the industry. jon: phil keating, thank you jane: time to send you to the "live desk." [captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- martha: i am martha maccallum. trace: i am trace gallagher. we are live inside the newsroom. this is where the news begins. this is the national desk. they are covering america. this is the foreign desk, covering the globe. and every picture that comes into fox news channel comes to the media desk. in the top box, the president is now in italy for the g8 summit. despite billions of dollars in bailout and stimulus, a global recovery has yet to take hold. in the united states, an obama adviser says there is need for a second stimulus.

there are staggering new numbers about the president's popularity. the latest poll shows his approval rating dropping like a rock. in the middle box, do information about the cyber attack on u.s. government computers. it is bigger than we thought. there is word the white house defense department and the stock this change are all affected. in bottom box, a d.c. train operator with some dangerous activity. texting while driving to what happened to the driver and the rest of the story? it is moments away. martha: you would think the homeland security building would be one of the safest places to work in this country. wait until you see this videotape that reminds us of what happened in oklahoma city.

the man was later executed for carrying out an anti-government attack. now, post 9/11, government investigators report stunning security lapses at federal buildings in this country, as this intensive undercover operation shows. investigators smuggled live bomb components into sites. after they got the parts into the building successfully, they went into the bathrooms and the assembled of the bombs, and then they roamed freely through the offices. in another part of the tape, you can see the security allows a baby in a car seat right through the x-ray machine. and how about this? a security guard is sound asleep. national correspondent and catherine herridge is in washington. a hearing on this has just

wrapped up. what did we learn? >> the main headline out of the hearing, which was somewhat contentious, the federal protective service, which is charged with protecting this government buildings, is really an agency in crisis according to investigators. the video release sums up that extent. when you look at the video of how the small bombs were smuggled into these buildings -- when you see those bombs explode, it is clear what kind of impact we could have in the future if these devices were successfully smuggled in, and they were able to let off these explosions. martha: it is incredible. it is not just a onetime breach. this happened in several instances. >> it was 10 buildings over four

cities. that was done to be shown this was not a problem in just one part of the country. this was a systemwide -- this was systemic within the federal protective services. one of the striking elements of the testimony today is that two levels of security failed. not only the first level of security when you get to the building, when you are screened, but once inside the buildings, the investigators had to find a safe place to assemble these devices. we heard exactly how that happened today from the investigator. >> in some cases, the bathrooms were locked, but the federal employees let us in. usually in under four minutes. it is a very quick thing to put together. then we placed it in a briefcase and walked around a variety of federal offices in the four cities. >> one of the elements that got people's attention in that room was just the amount of time that

was involved. if you can put together what amounts to an improvised explosive device in just four minutes, you can see how important it was that the first level of security failed. once inside, they could pull off the attack in very short order. martha: it is an incredible testimony. senator lieberman brought up something about a baby that was put on the conveyor. it ended up going through the x- ray machine. >> this is one of the more bizarre elements of the story. it is used as an example of the security guards in position, but simply not looking at the screens. the investigator testified that if they gua security guards woud have been looking at the screens, it would have been very obvious to them. the ultimate example of the lapse was the fact that a baby was put through the x-ray

machine. the security guard was not looking at that conveyer belt. senator collins said the incident clearly showed that nobody is looking. there is a very significant problem to say the least. martha: let's be thankful this has brought to light some of the gaps. the next step that will be taken will be for something to be done about this. thank you very much, catherine herridge. trace: let's bring in the former assistant director to the fbi. if you go back 15 years ago to the oklahoma city bombing, after that, security of federal buildings across this country was air tight. now, you see this happening. what is going on? >> it is disgraceful. if they use contract security

people, there lies most of the problems. the contract security is kind of a dismal industry to begin with. getting the right company. a company such as guardsmart, they do an excellent job. you have to look at their education. you have to make sure they have had criminal checks and security checks. have to look at their past employment. you have to train them. we have this preparing thiedness fatigue. trace: the baby that went through the x-ray machine. when you let a baby go through, are of the guards just so low

