The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I`m Jim Lehrer.

On the NewsHour tonight: the news of this Wednesday; then, a look at hiring private contractors to perform military duties in Iraq; a NewsHour report on the shortage of workers on the Mississippi coast a year and a half after Hurricane Katrina; and a news update on the Libby trial from Carol Leonnig of the Washington Post, plus thoughts about what the trial has revealed about the workings of the working press in Washington.

(BREAK)

JIM LEHRER: The U.S. military confirmed today a major security operation has begun in Baghdad. The plan was first announced by President Bush on January 10th. Yesterday, Iraqi Prime Minister al-Maliki acknowledged it had been slow getting started.

Today, U.S. Army Major General William Caldwell said it was ongoing, and he urged patience.

MAJ. GEN. WILLIAM CALDWELL, U.S. Army: Parts and pieces of this plan are already being put into place that the prime minister has talked about, and we would hope to start seeing a difference here in the near future.

It`s not going to be a sudden, immediate thing. It`s going to take time; it`s going to take patience; it`s not going to occur over night. But it will be a gradual effort that`s under way, with the most important thing being the Iraqis are in charge.

JIM LEHRER: Across Baghdad today, police found 33 bodies, all apparent victims of sectarian death squads. Elsewhere, at least 15 Iraqis were killed in a series of attacks.

And another U.S. Marine was killed in action on Tuesday.

The Associated Press reported today more than 330 Americans have died in the past four months. That`s more than at any comparable time since the war began.

A U.S. Marine helicopter went down in Iraq today, killing all seven people aboard. It was the fifth chopper lost in Iraq in just over two weeks` time. The CH-46 Sea Knight crashed between Baghdad and Fallujah. The victims were not identified. A Sunni group linked to al-Qaida claimed it shot down the helicopter. But a U.S. defense official said the crash appeared to be from mechanical trouble.

Three U.S. Army Reserve officers were indicted today for alleged bid- rigging in Iraq. They helped manage $26 billion in reconstruction aid in 2003 and `04. The indictment said they directed at least $8 million dollars to a construction company owned by American Philip Bloom.

In Washington, Deputy Attorney General Paul McNulty said they got a lot in return.

PAUL MCNULTY, Deputy Attorney General: More than $1 million in cash, a Cadillac Escalade, a Lexus, a Porsche, a GMC Yukon, a Nissan 350Z sports car, a Cessna airplane, real estate, a motorcycle, jewelry, computers, business-class airline tickets, and even future employment with Bloom.

JIM LEHRER: Bloom has already pleaded guilty and is awaiting sentencing. The indictments were filed in New Jersey.

The role of security contractors in Iraq was the subject at a House hearing today. Congressmen heard from relatives of four American guards who were brutally killed in Iraq in 2004. They worked for the private security firm, Blackwater USA. We`ll have more on the role of the contractors right after this news summary.

Top leaders at the Pentagon told Congress today debate over the war is not hurting morale in the field. At a House hearing, the chairman of the Joint Chiefs, Marine General Peter Pace, said the troops have their own priorities.

PETER PACE, Chairman of the Joint Chiefs: From the standpoint of the troops, I believe that they understand how our legislature works and that they understand that there`s going to be this kind of debate. As long as this Congress continues to do what it has done, which is to provide the resources for the mission, the dialogue will be the dialogue and the troops will feel supported.

JIM LEHRER: Pace did say America`s enemies might misread the debate for division and lack of resolve.

Next week, the House takes up a resolution against sending more troops. The Senate has deadlocked on debating any resolution.

A judge in Italy today ordered a U.S. soldier to stand trial for killing an Italian agent in Iraq. Nicola Calipari was shot at a checkpoint near the Baghdad airport in 2005. The U.S. military cleared the soldier, Specialist Mario Lozano. It said he feared an attack. Lozano will be tried in absentia. Pentagon officials said there are no plans to make him available to the court.

Rival Palestinian leaders held unity talks in Saudi Arabia today. President Abbas of the Fatah faction met with the exiled Hamas leader, Khaled Mashal. They talked in Mecca at the urging of the Saudis. The leaders vowed to reach a deal to end fighting between their two factions and to form a coalition government.

Authorities in Austria announced today they`ve broken up a global child pornography ring. It involved nearly 2,400 suspects in 77 countries, including 600 in the United States. They allegedly paid to watch graphic online videos involving young children. The head of the investigation said it started when police got a tip last July.

HARALD GREMEL, Austrian Police Investigator (through translator): In 2006, the Child Pornography Department of the Federal Police received information from a Web master of a file-hosting service, that its server was being abused to spread child pornography. Eight video files showing the severe sexual abuse of children were downloaded onto the server and linked to a Russian Web site where you could download them.

JIM LEHRER: The investigators said they believe the videos were produced in Eastern Europe. They said the FBI is investigating the U.S. suspects.

The moderator of NBC`s "Meet the Press," Tim Russert, testified today in the CIA leak case. Lewis Libby, the vice president`s former chief of staff, is accused of perjury. He says Russert told him Valerie Plame worked at the CIA in July of 2003. But today, Russert testified, "That would be impossible. I didn`t know who that person was until several days later." We`ll have more on this story later in the program tonight.

A U.S. Army investigator has concluded there`s no evidence detainees at Guantanamo Bay, Cuba, were mistreated. A U.S. Marine sergeant had claimed Navy guards bragged about beating the inmates.

But the military said today the chief investigator found nothing to back up the allegations. Officials said he talked to the suspects and the witnesses, but he did not interview detainees.

