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Concern for Possible Middle Class Tax Hike; July Sizzles for Stock Market; Ford Has Positive Sales; Three Americans Detained in Iran; What's a Blue Dog Democrat; Auto Rebate Program Needs Cash; Cash for Clunkers; More Protests in Iran; NATO in Afghanistan as Long as it Takes; Iraq's Celebrity Traffic Cop

Aired August 3, 2009 - 12:00   ET


T.J. HOLMES, CNN ANCHOR: Well, more signs of an economy on the mend. Stocks are trading higher today after the Dow posted its best July in 20 years. Ford also saying that its July '09 sales were up compared to July of 2008.

Now, despite these positive signs, there's concern a middle class tax hike could be on the horizon.

Listen now to Treasury Secretary Timothy Geithner, who did not rule that out.


TIMOTHY GEITHNER, TREASURY SECRETARY: People have to understand we have to bring those deficits down, and it's going to be difficult, hard for us to do. And the path to that is through health care reform, but that's necessary but not sufficient. We're going to do some other things as well, too.

UNIDENTIFIED MALE: So revenues are on the table as well?

GEITHNER: Again, we're not at the point yet where we're going to make a judgment about what it's going to take, but the important thing...

UNIDENTIFIED MALE: But you're not ruling it out. You can't rule it out.

GEITHNER: Well, I think that what the country needs to do is understand, we're going to have to do what it takes. We're going to do what's necessary.


HOLMES: OK. You clearly hear that the treasury secretary would not rule it out.

Well, President Obama certainly sounded like he was ruling it out as a candidate. Take a listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Under my plan, tax rates will actually be less than they were under Ronald Reagan. If you make less than $250,000 a year, you will not see your taxes increased one single dime.

If you make less than $250,000 a year, you will not see your taxes increase one single dime. Not your payroll taxes, not your income taxes, not your capital gains taxes, nothing.

If you make under $250,000, you will not see your taxes increase by a single dime. Not your income tax. Not your payroll tax. Not your capital gains tax. No tax.


HOLMES: All right.

Dan Lothian, what are we supposed to do with this now? We heard this over and over and over again. And this is getting attention because it's one thing if someone just makes a mistake. You know, honest mistakes are made. But you had two top economic advisers who would not rule this out.

What is the White House saying today?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you're right. In fact, as you pointed out there in that clip from the president on the campaign trail, he really was drawing the line in the sand that he was not going to be raising classes on the middle class. But, you know, whether this is a trial balloon that you heard there from Treasury Secretary Timothy Geithner, or what we also heard from Larry Summers, his top economic adviser -- take a listen to what he had to say. Leaving the door open again that the middle class could be taxed in order to pay for all of the expensive things this administration is trying to do, including health care.

Take a listen.


LAWRENCE SUMMERS, DIRECTOR, NATIONAL ECONOMIC COUNCIL: There's a lot that can happen over time, but the priority right now, and so never good a good idea to absolutely rule things out, no matter what.


LOTHIAN: So, again, it does appear that -- again, what I was saying, you know, are they throwing up this trial balloon, or is there a real shift, a fundamental shift in this administration to look for other places to get that revenue? I mean, right now, what the administration's mind has always been is that they would lean on the wealthiest of Americans in order to pay for health care.

Is that a shift? We don't know. I mean, typically, the administration will have what they call theses early morning gaggles where you're allowed to -- for at least the past couple of weeks -- go into the press secretary's office, sit down and talk about the news of the day, kind of go over it, haggle over it a little bit before you actually come out to the afternoon briefing.

This morning, they did not have one of those gaggles. Perhaps they're still trying to figure out what the response is, what the real message will be today. No doubt at the briefing Robert Gibbs will be hit hard on this issue to find out if the administration is shifting on its policy of not raising taxes on the middle class -- T.J.

HOLMES: Yes. As you said, I think the briefing at 1:00.

Just tell me, before I let you go, what is your first question today at the briefing, Dan?

LOTHIAN: Is the president going to stand behind his campaign promises or is he backing away from it? That will be one of them. I have a couple of others. I won't tell you what those are.

HOLMES: All right. We don't want to give them a heads up. We know they're listening.

Dan Lothian, we appreciate you, as always. We're looking forward to that briefing today.

Thank you so much.

We'll turn to some economic news now.

July seemed to sizzle for the Dow and also for Ford. Yes.

Susan, a U.S. automaker is having a good month? Please explain this one.

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: A good month and, in fact, the best month that we've seen in basically two years. Now we have the hard numbers behind it.

Ford was happy to leak this to CNN Radio yesterday. July sales for Ford rose two percent year over year, first monthly increase in two years. And here's something else. You know, everybody has been talking about the wild success of Cash for Clunkers, and Ford certainly gives credit to that program. But it says it had a successful month prior to it.

