL: ... that is -- is -- you are an "American Idol." You are.


ABDUL: You have a beautiful...


HILL: I -- I'm all verklempt. I really -- I just -- thank you.

COOPER: You are -- you are...

HILL: Thank you.

COOPER: You are my "American Idol."

HILL: And you know what? Back at you.


COOPER: All right, Erica, thanks. We will see you again in a little bit.


COOPER: Changing gears, Defense Secretary Donald Rumsfeld escapes the pressures at home to visit the war overseas -- coming up, his surprise to Iraq with Secretary of State Condoleezza Rice. We will have that and the inside story on plans to bring troops home.

And you won't believe this story. Take a look.


UNIDENTIFIED MALE: I think it's fine if the state of Mississippi wants to do that for both economic development and maybe for some safety. It has no place in the supplemental bill.


COOPER: Your tax dollars paid to have a railroad fixed. Now you may have to pay to actually move the railroad. We will explain and we will keep them honest next.


COOPER: Millions of dollars to fix a railroad, millions more to then move it. And it looks like you and I will get to pay the bill. We are "Keeping Them Honest" next.


COOPER: Breaking news -- actually, not just breaking news -- stunning news to bring you now. CNN has confirmed that a Senate panel looking into the problems with FEMA, the Federal Emergency Management Agency, has come to a conclusion. It is, quite simply, abolish it. Abolish FEMA. Senators Lieberman of Connecticut and Collins of Maine are leading the charge. The bipartisan report is expected tomorrow. It says that the problems with FEMA cannot be fixed, that years of poor leadership and paltry funding have rendered FEMA beyond saving.

A new agency would feature a director reporting directly to the president. The report also sets forth 86 proposed reforms and claims the country is still woefully unprepared for a disaster of the magnitude of Hurricane Katrina.

And, even as that was happening, senators were voting to stuff billions and billions of dollars in pork into an emergency spending bill for Katrina relief. We are going to bring you details on that in just a few minutes.

Other news tonight, Defense Secretary Donald Rumsfeld made an unannounced visit to Iraq today. Under attack at home, Mr. Rumsfeld was greeted at the airport by General George Casey, commander of U.S. troops in Iraq. They also met privately at the -- the U.S. Embassy.

Later, Secretary of State Condoleezza Rice joined Mr. Rumsfeld in a meeting with Iraq's new prime minister. Their visit was meant show support for Iraq's new government, which has struggled, of course, to get off the ground.

With all of this in the background, a number we have heard before has surfaced again, the possibility that 30,000 or more U.S. troops may -- may -- come home by the end of the year.

CNN's Jamie McIntyre has been talking privately to military planners and has the inside story.


JAMIE MCINTYRE, CNN SENIOR MILITARY AFFAIRS CORRESPONDENT (voice- over): For months, the U.S. military has been quietly planning for a possible reduction of U.S. troop levels in Iraq, by 30,000 or even more, by the end of this year.

UNIDENTIFIED MALE: Hey, boys, go ahead.

MCINTYRE: Now CNN has learned that plans drawn up by the top U.S. general in Iraq, George Casey, called for the current force of 15 brigades, roughly 130,000 troops, to be cut to 10 brigades, or about 100,000 troops, if conditions permit.

Officials familiar with the planning tell CNN, the reduction would be accomplished by simply not replacing some U.S. troops who are scheduled to rotate home over the next eight months. But General Casey is not ready to recommend that plan, until Iraq's fledgling military improves and the new prime minister gets his government up and running.

GENERAL GEORGE CASEY, COMMANDER, MULTINATIONAL FORCE IN IRAQ: We are seeing the situation a little clearer, I would say. And -- and the clearer I see it, the -- the better I can make my recommendations. MCINTYRE: Sources say there's an even more optimistic option that would reduce U.S. troops by another 25,000, leaving a force of 75,000 Americans in Iraq by the start of 2007. But that's based on a rosy and unlikely best-case scenario.