The human toll kept climbing today in an Arctic cold wave across much of the United States. The weather was blamed for 13 deaths. Most died in car wrecks, as icy roads caused havoc from the Plains to the Northeast. Temperatures stayed well below zero in a number of states.

On Wall Street today, the Dow Jones Industrial Average gained .5 point to close at 12,666. The Nasdaq rose 19 points to close at 2,490.

Singer Frankie Laine died Tuesday at a San Diego hospital of heart failure. Laine was one of the most popular entertainers of the 1950s, with hits that included "Mule Train" and "That Lucky Old Sun." He also sang the theme on the television series "Rawhide" in the 1960s. Frankie Laine was 93 years old.

And that`s it for the news summary tonight. Now: privatizing parts of the Iraq war effort; post-Katrina jobs in Mississippi; the Libby trial; and meet the press.

(BREAK)

JIM LEHRER: Gwen Ifill has our Iraq contractors story.

GWEN IFILL: While Congress focuses on the future of 150,000 troops on the ground in Iraq, new questions are being raised about at least 100,000 private contractors who are also critical to the war effort. Some are cooks, dishwashers, drivers, but many are armed and do not work behind the scenes.

Since early in the war, U.S. civilian leaders have been guarded by private contractors, everyone from Paul Bremer to U.S. senators to Ambassador Zalmay Khalilzad. Many of the contractors have been killed: four in a helicopter crash two weeks ago, and six others in this helicopter shot down in 2005.

U.S. officials say nearly 800 non-military contractors have died since March of 2003. The presence of these workers, not all of them American citizens, is a major element of the president`s plan to ramp up security in Baghdad.

SEN. JOE BIDEN (D), Delaware: General Petraeus is well-known to this committee.

GWEN IFILL: The top U.S. commander in Iraq, General David Petraeus, told a Senate hearing last month that, in Baghdad alone, about 85,000 U.S. and Iraqi forces are on the ground or headed there. Private security swells those numbers.

GEN. DAVID PETRAEUS, U.S. Army: You then should add in tens of thousands of additional forces that are over there that provide, of all things, contract security for our embassy. Myself, I was secured by contract security in my last tour there. And that frees up uniformed forces to perform other missions. And those have to be factored in, as well.

GWEN IFILL: But relatives of the four contractors who were killed in Fallujah in 2004, one of the most gruesome attacks of the war, told a House committee today their sons and husbands were exposed to unnecessary risk.

KATHRYN HELVENSTON WETTENGEL, Mother of Stephen Helvenston: Our four men were told that they would be working in armored vehicles with no less than six operators at each detail. There were supposed to be at least three people in each vehicle. This would have provided for a driver, a navigator, and a rear gunner, who would have heavy machine guns to fight off any attacks.

Our men were also told that they would be able to learn the routes through Iraq prior to going on any missions and to conduct a risk assessment of each mission to determine if it was too dangerous to go.

Blackwater did not provide our men with any of these protections. We`re subcontracting out our war. As I understand, there`s 100,000 contractors over there, and there doesn`t seem to be a law that applies.

GWEN IFILL: Representatives of several companies who employ the contractors said their work is essential.

ANDREW HOWELL, Blackwater General Counsel: Blackwater professionals, most of whom are military veterans, voluntarily go in harm`s way at the request, direction, and control of the United States government.

Chances are, if and when you as members of Congress and your staffs travel into Iraq, your lives will be protected for at least part of the trip by Blackwater. Areas of Iraq are among the most dangerous places on Earth, where violence against Americans is endemic. Our people choose to put their lives on the line daily in the service of our country.

GWEN IFILL: During questioning, Democrat Elijah Cummings tried, and failed, to get an Army official to divulge how many contractors are even on the ground.

REP. ELIJAH CUMMINGS (D), Maryland: Why does the administration rely on so many private contractors, do you know? And we can`t even count them?

HEARING WITNESS: No, sir, I do not.

GWEN IFILL: But North Carolina Republican Virginia Foxx said come committee members are demanding too much.

REP. VIRGINIA FOXX (R), North Carolina: What we should be doing is being focused on the way the systems operates in all these areas. And what we`ve got here is a gotcha situation, it seems to me.

There`s a tragic loss of life that`s occurred. And every life that`s been lost in any of our wars, I am sorry for. But what we ought to be about is asking for how the systems works, what`s wrong with the systems now, and how do we get at it, instead of spending all this time trying to get people on issues that are irrelevant to much of what we should be concerned about.

GWEN IFILL: But in a letter sent to two committee Democrats today, the Pentagon confirmed one element of the problem: Many layers of government contracting and subcontracting make it difficult to determine exactly how much money is being spent.

Now, for more on the role of private military contractors in Iraq, we turn to Robert Young Pelton, an author and filmmaker. His latest book is "Licensed to Kill: Hired Guns in the War on Terror." He spent last summer in Iraq, working on a documentary on security contractors.

And Doug Brooks, founder and president of the International Peace Operations Association, a trade association for military services companies.

Robert Young Pelton, we heard the Army official today tell members of Congress that she couldn`t exactly say how many people are on the ground. How extensive is this private military force or this contractor force in prosecuting this war?

ROBERT YOUNG PELTON, Author and Filmmaker: Well, in the war in Iraq, it`s essential. Soldiers cannot eat, they can`t go to the bathroom, they can`t do much of anything without a private contracting company providing their services.

More importantly, there is over 70,000 armed contractors working in Iraq -- half of those are Iraqis, half of those are expats -- that provide critical security for a number of the reconstruction projects. So our entire effort would fail if we did not have contractors.