We'll be able to break it down as we get more of the numbers.

What did well for Ford? Well, fuel-efficient cars, of course.

Fusion sales rose 66 percent, compared to last year. Escape sales rose 94 percent. Mercury Mariner sales rose more than 70 percent.

So, you get the idea.

Ford also unveiled its new Taurus, which used to be the most popular car in America. That came out at the end of the month, so we'll see how that does. But the bottom line is these are big-ticket items. Consumers are spending. It's very encouraging for economic recovery and it's very encouraging to investors.

And we have a very nice rally in the first trading day of August after the scorching month in July, the best month for July for the Dow and the S&P 500 in 20 years, because we also got two better-than- expected economic reports, T.J. So, it's a total trifecta here. We got a better-than-expected report on construction spending and on manufacturing. So, the Dow, the Nasdaq, S&P 500, all up about one percent.

HOLMES: All right. Susan Lisovicz, appreciate the good news from you today. Thank you so much.

LISOVICZ: You're welcome.

HOLMES: I know we'll be checking in with you plenty throughout the day.

And also, coming up in 30 minutes, the Cash for Clunkers program you've been hearing a lot about, it has been successful, maybe too successful. When will it run out of gas?

Our Christine Romans will be live for us with that in just a bit.

Also, what happens to the cars once they are junked? Poppy Harlow shows us a clunker being demolished and how the engine is purposely ruined.

All of that coming up. Stay with us for that.

Meanwhile we'll turn to Iraq and Iran. A little something going on there with a couple of Americans. Swiss diplomats, acting on behalf of the U.S. now, trying to arrange a meeting with the three Americans who have been arrested in Iran.

As CNN's Susan Candiotti tells us, they are accused of illegally hiking into that country from Iraq.


SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): Kurdish officials have identified the three Americans being detained as Joshua Fattal, seen here on his Facebook page, as well as Shane Bauer and Sarah Shourd, both appearing on Internet Web sites. They've been staying at a hotel before setting out to a scenic area for a hike in the mountains near Admed Awa in Iraq.

Despite warnings to be careful, they apparently strayed into Iranian territory across an unmarked natural border with northern Iraq. A friend who stayed behind at a hotel because he was ill said he last heard from them Friday. They called to tell them they were surrounded by Iranian soldiers during their hike.

Fattal's mother who lives in Pennsylvania confirms their captivity but is declining requests for on-camera interviews. She spoke with CNN Radio by phone.

LAURA FATTAL, MOTHER OF DETAINED U.S. HIKER (via telephone): My husband and I are eager for the best welfare and conditions for our son, Josh, and for the other two companions he's with. And that is our only concern -- his welfare and best conditions for him.

CHRIS FORAKER, FRIEND OF JOSH FATTAL: Josh is a very curious person. And he is interested in the world. He wants to -- wants to eat the world whole.

CANDIOTTI: Friends say the three have spent time or have lived in Western Europe and the Mideast and are seasoned travelers. Sarah Shourd appears on a Web site that mentions her travel. She's also named on Shane Bauer's Web site. He's a photographer.

The American hiker, Shon Meckfessel, who stayed behind because he was ill is now at the U.S. embassy in Baghdad, according to his grandmother. Meckfessel is a graduate student at the University of Washington. The State Department says it has asked the Swiss consulate in Iran to try to make contact with the detained Americans because the U.S. itself has no diplomatic relations with Iran.

(on camera): It's a very sensitive situation, especially given the strange relations between the U.S. and Iran.

Susan Candiotti, CNN, New York.


HOLMES: A battle over Michael Jackson's estate is going on in California right now, happening in a courtroom right now. What is the fight all about? We'll tell you what's at stake.


HOLMES: Show you a live picture. We're going to put that for you right now of a memorial happening just outside of Atlanta.

This is at New Birth Missionary Baptist Church. Thousands of people are expected for the funeral service of former boxing champ Vernon Forrest.

You may remember it was just a little over a week ago now that Forrest was shot to death at an Atlanta gas station. Police say he was robbed and then exchanged gunfire with possibly three to four suspects.

A host of celebrities and boxers, as well, expected at the memorial service. Among them, Oscar De La Hoya. Also Evander Holyfield.

Also Sugar Shane Mosley. Boxing fans will certainly know that name, but Vernon Forrest defeated Shane Mosley at a time when Mosley was undefeated, and that's really what propelled him to superstar status, Forrest. So, Sugar Shane Mosley expected to be at this funeral as well. Again, Forrest was 38 years old when he was shot and killed. He's a former Olympian, a welterweight and junior middleweight champion. But thousands expected. Just getting under way now for the memorial service for Vernon Forrest.

