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The Alzheimer’s-Diabetes Link• Israel on the Brink

JULY 24, 2006

EYEWITNESSTO HISTORY

PERSONAL LETTERS AND TRANSCRIPTS FROM THE NATIONAL ARCHIVES

George Washington on British biowarfareLady Bird Johnson on the JFK assassinationA fugitive slave’s love letter to his wifeGeorge H. W. Bush on the Nixon resignation

...and more

FIRSTHAND ACCOUNTS OF EVENTS THAT SHAPED AMERICA

The Alzheimer’s-Diabetes Link• Israel on the Brink

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CLOCKWISE FROM TOP: ROBERT KNUDSON—NATIONAL ARCHIVES; IBRAHIM MOHAMMED—AFP / GETTY IMAGES; ED WRAY—AP2 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

Letters 8One Week 12Explosions in the Middle East powder kegcreate a strategic nightmare

Washington Whispers 15Greta Van Susteren’s advice; Carter blamesCronkite; Gingrich’s literary pursuits

White House Week 18Sunlight on spending; the Mideastcrisis=GOP pain; ethnic cleansing in Iraq

Q&A: Chris Anderson 19“Long tail” is the next big business concept

Cross Country 20Big Dig woes; fires out west; LAPD trouble

The World 22Baghdad violence; terrorism hits Bombaytrains; jail break for Pakistani women

NATION & WORLD

Dean’s List 24The Dems’ ambitious plan for all 50 states

Fighting the Terrorism Hydra 28New threats crop up in Asia, Africa

Unconventional Prisoners 30Seeking a deal on terrorism detainees

How to Fight Insurgents 31The Army rewrites its manual

The Buffalo Bill 32An Interior official quits over a curious gift

Immigration Goes Local 33With Washington stalled, the states step up

Coaching Iraq’s Police Force 34Marine trainers find it a tough task

Letter From St. Petersburg 38Bush talks softly and turns on the charm

Gloria Borger: Senator Lieberman’sControversial Path May Hurt Dems 39

SPECIAL REPORT

Eyewitness to History 40Archives exhibit revives crucial moments inhistory with intensity and intimacy

J u l y 2 4 , 2 0 0 6 V o l u m e 1 4 1 , N u m b e r 3

Copyright © 2006, by U.S.News & World Report Inc. All rights reserved. U.S.News & World Report (ISSN 0041-5537) is published weekly with combined issues on January 30, July 3, August 14, and December 25 by U.S.News & World Report Inc., 450 W. 33rd Street,11th Floor, New York NY 10001. Periodicals postage paid at New York, NY, and at additional mailing offices. POSTMASTERS: Send address changes to U.S.News & World Report, PO Box 421197, Palm Coast FL 32142-1197. U.S. News may allow others to use its mailinglist. If you do not want your name included, please contact our Subscription Department by mail or phone. U.S.NEWS & WORLD REPORT® U.S. NEWS® WORLD REPORT® NEWS YOU CAN USE® WASHINGTON WHISPERS® Canada Post Publications Mail AgreementNo. 40051845, Canadian Goods and Services Tax No. R124481334. Return undeliverable Canadian addresses to: DPGM, 4960-2 Walker Rd., Windsor ON N9A6J3. U.S.News & World Report uses automatable polywrap.

Printed in the U.S.A. EDITORIAL OFFICES (202) 955-2000. 1050 Thomas Jefferson Street NW, Washington DC 20007-3837. ADVERTISING AND CORPORATE OFFICES (212) 716-6800. 450 W. 33rd Street, 11th Floor, New York NY 10001. SUBSCRIPTION DEPARTMENT (386) 447-6326. PO Box 420235, Palm Coast FL 32142-0235. www.usnews.com/accountstatus. CLASSROOM PROGRAM (215) 321-1121. 385 Oxford Valley Road, Suite 410, Yardley PA 19067. www.usnewsclassroom.com. REPRINTS ContactCatherine Wiencek, (800) 771-6445 Ext. 118, E-mail catherinew@fostereprints.com O S H

28 34

Cover: Photographs by (handwritten letter)

National Archives; (Kennedy) Bettmann/

Corbis; (troops) Art Archive/Laurie Platt

Winfrey; (Washington portrait) Dagli Orti—

Musee du Chateau de Versailles/Art Archive

COVER STORY

History From the History Makers 40History’s holy grail is original documents—letters, diaries, transcripts. A trove ofthese gems, from famous and ordinary Americans—including Lady Bird Johnson’sdiaries, above—is in a new exhibit at the National Archives, which we preview.

Contents continued on Page 6

Rozerem™ is a trademark of Takeda Pharmaceutical Company Limited and used under license by Takeda Pharmaceuticals North America, Inc.

Luvox® (fluvoxamine) is a registered trademark of Solvay Pharmaceuticals, Inc.

©2006 Takeda Pharmaceuticals North America, Inc. RAM-00182

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ROZEREM™(ramelteon) TabletsINDICATIONS AND USAGEROZEREM is indicated for the treatment of insomnia characterized by diffi-culty with sleep onset.CONTRAINDICATIONSROZEREM is contraindicated in patients with a hypersensitivity to ramelteonor any components of the ROZEREM formulation.WARNINGSSince sleep disturbances may be the presenting manifestation of a physi-cal and/or psychiatric disorder, symptomatic treatment of insomniashould be initiated only after a careful evaluation of the patient. The failureof insomnia to remit after a reasonable period of treatment may indicatethe presence of a primary psychiatric and/or medical illness that shouldbe evaluated. Worsening of insomnia, or the emergence of new cognitiveor behavioral abnormalities, may be the result of an unrecognized under-lying psychiatric or physical disorder and requires further evaluation ofthe patient. As with other hypnotics, exacerbation of insomnia and emer-gence of cognitive and behavioral abnormalities were seen with ROZEREMduring the clinical development program.ROZEREM should not be used by patients with severe hepatic impairment.ROZEREM should not be used in combination with fluvoxamine (see PRE-CAUTIONS: Drug Interactions).A variety of cognitive and behavior changes have been reported to occur inassociation with the use of hypnotics. In primarily depressed patients,worsening of depression, including suicidal ideation, has been reported inassociation with the use of hypnotics.Patients should avoid engaging in hazardous activities that require con-centration (such as operating a motor vehicle or heavy machinery) aftertaking ROZEREM.After taking ROZEREM, patients should confine their activities to thosenecessary to prepare for bed.PRECAUTIONSGeneralROZEREM has not been studied in subjects with severe sleep apnea orsevere COPD and is not recommended for use in those populations. Patients should be advised to exercise caution if they consume alcohol incombination with ROZEREM.Use in Adolescents and ChildrenROZEREM has been associated with an effect on reproductive hormones inadults, e.g. decreased testosterone levels and increased prolactin levels. It isnot known what effect chronic or even chronic intermittent use of ROZEREMmay have on the reproductive axis in developing humans (see Pediatric Use).Information for PatientsPatients should be advised to take ROZEREM within 30 minutes prior to goingto bed and should confine their activities to those necessary to prepare for bed.Patients should be advised to avoid engaging in hazardous activities (such asoperating a motor vehicle or heavy machinery) after taking ROZEREM. Patients should be advised that they should not take ROZEREM with orimmediately after a high fat meal.Patients should be advised to consult their health care provider if theyexperience worsening of insomnia or any new behavioral signs or symp-toms of concern.Patients should consult their health care provider if they experience one ofthe following: cessation of menses or galactorrhea in females, decreasedlibido, or problems with fertility.Laboratory TestsNo standard monitoring is required. For patients presenting with unexplained amenorrhea, galactorrhea,decreased libido, or problems with fertility, assessment of prolactin levelsand testosterone levels should be considered as appropriate. Drug InteractionsROZEREM has a highly variable inter-subject pharmacokinetic profile(approximately 100% coefficient of variation in Cmax and AUC). As notedabove, CYP1A2 is the major isozyme involved in the metabolism ofROZEREM; the CYP2C subfamily and CYP3A4 isozymes are also involved toa minor degree.Effects of Other Drugs on ROZEREM MetabolismFluvoxamine (strong CYP1A2 inhibitor): When fluvoxamine 100 mg twicedaily was administered for 3 days prior to single-dose co-administration ofROZEREM 16 mg and fluvoxamine, the AUC0-inf for ramelteon increasedapproximately 190-fold, and the Cmax increased approximately 70-fold, com-pared to ROZEREM administered alone. ROZEREM should not be used incombination with fluvoxamine (see WARNINGS). Other less potent CYP1A2inhibitors have not been adequately studied. ROZEREM should be adminis-tered with caution to patients taking less strong CYP1A2 inhibitors.Rifampin (strong CYP enzyme inducer): Administration of rifampin 600 mgonce daily for 11 days resulted in a mean decrease of approximately 80%(40% to 90%) in total exposure to ramelteon and metabolite M-II, (bothAUC0-inf and Cmax) after a single 32 mg dose of ROZEREM. Efficacy may bereduced when ROZEREM is used in combination with strong CYP enzymeinducers such as rifampin. Ketoconazole (strong CYP3A4 inhibitor): The AUC0-inf and Cmax oframelteon increased by approximately 84% and 36%, respectively, when asingle 16 mg dose of ROZEREM was administered on the fourth day of keto-conazole 200 mg twice daily administration, compared to administration ofROZEREM alone. Similar increases were seen in M-II pharmacokinetic vari-ables. ROZEREM should be administered with caution in subjects takingstrong CYP3A4 inhibitors such as ketoconazole.Fluconazole (strong CYP2C9 inhibitor): The total and peak systemic exposure(AUC0-inf and Cmax) of ramelteon after a single 16 mg dose of ROZEREM wasincreased by approximately 150% when administered with fluconazole. Similarincreases were also seen in M-II exposure. ROZEREM should be administeredwith caution in subjects taking strong CYP2C9 inhibitors such as fluconazole.Interaction studies of concomitant administration of ROZEREM with fluoxe-tine (CYP2D6 inhibitor), omeprazole (CYP1A2 inducer/CYP2C19 inhibitor),theophylline (CYP1A2 substrate), and dextromethorphan (CYP2D6 sub-strate) did not produce clinically meaningful changes in either peak or totalexposures to ramelteon or the M-II metabolite.Effects of ROZEREM on Metabolism of Other DrugsConcomitant administration of ROZEREM with omeprazole (CYP2C19 sub-strate), dextromethorphan (CYP2D6 substrate), midazolam (CYP3A4substrate), theophylline (CYP1A2 substrate), digoxin (p-glycoprotein sub-strate), and warfarin (CYP2C9 [S]/CYP1A2 [R] substrate) did not produceclinically meaningful changes in peak and total exposures to these drugs.Effect of Alcohol on RozeremAlcohol: With single-dose, daytime co-administration of ROZEREM 32 mgand alcohol (0.6 g/kg), there were no clinically meaningful or statisticallysignificant effects on peak or total exposure to ROZEREM. However, anadditive effect was seen on some measures of psychomotor performance(i.e., the Digit Symbol Substitution Test, the Psychomotor Vigilance Task

Test, and a Visual Analog Scale of sedation) at some post-dose timepoints. No additive effect was seen on the Delayed Word Recognition Test.Because alcohol by itself impairs performance, and the intended effect ofROZEREM is to promote sleep, patients should be cautioned not to con-sume alcohol when using ROZEREM.Drug/Laboratory Test InteractionsROZEREM is not known to interfere with commonly used clinical laboratorytests. In addition, in vitro data indicate that ramelteon does not cause false-positive results for benzodiazepines, opiates, barbiturates, cocaine,cannabinoids, or amphetamines in two standard urine drug screening methods in vitro.Carcinogenesis, Mutagenesis, and Impairment of FertilityCarcinogenesisIn a two-year carcinogenicity study, B6C3F1 mice were administeredramelteon at doses of 0, 30, 100, 300, or 1000 mg/kg/day by oral gavage.Male mice exhibited a dose-related increase in the incidence of hepatictumors at dose levels ≥ 100 mg/kg/day including hepatic adenoma,hepatic carcinoma, and hepatoblastoma. Female mice developed a dose-related increase in the incidence of hepatic adenomas at dose levels ≥ 300 mg/kg/day and hepatic carcinoma at the 1000 mg/kg/day dose level.The no-effect level for hepatic tumors in male mice was 30 mg/kg/day(103-times and 3-times the therapeutic exposure to ramelteon and theactive metabolite M-II, respectively, at the maximum recommended humandose [MRHD] based on an area-under-the-curve [AUC] comparison). Theno-effect level for hepatic tumors in female mice was 100 mg/kg/day (827-times and 12-times the therapeutic exposure to ramelteon and M-II,respectively, at the MRHD based on AUC).In a two-year carcinogenicity study conducted in the Sprague-Dawley rat,male and female rats were administered ramelteon at doses of 0, 15, 60, 250or 1000 mg/kg/day by oral gavage. Male rats exhibited a dose-relatedincrease in the incidence of hepatic adenoma and benign Leydig cell tumorsof the testis at dose levels ≥ 250 mg/kg/day and hepatic carcinoma at the1000 mg/kg/day dose level. Female rats exhibited a dose-related increase inthe incidence of hepatic adenoma at dose levels ≥ 60 mg/kg/day and hepaticcarcinoma at the 1000 mg/kg/day dose level. The no-effect level for hepatictumors and benign Leydig cell tumors in male rats was 60 mg/kg/day(1,429-times and 12-times the therapeutic exposure to ramelteon and M-II,respectively, at the MRHD based on AUC). The no-effect level for hepatic tumorsin female rats was 15 mg/kg/day (472-times and 16-times the therapeutic expo-sure to ramelteon and M-II, respectively, at the MRHD based on AUC). The development of hepatic tumors in rodents following chronic treatmentwith non-genotoxic compounds may be secondary to microsomal enzymeinduction, a mechanism for tumor generation not thought to occur inhumans. Leydig cell tumor development following treatment with non-geno-toxic compounds in rodents has been linked to reductions in circulatingtestosterone levels with compensatory increases in luteinizing hormonerelease, which is a known proliferative stimulus to Leydig cells in the rattestis. Rat Leydig cells are more sensitive to the stimulatory effects of luteiniz-ing hormone than human Leydig cells. In mechanistic studies conducted inthe rat, daily ramelteon administration at 250 and 1000 mg/kg/day for 4weeks was associated with a reduction in plasma testosterone levels. In thesame study, luteinizing hormone levels were elevated over a 24 hour periodafter the last ramelteon treatment; however, the durability of this luteinizinghormone finding and its support for the proposed mechanistic explanationwas not clearly established.Although the rodent tumors observed following ramelteon treatmentoccurred at plasma levels of ramelteon and M-II in excess of mean clinicalplasma concentrations at the MRHD, the relevance of both rodent hepatictumors and benign rat Leydig cell tumors to humans is not known.MutagenesisRamelteon was not genotoxic in the following: in vitro bacterial reversemutation (Ames) assay; in vitro mammalian cell gene mutation assay usingthe mouse lymphoma TK+/- cell line; in vivo/in vitro unscheduled DNA syn-thesis assay in rat hepatocytes; and in in vivo micronucleus assaysconducted in mouse and rat. Ramelteon was positive in the chromosomalaberration assay in Chinese hamster lung cells in the presence of S9 meta-bolic activation.Separate studies indicated that the concentration of the M-II metaboliteformed by the rat liver S9 fraction used in the in vitro genetic toxicologystudies described above, exceeded the concentration of ramelteon; therefore,the genotoxic potential of the M-II metabolite was also assessed in thesestudies.Impairment of FertilityRamelteon was administered to male and female Sprague-Dawley rats in an ini-tial fertility and early embryonic development study at dose levels of 6, 60, or600 mg/kg/day. No effects on male or female mating or fertility were observedwith a ramelteon dose up to 600 mg/kg/day (786-times higher than the MRHDon a mg/m2 basis). Irregular estrus cycles, reduction in the number of implants,and reduction in the number of live embryos were noted with dosing females at≥ 60 mg/kg/day (79-times higher than the MRHD on a mg/m2 basis). A reduc-tion in the number of corpora lutea occurred at the 600 mg/kg/day dose level.Administration of ramelteon up to 600 mg/kg/day to male rats for 7 weeks hadno effect on sperm quality and when the treated male rats were mated withuntreated female rats there was no effect on implants or embryos. In a repeat ofthis study using oral administration of ramelteon at 20, 60 or 200 mg/kg/day forthe same study duration, females demonstrated irregular estrus cycles withdoses ≥ 60 mg/kg/day, but no effects were seen on implantation or embryo via-bility. The no-effect dose for fertility endpoints was 20 mg/kg/day in females(26-times the MRHD on a mg/m2 basis) and 600 mg/kg/day in males (786-timeshigher than the MRHD on a mg/m2 basis) when considering all studies.Pregnancy: Pregnancy Category CRamelteon has been shown to be a developmental teratogen in the rat whengiven in doses 197 times higher than the maximum recommended humandose [MRHD] on a mg/m2 basis. There are no adequate and well-controlledstudies in pregnant women. Ramelteon should be used during pregnancyonly if the potential benefit justifies the potential risk to the fetus. The effects of ramelteon on embryo-fetal development were assessed in boththe rat and rabbit. Pregnant rats were administered ramelteon by oral gavageat doses of 0,10, 40, 150, or 600 mg/kg/day during gestation days 6 -17,which is the period of organogenesis in this species. Evidence of maternaltoxicity and fetal teratogenicity was observed at doses greater than or equal to150 mg/kg/day. Maternal toxicity was chiefly characterized by decreased bodyweight and, at 600 mg/kg/day, ataxia and decreased spontaneous movement.At maternally toxic doses (150 mg/kg/day or greater), the fetuses demon-strated visceral malformations consisting of diaphragmatic hernia and minoranatomical variations of the skeleton (irregularly shaped scapula). At600 mg/kg/day, reductions in fetal body weights and malformations includingcysts on the external genitalia were additionally observed. The no-effect levelfor teratogenicity in this study was 40 mg/kg/day (1,892-times and 45-timeshigher than the therapeutic exposure to ramelteon and the active metaboliteM-II, respectively, at the MRHD based on an area-under-the-curve [AUC]comparison). Pregnant rabbits were administered ramelteon by oral gavage atdoses of 0, 12, 60, or 300 mg/kg/day during gestation days 6-18, which is theperiod of organogenesis in this species. Although maternal toxicity wasapparent with a ramelteon dose of 300 mg/kg/day, no evidence of fetal effectsor teratogenicity was associated with any dose level. The no-effect level forteratogenicity was, therefore, 300 mg/kg/day (11,862-times and 99-timeshigher than the therapeutic exposure to ramelteon and M-II, respectively, atthe MRHD based on AUC).

The effects of ramelteon on pre- and post-natal development in the rat werestudied by administration of ramelteon to the pregnant rat by oral gavage atdoses of 0, 30,100, or 300mg/kg/day from day 6 of gestation through parturi-tion to postnatal (lactation) day 21, at which time offspring were weaned.Maternal toxicity was noted at doses of 100 mg/kg/day or greater and con-sisted of reduced body weight gain and increased adrenal gland weight.Reduced body weight during the post-weaning period was also noticed in theoffspring of the groups given 100 mg/kg/day and higher. Offspring in the 300 mg/kg/day group demonstrated physical and developmental delaysincluding delayed eruption of the lower incisors, a delayed acquisition of therighting reflex, and an alteration of emotional response. These delays are oftenobserved in the presence of reduced offspring body weight but may still beindicative of developmental delay. An apparent decrease in the viability of off-spring in the 300 mg/kg/day group was likely due to altered maternal behaviorand function observed at this dose level. Offspring of the 300 mg/kg/day groupalso showed evidence of diaphragmatic hernia, a finding observed in theembryo-fetal development study previously described. There were no effectson the reproductive capacity of offspring and the resulting progeny were notdifferent from those of vehicle-treated offspring. The no-effect level for pre-and postnatal development in this study was 30 mg/kg/day (39-times higherthan the MRHD on a mg/m2 basis).Labor and DeliveryThe potential effects of ROZEREM on the duration of labor and/or delivery,for either the mother or the fetus, have not been studied. ROZEREM has noestablished use in labor and delivery.Nursing MothersRamelteon is secreted into the milk of lactating rats. It is not knownwhether this drug is excreted in human milk. No clinical studies in nursingmothers have been performed. The use of ROZEREM in nursing mothers isnot recommended. Pediatric UseSafety and effectiveness of ROZEREM in pediatric patients have not beenestablished. Further study is needed prior to determining that this productmay be used safely in pre-pubescent and pubescent patients. Geriatric UseA total of 654 subjects in double-blind, placebo-controlled, efficacy trials whoreceived ROZEREM were at least 65 years of age; of these, 199 were 75years of age or older. No overall differences in safety or efficacy wereobserved between elderly and younger adult subjects.ADVERSE REACTIONSOverviewThe data described in this section reflect exposure to ROZEREM in 4251subjects, including 346 exposed for 6 months or longer, and 473 subjectsfor one year. Adverse Reactions Resulting in Discontinuation of TreatmentFive percent of the 3594 individual subjects exposed to ROZEREM in clinicalstudies discontinued treatment owing to an adverse event, compared with2% of the 1370 subjects receiving placebo. The most frequent adverseevents leading to discontinuation in subjects receiving ROZEREM were som-nolence (0.8%), dizziness (0.5%), nausea (0.3%), fatigue (0.3%), headache(0.3%), and insomnia (0.3%).ROZEREM Most Commonly Observed Adverse Events in Phase 1-3 trialsThe incidence of adverse events during the Phase 1 through 3 trials (% placebo, n=1370; % ramelteon [8 mg], n=1250) were: headache NOS(7%, 7%), somnolence (3%, 5%), fatigue (2%, 4%), dizziness (3%, 5%),nausea (2%, 3%), insomnia exacerbated (2%, 3%), upper respiratory tractinfection NOS (2%, 3%), diarrhea NOS (2%, 2%), myalgia (1%, 2%),depression (1%, 2%), dysgeusia (1%, 2%), arthralgia (1%, 2%), influenza(0, 1%), blood cortisol decreased (0, 1%).Because clinical trials are conducted under widely varying conditions,adverse reaction rates observed in the clinical trials of a drug cannot bedirectly compared to rates in clinical trials of other drugs, and may not reflectthe rates observed in practice. The adverse reaction information from clinicaltrials does, however, provide a basis for identifying the adverse events thatappear to be related to drug use and for approximating rates.DRUG ABUSE AND DEPENDENCEROZEREM is not a controlled substance.Human Data: See the CLINICAL TRIALS section, Studies Pertinent toSafety Concerns for Sleep-Promoting Agents, in the Complete PrescribingInformation.Animal Data. Ramelteon did not produce any signals from animal behavioralstudies indicating that the drug produces rewarding effects. Monkeys did notself-administer ramelteon and the drug did not induce a conditioned placepreference in rats. There was no generalization between ramelteon and mida-zolam. Ramelteon did not affect rotorod performance, an indicator ofdisruption of motor function, and it did not potentiate the ability of diazepamto interfere with rotorod performance.Discontinuation of ramelteon in animals or in humans after chronic admin-istration did not produce withdrawal signs. Ramelteon does not appear toproduce physical dependence.OVERDOSAGESigns and SymptomsNo cases of ROZEREM overdose have been reported during clinical development.ROZEREM was administered in single doses up to 160 mg in an abuse liabil-ity trial. No safety or tolerability concerns were seen. Recommended TreatmentGeneral symptomatic and supportive measures should be used, along withimmediate gastric lavage where appropriate. Intravenous fluids should beadministered as needed. As in all cases of drug overdose, respiration, pulse,blood pressure, and other appropriate vital signs should be monitored, andgeneral supportive measures employed.Hemodialysis does not effectively reduce exposure to ROZEREM. Therefore,the use of dialysis in the treatment of overdosage is not appropriate.Poison Control CenterAs with the management of all overdosage, the possibility of multiple drugingestion should be considered. The physician may contact a poison controlcenter for current information on the management of overdosage.Rx onlyManufactured by:Takeda Pharmaceutical Company Limited 540-8645 Osaka, JAPAN Manufactured in:Takeda Ireland Ltd.Kilruddery, County Wicklow, Republic of IrelandMarketed by:Takeda Pharmaceuticals America, Inc.475 Half Day RoadLincolnshire, IL 60069ROZEREM™ is a trademark of Takeda Pharmaceutical Company Limited andused under license by Takeda Pharmaceuticals America, Inc.