GWEN IFILL: On balance, is that a good or a bad thing?

ROBERT YOUNG PELTON: It is both good and bad. There are terrible things going in the name of security contracting, and there are some very important things going on. But the problem is, as these hearings showed today, how do you know the difference between a good contract and a bad contract, a good contractor or a bad contractor?

GWEN IFILL: Let me ask Doug Brooks that question. How do you know the difference?

DOUG BROOKS, International Peace Operations Association: I think they are companies that are anxious to make sure that they are seen properly, to have the kind of oversight and accountability that we`d like to see as taxpayers.

They provide enormous services. I mean, the security aspect, which is what everybody focuses on, is maybe 5 percent of the industry. Our numbers would actually be a lot smaller, in terms of security contractors, maybe 25,000, which most of them are Iraqis.

And that`s, you know, who should be doing security in these countries. But they`re working for Western companies. They have Western management and training, and I think that`s really important. They`re critical to this mission.

GWEN IFILL: As the president and General Petraeus and others promote this notion of adding additional troops to Baghdad, just Baghdad to enhance security there, how essential is that plan -- how much does that plan depend on the presence, as well, of this private security force?

DOUG BROOKS: I couldn`t say, but with the security force does do is free up the soldiers, the U.S. military soldiers, Iraqi soldiers, essentially to focus on their core mission of going after the insurgents. The security contractors are not allowed to do offensive combat operations; that`s reserved for the military. And so there`s that important element.

GWEN IFILL: So, Mr. Pelton, you are traveling with these security contractors last year. What`s the difference between -- if I fly to Baghdad tonight, and I am guarded by someone from a private security force, as opposed to a member of the U.S. military, what`s the difference?

ROBERT YOUNG PELTON: Well, the one thing that didn`t come out in these hearings, which is absolutely critical, the entire and full responsibility of a private security company is to their clients, not to the foreign policy of the U.S., not to any sort of regional or local peacekeeping or security effort.

And that means, if two security contractors are passing each other, and one poses a threat to one, they can fire on each other. In other words, the security element of what we`re providing over there is a for- profit, very specific to the client`s needs. And that`s a very, very big difference between what the military is doing over there.

GWEN IFILL: Unaccountable to the military?

ROBERT YOUNG PELTON: Absolutely unaccountable to anyone. And I`m sure Doug will oppose this, but the problem is, on December 24th, we had a murder in the Green Zone, an American contractor gunned down, an Iraqi bodyguard. We had somebody working for Triple Canopy shooting Iraqis for fun.

These are things that just are rumors and need to be investigated. Keep in mind the Fallujah incident is almost three years old, and many, many things have transpired since then, and all of them need investigation.

GWEN IFILL: Mr. Brooks, are these any more than rumors?

DOUG BROOKS: No, there`s some incidents that are going on. When you have 100,000 contractors, you`re going to have bad things happening. And, of course, contractors are not just working in Iraq. They`re working all over the world. And these issues of operating in post-conflict environments are going to come up.

There is no effective, internationally recognized legal system within Iraq at this point, and that`s a problem, when essentially --- normally, contractors would operate under local government authority. But, in Iraq, essentially, the legal system isn`t up to international standards at this point.

GWEN IFILL: So they`re not accountable to the Iraqi government?

DOUG BROOKS: There are two rules now that apply to contractors. One is the MEJA, Military Extraterritorial Jurisdiction Act, which says that anybody, any contractor working in support of a U.S. mission, can be brought back to the United States, of any nationality, which is interesting, can be brought back to the United States and tried.

That has not been enforced, and this is a problem from our industry, because it`s good for us if you have effective accountability. The other thing that`s been mentioned is the Uniform Code of Military Justice, which is the military system. And there`s been a change. It`s supposed to impact contractors, but we`re not sure they`re actually going to use that.

GWEN IFILL: What kind of change? You`re saying there`s a way that contractors can be held responsible...

DOUG BROOKS: They could be under military law, is what it says. The issue is that, in the past, this has been struck down by the Supreme Court, because it only applied to wars. And this is -- they changed the wording so that it applies to contingency operations, such as Iraq, as well.

It`s not clear that they`ll use it. I mean, essentially, theoretically, it could apply to any contractor. Most of the contractors are Iraqis. So is the U.S. government going to put an Iraqi in U.S. military court? I don`t think that`s going to happen.

GWEN IFILL: What about the point Mr. Pelton just made about coordination between the military and these contractors? Are they basically shooting past each other sometimes?

DOUG BROOKS: Well, OK, again, in terms of the security contractors, you`re talk maybe 5 percent of the number. It`s not that large. But, nonetheless, there has been issues.

And when you have such a volatile environment, you have people that are armed, you do have situations where they can shoot at each other. Now, there`s been some measures taken -- an IPOA has actually been working along these lines, as well -- to ensure that there is better coordination.

There`s something called "the rock," which is a center that keeps track of civilian convoys, private security details, and so on. And the military has access to that, so they can see where all the private elements are. The actual numbers of sort of friendly-fire incidents, as they`re called, have gone way down.

GWEN IFILL: Mr. Pelton, how about the rules of engagement? Are the military contractors -- are they bound by, say, the same rules for use of force as a member of the military would be?

ROBERT YOUNG PELTON: No, the rules of engagement in Iraq are very simple. For private contractors, you`re allowed to warn people off if they get within 100 feet. You`re allowed to fire warnings shots. If they continue at you, you`re allowed to fire shots directly in front of them or try to disable the vehicle. And then if they continue, you`re allowed to take out the driver. That`s, obviously, because of VBIEDs, or car bombs.