The Pentagon insists, any drawdown will be up to military commanders and not influenced by political factors, such as the upcoming midterm elections in Congress.

DONALD RUMSFELD, SECRETARY OF DEFENSE: The question of our force levels here will depend on conditions on the ground and discussions with the Iraqi government, which will evolve over time.

Sources say, eventually, the U.S. plans to consolidate its troops in a small number of heavily fortified super-bases in places like Baghdad, Tallil, and Balad, to lower their profile and get them out of the line of fire.

(on camera): There's a good reason no one at the Pentagon will publicly discuss troop cuts. That's because, if things don't improve in Iraq, those plans may have to be put on hold. And, even with cuts, it's likely a large number of U.S. troops will remain in Iraq for years to come.

Jamie McIntyre, CNN, the Pentagon.


COOPER: Retired Army General David Grange -- he is also a CNN military analyst -- joins me now from Chicago to discuss all this.

What do you think about it? Thirty thousand troops, do you think it's likely they could come home by the end of the year?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: I think it's something that's wished for by the Department of Defense and the American people, but, again, it's going to be conditions-based. It's up to the situation on the ground. It changes in conflict all the time, every day.

It has -- it has proved to have a plan to reduce the forces. But it's going to be driven by how things continue to work out.

COOPER: Well, it certainly should be driven, I think, everyone agreed, by events on the ground. But, as you well know, you know, having -- having commanded troops, you know, politics often does end up playing a role. That's got to be a concern of yours, that, somehow, with the midterm election coming up, there's going to be this drum -- drumbeat of, you know, people on all sides of the aisle wanting to get some troops home to at least show progress.

GRANGE: Well, I think you're right. I think it's going to be driven a lot about politics, admitted or not. And, also, because of the desire to reduce numbers, to show progress, there's a lot of pressure to bring G.I.s home. The thing is, on an irregular warfare, on insurgencies, it's something that can't be rushed. And if it's -- if it's better to accomplish the mission, to keep soldiers there, though we don't want to, we should, in order to be successful.

COOPER: And how do you think troops on the ground, or commanders on the ground, feel that drumbeat? I mean, how does that work? Do -- do -- is it that, you know, they kind of know, OK, we know our -- you know, that our civilian commanders kind of need -- need this, and, therefore, you know, we want to -- to please them, or does it come from above, you know, someone sort of saying, well, gee, really -- you know, keep insisting it really would be great to get 30,000 out now?

GRANGE: Well, I think a combination.

I mean, I think the people that serve in the armed forces, that wear the uniform, and rotate back and forth with Afghanistan, Iraq and -- and other contingency areas, they're under a lot of strain. So, they know there's a lot of pressure and desire to get -- to reduce the number of G.I.s in Iraq. I think it's going to be driven, though, how successfully the Iraqi political process is. If they don't have credibility, if the people don't have faith in that leadership of the Iraqi government, then the desire to support that government is not going to be there unless the people support this, we're going to continue to have the insurgency. It's up to the Iraqi people.

ANDERSON COOPER, CNN ANCHOR: I read an op-ed that you wrote in "The Chicago Tribune" a couple days ago on the recent criticism of Secretary of Defense Rumsfeld. Even more than questions of strategy, you said Rumsfeld needs to work on communication skills. What do you mean?

GRANGE: Well, I don't just mean Secretary Rumsfeld, I mean the leadership. In any organization, usually the greatest shortfall is a problem with communication. Vertically or horizontally. And it's almost like an hourglass. In other words, from the Pentagon, as information goes down, it might not get to the field commanders on the ground the way it's intended to be understood. And the same thing from the field commanders back up to the Pentagon. And so the commanders in between have a say in that. And some things aren't articulated exactly the way they are put out.

And so I do think there's a communication challenge right now in the Department of Defense. It's always been there. I mean, I've seen it the whole time I served, unlike -- not unlike any other organization, and I think the communications needs to be fixed of honest, open dialogue where people understand the intent of the senior to the junior and from the junior back to the senior.