©2005, Takeda Pharmaceuticals America, Inc.

05-1118 Revised: Nov., 2005L-RAM-00007 Printed in U.S.A.

NEW YORK, Tuesday, 8:55 AM –Today the National Collector’s Mintannounces a special limited releaseof 3,874 Morgan Silver Dollars 85-128 years old at $19.90 each. Severalprominent national dealers chargefrom $10 to $30 MORE for acomparable Morgan Silver Dollar.These Morgans are among the lastsurviving originals still in existence.The U.S. Government melted down270 million Morgan Silver Dollars formilitary needs during World War I(270,232,722 to be exact). Thisincreased the value of the survivingsilver dollars dramatically. In fact, therarest ones have sold for as much as$529,000.00. Due to volatile fluctu-ations in the precious metals market,price can be guaranteed @ $19.90 eachfor one week only!

MARKET CONDITIONSA worldwide silver shortage of 21.2

million ounces was reported last year!Private and government stockpiles aredwindling in response to this hugeshortage. The U.S. Government’s silverreserve stockpile, a total of over 2BILLION OUNCES, has been com-pletely depleted!

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You may order 1 Morgan SilverDollar for $19.90 plus $4 shipping,handling and insurance, 3 for $66.70ppd., 5 for $109 ppd., 10 for $212 ppd.,20 for $417 ppd., 50 for $1025 ppd.,100 for $2025 ppd. Don’t wait.ACT NOW!

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National Collector’s Mint, Inc. is anindependent, private corporation notaffiliated with, endorsed, or licensed bythe U.S. government or the U.S. Mint. ©2006 NCM AB-A64

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TOP: GREG GIRARD FOR USN≀ MIDDLE ROW, FROM LEFT: ILLUSTRATION BY OMAR LEE FOR USN≀ G. DOUGLAS BYERS—POLARIS;BOTTOM LEFT: JEFFREY MACMILLAN FOR USN≀ BOTTOM RIGHT: ILLUSTRATION BY DAVID BAMUNDO FOR USN&WR

6 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

V o l u m e 1 4 1 , N u m b e r 3J u l y 2 4 , 2 0 0 6

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Contents continued from Page 2

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America’s BestHealth Plans.Search our ex-clusive direc-

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Hospital Honor Roll. This year,only 14 centers earned specialdistinction in our “America’sBest Hospitals” rankings.Check out our Honor Roll. www.usnews.com/besthospitals

Washington Whis-pers Poll. Vote onthe latest debatefrom Capitol Hill.www.usnews.com/wwpoll

MONEY & BUSINESS

Chipping Away at Prices 48How low can they go? Slugfest betweenIntel and AMD means buyers can count onsome great bargains on computers

Muttering the ‘R’ Word 49A whisper of recession on Wall Street

Xinhua Finance Set to Soar 50How a single mom from Utah grew a com-pany, becoming a key player in China

Sign Here, Honey 53Marriage is a business. Prenuptial agree-ments are not just for the upper crust

Checklist for Tax Traps 54Tiptoeing through the capital-gains thicket

HEALTH & MEDICINE

Diabetes-Alzheimer’s Link 56Studies show an alarming tie between thediseases but also point to new treatments

Health Watch 58A battery of baby tests; warnings on Inter-net drug purchases; advice for women

Mortimer B. Zuckerman: As ViolenceEscalates, Hopes Are Dashed 60

Head CaseSure, when an officematecalls in sick, it could be aploy to play hooky—but itcould also be all in herhead. Headaches may bethe most common causeof sick leave from workand school. Learn moreabout getting back in thegame in our HeadacheCondition Center. www.usnews.com/headache

Scholarship SecretsScoring a private scholarshipfor college is often aboutbeing creative and gettingyourself noticed. But beforeyou start spinning yourwheels, pick up some groundrules from our conversationwith the gatekeepers them-selves: the scholarship judges.www.usnews.com/scholarship

Eyewitness to HistoryOur partnership with the Na-tional Archives makes grip-ping personal accounts ofhistory—from handwrittenreports by George Washing-ton and Thomas Jefferson to Lady Bird Johnson’s moment-by-moment tape-recorded diary of JFK’s assassination in Dallas—available to the public forthe first time.www.usnews.com/eyeonhistory

Grace Under FireTour our photo gallery ofthe burn centers at Mas-sachusetts General Hos-pital and Shriners BurnsHospital, where miracleworkers fight infectionand perform grafts tohelp their patients recoverfrom devastating injuries. www.usnews.com/burn

Craigs for RentIn several U.S. cities, apartment hunters now passup newspaper ads and real-estate brokers and headstraight to one source: theclean-cut, noncommercialCraigslist.org. If you’re on the prowl for new digs, set your strategy withour tips on navigating thispopular website.www.usnews.com/craigslist

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Treadmill Tractioni can attest to “no more excuses”

[June 26] about the importance of ex-ercise. I’m a 75-year-old cyclist with twototal hip replacements who rides 50miles every other day. I did a 100-milebike ride this past June called “RideAround the Bear.” It is almost 9,000 feetof climbing, 60 miles of off-and-onclimbing, and one of the most difficultbicycle rides in the country. I have doneit four times since 1999 and have beenthe oldest rider three of those times.

Pete Tomaino

Laguna Hills, Calif.

in addition to the physical ben-

efits that come with an exercise program,consider the mental benefits. Diagnosedwith bipolar disorder, for 20 years Ibarely existed on a variety of medica-tions. I finally discovered exercise andspend four to five days a week, 30 min-utes each session, doing high aerobic ex-ercise. It has been a godsend.

Henry Fischbacher

Tucson, Ariz.

my husband died about 16 months

ago after we had been married for 50years. At a friend’s suggestion, I start-ed going to an exercise program. It takesme 30 minutes to do the routine. I amwith other people, music is playing, andit is very relaxing. I have lost 10 pounds,lots of inches, and two pants sizes. Ex-ercising continues to help me througha difficult time.

Dot Hull

Spartanburg, S.C.

“no more excuses” makes a good

point about working out with a buddy. Itis helpful to know there is a free websitedevoted to helping people find workoutpartners. A group of us now meets at 6 a.m. to walk the beach three times aweek, thanks to www.exercisefriends.com.

Diane Bassett

Pacifica, Calif.

Edging Out M.B.A.’s?i was surprised at dean of co-

lumbia’s Graduate School of BusinessR. Glenn Hubbard’s response whenasked if more students opting for busi-ness degrees over science or engineeringmajors is a problem [“On the Record:R. Glenn Hubbard,” June 26]. Hereplied that “business and law are intu-itive to students. Science may be less in-tuitive.” It’s stunning when an academicleader like Hubbard insinuates that fu-

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ture business leaders will rely more onintuition than thinking and reasoning.One day the business community willrecognize that M.B.A. “emperors” haveno clothes, and the U.S. economy will bebetter for it.

Chris Weakley

Canton, Conn.

dean hubbard is an example of

what is wrong with business. Hedoesn’t “think it’s a problem if studentsvote with their feet” marching awayfrom science and engineering careers.In contrast, David Gergen’s editorial“Great to Good?” in the same issue saysthat if our country is to remain great in the face of international competi-tion, “we must improve—dramatical-ly—the way we compete.” It will be the engineers and scientists of thiscountry who maintain the competitive advantage.

Robert J. Meltzer

Kirkland, Wash.

Corrections:l In the “America’s Best Hospitals”rankings [July 17], Advocate LutheranGeneral Hospital in Park Ridge, Ill.,

was not properly identified as a NurseMagnet hospital because of a proc-essing error. Correcting the error im-proved Advocate Lutheran’s ranking to28 in digestive disorders, 37 in neu-rology and neurosurgery, and 28 inurology. The hospital also should havebeen ranked in cancer (40), ear, nose,and throat (47), and orthopedics (32).Other hospitals’ rankings were affect-ed as well. Fully corrected rankings are at www.usnews.com/besthospitals.U.S. News regrets the error.l In the “America’s Best Hospitals” arti-cle “Good Help, Close to Home,” an edit-ing error misattributed the comment “Igive patients names of my last 10 pa-tients of similar age and stage of disease”to physician James Eastham. The sourcewas Paul Sieber of Lancaster GeneralHospital in Pennsylvania.

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t all looked tragically familiar. Plumes of blacksmoke billowed over the sunny, seaside cityonce known as the Paris of the Mideast as Is-raeli bombs fell on Beirut and images of thebad old days of Lebanon’s torment—of its civilwar, of terrorist killings, and Israeli reprisals—all came flooding back.

Israel, of course, witnessed its own scenes offiery wreckage—created by the rockets of Hezbollah,the Lebanon-based radical group allied with Iranand Syria. Missiles struck the port city of Haifa. Thedestruction in both countries—and in the Palestin-ian territory of Gaza—demonstrated yet again theregion’s appalling capacity to spawn the sort of vio-lence that makes would-be peacemakers look likefools. The latest cataract came just as PresidentBush was heading off to St. Petersburg, Russia, tomeet with his counterparts for the premier annualdiplomatic gala known as the Group of Eight sum-mit. Presto, out went the carefully prepared script.

It wasn’t as if the crisis erupted overnight, how-ever. Tensions had been building since late lastmonth, when Palestinian militants from Hamaskilled two Israeli soldiers and captured a third, afterwhich Israeli forces began rumbling through Gaza.Hezbollah’s audacious cross-border attack last weekfrom Lebanon, which killed and wounded several Is-raeli soldiers and resulted in the abduction of twomore, raised the danger level higher still. Israel de-manded the soldiers’ return and emphasized thepoint by dispatching warplanes over Lebanon andtroops into Hezbollah-controlled areas in the south.

The fury in Israel over the captures now seems tohave morphed into a firm resolve to cut Hezbollahand Hamas down to size. It is an enterprise bothnecessary—responding to Hamas and Hezbollahrocket strikes on Israeli towns—and dangerous,with the risk that Syria miscalculates and entersthe fray. But Syria and Iran, Hezbollah’s patronsand paymasters, are playing with fire, too. Syriais still reeling from its withdrawal, under west-ern pressure, from Lebanon. Iran is an even trickier case. The zeal in Israel’s counterstrikesreflects the fear that Hezbollah’s new audacity is

ONE WEEKBy Thomas Omestad

The Flames ofWar, and SmallHope for Peace

I

GIL COHEN MAGEN—REUTERS U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 13

Israeli forces fire artilleryrounds into southernLebanon, the area that is home to Hezbollah.

ILAN MIZRAHI—WPN14 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

being authored in Tehran. ThroughHezbollah, Hamas, and the terroristgroup known as Palestinian IslamicJihad, Iran is insinuating its influencearound Israel and directly into the Pales-tinian lands. That is creating a potentialstrategic nightmare for Israel—and avexing problem for Washington, at log-gerheads with Tehran over its drive fornuclear weapons. By supporting Hezbol-lah and Hamas, Iran is building a ca-pacity to strike back if Washington or Is-rael tries to wipe out Iran’s nuclearfacilities. “Iran has decided not to takeon the U.S. but to take on Israel,” saysVali Nasr, a Middle East expert and pro-fessor at the Naval Postgraduate School.

Friend—and foe. The Middle East erup-tion compounds—and complicates—troubles the administration is facing ona host of other fronts. Those troubleshave been proliferating, despite a newsuppleness in President Bush’s second-term diplomacy (Story, page 38). In Iraq,Shiite-versus-Sunni violence threatens tooverwhelm the new, elected governmenton which the administration is pinningits hopes for an eventual American with-drawal. In Afghanistan, a resurgent Tal-iban is battling U.S. and British forces;Britain announced last week that it is

sending 900 more troops to reinforce the3,600 now in southern Afghanistan.

The Bush administration seems to begaining no ground in efforts to persuadeIran and North Korea to give up nuclearweapons development. The diplomaticinitiative offering incentives to Iran—seen as a last-ditch effort to avert sanc-tions or even military action—appears tobe stalled. Iran may be playing for time,even as key countries seek a United Na-tions Security Council resolution re-quiring that it halt its nuclear pursuits.The North Koreans test-fired missiles ina Fourth of July show of defiance—andare unwilling to return to negotiations.Diplomatic efforts at the U.N. to pun-ish the North are foundering.

Elsewhere, a stew of disparate troublesis simmering, too. Radical Islamists havetaken power in chaotic Somalia. A U.S.-brokered peace deal for Sudan’s Darfurregion is coming unraveled. Reversing re-cent progress, India is blaming Pakistan-linked terrorists for last week’s commutertrain bombings in Bombay.

Friend and foe alike now scrutinize thelimits of the lone superpower’s power—watching the Army that once rolled vic-toriously into Baghdad bog down in fight-ing an insurgency that has cost more than

2,500 American lives, cost hundreds ofbillions of dollars, and distracted policy-makers from other challenges. Many ofthe mounting crises, says ZbigniewBrzezinski, the national security adviserto President Carter, entail “a reaction tothe perception that the United States mayhave overreached” in Iraq. U.S. officialsdismiss such criticisms, along with con-tentions that Iraq is diverting the atten-tion of policymakers away from otherproblems. State Department spokesmanSean McCormack calls it “the canard ofdistraction. . . . We have a robust nation-al security apparatus that is fully up todealing with a wide range of challenges.They are fully capable of multitasking.”Still, the president’s advisers agree thathis efforts to alter the Middle East’s sta-tus quo with a shift toward democracy isa factor in the tumult. But whatever thedifficulties in Iraq and Afghanistan, theseofficials argue, America’s role on theworld stage was strengthened by havingtoppled the bad, old regime in Baghdad.

Perhaps. But with no clean break-throughs in sight there or elsewhere,muddling through the various crises maybe the best the administration can hopefor in the short run. There is no quick exit,it seems, from this world of troubles. l

One Week

Blocking traffic aftera Katyusha rocketlanded in the Israelicity of Nahariya

Zinio

Insert=True Align=Middle page=14A

Zinio

page=14B

ILLUSTRATION BY JOE CIARDIELLO FOR USN&WR U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 15

That Times LeakWas No SurpriseBefore you jump in withthose heaping scorn on theNew York Times for using aleak to reveal the secretTreasury program to searchfinancial transactions forterrorist activities, knowthis: The Treasury Depart-ment expected it to leak.When the program was de-veloped in 2003, a pressplan was included. The goal:Get out front with the spinthat there are safeguards toprevent snooping on privateaccounts, that it is legal, andthat there are big benefits toit. “These three elementsneeded to be in the first-day

Greta Van Susteren, the No. 1 woman on cable tv

by a mile, thinks she’s found the answer towhat audiences want. Give it to them straight,and junk the ’tude. “I think the news haschanged,” says the host of Fox News Channel’s

top-rated On the Record. “I think people no longer wantto listen so much to us reporting.” So, rejecting artsyshots of her interviewing newsmakers, the Washington-based Van Susteren takes just one camera on location.“Shoot the story,” she tells her crew. “Don’t shoot me.”She also makes nice on the Internet: “I answer viewerE-mails during commercial breaks.” Then there’s her“GretaWire,” where she chats about things like her dreamjob of working at Animal Planet. “It’s the only time wecan drop out of the formal aspects and seriousness of thenews and have a little fun,” she says of her blog.

It helps that she’s a techie. “I love the technology,”says the 5-foot, 3-inch Van Susteren, who lugs around aBlackBerry, a Motorola Q cellphone, a Sony camera andcamcorder, and two laptops. When she left cnn for Foxin 2002, her first request was for a BlackBerry. “No oneknew what I was talking about,” she says. “I almost fellover.” At last year’s Christmas party, the head of Fox’sit department told her he now services 430 Black-Berrys. “I’m a trendsetter,” says Van Susteren. “Eitherthat or I’m a work creator.”

story,” says an insider. Theplan worked. When theTimes told Treasury it wasrunning the story, topTreasury aides were ok’d totalk to the Times, Washing-ton Post, Wall Street Jour-nal, and Los Angeles Times,which presented the threepoints. “It was a textbookcase of very good pr man-agement,” says the insider.

Sorry, Wolf, but It’sFox in the Sit RoomThe real Situation Room—the war council office in theWhite House basement—is

getting a face-lift, and eventhough he has a show calledthe Situation Room, we hearthat cnn’s Wolf Blitzer isn’ton the bank of tvs in the de-sign mock-up. Surprise, sur-prise—they all feature Fox.

First Family FeudOver 2008 PickWhite House insiders sayPresident Bush and first ladyLaura Bush are engaged in agood-natured bid to pushtheir faves for the 2008presidential nomination.“There are two wild cards inthe race,” says our tipster.

“The first lady likes Condi”Rice, the secretary of state.“She has a great story totell,” says the insider ofRice. But Bush likes his bro,Jeb Bush, the Florida gover-nor. “He thinks Jeb’d be thebest.” One problem: Neitherwants the job.

Carter Says It WasCronkite’s FaultCraig Shirley, author of thewell-received book on RonaldReagan’s 1976 campaign,says he never thought JimmyCarter would talk to himabout the 1980 race for anew book, Rendezvous WithDestiny. But last Tuesday,just two weeks after he

Greta to Reporters:Scrap the TV Egos

By Paul Bedard

The latest Whispers are at www.usnews.com/whispers

16 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

wrote to Carter, the callcame through. “He’s con-cerned about his place inhistory,” Shirley says. Over45 minutes, the two hit onmany issues, especially howthe Iranian hostage crisis af-fected Carter’s loss. “Updat-ed opinion polls right beforethe election took placeshowed that we hadslipped,” Carter told Shirley.“And it was primarily be-cause Walter Cronkite andeverybody else was talkingabout it being the anniver-sary of the hostage taking.”

Karl Rove Does aMean Bill ClintonBush political adviser KarlRove does a great imperson-ation of Bill Clinton, as about200 business representa-tives found out during aWhite House briefing lastweek. When a fan suggest-ed that Rove team withClinton to raise money via apay-per-view debate, Rovedid an impression of Bubbainspired by a meeting inwhich the ex-prez offeredideas to help tsunami-wracked Indonesia. Everysentence started with thephrase, “It’s not because Iwas president, but . . . .”Rove says he left the meet-ing after it had dragged on for 45 minutes. “I am so glad,” an audience mem-ber quotes him saying,“that I didn’t work in hisadministration.”

The GOP’s MostWanted: CheneyThere’s some buzz in politi-cal circles that a handful ofcandidates don’t want a vicepresidential visit because itcan generate more bad pressthan it’s worth. But don’ttell that to Dick Cheney. He’s in bigger demand thanever, hosting more politicalrallies and fundraisers—80so far—for gop candidatesthis year than in the lastmidterm election in 2002.“The vice president,” saysRep. Tom Reynolds, head of

“It was pretty clever. Actuallyquite humorous—not to dis my friend the vice president.”President Bush, on Russian President Vladimir Putin, whocompared Dick Cheney’s criticism of Russia’s undemocraticmoves to the vice president’s errant bird-hunting shot

“Americans have a severedisease, worse than AIDS. It’s called ‘winner’s complex.’ ”Former Russian President Mikhail Gorbachev, who echoed Putin

“I’m not a person who thinks theworld would be entirely differentif it was run by women. If youthink that, you’ve forgotten whathigh school was like.”Former Secretary of State Madeleine Albright

“I should have planned ahead for a ride.”Pete Coors, head of Coors Brewing Co. and a former GOP Senatecandidate, cited for drunk driving

OUT LOUD

CHRIS BRITT / COPLEY NEWS SERVICE / THE STATE-JOURNAL REGISTER

Washington Whispers

the National RepublicanCongressional Committee,“has been a great partner for us.”

Once a Professor,Always a ProfessorWith his trilogy of Civil War novels behind him,Newt Gingrich is on to hisnext writing project: a novelabout the Pacific theater inWorld War ii. Writing withlongtime collaboratorWilliam Forstchen, the formerHouse speaker is titling thebook December 8. That’sPearl Harbor Day, Tokyotime. “We’re trying to cap-ture the essence of howRoosevelt was maneuveringin the Pacific,” Gingrichsays. “His real focus was onEurope, but he was trying tocontain the Japanese.”Heavy stuff, but Gingrichwrites historical fiction toescape. “I lose myself in his-tory as though it were anovel,” says the onetime col-lege history professor, who’sconsidering a 2008 run forpresident. “I get lost in,‘What would fdr do?’ ” l

With Bay Fang and Dan Gilgoff

Sources: White House, Good Morning America, New York Daily News, Rocky Mountain News

Coverage not available everywhere. Available features and services vary by phone/network. Sprint Mobile Broadband Network covers over 150 million people. Offers not available in all markets or locations. Subject to credit approval, $36 activation and $200 early termination fee per line. Deposit may be required. Additional terms and restrictions apply. See store or Sprint.com for details. Offer ends 7/29/06 or while supplies last. BlackBerry: Use subject to service-specifi c terms and conditions. Additional server and license fees apply. Data plan required with all active BlackBerry handhelds. Not available while roaming. Voice calls will incur per-minute charge without separate voice plan. Voice and data usage rounded up to the next whole minute/KB. Mobile Broadband: Service defaults to Nationwide Sprint PCS Network, where available, if Sprint Mobile Broadband Network is unavailable. Use as a private line or frame relay service substitution, service or like equivalent, is prohibited. Not available while roaming. Premium content not available. Shared data not available. Terms and conditions and additional restrictions apply. May not be combinable with other offers. Device model subject to availability. ©2006 Sprint Nextel. SPRINT, the “Going Forward” logo and other trademarks are trademarks of Sprint Nextel. The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties and trademarks or registered trademarks of Research In Motion Limited, used by permission. The Bluetooth word mark and logos are owned by the Bluetooth SIG, Inc., and any use of such marks is under license. All other product or service names are property of their respective owners. All rights reserved.

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18 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

There was relief lastmonth at the WhiteHouse when it became

known that senior adviserKarl Rove would not becharged in the case of wholeaked the name of a cia op-erative to the press. The onlyfallout seemed to be the up-coming trial of vice presiden-tial aide Lewis Libby for per-jury. But now Valerie Plame,the former cia officer, andher husband, former Ambas-sador Joseph Wilson, havesued Rove, Libby, and VicePresident Cheney himself,claiming the leak violatedtheir rights and put Plame indanger. Their suit chargesthat the White House re-vealed Plame’s identity to re-taliate against Wilson for hiscriticism of the administra-tion’s prewar posture on Iraq.Spokespersons for Cheneyand Libby declined to com-ment. A spokesman for Rovecalled the lawsuit baseless,and Robert Novak, the colum-nist who first printed thename, said that he, not Rove,initiated their Plame conver-sation. Still, a civil suit maydrag the matter on well be-yond the Libby trial.