But the real problem is that there are a number of convoys cruising through Baghdad using machine guns like we use horns. Those people don`t have to stop and explain themselves. They don`t stop at police checkpoints. They don`t carry identification in their car.

So there is a problem. And I think Doug is also agreeing that there needs to be some type of accountability and clarity in what these people do.

GWEN IFILL: And what would you recommend that accountability and clarity be?

ROBERT YOUNG PELTON: I think what Mr. Waxman is doing is exactly what we need. We need to subpoena the people who run these companies, the people who have beefs -- and that includes Iraqis -- who have had relatives murdered or shot down by contractors, and we need to show that, if you do something illegal, either in the name or on the payroll of U.S. government, you will be held accountable.

GWEN IFILL: Mr. Brooks?

DOUG BROOKS: We`re good with the accountability. In fact, it`s sort of odd that, as a trade association, we`re the ones who have actually been pushing, I think, to get effective accountability. Again, for the good companies, good accountability helps them, essentially makes it harder for the low-end companies to actually (inaudible) IPOA, essentially, companies have to apply for membership.

And once they`re allowed in, they have to operate at a higher level. We have an online code of conduct, and anybody can bring a complaint against our members.

I did want to touch a bit on the rules of engagement. Essentially what the Pentagon has done now is they`ve separated it out. And they say, OK, you have rules of engagement, that`s military. But for the contractors, it`s rules for use of force. They call it something different.

Essentially, for the military, they can use force to two things, which is, one, to compel somebody to do something, and, two, to prevent somebody from doing something. For the contractors, it`s the second. They`re allowed to use force to prevent people from doing something.

So it boils down to sort of three points, if you look at the rules for use of force. One, they can defend themselves, which Robert talked about. Two, they can defend whatever is in their contract, which a noun, a person, place, a thing, a convoy, a building, or whatever. And, three, it`s quite interesting, they are allowed to use force to defend Iraqi civilians under imminent threat.

GWEN IFILL: Mr. Pelton, how much of what private contractors are doing, especially the security contractors in Iraq, is unknowable? How much of it is classified? How much of it is caught up in the web of contracting, subcontracting, sub-subcontracting, that we heard about at this hearing today?

ROBERT YOUNG PELTON: Well, in my book, "License to Kill," I bring back the `60s, in which the CIA actually used corporations -- what they called CIA proprietaries, like Air America, to conduct covert operations. And it is the distinct desire of some of these companies to be involved in covert activities.

Now, they don`t necessarily have to be in a combat capacity, but they can be sort of as false fronts for intelligence-gathering, logistical support.

Secondly, I challenge any journalist to simply pick up the phone and call Blackwater, call Triple Canopy, and say, "I want to work and live with you guys for six months, and I want to get into your business and write a book." I did it for three years, and I can tell you that I think I saw a window that opened briefly and closed.

GWEN IFILL: How about that, Mr. Brooks? How closed is the window?

DOUG BROOKS: It really depends. Companies are willing to talk to some journalists more than others. But when you think about a small company, which may have only four or five people in their back office, and sometimes, you know, they can...

GWEN IFILL: Well, less about the journalists, and more about the general public, and what they can know about how their taxpayer money is being spent?

DOUG BROOKS: A lot of this comes down to the client. And I think this is interesting, and I think Robert makes a good point here. I mean, essentially the client has a lot -- in this case, in most cases is the U.S. government, either the State Department or Department of Defense -- has a lot of say over what the company is actually allowed to say, how open it is allowed to be.

And we have seen a number of instances where the government has basically told the companies, OK, we don`t want you talking right now. We are going to control the message, which doesn`t look particularly good for the industry, but it`s a reality that we have to deal with.

GWEN IFILL: Doug Brooks and Robert Young Pelton, thank you both very much.

DOUG BROOKS: My pleasure.

ROBERT YOUNG PELTON: Thank you.

(BREAK)

JIM LEHRER: Still coming tonight: the Libby trial and what it`s revealing about the working press; and a report on the post-Katrina labor shortage on Mississippi`s Gulf Coast. NewsHour correspondent Jeffrey Kaye of KCET-Los Angeles has that story.

JEFFREY KAYE, Reporter, KCET: In a triumphant and patriotic ceremony, officials recently opened up a job center in a Waveland, Mississippi, building that had been flooded during Hurricane Katrina. The opening was accompanied by a job fair where employers came to recruit workers.

JOB FAIR WORKER: It`s definitely a good career opportunity. We`re going to give it a shot.

JEFFREY KAYE: But after the resumes had been collected and the brief ceremony completed, there remained more employers than job-seekers. Attracting workers is a challenge for employers all along the Mississippi Gulf Coast. "Now Hiring" signs are practically everywhere.

Both unskilled and skilled employees are in demand by all kinds of businesses, among them Northrop Grumman Ship Systems in Pascagoula, Mississippi. With a workforce of over 17,000, the shipbuilder is the state`s largest private employer. But even with union benefits and wages that average more than $18 an hour, the company has had trouble filling positions.

EDMOND HUGHES, Northrop Grumman: We need 1,600 people desperately.

JEFFREY KAYE: Northrop Grumman Vice President Edmond Hughes says to find workers the company is casting a wide net.

EDMOND HUGHES: We`ve increased some of our college recruiting activities. We`re using contract labor to supplement. We`ve even gone as far as Puerto Rico to bring in some of our contract labor employees.