Well, out to California now, where Katherine Jackson is back in court today. She's expected to fight for some control of her son's estate.

Ted Rowlands joins us from outside the courthouse in Los Angeles.

You're outside the courthouse. Tell us what's happening inside the courthouse right now.

TED ROWLANDS, CNN CORRESPONDENT: Well, the hearing was delayed a bit, T.J. Just getting under way now, from what we've been told from a court spokesperson. And Katherine Jackson is there, along with, according to the spokesperson, two of Michael Jackson's sisters -- we don't know which ones -- and one of his brothers. So, a pretty huge contingent of Jacksons inside this courtroom. And we're told a huge contingent of lawyers inside the courtroom.

Two things are happening. First, we are expecting the judge will rubberstamp the custody agreement between Debbie Rowe and Katherine Jackson, where Katherine Jackson gets custody of the three children, Debbie Rowe gets some visitation at some point down the line when it's appropriate. Everybody's in agreement there.

The other side, though, they're not in agreement. Basically, what the judge is going to have to do is entertain Katherine Jackson's wishes to have a larger role in the estate. And basically, she's asking for more information.

The executors are saying, we're not willing to give her information unless she plays by our rules. And their rules are they want her to sign a confidentiality agreement that apparently is too cumbersome, according to her lawyers. So, basically, they're fighting, the judge is going to have to figure it out.

There's $100 million on the table at the low end, $500 million at the high end in terms of an estimation of Jackson's estate. So, a lot at stake here.

One other thing they are expected to figure out today is a stipend for Katherine Jackson and for the three children. So, a lot to do inside that courtroom and a lot of lawyers to maneuver around for this judge who will have his work cut out for him.

HOLMES: And Ted, I want you to follow up on one point you made there. It sounds like she's just asking for at this point information. She wants to have more access to a lot of things.

But what do we know she wants to do with it once she gets information? Does she want to at some point make a play to control all of her son's estate? ROWLANDS: It's unclear. It seems as though there's a bit of paranoia going on here, that -- you know, and you can imagine with sort of the secrecy involved in something like this and the amount of money and the different contracts, specifically one of the things that came up was they wanted to see the AEG contract that Michael Jackson signed to do all of these concerts, see what kind of compensation, see the details of it. And they haven't been able to see it.

And that was really disconcerting for Katherine Jackson's camp. And that's one of the things the judge is going to ask for.

Late today, AEG actually asked the judge if they could intervene, adding more lawyers and more people at the table.

HOLMES: All right. Ted Rowlands, trying to keep track.

We appreciate you keeping an eye on this, what has become an increasingly complicated legal situation.

Ted, we appreciate you. And certainly we'll be hearing from you again later.

Well, a nearly 20-year-old mystery now solved. The answer to what happened to Captain Scott Speicher was buried in the sand the entire time. A look back at the Pentagon's mistakes, some say, and where the long-awaited tip came from.


HOLMES: We want to listen in now live to the secretary of state answering questions about the three American hikers who are believed to be held in Iran.

Let's listen right now.


HILLARY CLINTON, SECRETARY OF STATE: We want this matter brought to a resolution as soon as possible. And we call on the Iranian government to help us determine the whereabouts of the three missing Americans and return them as quickly as possible.

With respect to the potential actions that might be undertaken by the international community, we're not going to be commenting on what might or might not be done. We've made it very clear that we wish to engage with the Iranians in accordance with President Obama's policy to discuss a broad range of issues. That would be a bilateral channel which we have communicated to the Iranians, and we continue to engage in multilateral channels -- most importantly, the P5 plus 1 discussions. And as you know, the P5 plus 1 representative, Javier Solana, put forth a proposal some months ago that we still have not received a response to.

HOLMES: All right. Just wanted to jump in and hear those comments at least from the secretary of state, Hillary Clinton, there about the three Americans believed to be, wide reported now, held under arrest in Iran after they accidentally -- it sounds like they accidentally crossed the border, an unmarked border, from Iraq into Iran. Apparently, these three Americans over the weekend were hiking when they found themselves where they shouldn't have been, according to reports, which was over the border, into Iran, found themselves surrounded by Iranian soldiers, and now believed to be held there.

The secretary of state there making some interesting comments, saying she's calling on the Iranian government to help determine the whereabouts and to return them as quickly as possible. Maybe leaving open the rumors sounding like they might not be sure, in fact, that they are being held by the Iranians, but saying to help determine the whereabouts.

Again, the Swiss right now are operating and negotiating on behalf of the Americans because, again, there's a strain in diplomatic relations between the U.S. and Iran. The Swiss have an embassy there, so they are trying to work and make contact with these Americans. But the secretary of state making comments. Wanted to bring that to you live as we got it.