Federal Spending:the Naked Truth

Sometimes an idea comes along that is so neat you won-der why no one thought of it before. In that vein, Sen.

Tom Coburn, an Oklahoma Republican and chair of theHomeland Security Subcommittee on Federal FinancialManagement, has introduced a bipartisan bill to create aGoogle-like online searchable database of all federal spend-ing. Currently, said Coburn, there is no way for taxpayers tofind out what the government is paying individuals, groups,localities, and contractors. “This bill will empower citizeninvestigators to root out waste, fraud, and abuse,” saidCoburn, a leading opponent of pork. The bill has someheavyweight sponsors, including Republican Sens. JohnMcCain and Rick Santorum and Democrat Barack Obama.

The Little LeakThat Keeps on Dripping

Mideast BloodshedSpells GOP Pain

While House SpeakerDennis Hastert last

week became the first Re-publican leader to predictthat the gop will gain seatsin the midterm elections,other Republican Houseand Senate members areworried that the new flare-up in the Middle East canonly hurt. They see a surgein gas prices and potential-ly more terrorism in Iraq,events that could reversePresident Bush’s recent up-ward spurt in the polls. “Itcan make a difference of 1,2, or 3 percent” in closeraces, said one Republicansenator. Lawmakers arehopeful that Bush can sus-tain an approval rating inthe low to mid-40s, whichcould render him a neutralfactor in the election. Butkey congressional aidessaid that the Iraq war,fighting among Israel andits neighbors, and highergas prices will remain adrag on Bush and the gop.“The Civil War was not apositive for Lincoln,” saidthe senator.

If It Looks LikeEthnic Cleansing…

U .S. officials are growingincreasingly worried

about the sectarian strifein Baghdad—and an appar-ent sharp increase in

forced migration there. Observers have detected a signifi-cant rise in the numbers of Sunnis and Shiites who arebeing chased out of their homes, sometimes forcibly, inmixed neighborhoods. The United Nations estimates thattens of thousands of people are moving. Some say thenumbers may even be higher and fear that killings of Sunnis by Shiite death squads last week could acceleratethe trend. An undetermined number of Sunnis have fled to Syria in recent weeks, while larger numbers ofboth Sunnis and Shiites have taken refuge in safer neighborhoods. l

With Paul Bedard, Danielle Knight, and Kevin Whitelaw

WHITE HOUSE WEEKEdited by Peter Cary

The president last week agreed to let a special court review the legality of his warrantlesswiretapping program. Sen. Arlen Specter, who cut the dealwith the White House, told reporters how it would work.

12:42 p.m., July 13, Capitol Hill

MATTHEW B. SLABY FOR USN&WR

You can get your own morning E-mail briefing combining exclusive Washington intelligence with daily political news in the U.S. News Bulletin at www.usnewsbulletin.com

PHOTO OP

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 19

Q&A: CHRIS ANDERSON

The Internet has changed virtuallyeverything about human existence.But how, exactly? Chris Anderson,editor of Wired, took on part of

the question by studying how Internetcompanies differ from traditional busi-nesses. In his new book, The Long Tail:Why the Future of Business Is Selling Lessof More, Anderson describes how revolu-tionary changes that began with the In-ternet are rewriting some of the mostbasic rules of free enterprise and em-powering the consumer.

Your book analyzes how the Inter-net economy has changed the con-ventional economy. What’s the dis-tinction between the two these days?I wrestle with this a lot. Wherevertechnology touches the economy,there will be profound changes. IsNetflix an Internet company or abricks-and-mortar company? Well,it uses the Postal Service, so it mustbe a hybrid. There’s a distinctionbetween physical products anddigital products, but it’s also likeasking about the electricity econo-my and the nonelectricity economy.There’s no distinction anymore.

So what is the long tail?It’s about life after the blockbuster.All our lives, we’ve seen the worldthrough the lens of hits. Not be-cause that’s all we want, but be-cause distribution channels havebeen so limited. If you have limit-ed shelf space, you only tend tooffer the products that sell thebest. But as the physical market-place has turned into a digital mar-ketplace, there’s a lot more shelfspace. Distribution costs have gotten solow you can offer practically everything.The marginal cost of the songs oniTunes, for instance, is almost nothing.Hits are going to have to share the stagewith nonhits.

Your analysis is somewhat technical.The phrase “long tail,” for instance, refersto the shape of a particular type of demandcurve. Can you explain the math in plainEnglish?Sure. Think of a demand curve shapedlike a ski slope. On the left-hand side itstarts high, then it drops down prettyquickly and levels out on the right side.The left side is where a few products sella lot. The right side represents the non-

hits. If you are limited in what you canoffer, you offer the hits on the left. Butthere are many more nonhits. In fact, thecurve goes on almost forever. That’s thelong tail.

Looking back, what have been some ofthe key transition points?In the book, I go all the way back to 1896and the Sears, Roebuck catalog. Theradical technology then was the railroad,which was supposed to bring Amazon-size variety to the Kansas prairie. Which

must have seemed amazing back then.Cable tv, digital tv—that brought an ex-plosion of choice to television. A key oneclearly was Amazon.com, where theyoffer practically everything. And it’s notjust about a massive increase in variety;it’s also about a massive increase in find-ability. In a physical store, it’s often hardto find obscure products, if they’re eventhere. The ability to search on the Weblets us find the variety.

How is this changing well-establishedindustries?The music business is ground zero forthe long tail. Record labels have strug-gled tremendously to adapt to a worldwhere people just don’t need them as

much. We have a whole generation nowthat has never gone into a record store.People get music from MySpace. I’m noteven sure what a label means anymore.. . . It could be a single band putting outits own music. The question for recordlabels is what can they offer artists thatartists can’t do for themselves.

What’s an example of a traditional com-pany that has benefited from the long tail? An example I like a lot is Lego. I havefour kids—the oldest is 9—so I’m slight-

ly obsessed with Lego. They sell afew dozen mainstream productsin stores. But on their website,they have more than 7,000 prod-ucts—for enthusiasts, train setsthat just don’t sell in stores. Bestof all, they let you design yourown Lego kit, and they ship it toyou in a box that you also design,and then other people can buyyour design.

KitchenAid is another one. In atypical store, KitchenAid productsonly come in a couple of colors. Buton their website or on Amazon,there’s a drop-down menu that letsyou pick from dozens of colors. Atthe beginning of every season, re-tailers always try to guess what thepopular color is going to be. Andthere’s always one they miss. Lastyear it was tangerine. Nobodyknows why, but it was tangerine.The way KitchenAid does it, youdon’t have to guess. You just put itout there and see what sells.

Are some products or industries resistant to the long tail?Certainly. I looked at the car com-

panies, where the obvious implicationis mass customization. But it turns out that in cars, the most importantthing is quality. When you start addingvariations at the factory, it tends tolower quality. That doesn’t work for the car companies.

So if you were an entrepreneur hoping to take advantage of long-tail economics tostart a new business and make a lot ofmoney, what would you do?That’s what all my buddies want toknow. It’s too hard to answer. I’m goingto take a pass on that one. l

A review of The Long Tail and an excerptare at www.usnews.com/longtail

COURTESY WIRED

INSIDE THE ‘NEW ECONOMY’

“As the physical marketplace hasturned into a digital marketplace,

there’s a lot more shelf space.”

By Rick Newman

20 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

Big Trouble Againat the Big Dig

The problems just keep oncoming for the Big Dig,

the massive public-worksproject that successfullyrerouted much of Boston’shighway system under-ground. Last week, 12 tonsof ceiling panels in the tun-nel connecting Boston Har-bor to Logan InternationalAirport came crashing downon a vehicle, killing 38-year-old Milena Del Valle. Gov.Mitt Romney demanded theresignation of the chairmanof the Massachusetts Turn-pike Authority. And stateAttorney General Tom Reil-ly launched a negligent-manslaughter probe.

By week’s end, investiga-tors had found 60 instancesof loose bolts in the east-bound tunnel, where DelValle was crushed; thewestbound tunnel was saidto be worse. “It’s hard toview [this] catastrophe asan accident,” Romney said.Tunnels had previouslybeen plagued with faultyslurry walls and leaks. InMay, officials indicted sixemployees of a concretesupplier for falsifying rec-ords to hide the shoddyquality of materials.

Another DangerousYear Out West

It’s that time of the year. Asa wildfire burned more

than 53,000 acres nearYucca Valley, Calif., officialswarned that another badfire season may be in theoffing for the West. Already,the Sawtooth fire has de-stroyed 45 homes and 110other buildings, mostly

around historic Pioneer-town, where parts of TheCisco Kid were shot. Morethan 4 million acres haveburned nationwide so farthis year, almost twice the10-year average, accordingto the National InteragencyFire Center. The fire dangeris above normal in north-eastern California and formuch of the Rockies.

Lingering Problemsat the LAPD

Anew report finds that theLos Angeles Police De-

partment still needs majorreform to prevent anothercrisis like the Rampart cor-ruption scandal.

In 1999, revelations ofroutine evidence tamperingand unjustified shootings inthe city’s Rampart Divisionled to lawsuits, overturnedconvictions, and criminalcharges against officers. The new task force reportsaid problems of shoddyoversight and harsh police

tactics still exist.The report’s most

challenging recommenda-tion calls for a major ex-pansion of the lapd,which, at just 2.4 officersper 1,000 residents, is tinycompared with cities likeNew York. The task forcebacks a push by PoliceChief William Bratton toadd more than 3,000 offi-cers. But lawyer Connie

l

YuccaValley

lLos Angeles

BOSTON. This car was crushed by falling panels in a Big Dig tunnel.

CALIFORNIA. Firefighters scramble to contain the raging Sawtooth Fire near the town of Morongo Valley.

Edited by Gordon Witkin

LUCAS JACKSON—AP

MATTHEW WEST—BOSTON HERALD / POLARIS

FROM TOP: KENNETH JARECKE—CONTACT FOR USN≀ GOOSE CREEK POLICE DEPARTMENT VIATHE POST AND COURIER / AP; JAY JANNER—THE AUSTIN AMERICAN-STATESMAN / AP

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 21

Rice, who led the study,says a change in cultureis needed at the lapd,which “is wired to celebratethe Dirty Harrys and toshoot the Serpicos.”

A Search and aSettlement

Surveillance cameras atStratford High School al-

lowed South Carolina policeto watch students suspectedof selling drugs back in2003. With guns drawn, thecops pounced—searchingsome 140 students withdrug-sniffing dogs.

But the police not onlyfailed to turn up drugs orweapons or make any ar-rests but soon found thatthe same surveillance cam-eras recorded their contro-versial raid, images ofwhich played endlessly onthe news. The principal re-signed, civil rights groupscomplained, and lawsuitswere filed. A federal judgelast week approved a $1.6

million class action settle-ment of the suits filed bythe students’ familiesagainst the school and theGoose Creek Police Depart-ment. Marlon Kimpson, alawyer whose firm repre-sented many of the stu-dents, said the settlement“is notice . . . that studentsdon’t shed their constitu-tional rights merely by en-tering a schoolhouse door.”No admission of wrong-doing was included in thesettlement, but both theschool and the police haverevamped their studentsearch policies.

Kinks in This Fall’s Texas Ballot

Yes to “Kinky.” No to“Grandma.” So said

Texas Secretary of State

Roger Williams in Austin.Now “Grandma” is suing.

The issue is just how in-dependent gubernatorialcandidates Richard Fried-man and Carole KeetonStrayhorn are to be listedon this fall’s ballot. Statelaw allows for nicknames tobe used, but not slogans.Friedman, a singer and au-thor, is known as “Kinky”and wanted to be listed thatway—which mostly madesense to Williams. The bal-lot will read Richard“Kinky” Friedman.

Strayhorn, the statecomptroller, has previouslycampaigned using the slo-gan “One Tough Grandma.”She’s concerned with namerecognition, because her last name is new; she’d won election previouslyunder a different last name, Rylander, and thenremarried. So this timearound, she wanted to belisted as Carole Keeton“Grandma” Strayhorn. ButWilliams said “Grandma”was a slogan, not a nick-name. So last week, Stray-horn sued Williams in statedistrict court. “I am Grand-ma,” she said. “And that’show people know me.” l

With Angie C. Marek, Silla Brush, Will Sullivan, Alex Kingsbury, and the Associated Press

l Austin

l Boston

l Goose Creek

AUSTIN. Richard Friedman wonthe battle to be “Kinky.”

LOS ANGELES. A new task force report says the LAPD is stillstruggling with a host of issues and needs more officers as well.

GOOSECREEK. A

video imagefrom that

controversialhigh school

drug raid

FROM TOP: SABAH AL-BAZEE—REUTERS; AP22 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

Edited by Terry Atlas

The ‘Last Chance’ Is Slipping Away

Perhaps the ugliest singleincident in Iraq last week

was the kidnapping of twodozen Shiites from a busstation in a volatile townnortheast of Baghdad.Twenty bodies were foundlater, handcuffed, blindfold-ed, and shot in the head.The grisly attack was onlypart of a cascade of sectari-an violence engulfing Iraq’scapital and environs. Shiitemilitias and death squadsand Sunni insurgents car-ried out a series of tit-for-tatretaliatory attacks in mixedneighborhoods that killedsome 250 people last week.

The surge in violencecame one month into themuch-hyped Iraqi and U.S.plan to beef up troop levelsand security in Baghdad. “Ithas not performed to thelevel that was expected,” saysZalmay Khalilzad, the U.S.ambassador to Iraq. IraqiPrime Minister Nouri al-Maliki told his parliamentlast week that his national

trains during Tuesday’sevening rush hour in Bom-bay, India’s vibrant financialcapital, also known asMumbai. The toll: at least200 dead and 700 wound-ed. Investigators suspect arole by Lashkar-e-Taiba, aPakistan-based Islamic mili-tant group that operates inKashmir, the Himalayan re-gion at the center of thelong-running India-Pak-istan conflict. Remarkably,Indians absorbed their

reconciliation plan, whichcould include amnesty forsome insurgents, might bethe “last chance” for peace.“If it fails,” he said, “I don’tknow what the destiny ofIraq will be.”

Life Goes On AfterTerrorist Attacks

With choreographedlethality, eight bombs

ripped into passengerscrowded aboard commuter

deadly 7/11 terrorist attacksand continued with the fre-netic chaos that is daily lifein the city of nearly 16 mil-lion. Despite fears of a sell-off, India’s stock marketbrushed aside anxieties togain 3 percent the next day.

A Killer’s Death IsCheered in Russia

Russia’s most notorious ter-rorist, the bearded

Chechen warlord ShamilBasayev, 41,was killed lastweek in an explosion—aboutwhich there are conflictingaccounts. Chechen rebelsblamed an accident that set

IRAQ. A bomb attack on aclinic in Tikrit, 110 milesnorth of Baghdad, killedthe wife of the governorof the Salahuddinprovince and woundedtwo of her aides.

CUBA

INDIA. Rescue workers carry a casualty from a bombed rush-hour commuter train in Bombay.

FROM TOP: ADALBERTO ROQUE—AFP / GETTY IMAGES; BERTRAND GUAY—AFP / GETTY IMAGES U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 23

off an explosives-ladentruck; Kremlin authoritiessaid it was a successful op-eration by special forcesagainst a killer responsiblefor a string of deadly attacksincluding: the takeover ofthe Nord-Ost theater inMoscow in October 2002(129 killed), a train bombingin December 2003 (47killed), suicide bombings inin August 2004 (103 killed),and the Beslan schooltakeover in September 2004(at least 331 killed).Basayev’s death provided aboost for Russian PresidentVladimir Putin, but it re-mains to be seen what be-comes of the violent Chechenseparatist movement in thewar-ravaged region.

No ‘Your Mamma’Insults for Zidane

Days after the head buttseen round the world,

France’s soccer superstarZinedine Zidane offered anexplanation, of sorts, and anapology to his fans, especial-

ly kids. The 34-year-oldmidfielder said he reacted infury after opponent MarcoMaterazzi of Italy insultedhis mother and sister. Mat-erazzi admitted insulting Zi-dane but not his mother,and it was left to the tabloidpress to hire lip readers inan effort to determine whatwas said.

Still Waiting forCastro to Go

Fidel Castro has gloweredat 10 U.S. presidents,

from Dwight Eisenhower toGeorge W. Bush, since tak-

ing power in Cuba’s1959 Communistrevolution. With theaging dictator due toturn 80 on August 13and thought to besuffering from anumber of ailments,it seems that timewill accomplishwhat declarations,sanctions, and plotscould not—bringchange to the impov-

erished island nation 90miles off the Florida Keys.What kind of change? Castrois setting the stage for hisbrother Raúl, 75, to succeedhim, and the country’s Com-munist Party is stepping upmeasures to strengthen ide-ological and political con-trol. The Bush administra-tion—and the Cuban exilecommunity—envision ademocratic Cuba. To thatend, Bush last week acceptedthe recommendation of thebipartisan Commission forAssistance to a Free Cuba tospend $80 million over twoyears to increase support for

anti-Castro programs and toassist Cuba’s struggling op-position movement.

A Jail Break forWomen in Pakistan

Across Pakistan, jail doorsare swinging open for

some 1,300 women long de-tained without trial for adul-tery or domestic disputesunder an abused 1979 Islam-inspired law. Authorities areeasing the controversial Hu-dood Ordinance—which,among other things, imposesharsh penalties for extra-marital sex—to now permitthe women to be released onbail while awaiting trial. Thelaw has been denounced bycritics who cite cases ofwomen languishing for yearsin jail for alleged adultery orminor crimes before beingacquitted at trial on falsecharges from husbands orangry relatives. l

With Kevin Whitelaw,Aamir Latif in Pakistan, andthe Associated Press

CUBA. Many arenow looking past

Fidel Castro, as theleader turns 80

next month.

FRANCE. Soccer starZinedine Zidanesaid an Italianplayer’s slur led tohis outburst.

IRAQ

INDIA

RUSSIA

FRANCE

ITALY

PAKISTAN

FROM TOP: MORRY GASH—AP; M. SPENCER GREEN—AP24 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Dan Gilgoff

Diamondhead, miss.—Here’s what the front line ofHoward Dean’s revolutionlooks like: two dozen seniorcitizens seated inside thisgated community’s club-house listening intently as

operatives from the state DemocraticParty pitch them on becoming precinctcaptains. A rep named Jay Parmley ap-proaches an oversize easel and flips to apage showing John Kerry’s share of the2004 presidential vote here in HancockCounty. “28%” is scrawled in magicmarker. “Kind of scary,” Parmley says.

But he flips the page to show formerDemocratic Gov. Ronnie Musgrove’sshare of the vote here in his unsuccess-ful 2003 re-election bid: “43%.” The dis-crepancy, Parmley explains, shows that

the better Mississippians know a Demo-crat, the more likely they are to vote forhim. Which is why he’s here recruitingprecinct captains. If Democrats can de-fine themselves on a “neighbor to neigh-bor” basis, Parmley says, their candi-dates can win again, even here, in a redcounty in a red state.

If that doesn’t sound revolutionary,consider this: Mississippi’s DemocraticParty hasn’t trained precinct captains formore than a decade. Until recently, thestate party consisted of a single full-timestaffer. In 2004, the Democratic Na-tional Committee invested so little herethat activists shelled out thousands oftheir own dollars to print up Kerry yardsigns. That all changed last summer,when newly elected dnc ChairmanHoward Dean began rolling out his “50-State Strategy,” a multimillion-dollarprogram to rebuild the Democratic Party

DEAN’SLIST

Nation & World

The Democraticchair plans tofight in everyone of the 50states. Is thisshrewd strategyor a recipe fordisaster?

Rahm Emanuelhas clashed withDean over how towin the House.

Howard Deanhas a long-termplan to rebuildthe Democrats.

The Sixth Amended Joint Plan (as Modified) to reorganize OwensCorning (“Plan”) has been filed in the United States BankruptcyCourt for the District of Delaware (Case No. 00-03877(JKF)) byOwens Corning and its affiliated debtors listed below (“Debtors”),the Official Committee of Asbestos Claimants and the LegalRepresentative for Future Claimants.

Persons or entities with personal injury or wrongful death claimsrelating to exposure to asbestos or asbestos-containing productsmanufactured, distributed or sold by any of the Debtors, may voteto accept or reject the Plan by September 1, 2006. Many claimsagainst the Debtors concern high temperature insulation productsmanufactured by the Fibreboard Corporation or Owens Corning.Product names included PLANT, PABCO, KAYLO, PRASCO andAIRCELL.

A detailed document describing the Plan, called the “DisclosureStatement,” which was approved by the Bankruptcy Court onJuly 11, 2006, together with a copy of the Plan itself and votingmaterials called a “Solicitation Package,” has been mailed toknown holders of claims against the Debtors or their lawyers.

Important Plan Provisions Regarding Asbestos-Related ClaimsThe Plan provides for a Trust to be set up to process and pay alleligible asbestos personal injury claims. The Plan provides thatpersons and entities with asbestos-related claims will be foreverbarred from asserting their claims directly against any of theDebtors. You should read the Plan and Disclosure Statementcarefully for details about how this may affect your rights.

Special Plan Voting ProceduresThe Bankruptcy Court has issued an order describing exactly whocan vote on the Plan and how to vote. The Disclosure Statementcontains information that will help you decide how to vote on thePlan if you are entitled to do so. Your legal rights may be affectedif you do not vote on the Plan. To be counted, a ballot voting on

To receive a copy of the Plan, the Disclosure Statementand other information related to voting on the Plan

Write: Voting Agent at Owens Corning c/o Omni Management Group, LLC,16161 Ventura Blvd., PMB 626, Encino, California 91436-2522

Call: 1-800-873-4096 Fax: 818-905-6542

Email: oc@omnimgt.com or Access: www.ocplan.com

If You Have an Asbestos Personal Injury Claim AgainstOwens Corning or its Related Debtors,

Please Read This Notice of Voting Rights and Hearing to ConsiderWhether to Approve Plan of Reorganization

Legal Notice

the Plan must be received by the Debtors’ Voting Agent by 4:00p.m., prevailing Pacific Time, on September 1, 2006. If a ballotis not received by that date and time, it will not be counted.

Copies of the Disclosure Statement, Solicitation Package, thenotice of the hearing to consider confirmation of the Plan and theprocedures related to it, and other key documents related to theDebtors’ bankruptcy cases may be obtained on the Debtors’bankruptcy website (www.ocplan.com) or may be obtained bywriting the Debtors’ Voting Agent at the address below.

Asbestos Personal Injury and Wrongful Death ClaimsProof of an asbestos personal injury or wrongful death claim doesnot need to be filed with the Bankruptcy Court at this time. TheBankruptcy Court has established special procedures for holdersof asbestos personal injury and wrongful death claims to vote onthe Plan. Lawyers for holders of these claims may vote on thePlan on behalf of their clients if authorized by their client. If youare unsure whether your lawyer is authorized to vote on yourbehalf, please contact your lawyer.