JEFFREY KAYE: The labor shortage is caused, in part, by the lack of housing. Vacant lots and slabs where homes and buildings once stoop extend for miles and miles along the Gulf Coast. Thousands of former residents have moved away. Many apartment buildings that before the hurricane charged rents at the half the current rate sit vacant and dilapidated, virtually untouched since Katrina`s devastation.

One reason for the short supply of affordable housing is that state of Mississippi gave a higher priority to rebuilding single-family homes and casino hotels. Officials decided to get the tourism industry quickly back on its feet, hoping to stimulate the broader economy, according to Gray Swoope. Swoope heads the Mississippi Development Authority, the MDA.

GARY SWOOPE, Mississippi Development Authority: Part of MDA strategy, actually, which was developed the week after the storm, was coming back and helping with the tourism. One of the things that we looked at is immediately the convention business. You know, the convention business, that people were coming into the hotels and the gaming industry, staying here, restaurants, other small businesses benefited greatly from.

JEFFREY KAYE: Swoope says his agency is now starting to address housing for low- and moderate-income residents. But the affordable housing shortfall is part of an economic climate that one prominent business has decided is untenable.

GARY SWOOPE: Our plans now are to close this facility by October and have our operation fully in Cookeville, Tennessee.

JEFFREY KAYE: Thomas Oreck, the CEO of the vacuum manufacturing company, the Oreck Corporation, had vowed to stick it out after Katrina. Instead, he is shutting down the firm`s assembly factory in Long Beach, Mississippi. The plant employs nearly 500 people.

One reason for the decision to move, according to Oreck, is the high cost of insurance. But the firm is also having difficulty with a high turnover rate among workers. Oreck says, since Hurricane Katrina, he`s raised wages 11 percent, but living costs in the area have gone up about 18 percent.

THOMAS ORECK, CEO, Oreck Corporation: After the storm, we gave significant pay raises, and even still are unable to keep up with what was a rising cost of living, and, you know, for the type of work that we do here to be competitive, because there is a limit to how much that we can do and stay competitive.

JEFFREY KAYE: And when you say competitive, you`re talking about globally competitive?

THOMAS ORECK: Yes, globally competitive and competitive in terms of even domestically.

JEFFREY KAYE: For many workers, the labor shortage offers opportunity, even for those in the service sector.

CANDIE KIRKLAND, Waitress: I mean, you can pretty much go anywhere you wanted to. I mean, McDonald`s is paying $9.75 to high school kids right now.

JEFFREY KAYE: And what did they used to pay?

CANDIE KIRKLAND: About $5.35 to $6.

JEFFREY KAYE: At the 27th Avenue Bistro in Gulfport, owner David Vickers is at the grill, because three employees didn`t show up for work, a common problem.

DAVID VICKERS, Restaurant Owner: I`m paying 20 percent, 30 percent more than I would have pre-Katrina.

JEFFREY KAYE: To attract workers?

DAVID VICKERS: To attract workers, for an hourly rate, OK? What I have difficulties dealing with is the big mom and dads, like the casinos. They come in, they came back and opened up. Well, they can offer $15, $16 an hour, plus health benefits.

JEFFREY KAYE: In the building business, many skilled workers are finding they can write their own tickets. The trades are in high demand.

WILLIE PARKER, Construction Worker: There`s so much work here, that, I mean, this is the best time to be a -- I believe that -- to be in construction.

JEFFREY KAYE: For construction workers, such as Willie Parker, it`s a boom time. Skilled workers make up to $25 an hour; unskilled helpers, up to $13.

But many of the construction workers are itinerant, here from out of state to make a quick buck and leave. Subcontractor Kevin Wallace came in from Tennessee.

KEVIN WALLACE, Construction Worker: Yes, we`ve had a lot of guys, you know, they get homesick, too, you know what I`m saying? They got families and everything up there. And I wish you could find more locals down here, really.

When you do hire somebody, they`re from out of town, you know, so I don`t know. A lot of them sleeps in their RVs. A lot of them were in tents up until, you know, the bad weather set in, and then, you know, they just evidently go home.

JEFFREY KAYE: Some Mississippi companies are using workers from much farther away than neighboring states. They`re importing hundreds of employees from abroad.

Late last year, Signal International, an oil rig construction and repair company, brought in some 300 workers from India. Working as welders and pipe fitters, they`ve been issued temporary visas by the federal government under a program that allows companies that can`t find U.S. employees to import foreign nationals.

The Indian workers live in housing inside the shipyard. They have to pay room and board. The company wouldn`t let us shoot there, nor would they provide a representative for an on-camera interview. But off-camera, a Signal vice president told us the company also uses hundreds of workers, provided by labor contractors, including many guest workers from Mexico.

The Mexican workers -- about 300 of them -- live in a fenced-in compound at a site that`s near the shipyard. When we started to interview the workers, the labor contractor that brought them in, Knight`s Marine and Industrial Services, told us to leave. They refused to answer any questions.

The workers live in wooden sheds without windows, plumbing or insulation. They sleep in bunk beds -- six to a cabin -- where they store food. These pictures were taken and provided to us by workers who asked to remain anonymous, saying they feared retribution.

Putting foreign workers up in sheds may represent an extreme response to the labor shortage. But Mississippi businesses worry that the problem will not be resolved easily or soon. Bruce Nourse is vice president of the MGM`s Beau Rivage Casino in Biloxi.

BRUCE NOURSE, Beau Rivage Casino: We lost about 70,000 homes on the Mississippi Gulf Coast. We have never built more than 2,500 homes in one year on the Gulf Coast. So just by virtue of that fact, it`ll take us years to recoup what we had prior to the storms.