We'll turn now to that Gulf War mystery that got solved over the weekend.

Our CNN Pentagon Correspondent Chris Lawrence joins us to talk about the discovery of naval flyer Michael Scott Speicher's remains. But first, background on this Navy pilot.


CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): Captain Scott Speicher's children were toddlers the day he disappeared. Now his remains are coming home to college students.

A nearly 20-year mystery. Was he captured? Tortured? All this time the answer was buried in the Iraqi sands and solved by a single tip.

MIRIAM NOVELLY, HIGH SCHOOL CLASSMATE: It's a bittersweet ending. I mean, it's great that we have finally accomplished an ending, but it is bittersweet.

LAWRENCE: Last month, an Iraqi citizen told American troops about the crash site. When the Marines arrived, another Iraqi said he was there when Bedouins found Captain Speicher already dead and buried his body. Searching the site, U.S. troops found multiple skeletal fragments and bones. And when military investigators compared Captain Speicher's dental records with the recovered jawbone, it was him.

SEN. BILL NELSON (D), FLORIDA: The whole family is just so grateful that the Navy stayed on this.

LAWRENCE: But the military made mistakes, starting hours after Speicher was shot down when the Pentagon declared him dead.

DICK CHENEY, THEN-SECRETARY OF DEFENSE: The total U.S. losses are one aircraft and one individual. UNIDENTIFIED MALE: The Pentagon has identified a United States Navy pilot as apparently the first U.S. serviceman missing in action in the Persian Gulf War.

LAWRENCE: Some in the military thought Speicher had ejected and might still be alive. In 1994, they proposed a secret mission to survey the crash site. But according to senior defense officials in the room, Chairman of the Joint Chiefs, General John Shalikashvili, scrubbed the plan and said, "I do not want to have to write the parents and tell them their son or daughter died looking for old bones."

In 2001, the Pentagon changed his status to missing in action. And there were accusations he was being held captive by Saddam Hussein. After the invasion of Iraq, some probably found Speicher's initials scratched into the wall of an Iraqi prison. And investigators even excavated a grave site in Baghdad but it was not him. Now the vigils can end. But one fact remains.

NELSON: We walked away from a downed pilot. It was done by mistakenly declaring him dead and then they didn't go and search for him. And that was a mistake. And that is very important, that we never repeat that mistake again.


HOLMES: All right. Chris Lawrence joining us now from the Pentagon.

Chris, one of those big questions certainly the military wanted to solve is, was he ever held in one of Saddam Hussein's prisons? So, it seems like we have the answer to that question.

So, do we have all the answers now? I mean, can the family now have that peace and all those questions answered?

LAWRENCE: Not quite, T.J. You know, there's got to be still a few more questions that the family would like to have answered.

Number one, is there any chance that he survived that crash, even for a little while? And two, did he die at the crash site, or did he die somewhere else, and was his body then brought to the crash site and buried there? Those are some of the questions the family may be trying to answer right now.

HOLMES: And I guess another question there, if we don't know exactly what happened, if he didn't die in that crash, but a question of why -- you talked about those Bedouins that did bury him out there in the desert -- why they buried him.

LAWRENCE: Yes. Bedouins are sort of like shepherds living off the land in a very remote part of Iraq.

Muslim law dictates and demands that you have a burial very promptly after a person's death. So, it's possible that the Bedouins buried him simply out of respect for his body. And you've got to remember, that part of Anbar Province was the move violent part of Iraq for a long time. It was only a couple years ago that the Sunni tribes switched sides and started working with the U.S. And that sort of changed the relationship into a more friendly relationship between the people there and the U.S. forces.

HOLMES: Yes, it was a much different place then.

Chris Lawrence for us on this story.

Again, at least part of the mystery is solved.

Chris, we appreciate you this afternoon.

LAWRENCE: You're welcome.

HOLMES: Well, you know about this Cash for Clunkers program. You get the cash, but what happens to everybody's clunker?

Well, our Poppy Harlow went to see some demolition for herself.


HOLMES: Well, Senate negotiators get back to work on health care reform today. House lawmakers, they're gone. They're going home for their August recess. But the bipartisan group from the Senate Finance Committee still searching for a compromise.

The panel says there won't be a vote before the Senate breaks for its August break. That's supposed to begin sometime at the end of this week.

Well, you heard the term "Blue Dog Democrats" used a lot over the past few weeks. This group of fiscally conservative Democrats is critical in the debate over health care.

CNN Chief National Correspondent John King, the host of CNN's "STATE OF THE UNION," explains the Blue Dog tag.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: In the contentious health care debate of recent weeks, you've heard from voices familiar and some maybe not so familiar -- Democratic leaders in the House and Senate, Republican leaders in the House and Senate, and, of course, President Obama and his key advisers. But if you're listening closely, it's likely you've also heard the term "Blue Dog Democrats."