Hearing to Confirm the PlanA hearing to confirm the Plan (the “Confirmation Hearing”) will beheld before the Honorable Judith K. Fitzgerald, United StatesBankruptcy Judge at US Bankruptcy Court, 5490 US Steel Tower,600 Grant Street, Pittsburgh, PA 15219 on September 18, 2006 at9:00 a.m. You may attend the hearing, but are not required to do so.If you want to object to the Plan, you must follow the proceduresoutlined in the Solicitation Package. Objections to the Plan mustbe filed with the Clerk of the Bankruptcy Court, United StatesBankruptcy Court for the District of Delaware, 824 Market Street,3rd floor, Wilmington, Delaware 19801, and received no later than4:00 p.m. (prevailing Eastern time) on September 1, 2006. If youor your attorney do not file an objection, the Court may concludethat you do not oppose confirmation of the Plan and may enter anorder confirming the Plan by which you will be bound.

DebtorsOwens Corning, CDC Corporation, Engineered Yarns America, Inc., Falcon Foam Corporation, Integrex, Fibreboard Corporation, Exterior Sys-tems, Inc., Integrex Professional Services LLC, Integrex Supply Chain Solutions LLC, Integrex Testing Systems LLC, Integrex Ventures LLC,HOMExperts LLC, Jefferson Holdings, Inc., Owens-Corning Fiberglas Technology, Inc., Owens Corning HT, Inc., Owens-Corning OverseasHoldings, Inc., Owens Corning Remodeling Systems, LLC, and Soltech, Inc.

JIM LO SCALZO FOR USN&WR26 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

from the ground up. Over the past year,the dnc has hired and trained fourstaffers for virtually every state party inthe nation—nearly 200 workers in all—to be field organizers, press secretaries,and technology specialists, even in placeswhere the party hasn’t been competitivefor decades. “It’s a huge shift,” Dean tellsU.S. News. “Since 1968, campaigns havebeen about tv and candidates, which

works for 10 months out of the four-yearcycle. With party structure on theground, you campaign for four years.”

The strategy is also a reaction to thepast two presidential cycles, when theshrinking number of battleground statesthe Democratic nominee was competingin left no room for error. Both electionswere arguably determined by a singlestate: Florida in 2000 and Ohio in 2004.

Says Dean: “We’ve gotten tothe point where we’re almostnot a national party.”

But Dean’s plan has helpedfeed a fierce intraparty bat-tle between the dnc and thecommittees tasked with elect-ing Democrats to Congress:the Democratic Congres-sional Campaign Committeeand the Democratic Senato-rial Campaign Committee.dccc Chair Rahm Emanuelhas been especially vocal toDean over concerns that thednc is misallocating re-sources in a year when theDemocrats are poised to takeback the House. Grousingabout insufficient funds fromthe dnc, Emanuel recentlytold Roll Call “there is no cavalry financially for us.”Emanuel declined interviewrequests, but dccc sourcessay more money should go toDemocratic candidates intight races, not to field organ-izers in long-shot red states.

A big bet. With the future ofthe Democratic Party at stake,Republicans are watchingclosely, too. “Dean could windup looking like a genius even-tually,” says a top gop strate-gist. “Or this could be the elec-tion that could have been.”

The promise and peril ofDean’s plan come into sharprelief in the Magnolia State,where neither this year’s U.S.Senate race nor the four Houseraces are considered compet-itive. And while Democrats en-joyed more-or-less single-partystatus here for the hundredyears following the Civil War,Republicans now hold thestate’s two Senate seats, thegovernor’s mansion, and mostother statewide offices. Thelast Democratic presidentialnominee to win the state wasJimmy Carter, in 1976. ButDean argues that such failures

are the result of the national party’s hav-ing packed up and left red states. “Nobodystands up and says, ‘Here’s why I’m aDemocrat,’ ” he says. “That’s why right-wingers have managed to brand us in un-attractive ways. To be branded right, youneed real people on the ground.”

The gambit has remade the Missis-sippi party with four full-time, dnc-paid staffers and a fundraiser. In four

Rita Royals leads a session on how to be a Democratic precinct captain in Diamondhead, Miss.

JIM LO SCALZO FOR USN&WR U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 27

months, finance director Wendi Hookshas tripled the number of $1,000-plusdonors to 24 and expects to more thandouble the party’s budget this year, to$400,000. Two field representativeshave recruited captains in more than500 precincts so far, along with volun-teers for phone banks and canvassing.“I’ve been trying to contact the partysince I moved back here in 1992,” saysHarold Terry, 43, a Jackson native whovolunteered last week at a phone bank.“Someone finally got back to me threeweeks ago.”

The new dnc hires tell similar stories.Rita Royals is a 57-year-oldformer rape crisis counselorwho paid to print her ownKerry signs in 2004. Thatsame year, DeMiktric Biggs,a student at Jackson StateUniversity, sent a county-by-county voter analysis to al-most everyone on the stateDemocratic committee—andnever got a reply. Now, theparty is using his work to planits ground game.

As the 2006 election nears,the precinct captains whomRoyals and Biggs are trainingwill be put to work leveragingthe dnc’s updated voter file—improved since technicalglitches stymied many stateparties’ get-out-the-vote ef-forts in 2004. Of course, withPresident Bush winning Mis-sissippi with nearly 60 per-cent of the vote, the Demo-cratic Party isn’t expectingdramatic results anytimesoon. “The Republicans had30 years to put themselves in the posi-tion they’re in,” says Dean. “To thinkwe’re going to turn the party around infour is wrong.”

That timetable makes operatives atthe other Democratic committees evenmore uneasy. But the 50-State Strate-gy, for the time being, is focused more onkeeping or regaining control of state leg-islatures, which have taken on more na-tional political value because they drawthe lines for U.S. House seats. In Mis-sissippi, Democrats control the Legis-lature but have lost dozens of seats re-cently. In Arizona, Republicans are threeseats away from vetoproof majorities inthe state House and Senate. The stateDemocratic Party there has used its dnc

field organizers to do aggressive out-reach to American Indians and Hispan-ics, particularly during the huge immi-grant rights protests earlier this year.

“The dnc has enabled us to become partof the fabric of these communities,” saysArizona party chair David Waid. “Thereused to be this sense of coming aroundonly when we wanted your vote.”

Waid and other state-level operativessay their beefed-up parties have alsohelped in candidate recruiting. “If youcan show a candidate you have the sup-port infrastructure to get them elected,he’ll run,” says Jerry Goldman, partychair in McCormick County, S.C., whonow works closely with his state party.“You have to show a candidate that he’snot out there by himself.” In Arizona,

Democrats have candidates in every leg-islative district for the first time in adecade. “Successful candidates for Con-gress come from winning offices at thecounty or municipal level,” says Ari-zona’s Waid. “We build that farm team,and it enhances our chances for takingback Congress.”

Cultural chasm. At least that’s the theo-ry. But in many red states, even someDemocrats say their failures have asmuch to do with the national party’s po-sitions on cultural issues like gay rightsand school prayer—which have becomepolitically potent only in the past 25years—as they do with ground organiza-tion. Discussing his national party’sstance on hot-button issues, Mississippistate Rep. Dirk Dedeaux says, “Theydon’t have to tinker; they have to dis-avow it. I’m opposed to gun control, op-posed to abortion on demand.”

Dedeaux says top-of-ticket Democratscan win on economic issues, particular-ly in poor states like his, but only by nar-rowing the gop advantage on social is-sues. “Democrats believe government isresponsible for the needs of average peo-ple, not just Big Oil and Big Tobacco,” hesays. “These aren’t sensational issues.They’re meat and potatoes.”

According to that view, if liberals likeJohn Kerry win the nomination for presi-dent, all the precinct captains in the worldcouldn’t muster enough Mississippi votesto put them over the top. Joel Ingram,chairman of the Lamar County Demo-

cratic Party, has struck out intrying to organize precinctcaptains because there’s nostrong national Democraticcandidate at the moment tomotivate people. “I believe thesolution is top-down,” he says.“To get people off the sofa, youneed a strong candidate at thetop.” Howard Dean probablywouldn’t make the cut, either.“It would be our fondestdream to have Dean be thenominee,” says MississippiRepublican Party Chair JimHerring. “Or Hillary Clinton.”

In the meantime, Dean’sbigger challenge may befending off attacks from his own party. The dccc’sEmanuel reportedly stormedout of a meeting with Deanrecently, and the two are saidnot to have talked since.dccc sources say Emanuel is steamed that Dean hasburned through tens of mil-lions of dollars by hiring di-

rect-mail firms and other vendors, leav-ing the dnc with $10 million on hand,less than a quarter of the Republican’swar chest. The fight now, say dccc

sources, is for the money that’s left.But Dean tells U.S. News that he has

pledged $12 million to so-called coordi-nated campaigns: state-level plans thatinclude Senate and House races, alongwith lesser offices. “I’m an outsider,and people in Washington don’t likeadvice from outsiders,” says Dean. Buthe says that he works well with theleaders in the House and Senate andthat “eventually I’ll work well with thedccc and dscc.”

For now, he seems to be working wellwith the grass roots. After the presen-tation in Diamondhead, Lisa Boughton,40, signs up to be a precinct captain. “Insmall towns like this,” she says, “you votehow your neighbor tells you to.” l

Nervous Democrats and waryRepublicans are watching Dean’s gamble very closely.

Nation & World

Jay Parmley (right) coaches a phone-bank volunteer in Jackson, Miss.

28 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Chitra Ragavan

Last October, as they inves-tigated a deadly suicidebombing at tourist-packedrestaurants in Bali, In-

donesian police got what seemedlike an important, albeit grim, in-vestigative break: They recoveredthe decapitated and swollenheads of three of the suicidebombers. At the Indonesian gov-ernment’s request, fbi forensicexperts in Washington digitallyreconstructed the bombers’ facesusing sophisticated biometrics.But when Indonesian police dis-tributed the fbi photos alongwith the original headshots, look-ing for help in their investigation,no one came forward.

The failure to identify the Balibombers highlights the conun-drum that fbi and other law en-forcement and intelligence agen-cies face: how to track themovement of radical Islamist ter-rorists in the vast string of islands ofSoutheast Asia, where poverty and eth-nic and religious strife have resulted ina surge of Islamic fundamentalism. “Youhave tens of thousands of islands with nocontact with each other, minimal contactwith mass media, and few policing serv-ices,” says Thomas Fuentes, special agentin charge of the fbi’s office of interna-tional operations, “making them a fertilearea for recruiting, training, and de-ploying suicide bombers.”

Two-front war. Half a world away, thosesame concerns apply to another vast,underdeveloped, and largely unpolicedland—Africa. The African continent haslong been a stepchild of U.S. foreign pol-icy, especially the nations of North Africaand one in particular: Somalia. Eachweek, there are two charter flights fromDubai to Bosaaso, a port city in northernSomalia, ferrying cash, weapons, and ji-hadists into the largely ungovernedcountry, where the reigning Islamic cler-ic is believed to have pledged loyalty, orbayat, to Osama bin Laden. A recent ji-hadist recruiting video shows Somali Is-lamic and non-Somali Arab radicalsfighting U.S.-backed secular warlords inMogadishu; now those radical Islamicwarlords seem to be in charge. “It’s the

same type of scenario we saw inAfghanistan as the Taliban were con-solidating control,” says J. Peter Pham,an Africa expert at James Madison Uni-versity. “I have a great sense of déjà vu.”

And so does the Bush administration.At the Pentagon, the cia, the State De-partment, and the fbi, there is a height-ened sense of urgency about these threatsand an energetic set ofnew efforts to preventthese lawless lands frombecoming hotbeds of ter-rorism. But critics won-der whether it’s alreadytoo late. “We haven’t putour resources in there;we haven’t asked theright questions,” saysPham. “Our commit-ment to date has been minimal.”

And yet, the U.S. government longhas known that these regions arefraught with peril. Several major attacksor plots against U.S. targets have hadsome link to the Philippines, includingmid-1990s plots to blow up 11 Americanairliners over Asia and to assassinatePope John Paul ii and President BillClinton, and the 9/11 attacks, which alsowere traced, in part, to Malaysia. As for

Africa, three of the four suspects whotried but failed to pull off a secondround of attacks on London’s commutertrains last July came from Somalia,Ethiopia, and Eritrea.

Now officials are scrambling to ad-dress the threats. Defense SecretaryDonald Rumsfeld and Secretary of StateCondoleezza Rice traveled to North

Africa and SoutheastAsia earlier this year tostrengthen military co-operation with key alliesthere. At the fbi, Direc-tor Robert Mueller hastasked Fuentes with cre-ating a “global fbi.”Over the past five years,the fbi has almost dou-bled its presence in these

regions, expanding the bureau’s reach tonearly 20 countries—including Nigeria,Egypt, Kenya, Senegal, Sierra Leone,Morocco, Australia, Hong Kong, thePhilippines, Indonesia, Malaysia, Thai-land, and India. The bureau is consid-ering opening offices in New Zealand,Fiji, Ethiopia, Algeria, Ghana, Cambo-dia, and Bangladesh.

But the political and diplomatic hurdlesare substantial. Each office costs millions

Nation & World

A TROUBLING SENSE OF DEJA VUThe feds are scrambling to address new terrorism threats in both Asia and Africa

ED WRAY—AP

A police officer standing guard outside a shop in Kuta, Bali, after the Oct. 1, 2005, bombing

“We haven’t putour resources inthere; we haven’t

asked the rightquestions.”

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of dollars to establish and equip. And thefbi has long struggled to recruit and trainG-men with the know-how to effectivelywork in these regions—language skills es-pecially, plus the necessary historical,geopolitical, religious, and cultural sen-sitivities. In addition, some of these coun-tries are resistant to allowing much of aU.S. law enforcement presence.

The ground zero of terrorism in the re-gion is the Indonesian archipelago, with17,500 islands, a 90 percent Muslim popu-lation, and a big regional terrorist organi-zation, Jemaah Islamiyah. Since 9/11, ji—

like al Qaeda—has been fragmented butby no means vanquished. “There’s a con-cern that instead of the organizations weall know and love, there will be smallgroups not on anybody’s radar screen,”says Sidney Jones, Southeast Asia projectdirector for the nonprofit InternationalCrisis Group, “that will plan and under-take suicide attacks.” The terrorist campsin the southern Philippines, which In-donesian jihadists use for combat train-

By Scott Michels and Chitra Ragavan

The Supreme Court’s landmark de-cision last month striking downPresident Bush’s military tribunals

made clear that Congress and the ad-ministration will have to work togeth-er to craft a new system for trying ter-rorism suspects. But just how difficultthat will be is only now becoming clear.As Congress took up the issue last week,the results were hardly encouraging.

The court found the mili-tary tribunals illegal underboth U.S. law and ArticleThree of the Geneva Conven-tions, which provide basicprotections for wartime pris-oners. The decision forcesBush to use establishedforms of military justice likecourts-martial or get Con-gress to craft new rules formilitary tribunals.

Reversal. Bowing to thecourt, the administrationconceded for the first timelast week that Article Threeapplies to all of its terrorismdetainees—reversing a policyset out in 2002. It was the lat-

est in a larger retreat from the theory thatBush alone may decide how to interrogateand try detainees. “This is part of a real-ization that real mistakes have been madein our basic approach to the war on ter-ror,” says retired military judge Gary Solis.

At the same time, some in the admin-istration tried to limit the impact of thecourt’s decision—setting up clashes inCongress and within the administrationat high-level meetings expected this week.“It will be an interesting litmus test,” saysa government official familiar with the dis-cussions. “Do we still want to do it our way,or are we willing to work with Congress?”

Nation & World

ing, present another huge problem, asdoes the recent spate of bombings in ruralsouth Thailand—triggered by anger to-ward the Bangkok government for failingto serve and protect the poor MuslimMalay minority. “It’s the kind of thing,”says Jones, “that if it’s allowed to fester,you’ll see people coming from the outside,wanting to help their Muslim brethren.”

Ripe. A recent phenomenon of Islam-ic militants migrating from Thailandthrough the porous border into Cambo-dia is also worrisome. “You have a poorpeasant population susceptible to any-body promising a better way,” saysFuentes. “In the 1960s, it was the VietCong and Khmer Rouge. The question iswhether those same peasant areas arenow ripe for Islamic fundamentalism.”

An Indonesian-born al Qaeda opera-tive, Riduan Isamuddin—known asHambali—certainly believed so. A for-mer ji operations chief and close con-fidant of bin Laden’s, Hambali—whomasterminded the 2002 Bali bombing—

lived in Cambodia for six months andplotted to bomb the American, British,and Australian embassies in PhnomPenh. He later aborted the plan and fledto Thailand, where he was captured ina 2002 joint cia-Thai operation and“rendered” to an undisclosed country. InAfrica, U.S. officials are monitoring theSaharan jihadist pipeline bringing Is-lamists from Morocco, Algeria, Libya,Tunisia, and Egypt into Iraq to fuel theinsurgency against U.S. military forces.“About a quarter of the jihadists wepicked up in Iraq are coming out ofAfrica,” says Dennis Pierce, chief of thefbi’s Africa Unit. The jihadists who re-turn to Africa are trained, connected,and battle hardened. “It’s a short hopfrom the African countries either intoItaly or the south of Spain or Portugal,”says Fuentes. “And once you are in Eu-rope, it’s a direct flight into the U.S.” l

With research assistance from the U.S. News library

In hearings last week, Daniel Dell’Orto,the Defense Department’s principaldeputy general counsel, advised Con-gress to approve the current tribunals,which allow secret evidence to be used.House Republicans appeared willing togo along—which would almost certain-ly prompt another court challenge. Butsenators from both parties balked, pre-ferring a system based on normal rulesof military justice, as recommended bytop lawyers within the military. Sen-ate Armed Services Committee ChairJohn Warner says White House nation-al security adviser Stephen Hadley pri-vately told him the administration willsupport the Senate plan.

Another sticking point will be interro-gations. The Justice Department warned

that Article Three, which prohibits “humiliating and degrading” treatment, couldexpose interrogators to crimi-nal charges. Some senatorsagreed, suggesting Congressmay alter U.S. law to permitcontroversial techniques.

The debate may only getmore intense. Senate leadersdon’t expect a vote on theissue until after Labor Day—when the election-year at-mosphere is sure to be poi-sonous. In the meantime, the fates of hundreds of de-tainees hang in the balance.Says Warner, “The eyes ofthe world are upon us.” l

BUCKING CONVENTIONCongress and Bush seek adeal on terrorism detainees

A sign of protest at a Senate Judiciary Committee hearing on detainees

30 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

KEVIN HORAN FOR USN&WR

By Linda Robinson

For the first time in 20 years, the U.S.Army has written a new field man-ual for counterinsurgency opera-

tions. The last one was written for theCentral American wars of the 1980s,when the United States backed El Sal-vador’s government and Army in a 12-year-long and ultimately successfulcounterinsurgency campaign against awell-organized Soviet-backed Marxistguerrilla movement. This effort, whichhas been a top priority,aims to help troops stemthe raging violence andshore up the shaky newgovernment in Iraq.

Lt. Col. John Nagl,who currently serves asadviser to the Pentagon’sNo. 2 civilian official,Deputy Secretary Gor-don England, helpedwrite the manual. Nagl’s Ph.D. disserta-tion at Oxford looked at the lessons of Vietnam and Malaya, where theBritish conducted a successful 12-yearcounterinsurgency. “One of the centralmessages of this manual,” he says, “isthat the less force you use, the more ef-fective you are.”

It is a paradoxical precept and one dif-ficult to apply amid the daily car bomb-ings and other carnage of Iraq. Yet avoid-ing civilian casualties is a necessity, nota luxury. Advocates of this approach arguethat the government and its military canwin only if they can protect the populationfrom the violence of the armed attackersand thus gain its allegiance.

Written by a team of authors, the man-ual must still pass through a few morebureaucratic hoops before it is sent outto officers in military schools and thosealready in the field. The manual is nowbeing circulated in the Pentagon and atkey military commands for feedback thatwill be incorporated into the final ver-sion. Lt. Gen. David Petraeus, who led the101st Airborne Division and the missionto train Iraq’s security forces until lastyear, has directed the current effort in hisrole as commander of the Combined

Arms Center at FortLeavenworth in Kansas.He has been the drivingforce behind the manu-al’s creation and expectsto have a final version is-sued by September.

Napoleon’s blunder. U.S.News attended a work-shop in the spring, whenPetraeus gathered the

manual’s authors and many of the coun-try’s top counterinsurgency scholars todiscuss the work in progress. The MarineCorps also participated in the drafting andplans to adopt the manual as its own. The241-page manual provides a hefty dose ofboth theory and practical guidance to aug-ment what has been a slim educationalbasis for counterinsurgency. After Viet-nam, the U.S. military turned away fromstudying low-intensity and guerrilla war-fare. Currently, a one-week course is givento officers before they deploy to Iraq, andunits go through another short coursewhen they arrive in Iraq at the coun-terinsurgency academy at Taji.

The key chapter of the manual is the

One centralmessage is that

“the less force youuse, the more

effective you are.”

THE BOOK ON BAD APPLES A new Army manual shows the smart way to beat insurgents

Lt. Gen. DavidPetraeus, at the NationalTraining Center

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SCOTT GOLDSMITH—AURORA FOR USN&WR32 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

fourth one, “Designing Counterinsur-gency Operations.” It emphasizes theneed to correctly diagnose a conflict’s na-ture and to continually assess the effec-tiveness of the approach taken. Telling-ly, it begins with a description of howNapoleon botched his 1808 invasion ofSpain and exhausted his empire by un-derestimating Spanish resistance. Un-derscoring this imperative, another ex-pert who contributed to the new manual,Tom Marks of National Defense Uni-versity, cites the need to see conflicts asfirst and foremost political, not military,contests. “We Americans understand thefact so imperfectly,” Marks says. “An in-surgency, whatever the ‘type’ or the in-spiration, is an armed political campaignfor power, which must be met by anarmed political counter.”

“Recipe for failure.” A lengthy chapteron intelligence lays out methods for as-sessing a conflict, including social net-work analysis and other tools. A chapteron “unity of effort” addresses the im-portance of civilian roles in reconstruc-tion and governance. Other chapters de-scribe how to execute counterinsurgencyoperations, to build or improve a coun-try’s security forces, and to enforce lead-ership and ethics. A section on detentionand interrogation warns that “distin-guishing an insurgent from a civilian isdifficult and often impossible. Treatingthe second like the first, however, is asure recipe for failure.”

The manual is replete with specificadvice. Appendix A, “A Guide for Ac-tion,” says: “Only attack insurgentswhen they get in the way. Try not to bedistracted or forced into a series of re-active moves by a desire to kill or cap-ture them. Provoking combat usuallyplays into the enemy’s hands by under-mining the population’s confidence. In-stead, attack the enemy’s strategy.” Else-where, soldiers are cautioned againstbefriending children but advised toreach out to women through cultural intermediaries.

Nagl will have a chance to put themanual he helped write to the test. Hav-ing served one tour in Iraq, he will takecommand of the 1-34 Armor Battalion atFort Riley in Kansas later this year.There his unit will organize and train theU.S. advisers who are embedded withthe fledgling Iraqi security forces, onwhich all hope of a U.S. drawdown ispinned. Nagl sees this as a career calling.“If you believe that this kind of war is notgoing to go away, we have to increase ourability at the lower end of the spectrum.We are making great strides, but there ismore we can do.” l

By Edward T. Pound

David Smith, a top Interior Depart-ment official, is an avid hunter andoutdoorsman. He’s no Buffalo Bill,

but he’s a good shot and can even counta buffalo among his many trophies. Why,way back in December 2004, Smith putthree shots from a high-powered rifleright between the eyes of an aging buf-falo at a billionaire friend’s ranch inTexas. Dances With Wolves, it was not.The ranch manager drove him to themeadow where the bison was grazing,and Smith delivered the coup de grâcefrom about 75 yards away.