JEFFREY KAYE: The rebuilding brings with it a catch-22: As government and insurance money flows in, the demand for workers will be even more urgent.

(BREAK)

JIM LEHRER: And now, the Scooter Libby trial. Ray Suarez begins our coverage.

RAY SUAREZ: Over the past three days, the jury in the Lewis "Scooter" Libby perjury trial has heard recordings of all eight hours of Libby`s testimony before a grand jury in 2004. Libby, Vice President Cheney`s former chief of staff, has been charged with lying to the grand jury during its investigation of who leaked the identity of CIA agent Valerie Plame.

Plame is the wife of Ambassador Joseph Wilson. Wilson openly had questioned the Bush administration`s intelligence on attempted Iraqi uranium purchases in the run-up to the war in Iraq.

Libby originally told the grand jury it was NBC`s Tim Russert who first revealed Plame`s identity to him during a conversation on July 10, 2003. But then, a search of his notes reminded Libby that Vice President Cheney had been the first, one month earlier.

The grand jury testimony is critical to Special Prosecutor Patrick Fitzgerald`s case. Here`s an excerpt of Fitzgerald questioning Libby before the grand about that time line.

PATRICK FITZGERALD, Special Prosecutor: And are you telling us under oath that, from July 6th to July 14th, you never discussed with Vice President Cheney whether Mr. Wilson`s wife worked at the CIA?

LEWIS "SCOOTER" LIBBY, Former Cheney Chief of Staff: No, no, I`m not saying that. On July 10 or 11, I learned -- I thought anew, that the wife -- that reporters were telling us that the wife worked at the CIA. And I may have had a conversation then with the vice president, either late on the 11th or on the 12th, in which I relayed that reporters were saying that.

When I had that conversation, I had forgotten about the earlier conversations in which he told me about -- reflected in my notes that we went over this morning. In early June, before the Pincus article, when he had told me that the wife worked at the CIA. I had just forgotten it.

FITZGERALD: And you just affixed the person -- who did you speak to on July 10th or 11th that you recalled learning again, thinking it was the first time, that Wilson`s wife worked at the CIA?

LIBBY: Tim Russert of NBC News, the Washington bureau chief for NBC News.

RAY SUAREZ: But Russert, arriving at the court today on crutches because of a broken ankle, has claimed he and Libby never discussed Plame during their 2003 conversation. This afternoon, Tim Russert took the stand as the last witness for the prosecution.

And also in the courtroom at that time, as she has been throughout the Libby trial, was Carol Leonnig of the Washington Post.

And, of course, Tim Russert was examined first by the prosecution. What did he have to say?

CAROL LEONNIG, The Washington Post: Tim Russert was a pretty compelling witness for a lot of different reasons today, but the first being that a lot of the jurors obviously have heard his voice before and recognize him. They were paying very close attention when he said that the cornerstone of Scooter Libby`s defense, or his account of the events of the summer of 2003, was not only inaccurate, but implausible and impossible.

Tim Russert recounted that he had a conversation with the vice president`s then-chief of staff, Scooter Libby, on or around June 10, 2003. Basically, Scooter Libby called him, had a complaint, was very angry, used some very clear and firm language, and wanted Chris Matthews and "Hardball" to stop saying the vice president had sent someone to Niger.

Russert said, in clear and sort of absolutely firm tones: We never discussed Plame. That would have been a surprise to me. I couldn`t have discussed her. I couldn`t have mentioned it to him. I didn`t know who she was, and I didn`t know she worked at the CIA.

RAY SUAREZ: Well, inaccurate, implausible, impossible, those are pretty tough words. But then Libby`s defense team got a crack at Russert. What happened then?

CAROL LEONNIG: You know, I`m so glad you asked, because many -- remember that the attorneys in this case are fantastic on both sides. You have a prosecutor who`s legendary, the Elliot Ness with a sense of humor. You have two of best and most-prominent across the nation white-collar defense attorneys defending Mr. Libby.

And what we`ve seen mostly is Fitzgerald`s work, Patrick Fitzgerald, the special counsel in this case. And throughout the government`s prosecution, or at least their case in chief, you have seen the defense attorneys pick, and pick, and find places where each witness has some recollection problems, memory flaws, things they recalled better with the grand jury than they did soon after the conversations, things like that, that made the memory of these witnesses questionable.

I`d have to say that, after watching all of those moments of cross- examination, that Tim Russert may have fared the best of all of them, because there were very few glancing blows in this cross-examination. Russert continued to say, very carefully, without being boxed in: This is exactly what happened. It`s a simple fact. There`s nothing that`s going to change it.

I`m paraphrasing, but I remember him very carefully saying, "This is the simple truth."

RAY SUAREZ: Well, does the Russert testimony tie up any loose ends for the prosecution`s case or fill in key parts of the story they`re trying to tell the jury?

CAROL LEONNIG: Well, you know, if you think about a trial as a movie -- well, let`s put it this way -- if you think about a trial as two sides trying to put on their version of events, Fitzgerald has now been able to put on his version of the events.

And he`s got to tell the story in a way that`s very compelling, that keeps the jury interested, and also is chronological and makes sense. And that`s why Russert`s testimony was, in essence, the crescendo.

Fitzgerald arranged it so that the grand jury testimony, the audiotapes of Libby in his own words, explaining his story of what happened, played right before Russert took the stand. And I don`t know if this was intentional, but I can`t imagine that it wasn`t, when you`re talking about Patrick Fitzgerald.