that they are not paying attention? >> it might be an individual working who is not always assigned to that post. somebody could have called in sick. it could be somebody not even trained to do that work. that is reprehensible. and then if you do not pay them a good wage and give them the benefits and keep up the training, and have the company that provides these contract security officers -- if you do not have them coming in every single shift. and do what the gao did. trace: this is a critical job. you should be awake and alert at your post. thank you. martha: a massive cyber attack overwhelming computers in the u.s. and in south korea. a slew of highly sensitive targets, including the white

house. an early analysis of this showed it also keyed on the state department, and the pentagon. south korea's main spy agency it say they believe it was carried out in this country by north korea or pro pyongang hackers who might be in this country. u.s. intelligence officials are not discussing who may have been behind this very serious attack. trace: 4000 u.s. marines on the ground. the lead commander says that is not nearly enough. the operation in afghanistan is one of the biggest military efforts of united states has launched since the war began seven years ago. these are new pictures of the operation underway in helmand province. the brigadier-general commanding those marines says he needs more men. jennifer, what exactly did the general say he needs at?

>> he would not go so far as to say that he needed more u.s. troops. he said he would like more u.s. troops in the south. he did say he was short on afghan forces. he said he only has about 400 to 600 afghan forces for the entire mission. >> the fact of the matter is that we do not have enough afghan forces. >> without those afghan forces, the marines can clear out these areas of taliban, but they cannot hold. that is a key part of the counterinsurgency strategy. they have only two state department officials assigned in the area. they are about to get three more. they will have a total of five. they are dealing with clearly in the coffee areas. that is a key part of the strategy. there just are not enough other development officials assigned

to the civilian surge. trace: thank you. martha: there is studying violence up in the streets. moms are roaming neighborhoods. -- there is stunning violence in the streets. more than 150 people are now dead. the military is moving next. havin' a cuppa tea. gecko vo: takes lots of sweat to become that big. gecko vo: 'course, geckos don't literally sweat... it's just not our thing... gecko vo: ...but i do work hard, mind you. gecko vo: first rule of "hard work equals success." gecko vo: that's why geico is consistently rated excellent or better in terms of financial strength. gecko vo: second rule: "don't steal a coworker's egg salad, 'specially if it's marked "the gecko." come on people.

trace: in the top box, ruth

madoff is free to move about the country and the world. she is getting her passport back. she is likely to avoid charges in connection to the scheme that landed her husband behind bars. in the middle box, awaiting the countdown clock to launch of the space shuttle endeavour. plans to build a new japanese space lab. the countdown begins at 10:00 p.m. eastern tonight. martha will talk to the last man to ever walk on the move. in bottom box, former president bill clinton wrapping up a visit to haiti. it is his first trip as the un special envoy. martha: the president of china has decided that he will not continue at the g8 summit in

italy. he is dealing with violence in the streets of western china. over 150 people dead in this violence so far. mobs flooded into muslim neighborhoods armed with meat cleavers and clubs. state media said riot police have arrested almost 1500 people. steven yates, a former deputy assistant to vice president dick cheney. a lot of people look at this story and they're not sure who is against whom, what side the government is on, and what side of the u.s. might be inclined to support. break this down in terms of the uighurs and the han chinese. >> there is a compelling human story behind all of this.

as part of china is as far west -- for centuries, this was not part of china. ethnically, it is not chinese. in recent years, the government in beijing has been sending a lot of han chinese people to occupy and start businesses in this far west area. the muslim majority is chretiesg in that area. they're getting less advantageous jobs in their home area. when they travel to other parts of china, they are treated somewhat like slave labor, which is the original dispute. martha: han chinese have been sent into this area to sort of populate it because they're not crazy about the uighurs in that area. on top of that, a very difficult economic situation in china out. you have a lot of inflammation

of tensions. >> absolutely. martha: as the united states looks at this, as president obama looks at this, what should the approach be? >> one, it is really time to step back, and the obama administration has really put climate change at the top of its agenda. secretary clinton and secretary geithner will be going to china to talk about climate change. as problems in north korea and iran are billing on, i do not think it is feasible at all to imagine pushing that kind of priority. the united states needs to make it clear that it stands with those who want freedom. martha: who do you stand with in this situation? the uighurs?