The kill has caused Smith no end of trouble. Interior in-vestigators looked into itand questioned whetherSmith had received theold bull’s remains as a“gratuity.’’ They also ex-amined his role in desig-nating Houston as a portof entry for wildlife andwild game trophies, anaction sought by huntersand others, including a friend of Smith’swho is his taxidermist.

Icon. When the dust settled, Smith gotboth good and bad news. Federal prose-cutors declined the case. But Interior in-vestigators found that he created “an ap-pearance of preferential treatment’’ insigning off on the Houston port becausethe action benefited his friends, includ-ing the taxidermist. As to the buffalo, theinvestigators said, Smith violated giftregulations and paid for its remains onlyafter they began their inquiry.

Smith denies giving special treatmentto anyone or violating ethics rules. In an

interview, he said that he had intendedto pay for the buffalo remains all alongand wrote checks for $3,170 as soon asthe ranch billed him. Effective last week,Smith, 38, resigned as deputy assistantsecretary for fish, wildlife, and parks, buthis departure, he says, had nothing to dowith the inquiry. He quit, he says, to starta law practice with a friend.

For decades, the image of the buffalohas served as the official Interior Depart-ment seal. Last year, in a bill designed toprotect buffalo at Yellowstone NationalPark, lawmakers wrote that “more thanany other animal, the American buffalo . . .is a wildlife icon of the United States . . . .’’The irony isn’t lost on Smith, who joined

the Interior Departmentin 2001 and whose wife isa White House official.“People can have a lot offun,’’ he says, “a lot of mis-chief with this.’’

Interior’s inspectorgeneral, Earl Devaney,opened an investigationlast June, according to acopy of his report ob-

tained by U.S. News under the Freedom ofInformation Act. The inquiry was basedon allegations from a fish and wildlife lawenforcement officer who said that Smithhad “inappropriately designated’’ Hous-ton as a port to help his taxidermist friendimport wildlife and wild game trophiesinto the country at a reduced cost. He alsosaid Smith had killed a buffalo at a Texasranch and accepted its remains as a gift.

Investigators determined that Interiorfollowed “appropriate administrative pro-cedures’’ in designating the port. But theysharply criticized Smith’s role in the de-cision. Their report cited his ties to a taxi-

Nation & World

A BUFFALO NOT ROAMINGA top government official, an old bull, and a fateful gunshot

“People can havea lot of fun,”Smith says,

“a lot of mischief with this.”

On the prowl inSouth Dakota’sCuster State Park

MATTHEW B. SLABY U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 33

dermist identified by Smith and others asMike Simpson, who owns a big taxidermyoutfit in Conroe, Texas, and does some ofSmith’s work on animal kills.

In an interview, Simpson said he andother hunters had been pressing for thedesignation for years. He asked Smith toidentify Interior officials who might helpwith the issue, he says. Soon after, Simp-son met with agency officials, and thedesignation process was set in motion,according to the inspector general’s re-port. Simpson says the port designationsaves hundreds of thousands of dollarsin permit fees and other costs for hisclients alone. “This was not at all a favorto me by David Smith,’’ says Simpson,past president of Safari Club Interna-tional. “I understand how it looked thatway, but it really wasn’t.’’

Smith, one of several Interior officialswho dealt with the port issue, signed therule designating Houston on Nov. 29,2004. Two other ports were also desig-nated. A few days later, at Simpson’s in-vitation, he attended an annual barbe-cue at the Double D ranch, a 5,000-acrespread southeast of Austin owned byDan Duncan, a billionaire oilman.

Duncan is identified in the report as“the rancher,’’ though not by name. Itsays that he “vaguely recalled some briefmention’’ of the Houston port designa-tion during the gathering. The report saysthat Duncan also said that Smith wasgiven the “honor’’ of killing the old, ill buf-falo. “According to the rancher,’’ the re-port continues, “one could practicallywalk up and pet the animal.’’ Duncan saidthat Smith shot the buffalo from “30 to40 yards away,’’ investigators wrote.

Point blank. Smith says that the animalwas dangerous and had damaged equip-ment on the ranch. He says that theranch manager asked him to kill the an-imal—and that he was anywhere from 75to 125 yards away when he shot the buf-falo between the eyes with a .300 Win-chester Magnum rifle. He shot it a sec-ond time in the same spot, then walkedup and fired a third shot into its brain atpoint-blank range.

Smith says that Simpson completedthe taxidermy work last August. Theskull was bleached, the hide tanned, andthe hooves made into bookends. He sayshe paid $2,770 for the work; the ranchcharged him an additional $400 “for anold, excess bison.’’

Smith says some will ridicule him forkilling an American icon. But he’s com-fortable with what he did, he says: “I killedthe animal as humanely as possible.’’ l

With Jennifer L. Jack

By Angie C. Marek

In the end, it was the drywall installersand the painters that really got to AndyAnderson. The 37-year-old city coun-

cilman and Harley-Davidson motorcyclesalesman from Palm Bay, Fla., says he wassick of seeing his fast-growing communi-ty be home to construction sites filled withillegal immigrants picked up at the day-laborer spot 10 minutes down BabcockStreet. “We don’t know a thing about[their] backgrounds . . . and we’ve got lotsof young families with kids out here,” An-derson says. So he crafted a bill allowing

local authorities to issue $200 tickets tocompanies for each nonlegal worker theyemploy, and then, if that doesn’t work,forbid them to do business in Palm Bayfor a minimum of two years. He expectsthe bill will pass in August.

Right or wrong, there are a lot of AndyAndersons out there right now, takingaction in city halls and statehouses na-tionwide. State legislators have intro-duced more than 500 immigration-re-lated bills this year, according to theNational Conference on State Legisla-tures. It’s the natural reaction amongAmericans frustrated by what seems tobe an endless debate in Washington.And with the Senate and House now inthe midst of new hearings—possiblyputting off negotiations on completingan immigration bill until next year—therush to pass laws at the state and locallevels is only growing more intense.

Last week provided a case in point. In

Colorado, legislators meeting in emer-gency session passed a massive package oflegislation that will deny illegal immi-grants older than 18 most state benefits, amove that will very likely take up to 50,000people off state benefit rolls. Meanwhile,the town of Hazelton, Pa., approved leg-islation fining landlords $1,000 for eachillegal immigrant found renting on theirproperty. A flurry of lawsuits is expectedto challenge these new laws, but today’s re-formers are trying to craft their measuresnarrowly to avoid the fate of efforts likeCalifornia’s Proposition 187, a successful1994 ballot initiative later overturned

in the courts. And thethreat of legal actionisn’t slowing the mo-mentum. “Nobody Iknow is content withtoday’s status quo,”says Andrew Roman-off, the Democraticspeaker of the Colo-rado House. “Wash-ington should takeColorado’s hint.”

Roadshow. Don’tcount on it. Althoughthe House passed atough, enforcement-focused bill in De-cember and the Sen-ate followed in thespring with a moremoderate measure,

including a guest-worker program,House leaders insisted on conductinghearings around the country in lieu ofsitting down to work out a compromisethis summer. “I’m not putting any time-line on this thing,” House Speaker Den-nis Hastert said of the move. “We needthis thing done right.”

But Michele Waslin of the NationalCouncil of La Raza calls the hearings “apolitical roadshow that makes you stopeven guessing when real negotiationsbegin.” She says the two sides could sitdown in September; hectic schedulesleading up to the November midtermelections, though, could punt it into nextyear. If that happens, a new Congress—which might look mighty different fromthis one—would have to start all over onimmigration, a process that could takemonths. It’s unlikely city council mem-bers and state legislators will be in muchof a mood to wait. l

THE IMMIGRATION MINUETStates and localities legislate while Congress chats

A Denver immigration protest; Colorado passed legislation last week.

IBRAHIM MOHAMMED—AFP / GETTY IMAGES34 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Anna Mulrine

Fallujah, iraq—At any giventime, there are generally a dozenor more prisoners in the jail cellsof the Fallujah police department

headquarters. Not surprising until youlearn that most of them are Iraqi po-licemen being held for professional infractions of varying degrees of seri-ousness: firing weapons in the air, ab-senteeism, taking bribes at checkpoints.For American military trainers here,who live among their Iraqi counterpartson cots set up in the spare rooms of theheadquarters, jailed cops are one ofmany challenges in a city where militaryofficials consider police the linchpin inthe city’s counterinsurgency operations.“Almost everything that happens in thecity involves the police,” says Lt. Col.Frank Charlonis, police implementationofficer for U.S. Marines who are trainingsecurity forces in Fallujah. “We lean onthem quite a bit.”

The embedded American mentors aretasked with teaching their Iraqi coun-terparts everything from alphabetizing

files to the bare basics of investigatingcrime scenes. The training requires lotsof hand-holding, says Charlonis. Hemeans this quite literally, as Charlonishas been known to stroll hand in handwith his police trainees, a practice thathis fellow marines tend not to let passwithout some comment. “It’s a sign oftrust,” says Charlonis, who also doles outwhat the marines here call “man kiss-es”—the double-cheeked smooches withwhich Iraqi men greet each other. “Youdrink some tea, get your man kisses, dosome hand-holding,” he says. “And ifdoing that gets us one key piece of in-formation, or one less day that we’regoing to need to put a marine on thestreet, it’s all good.”

Much of American mentoring here in-volves trying to increase the “prestige fac-tor” of the police, who under SaddamHussein’s regime were considered thelowest of the low—“the lowest paid, leasttrained,” says a senior military official.“And none were public servants.” In Sad-dam’s era, policemen tended to be “thedumb brothers who couldn’t do anythingelse,” he adds. “They were not considered

the stand-up people in society.” That rep-utation persists in Fallujah, say Ameri-can trainers, who note that their earli-est training projects involved teachingthe new Iraqi recruits, say, not to acceptbribes at checkpoints.

Infiltrators. The police force here is com-posed primarily of recruits from Fallu-jah, a key Sunni city in the volatile Anbarprovince, and because of fears about con-nections to local insurgents, mistrustamong U.S. trainers is rampant—eventhough most tips about insurgent activ-ity come from the police. Last month, Lt.Gen. Martin Dempsey told Pentagon re-porters that local police are “the biggestchallenge we have in terms of local in-fluences.” He added that Anbar provinceis one of the areas at greatest risk for cor-ruption and for influence from “ex-tragovernmental groups.” Indeed, thereremain concerns that the police areheavily infiltrated by insurgents andmilitias. The marines in Fallujah grap-ple with this infiltration. “A significantpercentage of these guys are not on ourteam and use their position to workagainst us,” says one U.S. trainer living

A policeman in Fallujahbrandishes his weaponduring the funeral forthe deputy police chief,killed by gunmen.

GETTING RIGHT WITH THE LAWU.S. Marine trainers are finding it a tough task to coach Iraq’s new police force

36 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

at the station. And there is some recenthistory to overcome: Fallujah remainsscarred from the major November 2004U.S. military assault to end insurgentcontrol of the city.

The distrust is often mutual. Fallujanpolice were moved from their roomsnear the U.S. transition team membersat police headquarters after threats byIraqi police to fellow Fallujan officerswho they believed were getting too closeto their American trainers. The marinesnote that it probably didn’t do much forrelations that the former bedroomof the Iraqis was turned into aweight and exercise room for theAmericans. Nor did it help thatmarines here spotted Iraqi policehigh-fiving after seeing a U.S. mil-itary convoy hit by an improvisedexplosive device.

Gen. Salah Khalil al-Ani, chiefof the Fallujah police department,says he understands the concernsand anger of the local insurgents,who “have white hearts”—mean-ing honorable intentions—as op-posed to the foreign insurgents,whom he views as “heartless mer-cenaries.” He has experienced re-sentment toward U.S. forces him-self, he says. Prior to the war,al-Ani was a general in the IraqiArmy. “When the Americans occupied Baghdad,” he says, “Icried.” When the Iraqi Army wasdisbanded by U.S. officials, hesays, he went to work as a taxidriver. “What do you think my po-sition was, in front of my wife?And my daughter—when shelooks at her father driving a taxi?”he asks, examining a strand ofworry beads he keeps on the deskof his office. He says the beads arean analogy for what has happenedin Iraq, for the local residents whohave scattered and the opportunities forreconciliation that were lost in the wakeof the invasion. “You cut the rope, and allthe spheres go everywhere. How can youbring them back? Now, it’s very difficult.”

Charlonis says he is aware that thegeneral knows the insurgents and workswith them. “Make no mistake,” he adds,“Salah operates in the gray zone.” Capt.Mark Mouneau, 29, who heads up thetraining team based at the station, saysit is a widely held belief around the sta-tion house that “none of these guys ispure of heart—they’re all taking theirchunk, and the general is, too. A lot oftheir attitude is that rank means they getto skim more off the top.” But they un-derstand, too, he adds, that “some level

of anticoalition rhetoric” is part of his po-litical strategy. “He’s trying to play bothsides, and here it’s a necessity,” Mouneausays. “You can’t be seen as a puppet.”

What’s more, Charlonis adds, thegeneral “has this amazing ability toreach across tribal and ethnic lines.”They respect, too, the risks he hastaken in working with American forcesand the work he has done to build thelocal security forces in a town wherepolice are often seen as collaborators.“We realize that by elevating him to

this level, we’ve made him a target,”says Charlonis.

As is the entire police force. Lastmonth, the deputy police chief was as-sassinated. Mouneau estimates that thestation house sustains one major attackand “four or five little ones” each month.Within minutes of his making this esti-mate, the station house parking lot is hitby a mortar. It strikes an ammunitionscache and causes a fuel tank just outsidethe station to explode, turning gravel intoprojectiles and shredding the tires of thehumvees parked in the building’s lot. Thefiretruck that arrives on the scene, the po-lice soon discover, is out of foam.

It’s the sort of danger that makes re-cruiting a difficult but vital undertaking.

Many of those who join the police forcetoday are desperate for the $75 basesalary they earn each month as police-men—as well as the $250 a month haz-ardous-duty pay supplement—a well-paid job by local standards. But whilethere are some 1,500 police in andaround Fallujah today, it’s not nearlyenough, says al-Ani, who adds that thepay problems and dire supply shortagesmean that the police continue to rely onAmerican forces for “everything.” Heglances around his office, decorated with

maps in faux-gold-gilded framesand posters of waterfalls. “All ofthe furniture, the maps, all of this,”he says, “is not from moi [Min-istry of the Interior].” What’smore, he adds, “there would be nofuel if marines are not here.”

Priorities. Lately, the trainershave begun teaching investigativeprocedures, but supplies remainscarce and technical skills arenonexistent, say U.S. military of-ficials. On one recent afternoon,U.S. and Iraqi forces began workbuilding an evidence room for alocal station as a U.S. trainer eyeda file cabinet. “Right now,” he said,“that’s where they keep blood,body fluids—everything.” Othersexpress concern that focusing oninvestigative techniques may bethe “biggest waste of time. They’redoing this way too prematurely,”adds another military official. For now, some advisers say, theyshould concentrate on simple se-curity—and retaining the police of-ficers they do have. “They need tobe far more concerned about themquitting in droves than they areabout not knowing how to do po-lice investigations.” In an Aprilmemo widely circulated amongU.S. military leadership, retired

Gen. Barry McCaffrey noted that “thecrux of the war hangs on our ability tocreate . . . local police with the ability tosurvive on the streets.”

To that end, al-Ani’s staff gathers re-cently released prisoners, who are sittingcross-legged in the hallway. Al-Ani hadordered their heads shaved (a way ofshaming them, says Charlonis), and as headdresses the men at his feet, he says thathe knows some of them participated inthe insurgency and that there are “doublefaces” within the force. But he is tired ofthe destruction, and it is up to them to endit. “You are the sons of Hammurabi,” hesays. “Your grandfathers built Babylon.They built something we can all be proudof. And maybe one day, so can you.” l

LANCE CPL. JOSH COX—USMC

Nation & World

“When the Americans occupied Baghdad, I cried.”

Gen. Salah Khalil al-Ani, chief of the Fallujah police department

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38 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Kenneth T. Walsh

It was a familiar role forPresident Bush as he de-fended his vice presidentfrom another round of

criticism. But this time thesource was more than a bitunexpected—it was RussianPresident Vladimir Putinwho took aim at Dick Che-ney for the veep’s recentcondemnation of Rus-sia for backpedalingon democracy. Putincalled it an “unsuc-cessful hunting shot,”a reference to Cheney’sembarrassing accidentin which he blasted acompanion with ashotgun. Asked aboutPutin’s zinger, Bushsaid, laughing, “It waspretty clever. Actually,quite humorous—notto dis my friend thevice president.”

The long-distanceexchange—with Putinin Russia and Bush inGermany—set the tonefor Bush’s trip abroad,as he met with newGerman ChancellorAngela Merkel andproceeded to St. Pe-tersburg, Russia, forchats with Putin and otherworld leaders at a meeting ofthe Group of Eight industri-alized nations. Bush was try-ing to be more conciliatoryand, well, diplomatic, thanin the past. For instance, hedeclined to address Putin’spotshot head on but went onto discreetly issue his ownmilder form of criticism ofPutin’s autocratic ways. Inwalking the tightrope be-tween conciliation and criti-cism, Bush was adoptinga more realistic and multi-lateral view of America’s rolein the world than he did inhis first term.

In St. Petersburg, Bushmet with 17 social activistsin private and listened totheir concerns about back-sliding on democratic re-form and about social condi-tions in Russia. But thepresident’s subsequent com-ments about the Putinregime were mild. “I assuredthem the United States ofAmerica cares about the

form of government in Rus-sia,” Bush told reporters. “Ihope I was encouraging forthem.” He said he cautionedthe activists, though, not tobe too impatient becauseeven “the United States tooka while to evolve.”

Needing allies. WhiteHouse aides acknowledgethat the war in Iraq hasmade America’s commanderin chief extremely unpopularin Europe, and that Bush re-alizes that he is dealing withtoo many crises to go italone—even though he issometimes impatient withthe slow pace of diplomacy.

As a result, Bush is trying toplay an inside game with hisforeign counterparts, oneleader at a time, in order tosolicit support for his inter-national agenda. “The war inIraq has turned public opin-ion against the president inmany places,” a senior WhiteHouse official told U.S. Newsduring the trip. “But thatdoesn’t mean he can’t get

other things done.”Anti-Americanism has

been on the rise across Eu-rope and elsewhere, accord-ing to a recent poll taken in15 nations by the Pew GlobalAttitudes Project. Majoritiesin 10 countries said the Iraqwar has made the world amore dangerous place, in-cluding 60 percent in GreatBritain, where Prime Minis-ter Tony Blair has seen hisown popularity plummet asa result of his support forthat conflict. The American-led war on terrorism drewmajority support in only twocountries surveyed—India

and Russia, which have theirown terrorism problems.Elsewhere, says Pew, “sup-port for the war on terror iseither flat or has declined.”

At nearly every opportuni-ty last week, Bush said hewas eager to work withAmerica’s allies on commonproblems, such as the war onterrorism, Iran’s nuclear am-bitions, and North Korea’s

missile tests. Bush issaid to realize he has alot of hard feelings toovercome because ofhis Lone Rangerimage. But he is tryingto show a more accom-modating side, andtells aides hebelieves his adminis-tration has enough incommon with tradi-tional allies such asGreat Britain, Ger-many, and France toovercome popular opposition.

Bush also turned onthe charm, often actingas if he were cam-paigning back home.He rolled up hissleeves and posed forthe cameras as hesliced chunks of roast-ed boar off an open-

fired spit at a barbecue host-ed by Merkel. “Laura and Iare from Texas,” he toldMerkel and her entourage,“and to invite us to a barbe-cue is the highest compli-ment you can pay us.” Hedrew cheers from a crowdwhen he announced “gutenmorgen” as he began a speechin Stralsund, part of Merkel’shome region. Bush went onto say he respected the chan-cellor’s judgment on globalissues, making the point thathe feels the same way aboutmany of the world leaders, inanother bow to his new goalof making nice. l

Putin and his wife, Lyudmila, greet the Bushes before the G-8 opening dinner.

PABLO MARTINEZ MONSIVAIS—AP

Speaking SoftlyL E T T E R F R O M S T . P E T E R S B U R G , R U S S I A

Nation & World

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 39

Let’s get the conventional wisdom

about Joe Lieberman out of the way: Yes, he hasbecome a target of the Democratic Party’s antiwarranks because he supports the war in Iraq. Yes, he’s a part of the evil Washington establishment.

Yes, he is every Republicans’ favorite Democrat. And yes,President Bush once even hugged him. Worse still, Lieber-man hugged back.

And so Lieberman is locked in a Democratic primary bat-tle against political neophyte Ned Lamont, a wealthy, anti-war liberal with a very Connecticut pedigree, much likeLieberman. Maybe in another year, or in another war,Lieberman’s forays across the aisle regarding foreign pol-icy would impress Connecticut’s elite moderates. Only thisyear, regarding this war, proper New England etiquette hasclearly been replaced by a full-blown revolt. And Lieber-man is the poster child for the uprising.

But it’s too easy to say that Lieberman is endangeredonly because he supports the war and most ConnecticutDemocrats do not. After all, Lieberman is an 18-year Sen-ate veteran with a past: He’s the Democrat who angeredliberals when he took to the floor to chastise Bill Clintonduring the Monica Lewinsky scandal. He’s the guy whoconfused moderates when he happily forfeited some of hislong-held “new Democrat” ideas—like school vouchers for inner-city kids—when he became Al Gore’s runningmate in 2000. He was even willing to compromise with Republicans on real Social Security reform.

Sure, if you’re in politicslong enough, you willmake everyone unhappy—and Lieberman is no ex-ception. But the war inIraq took it over the edge.Even some of Lieberman’smiddle-of-the-road com-patriots believe that he hastaken his celebrated inde-pendence a step too far—making a fetish of his dis-agreements with his ownparty. It’s not just that heassociated himself veryearly on with the war (asin writing the president inDecember 2001, askinghim to take on SaddamHussein). The real issue isthat he has taken on fellowDemocrats who dared toquestion the Bush admin-istration on the war—and

has said that if he loses the primary, he’ll bolt the party andrun as an independent.

That made lots of Democrats believe the Connecticutsenator’s campaign slogan should be “Putting LiebermanFirst.” Indeed, if Lieberman is seen as either: (a) beingdeserted by an antiwar party or (b) deserting an antiwarparty, it hurts Democrats looking for credibility on na-tional security. You can be sure every Republican will por-tray it that way, and with good reason. “It’s not good forthe Democrats to have Lieberman lose the primary andwin as an independent,” says Democratic pollster Geof-frey Garin. Inevitably, it’s going to be viewed beyond Iraqand through the prism of whether Democrats are strongenough to lead the war on terrorism. Democrats knowthat Lieberman knows it—and doesn’t much care. “He de-liberately chose the most controversial path,” says oneDemocratic strategist who is a Lieberman ally in spirit butthinks the senator has handled himself badly. “He’s be-come a lightning rod.”