You hear Libby in his own words, in March 2004, say that Tim Russert was one of the most respected newsmen, in his opinion. He was very honorable, in Libby`s opinion. Russert was a person who is accurate and fair. And maybe, an hour and a half later, Russert takes the stand and says, "What Mr. Libby has told you is not true."

RAY SUAREZ: Well, Fitzgerald has charged Scooter Libby with lying, with perjury. And his defense says he just has a bad memory. How did today`s court action play into those twin narratives, when each side got a chance to tell its version of the story?

CAROL LEONNIG: Well, keep in mind the two sides of the story have a lot of differences, but Russert is important for a couple of reasons. But let`s go to Libby`s story, which hopefully we`re going to hear a lot more about in the next, say, week and a half.

Libby`s story is that Cheney told him -- his boss, Vice President Cheney -- told him about CIA officer Valerie Plame when they were discussing her husband, Joseph Wilson, and his fairly sensational accusations that the administration had misled the American public about going to war.

And at that time -- Libby makes no bones about this in his testimony - - the vice president was very upset about this claim, and he thought Joe Wilson was wrong. And they had discussed the wife working at the CIA.

Libby, in his grand jury testimony, says over and over again that he learned it from Cheney, but when he started talking about it with reporters, it was after he had forgotten Cheney told it to him, and he learned it as if it were new from Tim Russert.

In other words, his boss tells him in mid-June, while they`re discussing this controversy. He forgets that his boss told him. He`s interacting with a lot of different people about this controversy, administration officials and reporters.

But when he start telling reporters about Valerie Plame and her identity, or reconfirming for them what they`re hearing about Valerie Plame, he does it after he`s forgotten his boss told him and Tim Russert has told him this information a month later, mid-July.

RAY SUAREZ: And, Carol, I need a very quick answer before we go. The defense fought very hard to keep the taped grand jury testimony out of court this time. The jury has heard a lot of Scooter Libby. Is there any indication whether he`s going to testify in his own behalf?

CAROL LEONNIG: There is an indication, and it came on Monday night. You know, throughout this case, the defense has argued pretrial that it was very important to them that they have access to all sorts of classified information because they needed to help establish that this chief of staff was so overwhelmed.

In filings on Monday night, they have said that they still want to be able to introduce evidence that he had a faulty memory, but not necessarily be required to put him on the stand.

RAY SUAREZ: Carol Leonnig of the Washington Post, thanks a lot.

CAROL LEONNIG: Thank you.

JIM LEHRER: Now, the practices of journalism, as revealed at the Libby trial. Jeffrey Brown has our Media Unit look.

JEFFREY BROWN: It`s been a most unusual parade of reporters to take the stand. Today, as we`ve heard, came "Meet the Press" host Tim Russert. Last week, Judith Miller, formerly of the New York Times, testified about three conversations she had with Lewis Libby in which Valerie Plame was discussed.

Former Time magazine reporter Matthew Cooper also testified last week about conversations he had with both Libby and top White House aide, Karl Rove. Other journalists are expected to be called by the defense in the days ahead, notably, Robert Novak, whose column in July of 2003 was the first to name Valerie Plame as a CIA operative.

The Libby trial, in fact, has opened a window into some aspects of how journalism is practiced in Washington today. And two media watchers are here to tell us what they see.

Alicia Shepard is a journalism professor at American University and author of the book "Woodward and Bernstein: Life in the Shadow of Watergate." Tim Rutten is a media columnist at the Los Angeles Times.

Tim, why don`t you start with an overview? What do you see?

TIM RUTTEN, Los Angeles Times: I think we see the picture of a certain strata of the Washington press corps, that has a relationship with the administration at its highest levels, based on aspect and mutual convenience. It`s not a pretty picture.

JEFFREY BROWN: Not a pretty picture.

Alicia?

ALICIA SHEPARD, American University: I think we see a really interesting way that Washington journalism works. So we see how journalists take notes; we see how they cozy up to sources; we see how their memories aren`t so good. We see a misunderstanding or not a common understanding of the words "on background," "deep background," "off the record." We saw that with the Matt Cooper...

JEFFREY BROWN: What`s an example there?

ALICIA SHEPARD: Well, when Matt Cooper testified, he told the jury at one point that he had used the words "off the record" with Scooter Libby and then, another time, used the word "on background," and that he had different meanings for them. "Off the record" meant that you couldn`t use it at all, and yet he used it.

And I think it just shows that these terms are somewhat meaningless, unless and you the source have that same understanding, and yet they`re used widely in Washington journalism.

JEFFREY BROWN: Tim, one of the issues is this question of, who talks to whom and to what end? And some people see this as a question of whether the press -- and I think you just alluded to this -- is whether the press and the people in the government are too cozy. Spin that out for us a bit. What do you see? How do you see it playing out in the Libby case?

TIM RUTTEN: Well, I think it plays out in a very interesting way, because if you stand back from what occurred during those months, you have the picture of a number of high-level Washington correspondents from very fine news organizations who were essentially missing the story in the interest of preserving their access.

I don`t think that, you know, one person in 50,000 in this country really cared what the identity of Ambassador Wilson`s wife might or might not have been.

I do think that a large number of people might have been interested in the story about how the White House, and most especially the office of the vice president, had set out in a systematic way to discredit a prominent critic of the administration`s rationale for going to war in Iraq.

That`s a real story, but that wasn`t the story that was being told, because these reporters were willing parts of that effort to discredit Ambassador Wilson.

JEFFREY BROWN: Now, Alicia, on the other hand, reporters have to get information.