Now, individually, most are not so influential. But together, their more conservative voices are proving pivotal in the debate over how to pay for health care changes and whether a new govern-run insurance program is such a good idea.

So, what's a Blue Dog? Let's take a closer look.

These are the states represented by at least one member in a congressional delegation who calls himself a Blue Dog. And you see them. And let's, again, take a peek in here.

There are 52 members of the Blue Dog Coalition. They represent those 29 states we just showed you. Thirty-two of these members, and this is important, represent districts won by Republican John McCain in 2008.

So in our "American Dispatch" this week, we wanted to take a closer look. Look out here, western Idaho, this blue congressional district, the first congressional district. We wanted to look up close at the blue dogs who have to balance the party's call for major health care reforms with a constituency that doesn't like big spending and doesn't trust big government.


KING (voice-over): Western Idaho is, in a word, spectacular. Rolling hills filled with golden grain. Breathtaking forest. Shimmering lakes. And tiny towns, like Saint Maries, built around the mines and mills and anchored by places where everyone is on a first- name basis and everyone thinks a business and the government should put a premium on the bottom line.

GWEN WOTRING, OWNER, BUCK'S (ph) DRIVE IN: It's difficult to be a liberal in this neck of the woods.

KING: Gwen Wotring is a proud Democrat, but she knows from the lively conversations in her restaurant, she's in the minority, especially in the recent debate over what to do about health care.

WOTRING: I come from British parents. They taught me that socialized government is not a bad thing that everybody reports it to be. I think that the government needs to take over health care.

KING: Saint Maries is in Benewah County, a timber region where John McCain won by a nearly two to one margin last November. Sheryl Halverson (ph) is the country Democratic chairwoman. Says what sells in New York or San Francisco will likely fall flat here.

SHERYL HALVERSON: We're westerners. And westerners are more independent. This is a hunting and fishing place. People don't want to give up their guns. And so we tend to be more self-reliant or think that everyone should be more fiscally conservative.

KING: For only the third time in forty years, the local congressman is a Democrat, Walt Minnick, one of those who adds the word blue dog to his party affiliation.

WOTRING: That means someone who thinks realistically and pragmatically about spending. I think the blue dog Democrats see their constituents more realistically than the real strong liberals.

KING: To visit a place like this is to see the blue dog dilemma up close.

DON GRIESEL, ST MARIES, IDAHO: You know, years ago I voted for Reagan, even though I thought he was too liberal. KING: Don Griesel applauds Minnick and fellow blue dogs for complaining the president's health care ideas cost to much and give government to much power, but he won't reward the Democrat with his vote because Griesel wants the House back in Republican hands.

GRIESEL: If he doesn't change his party, there's no way I can vote Democrat because like, right now, they have control of the House and all and that's what's killing America.

KING: Across the table, psychologist and proud liberal Patricia Bauer has reservations of a different sort.

DR PATRICIA BAUER, ST. MARIES, IDAHO: I'm concerned about him being too conservative. I am happy that he's watching the numbers because I think we need to do that. But I'm concerned that fiscally responsible becomes a ney vote for health care.

KING: University of Idaho Political Science Professor Bryan McQuide says it is an near impossible balancing act, blue dog label or not.

ASST. PROF BRYAN MCQUIDE, UNIVERSITY OF IDAHO: The district is very Republican. Much of the district is solid red in terms of the blue and red American. Obama is going to be an issue, especially if there's more and more liberal proposals (ph) coming out.

KING: Gwen Wotring disagrees when her congressman fights plan for a government health care option.

WOTRING: I employ 25 people here, most of whom who don't have insurance.

KING (on camera): Because you can't afford to give it to them?

WOTRING: I can't afford to give it to them.

KING (voice-over): Disagrees, but Wotring understands the blue dog rationale.

WOTRING: Loggers and fellows that work in the timber industry that are pretty right wing. And the way he thinks is pretty typical of most moderate, be it Republicans or Democrats, in this area. He needs to do that because that's what his constituents want.


HOLMES: Well, blue dog Democrats criticize the president's health plan as too costly, which is why we've seen the White House and Democratic leadership meeting with the blue dog group.

The Senate may follow the House today and refuel the auto rebate plan known as Cash for Clunkers.

Christine, this thing is working and it's working well. It might be working to well. But if the Senate doesn't follow suit, is this plan about -- or is this whole program about to go away? CHRISTINE ROMANS, CNN CORRESPONDENT: That's -- if the Senate does not approve, T.J., another $2 billion, yes, the White House says this thing will be done by the middle of the week. And it has been much more popular than a lot of people thought.