Blog fodder. That’s putting it mildly. The lefty bloggers con-sider him close to the Most Evil Man in America, and theirvitriol and name-calling are enough to make anyone wantto vote for Lieberman. But make no mistake—that worldcounts, big time: Primaries are all about voter turnout.Turnout is all about intensity. Intensity brings out the truebelievers. And the Democratic believers, in election 2006,are against the war. What nobody can truly figure out yet is whether those feelings will translate to the rest of the

Democratic ranks. How-ard Dean expected it tomaterialize in the 2004campaign; it did not—atleast not for him.

No doubt about it,there’s going to be a signifi-cant debate on foreign pol-icy inside the DemocraticParty before the next presi-dential election, and it’sgoing to be high-stakes—establishment vs. out-siders; antiwar vs. pull-the-trigger Democrats. “Wecan’t send the wrong kindof message that we don’ttake these [national secu-rity] threats seriously,” saysWilliam Galston, a formerClinton domestic policy ad-viser. “If that becomes thepublic face of the party,then we lose.” l

By Gloria Borger

Lieberman has been called the Republicans’ favorite Democrat.

A Troublesome Joe

CHARLIE ARCHAMBAULT FOR USN&WR

Democrats are angry that Lieberman’sre-election strategy has pushed thenational security issue to the edge.

On Politics

Special Report

tory with an intensity and intimacy that no secondary source can match.

As always when savoring musty documents, one mourns the loss of the

personal note, the fountain pen, even the manual typewriter. The obser-

vations are thoughtful, the language elegant and precise. Yet new tech-

nologies, however unromantic, bring new possibilities. With E-mail, cam-

era phones, and instant-message programs, more Americans now have

the tools to tell their stories. For better or worse, they are immediate, spon-

taneous, unfiltered—just the way the first recordings of history should be.

NATIONAL ARCHIVES; (INSETS, FROM LEFT) CHARLES THEVENIN, STORMING OF THE BASTILLE, JULY 14,1789, REUNION DES MUSEES NATIONAUX / ART RESOURCE; UPI—BETTMANN / CORBIS; BETTMANN / CORBIS;

THOMAS O’HALLORAN FOR USN≀ SCALA / ART RESOURCE; HULTON-DEUTSCH COLLECTION / CORBIS;ROBERT KNUDSON—NATIONAL ARCHIVES; HULTON-DEUTSCH COLLECTION / CORBIS

A letter from ThomasJefferson to John Jay

he instinct to tell what we have seen,” observes curator

Stacey Bredhoff of the National Archives, “is as old as hu-

manity.” Thomas Jefferson recounts the storming of the

Bastille with the ambition of a cub reporter; Lady Bird John-

son confesses that witnessing the Kennedy assassination was simply “too

great a thing to have alone.” Whatever the reasons for it, it is to this im-

pulse to record that we owe “Eyewitness: American Originals From the

National Archives,” an exhibit running now until next January in Wash-

ington, D.C., and scheduled to travel later around the country. In the pages

that follow are selections from that exhibit: letters, transcripts, and di-

aries—from Americans famous and not—that revive crucial moments in his-

here,” and our SS man . . .vaulted over the front seat ontop of Lyndon, threw him to

the floor and said, “Get down.” Sena-tor Yarborough and I ducked ourheads. The car accelerated terrificallyfast—faster and faster. Then suddenlythey put on the brakes so hard that Iwondered if they were going to makeit as we wheeled left and went aroundthe corner. We pulled up to a build-

BOTTOM, FROM LEFT: NATIONAL ARCHIVES; NATIONAL ARCHIVES / CORBIS42 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

When it set out to investigate JohnF. Kennedy’s 1963 assassina-tion, the Warren Commission

collected accounts from as many wit-nesses as possible—including Lady BirdJohnson, wife of the man who would takeKennedy’s place. But rather than bringthe new first lady in to testify, the com-mission accepted a transcript of heraudio diary.

Two or three days after the assassina-tion in Dallas, Lady Bird recounted herexperience into a tape recorder, speak-ing slowly and deliberately. About a yearlater, when the Warren Commission is-sued its final conclusions—that the as-sassination had been the work of a lonekiller, Lee Harvey Oswald, not part of alarger conspiracy—Mrs. Johnson waslisted as one of many dozen witnesses.

It all began so beautifully. After adrizzle in the morning, the sun cameout bright and beautiful. We weregoing into Dallas. In the lead car,President and Mrs. Kennedy, Johnand Nellie, and then a Secret Servicecar full of men, and then our car—Lyndon and me and Senator Yarbor-ough. The streets were lined with peo-ple—lots and lots of people—thechildren all smiling, placards, confet-ti, people waving from windows. One

last happy moment I had was lookingup and seeing Mary Griffith leaningout of a window waving at me. Thenalmost at the edge of town, on ourway to the Trade Mart where we weregoing to have the luncheon, we wererounding a curve, going down a hilland suddenly there was a sharp loudreport—a shot. It seemed to me tocome from the right above my shoul-

der from a building. Then a momentand then two more shots in rapid suc-cession. There had been such a galaair that I thought it must be fire-crackers or some sort of celebration.Then, in the lead car, the Secret Serv-ice men were suddenly down. I heardover the radio system, “Let’s get out of

Special Report

First the Sunshine, Then the Horror

Sometimes, war really can bringfreedom. It did, at least, in thewinter of 1862, for a slave named

John Boston, who writes to his wife, Elizabeth, from Upton Hill, Va., wherehe had joined a Brooklyn-based regi-ment of the Union Army. Thousands of other slaves made similar movesduring the four years of the Civil War. Many fugitives were caught orkilled when they fled. As workers, in-formants, and soldiers in the UnionArmy, they put their lives on the lineone more time.

Elizabeth Boston may never havelearned that her husband was one of thelucky ones. Authorities interceptedBoston’s letter, and its final possessor

Sweet Freedomand Its High Price

“I…saw a bundle of pink, just like a drift of

Black Union soldiers,(right); a poignant letter

from a fugitive slave

BETTMANN / CORBIS

TOP RIGHT: SCALA / ART RESOURCE U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 43

ing. I looked up and saw it said “Hos-pital.” Only then did I believe thatthis might be what it was. . . . I castone last look over my shoulder andsaw [in the president’s car] a bundleof pink, just like a drift of blossoms,lying on the back seat. I think it wasMrs. Kennedy lying over the presi-dent’s body . . . .

Embedded reporting had not yet beeninvented when Thomas Jeffersonwatched a mob of Frenchmen storm

the Bastille in 1789. As a result, his ac-count is limited only by the quality of hissources. “How they got in,” he wrote of themen and women who started the revo-lution, “has as yet been impossible to dis-cover.” Other events Jefferson relaysmore confidently and with shocking calm.

And why not be confident? After all,America’s minister to France saw all ofthis with his own eyes. Before the riots,he had been watching King Louisxvi call a meeting of the StatesGeneral at Versailles to discussthe country’s financial crisis.When chaos broke, he fol-lowed the mobs into thestreets of Paris.

The people now armedthemselves with suchweapons as they could find inarmourer shops & private hous-es, and with bludgeons, & wereroaming all night through all parts ofthe city without any decided & practi-cable object. The next day the Statespress on the King to send away thetroops, to permit the Bourgeoise ofParis to arm for the preservation oforder in the city, & offer to send a dep-utation from their body to tranquilizethem. He refuses all their propositions.. . . The mob, now openly joined by theFrench guards, force the prisons of St.

Lazare, release all the prisoners, & takea great store of corn, which they carryto the corn market . . . . On the 16th . . .they send one of their members . . . tothe Hotel des Invalides to ask arms fortheir Garde Bourgeoise. It was remark-able that not only the Invalids them-selves made no opposition, but that abody of 5000 foreign troops, encampedwithin 400 yards, never stirred. Mon-sieur de Corny and five others werethen sent to ask arms of Monsieur deLaunai, Governor of the Bastille . . . .

The depositition prevailed on thepeople to fall back a little, ad-

vanced themselves to maketheir demand of the Gover-nor, & in that instant adischarge from the Bastillekilled 4 people of thosenearest to the deputies. Thedeputies retired, the people

rushed against the place,and almost in an instant

were in possession of a fortifica-tion, defended by 100 men, of infi-

nite strength, which in other times hadstood several regular sieges & hadnever been taken . . . . They took all thearms, discharged the prisoners & suchof the garrison as were not killed in thefirst moment of fury, carried the Gov-ernor and Lieutenant Governor to theGreve (the place of public execution)cut off their heads, & sent themthrough the city in triumph to thePalais royal.

A Captivated American in Paris

Lady Bird recordsher diary; inset, thefateful motorcade.

Jefferson recountsthe storming of theBastille in 1789.

blossoms, lying on the back seat.” LADY BIRD JOHNSON, 1963

ROBERT KNUDSON—NATIONAL ARCHIVES

CHARLES THEVENIN, STORMING OF THE BASTILLE, JULY 14, 1789, REUNION DES MUSEES NATIONAUX / ART RESOURCE

was not Elizabeth but Edwin Stanton,the secretary of war.

My Dear Wife it is with grate joy i takethis time to let you know whare i am iam now in Safety in the 14th Regimentof Brooklyn this Day i can Address youthank god as a free man i had a littletrouble in giting away but as the lordled the Children of Isrel to the land ofCanon So he led me to a land whare fre-dom will rain in spite Of earth and hellDear you must make your Self content iam free from al the Slavers Lash and asyou have chose the wise plan Of Servingthe lord i hope you will pray Much andi will try by the help of God To Serv himwith all my hart i am with a very niceman and have All that hart can wishBut my Dear I Cant express my gratedesire that i have to See you i trust thetime will come when we Shal meetagain And if we dont met on earth wewill Meet in heven whare Jesus ranes.

Editor’s note: Punctuation and spellings are unchanged from the original documents.

“Every car was loaded with bodies. …thousa

The mother of three U.S. senators,one of whom became president, en-joyed “one of the most fabulous, fas-

cinating experiences of [her] life” not onCapitol Hill or at the White House butabroad. In December 1937, PresidentFranklin Roosevelt appointed RoseKennedy’s husband, Joseph, U.S. ambas-sador to Great Britain. A longtime busi-nessman, Joseph Sr. had fought hard towin the top diplomatic post; as he re-peatedly told one son, Robert, “Thingsdon’t happen, they are made to happenin the public relations field.”

The appointment, which would even-

Before he actually went there, Pfc.Harold Porter read about Germanyin the socialist Jan Valtin’s Out of

the Night. The book’s account of the vi-cious Gestapo, the Nazi’s secret police,seemed to him “preposterous.” Then, inMay of 1945, he went to Germany as amedic with the U.S. Army and changedhis mind. His troop, the U.S.

Army’s 116th evacuationhospital, was one of the first medicalunits to enter the notorious concentra-tion camp at Dachau after its liberation.Between 1940 and 1945, more than28,000 people died there, and by April1945, 32,000 sick and starving prison-ers—jammed into a space intended forone-third that number—were neardeath. In the excerpt below, Porterwrites to his parents about what he saw.

Dear Mother and Father,. . . By this time I have recovered

from my first emotional shock and amable to write without seeming like ahysterical gibbering idiot. Yet, I knowyou will hesitate to believe me no mat-ter how objective and factual I try to

NATIONAL ARCHIVES44 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

be. I even find myself trying to denywhat I am looking at with my owneyes. Certainly, what I have seen in thepast few days will affect my personali-ty for the rest of my life. We knew aday or two before we moved that wewere going to operate in Dachau, andthat it was the location of one of the

most notorious concentrationcamps, but while we expectedthings to be [grisly], I’m sure noneof us knew what was coming. It iseasy to read about atrocities, butthey must be seen before they canbe believed.

The trip . . . was pleasantenough. . . . The Bavarian Alpscountry, with the cottages, rivers,country estates . . . was almost likea tourist resort. But as we came tothe center of the city, we met atrain with a wrecked engine—

about fifty cars long. Every car wasloaded with bodies. There must havebeen thousands of them—all obviouslystarved to death. This was a shock of thefirst order, and the odor can best beimagined. But neither the sight nor theodor were anything when comparedwith what we were still to see.

Marc Coyle . . . took me to the cremato-ry. Dead SS troopers were scatteredaround the grounds, but when wereached the furnace house we came upona huge stack of corpses piled up like kin-dling, all nude so that their clotheswouldn’t be wasted by the burning.There were furnaces for burning six bod-ies at once, and on each side of them wasa room twenty feet square crammed tothe ceiling with more bodies—one bigstinking rotten mess.

Royal Hosts anda Giddy Guest

A Loyal Servant’sGuilty Confession

Recalling a ‘Shock of the First Order’

In late February 1933, Theodore Joslin ofWashington, D.C., took a precautionmany others across the country had al-

ready taken. Two weeks earlier, the gov-ernor of Michigan had declared a “bank-ing holiday” after two of his state’s largestbanks came close to failure. Fearing worseto come, Americans across the countrypulled out their savings, putting themoney into mattresses, shoe boxes, andother hiding places—anywhere but thebank. Joslin followed suit, withdrawingthe greater part of his checking account.And as any secretary might, he guiltilyconfessed his decision to his boss—Presi-dent Herbert Hoover. The conversationis recounted in Joslin’s diary.

The banking crisis lasted through theend of Hoover’s presidency; by the timeFranklin Roosevelt took office, Ameri-cans had withdrawn more than $1.2 bil-lion from banks in just two weeks.Hoover had left, but Joslin was stillaround to witness fdr’s reaction: “Look-ing angry and depressed,” Roosevelt isreported to have said: “We are at the endof our string.”

Tuesday, Feb. 28, 1933The people are more panic stricken

today than at any time since the begin-ning of the depression. This is nowquite strictly a banking panic, which

Prisoners cheer their liberators.

HULTON-DEUTSCH COLLECTION / CORBIS

nds of them…starved to death.” HAROLD PORTER, 1945

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 45

is drying up business as never before.Speaking to Ogden Mills this after-noon, the President said:

“As a matter of fact we are dealingwith three panics, banking, currency,and gold. It seems to me that clearinghouse scrip would best meet the situa-tion. If such scrip should be issued, itwould be used. I do not respond to thesuggestion of guaranteeing bank de-posits. If we should guarantee 75 per-cent of the deposits, it might well be thatwithdrawals would continue. But thepolicy of banks in distress making pay-ments of five or ten percent is no good.It is limiting business dreadfully.”

Monday, Feb. 27, 1933

The Commer-cial did openthis morning and althoughI felt unpatriotic in doing so, I drewout most of the money in my checkingaccount and had Rowena come in andwithdraw her savings account. And Itold the President what I had done.

“Don’t hoard it, Ted,” was his only

comment. “Put itin another bankthat is safe. Iwould suggest theRiggs. It is themost liquid.”

But I am “hoard-ing” temporarily.No bank is reallyliquid today andwon’t be until this

panic is over. The daily hoarding fig-ures from the Treasury are [ghastly].That of yesterday was $165,000,000bringing the total to in excess of$2,200,000,000.

Special Report

tually end Joseph Sr.’s politicalcareer, began brightly. Britishsociety embraced the Kennedys,inviting them to events that left their photographs—father,mother, and especially the chil-dren—scattered throughout theBritish papers. The family’sbeautiful matriarch, Rose, re-ceived an especially warm wel-come. This diary entry describesthe highlight of her three-yearhoneymoon with British highsociety: the family’s trip to meetKing George vi and his wife,Queen Elizabeth, at their homein Windsor Castle.

We came up from London in an em-bassy car from Windsor and drovethrough a large and beautiful park to

arrive at the castle at 7:00 p.m. Therewe were met by the master of the house-hold, Brig. General Sir Hill Child, whoconducted us to our rooms. They were in

one of the towers with a lovelyview of the park, and were up-holstered in red damask &white linen paper: there wereaccessories in gold and white.In my bedroom was a hugebed, also upholstered in reddamask and set high, so onehad to use a step stool to enterit. There were numerous serv-ants in evidence, in full livery;soon one of them brought ussherry. Another, who as well aslivery wore a peruke, was especially appointed to attendus and led the way wheneverwe left the suite.

After a few minutes of contemplat-ing the scene, Joe turned to me andsaid, “Rose, this is a hell of a long wayfrom East Boston.”

PANIC. Depositorsbesiege a bank inPassaic, N.J.; Joslin(right) with Hoover.

The Kennedys in London

BETTMANN / CORBIS (2); (INSET) NATIONAL ARCHIVES

HULTON-DEUTSCH COLLECTION / CORBIS

Just hours after attacking Pearl Har-bor, Japan invaded the Philippines.The second assault was less imme-

diate but arguably much longer lasting—longest of all for the thousands of Amer-ican civilians living there at the time,who quickly became Japan’s captives.Many of them would remain internedthere until the end of the war, with lit-tle attention from home. American RedCross worker Marie Adams, interned ina Manila camp for more than threeyears, writes about her experience afterbeing liberated in 1945.

When we read that each week a foodkit was being distributed to prisonersheld in Europe, I think our morale hitan all-time low. We had known thatwe were isolated from the world, butthe fact was truly driven home to us bythat information more than anythingelse. We felt that we were indeed the“lost tribes of the Philippines”—no con-tact with home, no contact with theRed Cross, no contact with the outsideat all, and none to be expected. Peoplebecame very nervous and irritable thatyear. The mail situation was a con-tributing factor. Some in the camp re-ceived none at all. I received my firstletter, then eighteen months old, inMarch 1944. Between then and Novem-ber 1944, I received altogether sixty-eight letters, none of which wasyounger than a year. My family re-ceived my first letter two weeks before Iwas liberated. . . .

In my May [post]card, which theyreceived just before I was liberated, Iasked them to send me milk, meat,sugar, butter, chocolate, soap, and var-

‘I t’s weird,” wrote George H. W. Bushin his diary entry for Aug. 9, 1974,the day that Richard Nixon

became the first president in Ameri-can history ever to resign from the of-fice. One question seemed to keep com-ing up: “What kind of a man is this really?”

That summer, news of Nixon’s ties toa break-in at the Democratic NationalCommittee’s Watergate headquartershad led to even worse revelations. Fac-

ing impeachment, Nixon an-nounced on August 8 that he would resign. The nextday, in his last hours as president, he made a pri-vate farewell speech. Bush,whom Nixon had appointedchairman of the RepublicanNational Committee, got to sit in. Thespeech was “masterful,” Bush noted,but—in a telling contradiction—its au-dience was noticeably small.

There is no way to reallydescribe the emotion of theday. Bar and I went downand had breakfast at theWhite House. Dean andPat Burch and theBuchanans were there inthe Conference Mess. Therewas an aura of sadness,like somebody died. Grief.Saw Tricia and Eddie Cox

in the Rose Garden—talked to themon the way into the ceremony. Presi-dent Nixon looked just awful. Heused glasses—the first time I ever saw

BETTMANN / CORBIS46 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

ious toiletries. I thought that thatmight convey the message that we hadnothing to go on. However, just afterthat, in June, the Japs forbid us to giveany further information about whatwe needed or wanted.

Among the minor irritants towardthe last was the fact that we had to bowto every Jap we met. That seemed to geton people’s nerves more than any othersingle thing. . . . During the last few

months there was a tensionamong the internees that is al-most indescribable. Irritabilityis one of the first symptoms ofstarvation, and certainly thatsymptom was marked amongus. We were all cross, irritable,and edgy; we argued aboutthings that were utterly in-significant. We were ready toclaw each other’s eyes out—overnothing at all. We were hungry;we were starved. When I went tobed at night, I felt just on theverge of screaming. I ached to

the ends of my fingers and toes, withthe most horrible ache that I have everexperienced. We were so thoroughly de-pleted that frequently I would sit onmy bed and stare at the sink in the cor-ner of the room, wondering whether itwas worth while to make the effort toget up and go over to it to wash myhands, or whether it wouldn’t be betterto wait until lunch-time to do it, be-cause it would save that much energy.

Special Report

We Were Hungry;We Were Starved

George H. W. Bush

PRISONERS. Internees at a camp nearManila. Below, Adams, 95 pounds atliberation, helps a detainee.

UPI—BETTMANN / CORBIS

NATIONAL ARCHIVES

Last Digs in a Tearful Farewell

to, a sailor says that a number of thesecoming out have been innoculatedwith design of spreading the smallpoxthro this country camp. I have commu-nicated this to the General Court & rec-ommended their attention thereto.They are arming one of the transportsin Boston with which they mean todecoy some of our armed rebels, as weare appraised of their design, I hopethey will be discounted.

My best respects rain on the Gentle-men in Congress & I am

Sir, your most Humble ServantG. Washington

Everyone knows John Hancock hadquite a signature. He is less famous,however, for being the first recipi-

ent of a full-blown bioterrorism warn-ing. It’s not exactly “Bin Laden Deter-mined to Strike,” but a longhand letterfrom Gen. George Washington, written toHancock in the winter of 1775 from theContinental Army’s basein Cambridge, Mass.,comes close.

Washington had spentthe previous decade and a half tending his crops and slaves at Mount Ver-non. But when the Sec-ond Continental Con-gress called a meeting inPhiladelphia, he left Vir-ginia and traveled north.Soon he was even far-ther away from home, inCambridge, relaying badnews. The Revolutionarytroops, Washington in-formed Hancock, thenpresident of the Conti-nental Congress, mightbe at risk of becoming vic-tims of smallpox spreadby British troops. A seriesof similar letters in the

them. Close to breakingdown—understandably.Everyone in the room intears. The speech wasvintage Nixon—a kick or two at the press—enormous strains. Onecouldn’t help but look atthe family and the wholething and think of hisaccomplishments andthen think of the shameand wonder what kindof a man is this really.No morality—kickinghis friends in thosetapes—all of them. Gra-tuitous abuse. Caringfor no one and yet doing so much.When he used the word “plumbers”meaning it “laboring with his hands”the connotation was a shock on me. I remember Lt. Col. Brennan who has been with him so long—Marine—

standing proudly but with tears run-ning down his face. People who la-bored next to Nixon’s side forever arenot invited. It’s weird. The Nixonspeech was masterful. In spite of his inability to totally resist a dig at

the press, that argu-ment about hating—only if you hate do youjoin the haters. Afterthe Ford swearing inmany of the pictureswere changed with agreat emphasis on thenew President. We . . .hung around waitingfor the swearing in ofFord. And then thewhole mood changed. It was quiet, respectful,

sorrowful in one sense, but upbeat.The music and the band seemedcheerier, the talking and babbling ofvoices after Ford’s fantastic speech,crowds of friends, indeed a new spir-it, a new lift.

Special Report

BOTTOM, FROM LEFT: DAGLI ORTI—MUSEE DU CHATEAU DE VERSAILLES / ART ARCHIVE; NATIONAL ARCHIVES U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 47

More documents and photographs from “Eyewitness: American Originals From the National Archives” may be found at www.usnews.com

same month from Washington to Con-gress continued to mention the threat.

Whether Washington’s fears of aBritish smallpox attack became truecannot be proved; it is known, how-ever, that between 1775 and 1782,smallpox killed more Revolutionary sol-diers than did the Revolution.

There is one of part ofthe information that Ican hardly give credit

Military Origins of a Modern Fear

SHAMED. Nixon offers a finalwave after parting words to asurprisingly small crowd.