ALICIA SHEPARD: They do. And they have to make a connection, and they have to, quote, unquote, "cozy up" with their sources, because high- level administration sources do not want to talk on the record. And that makes it very hard to be a journalist in Washington, especially with the Bush administration.

JEFFREY BROWN: You talked about on and off the record, which raises the question of anonymity.

ALICIA SHEPARD: Yes.

JEFFREY BROWN: A lot of the anonymous sources has been talked a lot about here.

ALICIA SHEPARD: And that may be one of the biggest casualties of this case.

JEFFREY BROWN: Why do you say "casualty?"

ALICIA SHEPARD: Well, the actual protecting of an anonymous source looks like Matt Cooper and Judy Miller were willing to not -- well, to not reveal their source. And in this case, it was a source that was trying to smear Joe Wilson.

And so, you know, yes, journalists have to protect good and bad sources, but there`s something kind of screwy about this instance of trying to protect somebody who`s trying to hurt someone.

JEFFREY BROWN: On the other hand, you`ve written about Watergate, and the most famous anonymous source is Deep Throat.

ALICIA SHEPARD: Right.

JEFFREY BROWN: There`s an example where people look at that as a good case of using anonymity.

ALICIA SHEPARD: Well, certainly. And there are very good anonymous sources. I mean, there are plenty of examples of where journalists use good sources. But in this case, again, the White House was giving information to reporters, and reporters were protecting the sources, and the White House`s goal was to hurt somebody who was criticizing the White House.

JEFFREY BROWN: Tim, how do you see the anonymous source playing out in the Libby trial?

TIM RUTTEN: Well, I think we`ve been reminded very forcefully that there`s a critical difference between a source who wishes to remain anonymous, because they may suffer some retribution for doing the right thing, and a source who wishes to remain anonymous simply to conceal their identity. And certainly that was the situation with Scooter Libby.

JEFFREY BROWN: Tim, another question that`s come up is just how journalists take notes, when they do, when they don`t, who owns those notes, all kinds of sort of interesting -- how does it work when you`re talking to sources?

TIM RUTTEN: Well, you know, obviously, everybody does these things differently. I can tell you, as somebody who`s done investigative work. And it`s been my habit throughout my career, which is longer than I care to remember, that I don`t keep my notes after a story is done. I destroy them immediately, precisely to avoid situations like this. And, frankly, these notes are worthless as evidence.

JEFFREY BROWN: Worthless as evidence?

TIM RUTTEN: They are.

JEFFREY BROWN: But it led you to actually destroy your notes?

TIM RUTTEN: Absolutely. Every time I finish a piece, I take the notebook, and I rip it to shreds. I have no files, and I have no notes.

ALICIA SHEPARD: Wow. I would never do that, and I think that you keep your notes to protect yourself. In this case, obviously, it hurt both of them.

TIM RUTTEN: I don`t think it protects you at all. In fact, it opens you to exactly this kind of parsing over things that appear to mean what they do not mean.

ALICIA SHEPARD: Well, I`d like to also add that any profession, once they`re on the witness stand, whether you`re an emergency room doctor or a high school teacher, when you are asked questions the way that Matt Cooper and Judy Miller and Tim Russert were today, it`s going to make the profession look bad.

JEFFREY BROWN: It just looks bad watching it get done, no matter what it is.

ALICIA SHEPARD: Exactly. And, you know, overall nothing has proven - - that any journalist have done has proven to be criminal.

JEFFREY BROWN: Let me ask you both something. How much of this -- Tim, you started off by saying that this was a look at a certain sector of journalism, but how much is that true? I mean, how much is this journalism at a very high level of Washington politics, and how much of this goes on at any state capitol or any city hall?

TIM RUTTEN: Well, some of it goes on, but the stakes are much lower. And part of what occurred here was an example of what happens when people think they`re playing for very high, career-enhancing stakes. And, again, as I said, it`s not, in this case, a pretty picture.

We`ve seen that -- it`s also very important to make the point that Washington and the Washington press corps are filled with diligent reporters and editors pursuing their craft with great integrity. We see in the case of the New York Times, for example, that, while the vice president`s office felt that Judy Miller was a sympathetic ear into which they could speak, they most emphatically felt that Nick Kristof, the columnist, was not.

JEFFREY BROWN: Quick response?

ALICIA SHEPARD: I would sort of say another side that we are seeing is from the White House, that the White House likes to dump information on Friday to reporters so that it will get in Saturday`s paper and not get paid attention.

We saw with Ari Fleischer that sometimes the White House press person does not always have good information. We saw that the White House is selective about who they give information to and that they occasionally coddle certain reporters and freeze out others.

And so that just provides the rest of the world another window, not just from the journalist`s point of view, but how the White House attempts to manipulate the press.

JEFFREY BROWN: All right. And as we heard from Ray and Carol, the defense will start tomorrow, and the window will -- we`ll see where it goes.

ALICIA SHEPARD: Get wider.

JEFFREY BROWN: Get wider. Alicia Shepard and Tim Rutten, thanks very much.

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JIM LEHRER: And, again, the other major developments of this day.

The U.S. military confirmed a major security operation has begun in Baghdad. And a U.S. Marine helicopter went down in Iraq, killing all seven people aboard.

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JIM LEHRER: And, once again, to our honor roll of American service personnel killed in Iraq and Afghanistan. We add them as their deaths are made official and photographs become available. Here, in silence, are 10 more.

We`ll see you online, and again here tomorrow evening. I`m Jim Lehrer. Thank you, and good night.