You know, when they were first, you know, putting the stimulus together, they thought about $4 billion for Cash for Clunkers. It got whittled down to one and that $1 billion in Cash fro Clunkers was eaten up in just really a few days. The auto industry telling us, frankly, that they had, in the last week of July, more sales of cars because of this than for the whole rest of the month of July. So more in one week, four or five days, than for the whole other month -- the rest of the month of July. And this is why because some people are able to go and get a car, buy a new car, trade in their old one and get more for it than it's even worth. Listen.


UNIDENTIFIED MALE: I traded in a car. Got $4,500 for a car I paid $4,000 for four years ago. It had 220,000 miles on it. So I think I made a great deal.


ROMANS: So here's how we know the stimulus is working. Ford is saying it's had the first increase in car sales in two years. I told you about all of those sales in the end of July, people are thinking the beginning of August is going to have an awful lot of car sales too. They'd like to see this keep going.

The criticism, though, T.J., from some people is, you shouldn't have the government running the used car business. You'll hear about this, I'm sure, this afternoon in some of this debate from people around the Senate. Maybe people who don't want to vote for this.

And also some people say the point of stimulus is not to cram three or four months of car demand into just a few weeks, but it's to generate new demand from somewhere. Some people are saying this isn't necessarily new demand, it's just people who have been on the sidelines waiting, waiting, waiting and then now they're going to sell their car.

Whatever the reason, it is really boosting car sales.

HOLMES: You know, what a deal. He paid $4,000 for a car and got $4,500 for it.


HOLMES: That's a pretty good deal.

ROMANS: And 220,000. God love you for driving your car that far, right? But the point is to get those big gas guzzlers, those not very efficient cars, off the roads. Get them off the roads and then that goes a little ways to our energy dependance issues and also -- well, it's just better for the environment. That's at least the goal of this whole thing.

HOLMES: Well, it is working. So far so good. And maybe too well.

Christine, thank you.

We're talking about that guy's car there. His that he traded in and all of those others, what exactly happens to the ones that are left behind at the dealership? Well, we'll turn to's Poppy Harlow now. She has "The Breakdown" for us from New York.

That's a lot of cars apparently people are turning in. We've got to do something with them. Where are they going?

POPPY HARLOW, CNNMONEY.COM: Yes, I mean, Christine made a great point, this isn't just sort of an economic stimulus plan of sorts. It's also a plan to get the worst polluting cars off the road.

So here's what happens. The dealers that take your trade-in, they are forced to get rid of those gas guzzlers. They literally, T.J., have to destroy the engines. We visited a Nissan dealer right here in New York. They killed this 1996 Plymouth Voyager mini van. What they're doing there, they drain the oil, then they pour that mixture of water and sodium silicate, also known as liquid glass, if you've never heard of it, into the engine. You rev up the car. The solution hardens and in about seven minutes you can never drive that car again. So these clunkers will never be back on the road. And that's the goal.

And that Voyager you saw, it's actually the first one that that service manager at the dealership had ever killed. Take a listen to what he said.


ANTHONY CACCIOLA, PREMIUM NISSAN: As a service manager, you never want to see them junk their old cars, you'd rather see them fix them. But as the sales end of it goes, it's going to be a huge success and, you know, can't wait to do another 100 of them.


HARLOW: No, he can't wait because they get to trade them in and buy them new cars and that helps the dealership. Of course, an incredibly popular program. About $1 billion in funding. T.J. , as we all know now, about exhausted in just about a week of the program.

HOLMES: All right, you talk about that liquid glass there, I think you called it, they pour into the engine. That's the first thing they have to do, have to kill the engine, then what?

HARLOW: Then they take it to a scrap yard. And first, look, the doors, the hood, anything you can use is stripped out. But, of course, the engine can't be stripped out. Then it's crushed, as you see right there. But some auto recyclers, they don't like this because the engine, T.J., is the most valuable part for them. About 60 percent of their sales for these recycled auto parts are generally the engines. But they can still sell the hood and the doors, anything else they strip from these clunkers.

And I asked people on FaceBook, what do they think, are you trading in a clunker? What do you think of the program? And I want to bring you a comment here from Howard. He wrote in. I thought it was good. He said, "listen, this is a win-win situation." He said they should do it again in five years when the electric cars become more prevalent.

So we'll see. It's working for now, that's for sure, T.J.

HOLMES: It's working now. All right, Poppy Harlow for us today. Thank you so much. And the Cash for Clunkers, that is the top story on You can check out for the latest financial news as well as analysis.

We will turn to the fight in Afghanistan now. Is the country secure enough for elections? We'll go live to our correspondents on the ground to find out.