COOPER: Interesting. David Grange, thanks for joining us. Appreciate it.

GRANGE: My pleasure.

COOPER: Sticking with Iraq, new allegations tonight from a former CIA officer who blasts the White House for ignoring crucial intelligence leading up to the war. Take a look.


UNIDENTIFIED MALE: One of our top near east officers was told by a senior officer dealing with the case that, look, you guys don't understand. You guys don't get it. This isn't about Intel anymore, it's about regime change.


COOPER: My interview with Tyler Drumheller coming up on 360.

Plus your tax dollars paid to have a railroad fixed. Now it may have to be moved which would cost hundreds of millions of dollars more. We're "Keeping Them Honest."

And dogs on vacation thanks to a business that's on the rise. Take a look.


REPORTER: Instead of boarding your dog when you go on vacation consider staying where man's best friends are welcomed with open paws. Like this Vermont inn.

MITCH FRANKENBERG, OWNER, THE PAW HOUSE: Some places accept dogs, but we cater to the unique needs of dog owners. We have custom- made dog beds, we have a place for you to keep your dog. We take care of your dogs when you're not here.

JENNIFER FREDRECK, OWNER, THE PAW HOUSE: We came up with this concept because we have big dogs and it's difficult to travel with them. We were very frustrated. We'd find places that were pet- friendly and we just were not satisfied with the service that we were receiving.

REPORTER: Five years ago this husband and wife team quit their secure jobs to get a new leash on life.

FRANKENBERG: We were comfortable from day one. We've had more guests every year than the year before. And we've had guests from almost every state in the country, so the risk was definitely worth it. Plus we're growing. We're going to be opening new locations throughout the country, too.

FREDRECK: One of the most rewarding aspects of this is I feel like we make a difference in so many people's lives.

KATHLEEN JERABECK, GUEST, THE PAW HOUSE: It's so great to finally find a place that I can bring my boys. To me, Bailey and Mozark are not just my dogs, they're part of my family. My vacation is also their vacation.


(COMMERCIAL BREAK) COOPER: When a former CIA officer blasts the White House over the war in Iraq and makes headlines Sunday on "60 Minutes," Tyler Drumheller, formerly the CIA's highest ranking officer in Europe let loose. Drumheller's most damning charge is that before the war in Iraq began, the president's inner circle became interested in intelligence only if that intelligence fit their policy. I spoke with Drumheller earlier.


COOPER: Mr. Drumheller, some people say why keep harping on what got us into the war in Iraq. We're there, let's deal with it. But you've said that we'll never get out of this situation in Iraq until we come to grips with what really started the war. What do you mean?

TYLER DRUMHELLER, FORMER SENIOR CIA OFFICER: Well, as I've looked at it over the last year since I retired, I believe that the administration and the government, as we've planned for Iraq now, everything is geared around trying to justify or trying to explain or trying to link in the original reasons for going to war, the WMD, the liberation of the Iraqi people. Until -- I think until they deal with the actual truth of what happened, the issues of what happened and why they're doing it, and there are very valid strategic reasons for what was going on and what happened, I think we're going to be stuck there. We're going to be stuck in a situation where we can't go and we can't stay.

COOPER: And based on what you saw as head of the CIA's European operations, why do you think we entered this war? Was Saddam an imminent threat to America?

DRUMHELLER: No, he wasn't an imminent threat to America. I think he was a long-range strategic threat to America. The problem was that they underestimated the amount of military force it was going to take to deal with the post war situation because they felt they were coming in to liberate the Iraqis and the people were going to greet them as liberators.

COOPER: The White House says look, it was faulty intelligence not political manipulation of intelligence that was the problem. Dan Bartlett, counselor to the president, said this, "The president's convictions about Saddam Hussein's possession of WMD was based on the collective judgment of the intelligence community at that time. Bipartisan investigations by the congress and Silberman-Robb Commission found no evidence of political pressure to influence the prewar intelligence assessments of Iraq's weapons programs." True?