THOMAS O’HALLORAN FOR USN&WR

George Washington

MARK RICHARDS48 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Kit R. Roane

Intel has long been locked in a brutalchess game with chip rival AdvancedMicro Devices. Now it looks as if theworld’s biggest chipmaker is ready to

sacrifice the rest of its pawns.The Santa Clara, Calif.-based Intel is

set to release several new products overthe next few months, including a high-ly anticipated chip for servers. But Intelis already hitting back hard at its SiliconValley rival on another front: price.

In an attempt to stem a slow loss of

market share, Intel has deeply dis-counted what computer manufacturerspay for many of its existing processors.amd has been forced to cut prices aswell. And further cuts could be coming,analysts say. That means consumers inthe market for a new computer couldsoon get even bigger bargains.

“You will certainly get more bang forthe buck,” says Toni Duboise, senior ana-lyst of desktop computing at CurrentAnalysis, a market research firm. Shenotes that both Intel- and amd-basedmachines with 64-bit processors can

now be had for $499, about $100 lessthan they were earlier this year. And, sheadds, “you are getting more performancefor your investment.”

Upgrades. Consumers and the compa-nies that assemble computers, such asDell, aren’t the only ones that will ben-efit from this battle. Suppliers of pe-ripherals like hard drives and dvd burn-ers may also be helped as the box makerschoose to use the savings on processorsto offer consumers upgraded compo-nents, analysts say.

But for Intel and amd, this could verywell be a bloody war that produces noclear victor. Profit margins are sure tosuffer. And Intel’s push to regain marketshare—it still supplies some 80 percentof semiconductors used in pcs world-wide—comes at a time when both com-panies are already contending with a glutof chips on the market.

Needham & Co. managing directorCharlie Glavin believes that by next yearovercapacity will probably reach 20 per-cent. By 2008, it could hit 40 percent.“And neither company can cut back oncapital spending because both companieshave to keep getting down to smaller and

CHIPPING AWAYAT TECH PRICES A Silicon Valley slugfest between Intel and AMDshould serve up some bargains for computer buyers

Money & BusinessChip warfare mayhurt Intel and AMDbut help buyers.

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 49

smaller size chips in order to com-pete on power and cost,” saysGlavin. He adds that he doesn’tquite understand why “Intel andamd are content to spoil a per-fectly good oligopoly” with thisprice war.

Bad news? amd is already show-ing the strain. Intel’s talk about fur-ther price cuts has kept chip buy-ers on the sidelines. Citing thislower demand, amd this monthlowered its revenue and earningsoutlook. It also warned that sec-ond-quarter revenue would fall by9 percent to about $1.22 billion.

Intel has remained mum on itsoutlook, but both companies areset to report earnings this week.Some analysts fear that Intelmight also release bad news. Ithas cut its chip prices by an esti-mated 50 to 60 percent. Lastweek, Intel announced plans tolay off 1,000 managers, and morecuts are in the offing.

Merrill Lynch analyst Joe Oshawrote to clients in a note titled“The Shoe Drops” that both com-panies were hurting, with the com-panies’ aggregate processor rev-enue set for a double-digit declinefrom this year’s first quarter.

“It’s setting up to be a realslugfest,” Osha says. “That die isalready cast,” he adds. “You can’tput the capacity in place, then nottry to fill it. . . . If you sit back, you

get hurt anyway.” Sitting back is what got Intel into trou-

ble in the first place. Over the past twoyears, amd has come up strongly frombehind by developing innovative chipsthat might not always have been fasterbut that accomplished tasks using lesspower and producing less heat. EvenDell, one of Intel’s most stalwart cus-tomers, now uses amd chips in some ofits computer lines.

Intel is fighting back with new chipsslated for release this year that it says areboth more advanced than its rival’s anduse less power. But with no new killerapplication to boost demand—Micro-soft’s Vista operating system won’t bebroadly released until at least January—there is little on the horizon that mightspur demand for new computers or giveeither chipmaker a clear edge. So pricebecomes the great motivator.

In the end, Intel’s decision to slashprices may help rattle amd’s recentlynear-perfect game. amd is unlikely tocede much of the market gains it hasmade, but the war will surely bring itsgross margins down. Intel’s margins arealready low and, as a much bigger rival, it

By Paul J. Lim

Adiscouraging word is beginningto be heard on Wall Street: the“R” word, as in recession.For months, brokers and bond

traders have marveled at how the U.S.economy has been hot enough to goosethe stock and labor markets but not sohot as to ignite inflation. But after 17straight interest-rate hikes by the Fed-eral Reserve Board over the past twoyears, many now fear that the economyis cooling down rapidly. Merrill Lyncheconomists, for example, believe thereis a one-third chance that the U.S.

economy will slip into recession some-time next year.

The majority on Wall Street are stillforecasting a slowdown, not an official re-cession of two quarters with negativegrowth. But the economy is clearly in itslate phases of expansion, and most mar-ket watchers predict business activity willweaken further. The June labor marketreport—which showed a worrisome dropin the number of new jobs created—onlyfueled fears that consumers, alreadystrapped by rising gas prices and higherinterest rates, will pull back even more.“The blocks are in place for a recession in2007,” says James Stack, editor of the In-vesTech Market Analyst newsletter.

One key indicator is that treasurynotes and bonds are now yielding lessthan the federal funds rate, which iswhat banks charge one another onovernight loans. Typically, long-termbonds are supposed to pay more thanshort-term debt because investors expecta greater return for tying their money upfor longer periods of time.

Inversion. But today, the federal fundsrate, the shortest form of debt, stands at5.25 percent while 30-year bonds werepaying just 5.11 percent last week. Whilenot a perfect predictor of pending re-cession, this type of yield-curve inversion“is a strong signal that growth is going to

slow measurably,” says Mark Zandi,chief economist for Moody’s Econ-omy.com. Zandi, though, does notpredict a recession, noting strongcorporate profits.

A recession would almost cer-tainly spur layoffs and send the un-employment rate, currently a mod-est 4.6 percent, back up above 5percent. It could also hurt the stockand housing markets, both of whichare already cooling.

In the past quarter century, trea-sury bond yields have slipped belowthe Fed funds rate only four othertimes. “And each of these preced-ed either a downturn in the econ-omy, a major financial strain, or

both,” says David Rosenberg, NorthAmerican economist for Merrill Lynch.The last time treasury bonds were allyielding less than the federal funds ratewas March 2000, just before stocks fellinto a grisly bear market and about ayear before the 2001 recession.

Ironically, it was as recently as Maythat economists were fretting about in-flation, not recession. But history showsthe economy can go from too hot to toocold in a hurry. Since 1920, the time be-tween the last in a series of Fed ratehikes aimed at slowing the economy andthe first in a series of rate cuts to spurgrowth has been just 5.5 months, ac-cording to Ned Davis Research. l

can withstand a lot more pain. WithIntel’s stock in the dumps, some analyststhink a floor of sorts has developed. A fewsee an upswing in the making.

Whether this is the first salvo in a warthat will lead Intel back to its former gloryis another question. Semiconductors areused in everything from automobile and

telecom components to cellphones, digi-tal televisions, and video games. But Intelno longer reigns supreme, and nobodyseems willing yet to bet on when it mightdo so again. “Is Intel back on the trajec-tory to being the kind of industry-leadingcompany it was?” asks Osha. “On that,the jury is still out.” l

MUTTERING THE ‘R’ WORDSome on Wall Street spy a recession on the horizon

FINAL ART

SLUG: 330G1ARTIST: cadySTORY: 24econPAGE:Copyright © 2005 by U.S. News andWorld Report. All rights reserved

TOPSY-TURVY RATESWhen short-term interest rates exceed long-term treasury yields, recession often follows.

5.00

5.04

5.08

5.12

5.16

5.20

5.24

5.28

Source: Bloomberg

5.11%30-year bond

5.25%federalfunds rate

2-year note

10-year note

Note: Treasury yields as of July 13

5.03%5-year note

USN&WR

50 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Rick Newman

Fredy Bush couldn’t have known,but 1999 turned out to be a badyear for an American to start abusiness in China. Shortly aftershe founded Xinhua Finance, a

financial news and information com-pany similar to Reuters or Standard &Poor’s, the dot-com bust began to mush-room, and venture capitalists suddenlysnapped their walletsshut. Then Chinesefighter jets forced downa U.S. surveillanceplane on Hainan Island,putting Washingtonand Beijing nose tonose. The Sept. 11, 2001,terrorist attacks and aworldwide recession fol-lowed soon after, andthen the sars virusturned much of Asiainto a quarantine zone.“I stayed awake at nightwondering if we wouldgo bankrupt,” Bush, 47,recalls. “Every macro-economic and geopolit-ical event seemed to begoing against us.”

Her company rodeout the turbulence,however, and XinhuaFinance is now poisedto play a key role in thesurge of foreign invest-ment in China—and benefit handsome-ly from it. The kind of data it publishes—market analysis, credit ratings onhundreds of companies, stock and bondindexes—is manna to investors desper-ate to understand one of the world’smost exciting, yet abstruse, economies.In 2005, the company’s revenue grew 84percent, to $110 million. And the growthof Xinhua Finance itself—founded notby a deep-pocketed corporation but by asingle mom without a college degree—

serves as a parable for American entre-preneurs seeking their fortunes in trickyforeign markets. “She’s not the usualbrash American businessperson,” saysClifford Ng, a lawyer with Preston, Gates& Ellis in Hong Kong, which helped takeXinhua Finance public in 2004. “She’svery good at building the relationshipfirst and making people comfortablewith her. Then the deal gets easy.”

Few people begin their careers less like-ly than Bush to end up asa globetrotting dealmaker. Bush was raisedas a Mormon in Utah,where she was marriedwith two kids by the timeshe was 19. During herfirst year of college, herhusband died in a mo-torcycle accident. Shemigrated to Californiaand ended up workingfor a woman from Tai-wan, who told Bush shecould make $3,000 amonth working as anEnglish-speaking assis-tant to a government of-ficial over there. So in1985, she packed up her8-year-old son and 5-year-old daughter andmoved to Taipei—un-aware that, among otherthings, the island statewas under martial law.

Quick study. The jobpaid off, though. She worked as a clerk tothe secretary general of Taiwan, respon-sible for helping purchase commoditieslike corn, soybeans, and grain. In 1988,after martial law had been lifted, the gov-ernment started to privatize state-ownedbusinesses, and markets began to open up.Bush saw a chance to apply what she hadlearned, starting a commodities consult-ing business called the Bush Corp. Mean-while, she started studying Mandarin Chi-nese and the global securities markets.

With China gradually opening up—much the way Taiwan had—Bush movedto Hong Kong, then to Beijing, and fi-nally to Shanghai. Along the way, shesent her kids to high school and collegein the States, traveling to homes in SanFrancisco and Hawaii, where they wereenrolled. She hired nannies to stay withthem until they were older and “com-muted” to be with them on weekendsand holidays.

In the mid-1990s, Bush and her com-pany started working with the XinhuaNews Agency, the official news outlet ofChina’s Communist government. WithChina eager to attract foreign money,party ministers knew they’d have to startdemystifying their economy and pro-viding more transparent financial data.Bush provided quotes and analysis to theagency much as she had to clients in Tai-wan, and got to know key insiders. Busi-ness was good. She made enough moneyto ensure, for the first time, that shecould finance good colleges for her kids.

Money & Business

Fredy Bush has builtXinhua Finance intothe market leader.

PLAYING THE CHINA CARD

A single mom from Utah finds a way into the soul and wallet of the Middle Kingdom

Person: Fredy Bush, 47

Position: Founder andCEO, Xinhua Finance, aShanghai-based news andinformation company

Revenues: $110 million

Strategy: Partner withChina’s Xinhua NewsAgency, recruit westerntalent, buy other firms

Stake: Over $40 million

“I stayed awakeat nightwondering ifwe would gobankrupt.”

GREG GIRARD FOR USN&WR U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 51

By 1999, Bush believed strongly thatChina would become a member of theWorld Trade Organization, with a boomin foreign investment sure to follow. Sheapproached contacts at Xinhua NewsAgency with a bigger plan than before,asking them to license its name and in-vest in a financial news service. Bush re-alized it was one of China’s strongestbrands and a powerful marketing de-vice. “Xinhua has a name and authori-ty and presence that’s indisputable inChina,” she says. “If we had called thecompany China Finance, and it wasbeing run by a foreign woman in China,with no partnering, I don’t think itwould have been successful.”

The news agency ended up with a sin-gle-digit ownership stake in Xinhua Fi-nance and control of two of nine boardseats. A news agency executive, WuJiguang, became chairman of Xinhua Fi-nance. Bush knew that a Chinese faceatop the company would play well withher local audience. She became vice

chairman and ceo. Then, to build cred-ibility with the outside investmentworld, Bush recruited executives fromfirms such as Standard & Poor’s, kpmg,Moody’s, Credit Suisse, and Citigroup.She also knew it was critical that hercompany be perceived as independent ofthe Chinese government and the Com-munist Party. One step was formingpartnerships with Lehman Bros. and theftse Group, publisher of London’s ftse

100 index, and adopting their method-ologies for measuring stocks and bonds.Bush says that not once has any Chineseauthority tried to change or censor any-thing. “We’ve been watching them fortwo years, and we keep liking what wesee,” says Jared Carney of the Milken In-stitute, the Los Angeles-based econom-ic research outfit, which plans to cospon-sor a new set of Chinese economicindicators with Xinhua Finance.

Head start. Bush’s strategy appears tobe working. China’s accession to thewto in 2001 drew legions of multina-

tional corporations to theMiddle Kingdom. Yet eventhough it competes with bigwestern companies like DowJones, Reuters, and Moody’s,Xinhua Finance stands out.“We believe Xinhua’s growthopportunity in China isunique,” analyst MichaelGilmore of Nomura Securi-ties wrote recently. The nameis one advantage. So is thehead start. With more than1,000 employees who pro-duce about 300 news storiesand analyses each day, Xin-hua Finance has a broaderreach than any other com-pany operating in China. Ithas an aggressive build-outplan, too. Instead of coastingon the Xinhua name, Bush is acquiring companies thatspecialize in related fieldslike investor relations and fi-nancial broadcasting—alongwith proprietary databasesand methodologies that willenhance the company’s repu-tation for hard data.

As for her lack of formalschooling, Bush has gatheredthe kind of business intelli-gence during two decades inAsia that grad schools andconsultancies can’t teach.One tip: Be nice. “In Asia, it’salways about manners andpoliteness,” she says. “In theU.S., it’s more like, ‘I’m doing

business with you, but I’m going to saymean things about you anyway.’ ” Cul-tural insights matter too, she insists. Inaddition to wisdom, Bush has also foundwealth in Asia. She owns more than 5percent of Xinhua Finance, currentlyworth more than $40 million.

In China, of course, there are alwaysrisks, such as the threat of runaway in-flation. And analysts like Gilmore pointout that Xinhua Finance could becomeoverstretched if it expands too quick-ly, in too many directions. But if Bushand her team put the pieces togetherright, they could be sitting atop an em-pire in a few years. There’s still nowherenear enough data to satisfy investorspouring money into China, and XinhuaFinance’s early lead could help form a new kind of financial powerhouse.“Think of a company with the combinedpower of cnbc and s&p,” says Gilmore.“It would shoot competitors out of thewater.” Bush & Co. may soon be party-ing like it’s 1999. l

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U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 53ILLUSTRATION BY OMAR LEE FOR USN&WR

By Kerry Hannon

When Lisa, an artist, wassheepishly asked by hersoon-to-be spouse, aWashington, D.C., at-torney, to sign a prenup-tial agreement, she flat

out refused. “I thought it was sure todoom our marriage,” she says.

Lisa, who did not want to be identifiedfurther, is not alone. Being asked to sign aprenup is a sensitive request. It conjuresup feelings of distrust and heartlessness.

It’s as if your fiancé is planning the exitstrategy even before the honeymoon.

Love me do? Most people think of mar-riage as the ultimate emotional and spiritual bond. By all accounts, PaulMcCartney felt that way when he mar-ried Heather Mills four years ago. Nowthat the pair has split, legal experts es-timate he could lose up to a quarter of hisestimated $1 billion fortune because hereportedly felt that asking her to sign aprenup was unromantic.

But marriage, especially for matureboomers, of whom 28 percent have been

married twice or more, in many respectsis a business. Simply put, a prenup is adocument or pact signed before your mar-riage that details how your financial as-sets, such as real estate, cars, savings, in-vestment portfolios, and pensions, will bedoled out when the marriage ends eitherin divorce or the death of a spouse. Andthere are liabilities to consider as well.Your heart’s delight may have debts andliabilities you know nothing about. Col-lege loans, for example, may be due thatcould amount to a hefty $70,000 or more.If the person you’re planning to marry has

Money & Business

PRIME TIMEPERSONAL FINANCE | INVESTING | RETIREMENT PLANNING

Planning for Love and Money A prenuptial agreement certainly isn’t romantic, but it could prove indispensable

$

ILLUSTRATION BY HARRY CAMPBELL FOR USN&WR54 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

been married before, he or she may havechildren to rear. The agreement, however,can’t cover some issues related to chil-dren, such as child support or custody.

While starry-eyed McCartney seem-ingly put love before money, more andmore couples aren’t doing that. They’reslipping the contract, which is valid in all50 states and the District of Columbia,onto their wedding planning to-do listsalong with picking a cake and acaterer. “There has been a me-teoric rise in prenuptial agree-ments and postnups in the lastfive years,” says Arlene Dubin,a matrimonial attorney at Son-nenschein Nath & Rosenthal inNew York City and author ofPrenups for Lovers. She esti-mates that her prenup businesshas doubled since 2001.

At the New York-basedEquality in Marriage Institute(www.equalityinmarriage.org), a nonprofit that advisescouples, the number of in-quiries about prenups fromboth men and women has climbed from1,500 a month in 2003 to some 5,000 amonth so far this year. But no one real-ly knows how many prenups exist. Un-like a divorce filing, a prenup isn’t a pub-lic document but simply a contractsigned between two people—both rep-resented by separate and independentlegal counsel—before a marriage. “Manycouples keep these spouse-to-spousearrangements between themselves andtheir lawyers,” says Dubin. “They’re awk-

ward about them in some way. One re-cent client was so embarrassed she didn’teven tell her mother.”

The current boom in prenups makesperfect sense. “Couples are looking atmarriage like a business contract for sev-eral key reasons,” says Dubin. First, theyare getting married later in life than pre-vious generations, often in their mid-30s. By then, they have accumulated

some wealth in 401(k) retirement plansand iras and often a home or a condo.“People are shocked when they realizethat an ira in their name is really a mar-ital asset,” she says.

Second, they’re entering marriagewith advanced degrees that will have en-hanced earning power in the years tocome. In some states, like New York, po-tential future earnings are consideredmarital property. Third, boomers are inheriting money from parents in a

massive generational shift in wealth. Finally, there’s the gloomy fact that half

of all marriages end in divorce. Second-time-arounders, particularly agingboomers with children from a first mar-riage, are more likely to meet head-on thedifficult and delicate discussion of sign-ing a prenup. They’ve already sloggedthrough the financial mess of a failed marriage and often want to ensure

that their children receive theirintended inheritance. “Havinga prenup is like putting on aseat belt when you drive yourcar,” says Courtney Knowles, aspokesperson for Equality inMarriage. “You don’t click it be-cause you are expecting to havean accident. It’s protection ifyou do,” he says.

Splits. If you don’t have aprenup and can’t come to anagreement with your soon-to-be ex-spouse during the di-vorce proceedings, your statelaws will dictate division of theassets. In community proper-

ty states—Arizona, California, Idaho,Louisiana, Nevada, New Mexico, Texas,Washington, and Wisconsin—you willprobably get half of everything. In otherstates, assets will be split by the court de-pending on factors such as how long youwere married and what you actually ac-cumulated together. Domestic maritallaw is very subjective, says Dubin. It’s notblack and white. “Prenups may overridestate law in most situations,” she says.

For the agreement to be valid, it’s criti-

Money & Business

“Having a prenup is like putting on a seat belt whenyou drive your car. You don’tclick it because you areexpecting to have an accident.It’s protection if you do.”

Courtney Knowles, Equality in Marriage

CHECKLIST3

Now that Congress has ended some ofthe uncertainty over the capital-gains tax by extending the current

favorable treatment of investment profitsthrough at least 2010, you would thinkeverything is fine.

Not so. There are still issues involvinghow the tax is applied and growing atten-tion to capital-gains tax that goes uncol-lected because of evasion and confusion.

Here is a map for tiptoeing through thecapital-gains thicket:

3Different investments, different taxrates: Long-term gains from selling

stocks, mutual funds, and many other in-vestments are taxed at a top rate of 15

percent if the asset was ownedlonger than 12 months. Thatcompares with a top rate of 35percent on wages, interest, orshort-term gains on assetssold within a year. People inthe lowest tax brackets payonly 5 percent on long-termgains through 2007, thennothing through 2010.

But there’s a rub thatirritates art dealers, in-vestors in coins andprecious metals, andothers who roam about out-side the stock market. Profit from paint-

ings, other artwork, antiques,and “collectibles” such asstamps and coins is taxedas high as 28 percent, al-most double the top rate onsecurities. Included in thedefinition of a collectible

are gold and silverbullion. Also col-lectibles, says theIRS, are investmentcoins that substitutefor bullion, such as

the American Eagle andthe recently introduced American Buffa-lo, though some dealers and collectors

Tax Traps Can Snare Your Capital Gains

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 55

cal that each of you hires your own lawyer.You don’t want your spouse to argue thatthere was any conflict of interest. Thou-sands of attorneys specialize in matrimo-nial law and handle prenups frequently.For more information, check out the American Academy of MatrimonialLawyers (www.aaml.org), the AmericanBar Association (www.abanet.org), orwww.equalityinmarriage.org.

Full disclosure is para-mount. Both you and your fu-ture spouse must divulge de-tailed financial information,including all assets, income,and premarital debts. You needto think about what will hap-pen to premarital property interms of appreciation over thecourse of your marriage.What’s more, you will want toclarify what will happen tojointly held and individuallyowned property such as art-work, jewelry, or real estate.You might determine spousalsupport should you divorce, orprovide a waiver or property settlementinstead of support when possible.

Prenups aren’t just about the money,though. You can determine who will getcustody of your Labrador retriever, orwho will be responsible for child careand what religious upbringing your childwill have, among other lifestyle issues.

In general, a prenup can be a useful fi-nancial planning tool and a way to com-municate about a difficult subject. Somepeople use it to plan for how all finances

will be managed during their marriage.After all, money is the No. 1 thing couplesargue about. Anything goes. But the mostimportant thing is that you discuss yourfinancial lives openly before you marry.

The pact must be signed voluntarily byboth of you and far enough in advance ofyour wedding day that no one can claimto have signed under duress. Two orthree months ahead is advisable. If there

are bad feelings about signing a prenup,you might consider setting a future dateon which the contract will expire.

Writing a prenuptial agreement isn’tcheap. It will cost you anywhere from$1,000 to tens of thousands, dependingon how complicated it is. To save somebucks, you might draft an agreementahead of time. You can hire a mediatorfor a fee typically below what you’d payfor a lawyer’s time. Or you can write apreliminary pact together with help from

a guidebook such as Equality in Mar-riage’s The Commitment Conversation($10). Then you can meet with yourlawyers to fine-tune the document.