HOLMES: And hello, again, everybody. I'm standing over here in our -- this is our Iran desk. This has been a busy place lately. Certainly the past month or so since the protested elections -- presidential elections there in Iran. You know it's been up and down. I want to bring in Reza Sayah here.

It's been up and down. At first it was heavy with a lot of protests. Died down a little bit. But every once in a while they sparks back up. And it was sparked -- something sparked them this time around.

REZA SAYAH, CNN CORRESPONDENT: Right now it's back up. There was a lot of buzz today that demonstrators, opposition supporters would go back into the street and hold demonstrations to coincide with the ceremony today, where the supreme leader endorsed President Mahmoud Ahmadinejad. And we're talking to sources on the ground, protesters, thousands of them in this area. This is Vanex (ph) Square. A major quare in downtown Tehran. And according to sources, you have thousands of people marching up and down Valeax (ph) chanting, "God is great," "death to the dictator."

Also on the scene there, hundreds of security forces, members of the besieged riding in pairs on motorcycles. Sources telling us they are charging these protesters when they chant on the sidewalk, the usual game of cat and mouse when they chant. They charge, they disburse and they start back up again on another street corner. No report of clashes as of yet. But sources telling us at least three arrests.

Of course earlier today you had that ceremony with the supreme leader endorsing Ahmadinejad. A no-show there was opposition candidate, the man who was defeated on June 12th. Where does he turn up tonight according Fars news agency, a state-run news agency? He is there according to Fars news, among what they call an illegal protest. A huge development there. An opposition candidate, former government officials missing from the ceremony today in protest and he shows up in one of demonstrations today. It's about 9:15 right now, still going on. This was supposed to be the president's day, but the opposition movement saying this is our day as well and we're not going away. T.J.

HOLMES: Are we still having some of those same challenges and they still have those restrictions on the media there? Are we still -- we can only do so much and get so much out there (ph)?

SAYAH: Yes, we depend on our sources and pictures coming in. I think we may have one. This is a picture that was just posted on the Internet. We cannot independently verify where this is, but according to the picture posted, it is in Valleyasa (ph). And there you see some opposition supporters wearing that familiar green, the official color of the opposition movement. Again, we're depending on these individuals, these citizen journalists to send us pictures and give us information with our sources there. They're risking a lot to do that. But without them and without our sources on the ground, we certainly couldn't report the facts to you.

HOLMES: All right, Reza Sayah, the latest developments happening in Iran. And there are some developments today. Thank you so much.

SAYAH: You're welcome.

HOLMES: We'll let them get back to work over here. But stay with us here, we've got a little video to show you. Something a little interesting. Exactly what not to do when you want to implode a building. Stay with us.


HOLMES: Michael Jackson's mother will be the one to raise his three children. That is the word we are getting from the courthouse, in fact, that the judge has now said she will be the permanent guardian for Michael Jackson's three children. We're talking about Prince Michael, Paris and also Prince Michael II, also known as Blanket. The children are 12, 11 and seven years old. In Michael Jackson's 2002 will that he wrote, he actually said that he wanted his mother to raise the children. But now a lawyer -- excuse me, a judge has now made it official that she will be the one to raise those three children.

That is just one of a number of issues being handled out in court today. A hearing going on right now with a lot of lawyers representing so many different interests and entities who are essentially bickering back and forth about who is going to control Michael Jackson's estate. But at least one thing has been settled and the judge is saying that Katherine Jackson, Michael Jackson's mother, will, in fact, be the permanent guardian of his three children. We'll keep an eye on that hearing going on right now. We'll turn to Afghanistan now and the fight there. NATO's new leader says the military alliance will stay in Afghanistan supporting the country's people for "as long as it takes." NATO's international security assistance force has suffered record casualties in recent months in the fight against the Taliban. Our Ivan Watson joining us now from Kabul.

Ivan, hello to you. We have seen a lot of reports of violence there lately and a lot of casualties. Tell us, Ivan, how is it now, the latest on the violence there?

IVAN WATSON, CNN CORRESPONDENT: It was a really bloody weekend here. Nine U.S. and NATO troops killed over the course of the weekend in a number of different incidents around the country on Saturday and Sunday. Six of them American troops and then two Canadian soldier and a French soldier. And today, a deadly incident in the western Afghan city of Harat (ph), T.J. That was a roadside bomb evidently targeting an Afghan police chief. It killed two of his body guards, wounded him and killed another 10 Afghan civilians who were just in the area. Wounded dozens there.

And that just brings us to the point that Afghan civilians are suffering the brunt of this conflict. According to the United Nations, more than a thousand Afghan civilians killed over the first six months of this year. Chief cause of death, T.J., number one, is insurgent -- Taliban insurgent roadside bombs and suicide bombs. Number two, western, NATO and U.S. air strikes.