DRUMHELLER: It's true in the sense that I think they're looking at the wrong thing. There was never any -- I never saw any real direct pressure. No one ever came and said, give us this intelligence on this. It was simply this was the way -- there was an inertia towards war, a constant movement towards dealing with Iraq.

COOPER: You're saying they had made up their minds?

DRUMHELLER: Yeah, they had made up their minds before they went in, and they were looking for the intelligence to support it.

COOPER: What convinced you that they were hand-picking what intelligence to believe and what they didn't? I mean you've talked in the past, the CIA had a highly placed source in Saddam's government. You won't name him. It was widely reported as Naji Sabri, Saddam's foreign minister. And that source categorically stated they had no active WMD program.

DRUMHELLER: Well, yeah. What he said was that they have -- that they had -- if Saddam could do it, he certainly would. There's no question about that. That's why he was a long-term strategic threat. But as an immediate threat, an imminent threat, they were at least 18 months to two years away from building a nuclear weapon if they had the physical material, which they didn't have. And their biological capability had been largely destroyed after the first gulf war and had been kept from being rebuilt by the inspections.

COOPER: And yet when that information -- when the agent started to turn information, which didn't meet the political agenda, you're saying, of this administration, what happened? They stopped paying attention to him?

DRUMHELLER: Well, we stopped, we didn't get any more requirements or questions from the agent, were not coming back from the White House or from any of the other parts of the government. We questioned that. And eventually, we're told that the officer who was handling the case, who was one of our top near east officers was told by a senior officer dealing with the case that, look, you guys don't understand. You guys don't get it. This isn't about Intel anymore. It's about regime change.

COOPER: Mr. Drumheller, appreciate you talking tonight. Thank you.

DRUMHELLER: Thank you very much.


COOPER: In Mississippi, a rail line gets fixed and now lawmakers want millions of your tax dollars to move it. Part of a bill that's supposed to pay for hurricane relief and Iraq. What's going on? We're "Keeping Them Honest."

Also, a priest on trial accused of killing this nun. A ritualistic crime. Her body found in a hospital chapel. Today testimony that could damage the prosecution's case. The latest when "360" continues.


COOPER: Well, some breaking news to report. CNN has confirmed that a senate panel looking into the problems with FEMA, the Federal Emergency Management Agency, will recommend scrapping it, abolishing FEMA. Senators Joe Lieberman of Connecticut and Susan Collins of Maine are leading this charge. They are recommending, and it is just a recommendation, a new agency reporting to the Department of Homeland Security, but that will also have a direct line to the president during an emergency. The full bipartisan report is expected tomorrow. It claims the country is still -- still -- woefully unprepared for a disaster of the magnitude of hurricane Katrina. Let's remember that magnitude was only a category three storm.

Another fascinating story happening out of Washington tonight. We could be on the verge of a new war between the president and fellow republicans in the senate. By one vote tonight, Mississippi senators Trent Lott and Thad Cochran(PH) got a big step closer in their plan to spend $700 million of taxpayer dollars, I should add, your money, on a new railroad. Now, it's part of a bill for emergency spending for Iraq and Katrina. The president is now threatening to veto this bill because of all these add-ons. That's the sticking point. Is moving this train really an emergency? CNN's Sean Callebs' tonight "Keeping Them Honest."


SEAN CALLEBS, CNN CORRESPONDENT: Call it the little engine that could. You'd never know it to see it chugging through the heart of Mississippi, but it could ignite an angry battle between the White House and republican senators. Here's why. Mississippi's powerful GOP senators Thad Cochran and Trent Lott, want the federal government to cough up $700 million of your tax dollars to buy this rail line. According to the plan, it would be replaced by a brand new coastal highway and a light rail for trolley cars. If you live in Mississippi, what's not to like? The highway and the trolleys could breathe life into casinos and stimulate an economy battered by hurricane Katrina and taxpayers all over the country would pick up the tab.