It’s never too late to draw up an agree-ment, even after you have been marriedfor a while. A postnuptial agreement isjust as valid as a prenup but subject togreater scrutiny in some states, and it isset up in the same way. You should seri-

ously consider this option if youinherit a large sum of money orhave a fat cash infusion fromselling a business.

Nothing new. While poppingthe “P” word is the latest rage,religious marriage contractshave been around for cen-turies. At some Jewish wed-dings, a husband gives his wifea ketubah, a written contractthat defines a husband’s obli-gations to his bride. An Islam-ic marriage contract some-times governs where the couplewill live and who will carry outwhich household duties.

As for Lisa, her marriage did end in di-vorce a few years later, doomed not by thedreaded prenup but by the tenuous na-ture of entwining two human lives. In theend, she figures, she might have landeda better divorce settlement if she hadsigned the prenup. When it came time todivorce, she was so shell-shocked, shesimply walked away. With a prenup, shewould at least have been guaranteedsomething. As Dubin points out, “There’sromance, and then there’s reality.” l

Anyone who is bringing a lot of assets to the partnership($100,000 and up, including all retirement accounts)

Anyone who has children from a prior marriage

Anyone who has his or her own business or is a partner in acompany

Anyone on a fast career track who is likely to earn a heftysalary in the future

Anyone who is paying for his or her spouse to get an ad-vanced degree likely to result in significant future earnings

WHO NEEDS A PRENUP?

mistakenly believe otherwise.Gilbert Edelson, administrative vice

president of the Art Dealers Association ofAmerica, says the treatment of artworkpenalizes those who assist cultural growthby investing in such items. The higher taxon precious metals punishes portfolio di-versification, argues Michael DiRienzo,executive director of the Silver Institute.He notes that even exchange-tradedfunds that track the price of gold and sil-ver are subject to the higher capital-gainstax. (ETFs are a type of security thattrades like a stock.)

Bills to extend the lower capital-gainsrate to artwork and precious metals havebeen introduced in Congress, but the out-look for passage anytime soon is not goodfor art and only modestly better for metals.

3 Surprise! You have taxable income:Mutual fund investors are sometimes

surprised to receive a capital-gains distrib-ution when a fund sells shares from itsportfolio. The distribution is immediatelytaxable even when the investor automati-cally reinvests the payout into the samefund and thus receives no current cash.Legislation to defer tax in such cases hasbeen introduced in both houses of Con-gress, but again, enactment is a long shot.

3 The depreciation trap: In anothertwist, capital gains can be tricky to

figure for people who sell real estate onwhich depreciation has been deducted.They may face a special tax rate of 25percent on at least some of the gain.

With all the rules, some investors inno-cently foul up. Others exploit cracks in IRS

enforcement to understate income. Misre-porting of capital gains may cost $17 bil-lion a year in lost tax revenue, says Demo-cratic Sen. Evan Bayh of Indiana, who hasintroduced legislation to require more re-porting to the IRS by stockbrokers and mu-tual fund firms. They must now report onlythe amount received by an investor whensecurities are sold. Bayh’s proposal wouldrequire them to also report the cost of suchsecurities, thus enabling a check on theamount of profit a taxpayer reports.

Enhanced reports would hinder under-stating gains. But a June report by Con-gress’s Government Accountability Officesays that better reporting could also bene-fit a sizable contingent of confused peo-ple who mistakenly overreport their gains.–Leonard Wiener

56 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

By Josh Fischman

leanor Miller has diabetes. The81-year-old from Olympia,Wash., doesn’t take insulin,and she largely controls herdisease with diet and exercise.Her husband, oddly enough, isthe one who has taken insulin.Yet Clarence Miller, 82, is not

diabetic. He has Alzheimer’s disease.“When I heard about this, I thought, ‘In-sulin? That’s just crazy,” Eleanor says.Yet as part of an experiment at the Vet-erans Administration Puget SoundHealth Care System in Seattle, Clarenceinhaled an insulin mist, and “there wasa bit of a difference to him. It was sub-tle,” says Eleanor, ”but he would re-member things overnight that he oth-erwise would have forgotten.”

There’s a reason that a diabetes treat-ment may have gone to Clarence Miller’shead. This week, at a major Alzheimer’sAssociation meeting in Madrid, re-searchers behind the va experiment andother experts are making a strong casethat diabetes hammers not just the bodybut the mind. Indeed, it may be a precur-sor to Alzheimer’s. As blood sugar controlgets worse in diabetics, Alzheimer’s riskclimbs astronomically, one study found.And in the brain, cells with problems han-dling insulin—a diabetes hallmark—de-velop damage that looks exactly like theravages of Alzheimer’s. The resemblanceto type 1 and type 2 diabetes is so strong“that we’re starting to call Alzheimer’s‘type 3,’ ” says Suzanne de la Monte, aneuropathologist at Brown MedicalSchool in Providence, R.I., who is pre-senting her work in Madrid.

It’s a scary similarity. About 20 millionAmericans have diabetes, and an addi-tional 41 million are close to getting it—

a condition called prediabetes. “We al-ready have an explosion of diabetes. Asthat population ages, we’ll have ever in-creasing rates of Alzheimer’s,” says epi-demiologist Donald Miller of the BostonUniversity School of Public Health. Thereare currently 4.5 million Alzheimer’s suf-ferers, and it costs an estimated $100 bil-lion to care for them each year. Diabetescould multiply that many-fold. “That’s afrightening thought,” Miller says.

But the bond also brings hope. Thesame drugs that successfully treat diabetesmay actually forestall the brain disease.

“It’s preliminary, but it’s also truly excit-ing,” says neurologist Ronald Petersen, di-rector of the Mayo Clinic’s Alzheimer’sDisease Research Center in Rochester,Minn. “We’ve been kind of stuck devel-oping new Alzheimer’s therapies, and thisgives us a whole new avenue to try.”

There have been scattered reports inthe past hinting at an Alzheimer’s-dia-betes connection, but the Madrid meet-ing highlights new, powerful studies. Re-searchers at Stockholm’s KarolinskaInstitute identified about 1,100 peoplewho were free of both diabetes and

E

AN ALARM

Health & Medicine

New studies saydiabetes leadsto Alzheimer’s.Still, that raiseshope for novelbrain treatments

G. DOUGLAS BYERS—POLARIS U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 57

Alzheimer’s and gave them several medi-cal exams over the course of nine years.Some of these folks developed border-line diabetes—their blood sugar levelsstarted to climb above normal but notquite to diabetic levels. These people hada risk of developing dementia that wasnearly 70 percent higher than peoplewithout such blood sugar problems.

Among people with full-blown dia-betes, the risk of Alzheimer’s increasesas blood sugar control worsens, anotherstudy showed. “I was actually surprisedat how strong this effect was,” says

Rachel Whitmer, an epidemiologist withKaiser Permanente’s Division of Re-search in Oakland, Calif. She and her col-leagues followed nearly 23,000 diabet-ics, with an average age of 66, for abouteight years. During that time, their bloodsugar control was frequently monitoredwith a test called an A1c. A score of 7 orless on the test is good. But a score be-tween 10 and 12 meant people were 16percent more likely to get dementia.Scoring between 12 and 15 boosted thechances to 25 percent. And people withscores greater than 15 had a dementia

risk that was a whopping 83 percenthigher than those with the lowest scores.“It really shows there is a link betweenthe two diseases,” says Whitmer, “and forall of us it underlines how important itis to control your blood sugar.”

Internal junk. But just how can diabetesdrive up the risk of Alzheimer’s? “Thereare a number of possible ways, and manyof them have to do with how cells use en-ergy,” says Petersen. Energy comes fromblood sugar, and insulin is the body’ssugar ferry. If cells don’t let it in—that’swhat happens in type 2, the most com-mon form of diabetes—those cells start tostarve. The same thing happens to neu-rons in the brain. The weakened neuronscan’t clear away internal junk, like clumpsof amyloid protein, something that’s seenin Alzheimer’s. And then they die.

Another pathway may involve thecell’s internal energy factories, calledmitochondria. They become damaged inAlzheimer’s, suggests Allen Roses, anoted dementia scientist who runs ge-netics research for drug maker Glaxo-SmithKline in Research Triangle Park,N.C. “Fragments of proteins calledapoes, found in Alzheimer’s, poisonmitochondria,” he says. Over years, thisweakens the cell and kills it. Other re-searchers have suggested that if insulinproblems are added on top of this, as indiabetes, it’s an “extra hit” on the neu-rons, hastening their death.

This could explain the apparent anti-dementia abilities of drugs that improve acell’s ability to utilize insulin. Boston’sMiller reports at the meeting about a pro-tective effect in a huge study of 142,000 di-abetic patients. Those who got insulin-sen-sitizing drugs such as Avandia had muchlower rates of Alzheimer’s than did pa-tients taking a different drug class.

Then there’s the effect of extra insulinon those with Alzheimer’s like ClarenceMiller, who took the hormone for threeweeks. “Overall, they could recall storiesa little better and had better attention,”says Suzanne Craft, the va neuroscien-tist who led the study. “Their familiesalso reported a change, saying they justseemed brighter, a little bit more with it.”

But the effects were small, and everyonein Madrid worries that healthy people, ter-rified of Alzheimer’s, will rush out to trythese drugs. “That’s a big mistake. We haveno proof they work in the general popu-lation,” says Mark Sager, director of theWisconsin Alzheimer’s Institute in Madi-son. “I wouldn’t prescribe it.” But, Sageradds, this week’s reports are promptinghim to look closer at the insulin connec-tion. If the link between the two diseaseskeeps getting stronger, he might start pre-scribing these drugs after all. l

MING LINKAn Alzheimer’spatient on anOregon beach

58 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

Better KnowWhat’s in That PillLast week, the Food andDrug Administrationwarned that some supple-ments marketed on the In-ternet as a natural way tocure impotence actuallycontain chemicals the sameas or similar to the prescrip-tion medications Viagra andLevitra. The fda says thatthe products—Zimaxx, Li-bidus, Neophase, Nasutra,Vigor-25, Actra-Rx, and4everon—can cause a druginteraction in men takingother medications. Peopletaking drugs with nitrates,for example, may danger-ously lower their blood pres-sure by adding the supple-ments. “Just about anybodycan post something on theInternet and call it a dietarysupplement,” says Linda Sil-vers, leader of the fda’s In-ternet and health fraudteam. “It’s important thatconsumers be vigilant.”–Betsy Querna

Need Information?Don’t Call UsIf you’ve got a question aboutMedicare’s Part D drug cov-erage, don’t count on the in-surers’ toll-free hotlines foranswers. A study released lastweek by the Government Ac-countability Office found thatcustomer service reps at the

call centers gave accurate andcomplete answers just 34percent of the time. A Maystudy found that the Centersfor Medicare and MedicaidServices’ own call center fre-quently got it wrong, too.Medicare experts recom-mend contacting your StateHealth Insurance AssistanceProgram, which provides

counseling about Medicaredrug plans in the state. Tofind your ship agency, usethe Eldercare Locator (eldercare.gov, 800-677-1116), runby the federal Administrationon Aging. “It’s a great re-source,” says Vicki Gottlich, apolicy analyst with the Centerfor Medicare Advocacy.–Michelle Andrews

Again: Don’t Smoke,and Lose WeightLast week, women got newreasons to follow a morehealthful lifestyle. Twostudies in the Journal ofthe American Medical Asso-ciation on women and can-cer suggested that femalesmokers are more likely todevelop lung cancer thanmen and that gainingweight increases the oddsof breast cancer. In the firststudy, researchers foundthat 2.1 percent of thewomen screened had lungcancer, compared with 1.2percent of men. Womenwere also more likely tosurvive. No one knows whythere are disparities, but

hormones might play arole, says Alfred Neugut, amedical oncologist at Co-lumbia University Collegeof Physicians and Surgeonsand coauthor of the editori-al accompanying the study.Women who gained justover 20 pounds aftermenopause had an 18 per-cent higher chance of de-veloping breast cancer thanthose who maintained theirweight. Losing weight, bycontrast, cut the risk—especially in women whodidn’t use hormone re-placement therapy.–Katherine Hobson

HEALTH WATCH

More information on lung cancer, breast cancer, and other conditions is at www.usnews.com/besthealth

You may need a different number.

More apt to get cancer (and live)

According to a reportcard released by theMarch of Dimes last

week, only five states andthe District of Columbianow routinely screen new-borns for 29 rare but treat-able conditions, from impaired hearing to hypo-thyroidism. Many of theconditions are life threaten-ing if not caught early, butthey can be successfullyhandled through diet ormedication. The tests,which are recommended bythe American College ofMedical Genetics, are fastand easy to administer: Allbut the hearing screen, infact, can be accomplishedby taking just a few drops

of blood from the baby’sheel. Iowa, Maryland, Mis-sissippi, New Jersey, andVirginia test for all 29 con-ditions; overall, the propor-tion of babies getting atleast 20 of the testsjumped from 38 percent to64 percent in the past year.“States are really moving inthe right direction here,”says March of Dimes Presi-dent Jennifer Howse. Sherecommends that expectantparents find out which testsare done at hospitals intheir state; a full screeningcan be arranged with anoutside laboratory. Theextra cost, she says,shouldn’t be more than$100. –Rachel Courtland

A Battery of Baby Tests

GETTY IMAGES

DAVID JOEL—GETTY IMAGES

ERIC MCNATT—GETTY IMAGES

Edited by Anne McGrath

U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006 59

suits and ties during theday but, in effect, wears black balaclavas at night. Dr.Jekyll may offer a cease-fire, but it is only a tactical pausefor Mr. Hyde to rebuild for more war. The Hamas men-ace is not confined to Israel, for it is now welcomingother Islamic terrorist organizations, including al Qaedaand Hezbollah. The latter has already undermined theindependence of the Lebanese government, and, indeed,is now a part of that government.

But what about Mahmoud Abbas, the pacific-sound-ing hope of the West? Yes, what of Mr. Abbas? Sadly,what we have witnessed is his utter failure to influencethe Hamas government. He has failed to honor the pledgehe gave Israeli officials to muster the forces for a house-to-house search for the abducted soldier. That he hasfolded to Hamas is evidenced by his agreement to a ver-sion of the so-called prisoners’ document. It is not a basisfor peace talks but a step toward war. It is a dramatic pull-back from Fatah’s previous position because it reopensthe most vital questions about Israel’s right to exist(which is explicitly rejected by the Hamas negotiators)and endorses terrorism andviolence. It means that bothHamas and Fatah are equal-ly committed to Israel’s anni-hilation. Now that Fatah isseeking to outflank Hamas onthe side of radicalism, it is nosurprise that Israelis feel theydo not have a partner forpeace. Abbas’s willingness tosign it should open the eyes of the world to the fact thathe is no moderate and no potential peacemaker.

Code words. Soon Israel will also have to confront thepolitical challenge of a modified version of this “pris-oners’ manifesto” signed by Hamas and Abbas. Again,it is not really about peace with Israel; it is about end-ing the civil war between the Palestinian factions. Thelanguage of the document is confrontational, not com-promising. It does not call for an end to terrorismagainst the Israelis, only an end to violence among thePalestinians. It repudiates the framework for peace ne-gotiated by years of effort, specifically U.N. Resolution242. It demands all territory captured by Israel in the1967 defensive war. And even if that were conceded,which it is not, the document does not indicate that thePalestinians would then withdraw their claims to Israel’spre-1967 territory.

The Oslo accord—and the four-power road map agree-ment—called for an end to terrorism. This, instead, isa manifesto for terrorism. It does not require that thePalestinian Authority dismantle terrorism but just theopposite. It calls for continuing violence and for “pop-ular resistance” against the Israeli occupation “in allits forms, places and policies,” and “by all means,” lan-guage long recognized as code for terrorism and as le-gitimizing the murder of Israelis. Nor does it restrict ter-rorism to the West Bank but only suggests that terrorismbe focused in the West Bank, without precluding Pales-

tinians from carrying out terrorist acts against Israel in-side its pre-1967 borders.

Most critically, it advocates the right of return forsome 4 million Palestinian refugees, as they define them-selves today, the descendants of the 700,000 Arabs whofled during the 1948 war primarily at the behest of theirown leaders. These refugees, under the new Palestinianmanifesto, are now proposed to be returned to pre-1967Israel, virtually putting the Jews into a minority in theirown country—the very situation that the United Nationsruled out in deciding the original partition of Palestine.

Tragically, this document and the violence in Gaza haveundermined the domestic support for the main programof Prime Minister Ehud Olmert (whom Hezbollah leaderHassan Nasrallah compared, unhelpfully, to Neville Cham-berlain). That program—known as realignment—con-templated a dramatic withdrawal from roughly 90 percentof the West Bank. Today, 49 percent of the Israeli publicopposes the realignment plan and only 38 percent sup-ports it. It is clear that Israeli withdrawals and concessionshave brought about not Palestinian moderation but just

the opposite. It is equally clearthat the proposed realignmentof the West Bank’s borders willnow simply create a new battleline, just as the disengagementin Gaza created new battlelines. A withdrawal from theWest Bank would put Hamaswithin range of Israel’s mainpopulation centers and infra-

structure, raising the fear that a rocket launched from theWest Bank could hit the country’s most densely populat-ed areas, like Jerusalem, Tel Aviv, and Ben-Gurion airport.Israel cannot even begin to contemplate exposing its cit-izens to such peril. It will have to review its concept of thestrongest defensive line.

It is more clear than ever that the core of the Israeli-Palestinian dispute stems not from Israel’s unwilling-ness to compromise but from the nature of its adversary;and that the desire among Palestinians to eliminate Is-rael is too powerful, the adherence to violence too per-vasive, to overcome. Most fair-minded observers sharethe Israeli conclusion that there is no Palestinian part-ner for peace. As the leading Egyptian paper, Al-Ahram,pointed out: “The Palestinians must be aware by nowthat they can no longer count on Arab help, economi-cally, politically, or militarily . . . . Arab nations have hadenough . . . of the slogans and rhetoric that have got-ten us nowhere. . . . The Palestinians have lost Arab back-ing both on the official and nonofficial levels.” And theceo of the Arab News Agency Al Arabiya wrote, “Wasthe result worth all the damage it caused?”

The Middle East equation today could hardly be morestark or depressing. It reveals once again that Hamasand the Palestinians, now joined by Hezbollah, armedand financed by Iran, wish to get rid of Israel. This willbe a “long war” in which victory will be the culmina-tion of a series of unavoidable catastrophes. l

The core of the Israeli-Palestinian dispute is not Israel’s unwillingness to

compromise but Palestinians’adherence to violence.

Editorial

(Continued from Page 60)

60 U.S.NEWS & WORLD REPORT • WWW.USNEWS.COM • JULY 24, 2006

Eleven months ago, israel withdrew

from every last inch of the Gaza Strip. The Is-raelis dismantled all military bases, destroyedall their settlements, turned over functioninggreenhouses that could employ 4,000 people,

expelled all 7,500 Israeli settlers—all at a huge financialand political cost. Prime Minister Ariel Sharon evenwent a step further, declaring the lines that divide Israelfrom Gaza an international frontier, making Gaza thefirst independent Palestinian territory ever.

Everyone hoped then that the Palestinians wouldshow the world what they could achieve with freedomas a template for a future independent state. Alas, theyhave shown us all too well. Not one day of peace has fol-lowed since then. The pattern was set on the very day ofIsrael’s pullout. Palestinian militants fired rockets fromGaza into Israeli towns on the other side of the border,targeting innocent civilians living in the pre-1967 Israelrecognized by the interna-tional community. The finalstraw came last month, withthe Hamas attack that killedtwo Israeli soldiers and re-sulted in the kidnapping of athird. Last week, inspired bythe rhetorical threats of Iran’sincendiary president, Mah-moud Ahmadinejad, Hezbol-lah—like Hamas, another Iranian proxy—attacked Is-rael from the north, killing eight Israeli soldiers andabducting two more, and then began raining rocketsdown onto Israel civilians.

Nature’s law. The Palestinians are giving the lie to vir-tually every scenario so hopefully envisaged by theirfriends, including Israeli supporters of disengagement.They failed to begin building schools, roads, and hos-pitals; they made no effort to turn Gaza into a thrivingstate, nor did they create villages of their own out of thesettlements the Israeli government forced its settlers toabandon. They vandalized the greenhouses not once, buttwice. They elected a radical Islamic Hamas govern-ment; they breached the border with Israel, permittingthe smuggling of huge quantities of weapons and cre-ating new bases for terrorism.

Not only did Hamas fail to become more moderate;Fatah and the Palestinians became even more radical-ized, moving closer to Hamas’s extremist position,choosing to interpret Israel’s voluntary evacuation notas a gesture of peace but as a victory for the armed strug-gle. Terrorism in Gaza flourished, tunnels were dug,more weapons were imported, militants trained, moreKassam rockets were produced and fired at Israel.

At first, the Israelis tried nonlethal deterrence—diplo-matic warnings, then sonic booms from fighter jets toremind the Gazans that Israel has the power to retali-ate. Those failed. It was a sad demonstration of the truthin the metaphor that in the Middle East the law of na-ture prevails—an animal perceived as weak invites onlyattack. The Israelis fell back on targeted assassinationsagainst the terrorist leaders—exactly what America didagainst Abu Musab Zarqawi in Iraq, despite the risk thatinnocents might be killed because the terrorists hideamong civilians, moral shields for immoral men.

Some apologists suggest that Israel should ignore thePalestinian rockets because they are puny and erratic.That’s easy to say from an armchair, but every one of therockets fired into urban areas is intended to kill or maimas many Israeli civilians as possible. The Israeli town ofSderot lost 13 people to Palestinian rocket fire, and athird of the children are said to suffer from post-trau-

matic stress disorder. Now,Palestinian militants havebegun firing longer-rangerockets that have reachedlarger cities like Ashkelon,where 115,000 Israelis live.

The last thing Israel want-ed to do was get involvedagain in Gaza, much less inLebanon, but Hamas and

Hezbollah gave it no choice. Who can doubt the right—indeed, the duty—of a government to defend its citizensagainst random attacks? Who would doubt the U.S. re-sponse if rockets were raining from across the Mexi-can border into American cities, or if Canadian forcessimultaneously killed and kidnapped Americans on U.S.soil? And who but Israel would be shipping foodstuffs,medicines, and chlorine containers for purifying drink-ing water to avoid a humanitarian crisis in Gaza? Couldyou imagine the allies sending foodstuffs and medicinesto Germany during World War ii? Perversely, the ter-rorist organizations are focusing terrorist acts on thevery border crossings that are Gaza’s lifelines. Why isHamas doing this? To claim there is a humanitarian cri-sis in Gaza, as a way of forcing Israel to relinquish its ef-forts to find its abducted infantryman.

Israel has several objectives. First, it wants to reassertthe power of its deterrence so that Hamas and Hezbol-lah know that terrorist violence will be met with evermore painful and far-reaching responses. Israel intendsto make it crystal clear that kidnapping simply does notpay. Israeli intelligence has already detected 20 new kid-napping plots, with more undoubtedly to come. TheHamas government may wear

From Bad to Worse

When Israel withdrew fromGaza, Palestinians’ supporterssaw hope for a bright future.The Palestinians today haveutterly dashed those hopes.

EditorialBy Mortimer B. Zuckerman l Editor-in-Chief

(Continued on Page 59)

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