Now, there is an election being prepared for right now. A presidential election. It's scheduled to take place on August 20th. We caught up with one of the candidates, Abdullah Abdullah. He's one of the rivals to the president of Afghanistan, who's running for re- election. And he accused Hamid Karzai, the incumbent president, of failing to keep the security in the country, forcing the U.S. to double the number of troops in Afghanistan since last year. Let's take a listen to what he said.


DR. ABDULLAH ABDULLAH, AFGHANISTAN PRESIDENTIAL CANDIDATE: Unfortunately, the government of Afghanistan has failed to provide security for its citizens and also to utilize the opportunity which was the presence of the foreign troops, international troops, as well as billions of deconstruction assistance in Afghanistan, to stabilize Afghanistan to the extent that eight years down the road we would have been able to say, less troops rather than more.


WATSON: Now, T.J., Hamid Karzai, he has also been out stumping. He's been out traveling and trying to attract supporters and voters for August 20th, for the presidential election. And he's been defending his record. He says that since the Taliban was overthrown eight years ago, millions of Afghan refugees have returned to this country and he has pledged to do more with the help of the international community to bring peace to this war-torn country. T.J.

HOLMES: Ivan Watson keeping an eye on things for us there in Afghanistan. Thank you so much.

Well, no matter where you are in this country, you probably think you've got a pretty tough morning commute. Well, Baghdad's rush hour ain't no joke either. We're going to meet the man many Iraqis trust to get them where they're going.


HOLMES: All right, Chad, you've seen implosions before. We've seen a ton of these things, right?

CHAD MYERS, AMS METEOROLOGIST: Successful ones, yes.

HOLMES: You know, I've never seen one go badly.

MYERS: I've only seen one that was on old smoke stack that was supposed to go down that actually fell over.

HOLMES: We -- let's go ahead and show what was supposed to happen, implode an old flour factory in Turkey. This is what happened.

I have never, Chad, seen a building fall over like this before. And Rob made a point earlier as well, it looks like somebody was out there with an axe, like you were chopping down a tree and the side of it was gone.

MYERS: It just looks to me like they blew up the strongest building in the country. I mean, I'm only kidding. I'm not being serious. But this thing was so well built it literally didn't even collapse when it fell on its side.

HOLMES: What they're saying here is that explosives only on one side of the building detonated. So that's the hole we see here that left the building standing for a short time and then that was eventually going to happen. And also I'm sure the guy who built that building is laughing somewhere. Like, you can't take my building down, baby.

MYERS: I told you I built that strong. It was supposed to go straight down and not, obviously, roll over.

HOLMES: But it didn't hit anything. It got close to another building but it didn't . . .

MYERS: No casualties.

HOLMES: No casualties. That's a good thing there. Just giving us something to look at and talk about.

Chad, thank you for playing, as always. And we're going to turn now to Iraq, where Iraqi forces are now taking responsibility for security in their country and one general is determined to make the Iraqi capital safe for commuters. Phil Black reports the sultan of the side streets is stopping traffic in Baghdad.


PHIL BLACK, CNN CORRESPONDENT (voice-over): Rarely do traffic police officers anywhere inspire this much affection or so much respect. "It's a great honor to meet you," this man says. General Ahmad Alkat (ph) has been a traffic officer in Iraq for 23 years. And the last 18 months, he's also become a television celebrity. General Ahmad is Baghdad's traffic guru. With old roads and soaring car ownership, the traffic in Baghdad is pretty much always terrible.

General Ahmad tells the audience of "Good Morning Iraq" just how terrible it is. He reports live from the street and the city's traffic monitoring center using its 85 cameras to make sense of the gridlock.

He tells me he loves his job, doesn't care about being a celebrity. And he's just happy that people are watching and learning. General Ahmad, doesn't only give traffic reports. He's become a moral compass for the city's drivers, publicly criticizing their mistakes. Anybody's. Even the police or other officials. "Look at this car driving on the wrong side," he says here. "What gives him the right to break the law just because he's driving a government car?"

BLACK (on camera): Successfully navigating Baghdad's road network isn't just about convenience or getting somewhere on time. In this city, people are killed while sitting in traffic. General Ahmad Alkat knows this personally.

BLACK (voice-over): Last year, his 18-year-old son was killed by a roadside bomb. He says his job has now become a duty.

"Some people thought about revenge when they lost loved ones," he says, "but it won't bring my son back. This is why I have to keep doing this until I die."

And his viewers is believed he is saving lives.

"When I drive, I remember General Ahmad's advice and put on my seat belt," this man says.

An unlikely but effective hero, in a city that needs many of them.

Phil Black, CNN, Baghdad.


HOLMES: And the CNN NEWSROOM continues right now with Kyra Phillips.

Kyra, it's all yours.