IRA FAY TREMMEL, LIFELONG BILOXI RESIDENT: I'd like to see maybe a -- what do you call it -- the street car that's like in New Orleans that would go from one end of the coast to the other. I think that would be great. I'd love to see something like that.

CALLEBS: It's such a good idea for Mississippi that Cochran and Lott actually tried to get federal money to move the rail line and build the new highway well before anyone ever knew Katrina was coming, but they never got it approved, and that's why the mega billion-dollar emergency spending bill for the war in Iraq and hurricane Katrina is such a great vehicle for the little engine that could. But that's where they run into the White House buzz saw. Even critics in their own republican party say it's laughable to call the rail line an emergency.

SEN. TOM COBURN, (R) OKLAHOMA: It certainly shouldn't be paid for by the people of this country. When, in fact, it's a state issue. So I think that probably their idea's a great one for economic development, but it certainly isn't something that has to happen right now.

CALLEBS: Meaning it has no place in an emergency bill for Katrina, let alone the war in Iraq. But Lott and Cochran are passionate. The trains on this line are operated by CSX and mainly move dangerous chemicals. And the lawmakers point out, look how close they are to houses. Also, they say, the new highway will make it easier for evacuations the next time a powerful storm threatens the coast.

People along Mississippi's gulf coast bristle at the notion that moving the CSX rail line north is the pet project of the state's powerful republican lawmakers. In fact, locals say it has been discussed for years. And for economic and safety reasons, they say now is the time to do it. Never mind that CSX just spent $250 million of its own money to repair this line after Katrina. And critics say how on earth can moving a state highway from here along the water several blocks inland, make a substantial safety difference? Again, critics in the senate say Lott and Cochran are wrong.

COBURN: Their claim is, is that it increases the speed of access of exiting that area by enhancing the road there. But, you know, they're talking about moving something that's about 2,000 yards away from a major road anyway.

CALLEBS: And you would think that Biloxi's mayor would wholeheartedly embrace the pitch to buy out the CSX line. Especially if it's supposed to make his town safer. But A.J. Holloway says building a new highway isn't easy.

MAYOR A.J. HOLLOWAY, BILOXI, MISSISSIPPI: You're going to have a lot, a lot of obstructions that's going to have to be dealt with in some kind of way. It won't be cheap.

CALLEBS: But all of that is beside the point. Mississippi's two powerful senators just keep plugging along like the little engine that could, saying I can get this measure passed. I think I can, I think I can. Meanwhile, the White House and so many others keep asking, what does this have to do with emergency money for the war efforts and hurricane recovery? Sean Callebs, CNN, Biloxi, Mississippi.


COOPER: Of course if it stays on the bill and the president vetoes it, it would be his first veto so far.

A nun murdered in a hospital chapel room. A priest on trial for the crime. Today a DNA expert took the stand with blood testimony that could prove damaging to the prosecution saying it wasn't the priest's blood. That's coming up.

Also tonight, mumps, the disease is making an unwanted comeback with outbreaks spreading. Dr. Sanjay Gupta tells us if we should be worried when "360" continues.


COOPER: The trial of a priest accused of the ritual killing of a nun took what may end up to be a major turn today. Jurors already saw the prosecution use a mannequin to show how the nun was stabbed with cross-like wounds across her chest. Today they were given more evidence to consider, including an altar cloth and blood stains. The question is, whose blood is it? CNN'S Rick Sanchez investigates. (BEGIN VIDEOTAPE)

RICK SANCHEZ, CNN CORRESPONDENT: The altar cloth seen here covering a body in a court demonstration is used in Catholic mass during communion. It's where what is most sacred to Catholics is placed, the holy host and wine. But police say Father Gerald Robinson used his altar cloth for another purpose, to cover the body of his victim, Sister Margaret Pall, in a satanic killing inside his own chapel. However, a major development in court today. A DNA expert testified that blood found on the cloth did not match his.

UNIDENTIFIED MALE: The DNA that was tested and compared to Father Robinson, he's not on it?


SANCHEZ: Robinson has pleaded not guilty to killing the 71-year- old nun with this letter opener found in his office. Experts testified that the shape of the opener matches up exactly with her stab wounds. However, in court yesterday, there was another blow for the prosecution. When it was revealed that fluid on the letter opener also did not match the priest's blood.

UNIDENTIFIED MALE: You cannot say that it was blood. You can only say that it possibly is blood, correct?

UNIDENTIFIED MALE: That's correct.

SANCHEZ: So whose blood is it? Prosecutors insist the priest killed Sister Pall and then made it look like she'd been sexually assaulted by pulling down her undergarments. They say there are no consistent blood matches because back in 1980 when the murder occurred, DNA evidence wasn't even collected. Therefore, all the blood from the scene isn't available. This leaves them relying on decades-old witness accounts, circumstantial evidence, and their key piece of evidence, this unique letter opener. And on the stand today, one expert testified the blood stains on the altar cloth match the ridges on the handle of the letter opener.

UNIDENTIFIED FEMALE: If another object made it, it would have had to have been basically the same shape, the same size, in the same configuration.

SANCHEZ: In fact, it's when cold case detectives using today's forensic techniques reexamined the letter opener and noticed how its ridges matched blood patterns on the altar cloth that they decided even though nearly a quarter century had passed, that they had solved the crime. That's when they exhumed the 71-year-old nun's body and charged the priest. Will it be enough, though, to convince a jury to convict this man of the cloth? Rick Sanchez, CNN, Atlanta.


COOPER: We'll have more on this trial coming up in the 11 o'clock hour of 360. But first, Erica Hill from "Headline News" joins us with some of the business stories we're following. Erica? ERICA HILL, CNN ANCHOR: Hi again, Anderson. A big day on Wall Street, the Dow closing at its highest level in six years, up more than 71 points to finish the day at 11,354. Both the NASDAQ and the S&P did gain more than 3 points, those climbs being credited in part to an upgrade in GM's restructuring and solid earnings reports from some blue chip companies.

But Wall Street not the only one on the rise, new home sales up as well. Nearly 14 percent in March. The biggest jump in 13 years. The price of an average home, however, fell just over 7 percent to 279,000.

And living the American dream it turns out could be just that, a dream. A new study by an economist says most Americans won't lead a rags to riches life, saying that a child born into poverty has just a 1 percent chance of becoming wealthy whereas a child born rich has a 22 percent chance of staying that way. Rather uplifting, isn't it, Anderson?

COOPER: Yeah, really, great. Erica, stick around.

Right now time for the shot. Want you to see the shot with everyone else. It's our favorite photo or piece of video of the day. And the shot tonight, well, it's pretty much self-explanatory. Take a look.


Sin and catch. Boom. Get them up there. Jump roundhouse. Good kick. Kick it. One more.

COOPER: These are some pretty sweet moves. We found this on today. We've been looking at it all day frankly. We like to call it the Karate Kid Chimp. Don't really know much about the Kung Fu Primate, but it is certainly making the rounds on the internet and Erica we think it's pretty worthy of the shot of the day.

HILL: I think it's giving the smoking chimp a run for its money. In primate land.

COOPER: And what's great is it just repeats over and over again. And frankly we can watch it all day long. Erica, thanks, talk to you in the next hour.


COOPER: Something far more serious when we come back, the man President Bush called the architect, some call the brain or the boy genius. Karl Rove back in front of a grand jury, still not out of legal jeopardy. We'll look at all angles.

Also a story so bizarre it is playing out in stereo. Two millionaire murder victims, their accused black widow wives, a poisoned milk shake, and that is not all.

Later, a forgotten childhood disease making a grown up comeback, the mumps.


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