>> yes, i think you have to stand with people who seek economic and political rights at home. the burden is on the government, who has had to type of a control on the population -- too tight of control on the population. martha: the uighurs who were released from guantanamo, and now you see these people killed in the region they live in in china. you kind of debt by the chinese did not want to take back the uighurs -- you kind of get it. >> yes, but it is two sides of the coin. they are easy recruits for fundamentalist movements elsewhere. the chinese treatment of that region the sparks that kind of networking and slow.

martha: steven yates, thank you very much for helping us understand this situation in china. trace: president obama wants health care reform by the end of the year. how to pay for it all? the $1 trillion question may now be in jeopardy. an issue that will affect each and every one of us. we will have both sides, a fair and balanced debate, next. ( crack of bat, cheering ) not playing with the kids? not on these legs. poor leg circulation. doctor says it's p.a.d. peripheral artery disease? hmmm. more than doubles your risk for a heart attack or stroke. so i hear. better ask your doctor about plavix. plavix can help protect you from a heart attack or stroke. plavix helps keep blood platelets from sticking together and forming clots, the cause of most heart attacks and strokes. my cousin the m.d. call your doctor about plavix.

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trace: health care reform getting a shot in the arm. hospitals of three on $155 billion in government payments. vice president joe biden says concessions like these are making health care reform

possible. >> reform is coming. it is on track. we have tried for decades to fix a broken system, and we have never come in my entire tenure have been this close. trace: some lawmakers want to pay for this by taxing health care benefits. the plan is very much in doubt, in danger in the president's hope of passing the bill by october. linda douglass is the communications director. by my math, take off $155 billion, you are still $1 trillion short. how do you pay for it? >> it is important to note that the pharmaceutical industry and the hospital industry have now said they can achieve major savings in the system that will go toward supporting health care

reform for all americans. trace: how do you pay for the rest of it? you are still $1 trillion short? >> the president has put a proposal on the table. $950 billion inside the medicare and medicaid systems. everyone in the industry has a acknowledged there is tremendous waste. trace: the republicans call that fuzzy math. they say what will really happen is a massive tax increase. the president said we have to make "tough decisions." there really is no way around to doing this except for raising taxes dramatically. who do you raise them on and how much? >> in addition to taking money that is already in the system and reallocating it for much better quality care for all

americans, there's also a proposal that will raise revenues by taking the rate of itemized deductions for the very wealthiest americans, and returning it back to the level where they were when ronald reagan was president. as several senators have said, congress is looking at this proposal, taking it seriously, and this is a way of raising revenue in addition to the $600 billion in savings of health care money that is being spent inefficiently. trace: cbo says it is still not going to be enough. you're going to be short. how many times can you go back to the well? in a climate like this, americans hate the thought of raising taxes. how do you get that by? >> americans really hate the idea that every single year, they're watching the costs of health-care rise in such a way that most americans are wondering whether they can

afford to go to the doctor. they are paying more and more out-of-pocket through deductibles or co-payments. more than half of americans now are underinsured. you may not be taking the kids to the checkup that they need. trace: a lot of people have said the 46 million uninsured a number is not really so. if you take the leillegals out of it and the people who choose not to have insurance. thank you. a medical doctor and chairman of the congressional health care caucus. i'm not sure if you heard the prior conversation, but max baucus of the senate finance committee says we can save money by eliminating certain treatments and eliminating certain tests.

in essence, the governor will tell you what you can and cannot do for your patients. >> that is what you just heard in your previous interview. one person's waste is another person's critical intervention. who is going to make those decisions? that is something we heard testimony about last week before the recess. the secretary of health and human services would make a lot of those decisions. we do not know what the parameters surrounding those decisions will be. a lot of those decisions are up in the air. the hospitals came to the table with some stuff. how excited will they be to get things up? trace: the white house says they will come up with a plan to pay for this. they say a lot of it will be tax increases to the question that everybody else has, if this fails in congress, it is going

to be because lawmakers on capitol hill cannot come to terms on how to pay for this. i do not think anybody has figured out a way to pay for this thing. >> that is why the discussion about how to pay for it has drifted. when president obama was running as a candidate, she accused senator john mccain of doing one of the very things that will likely have to happen now, which is taxing health benefits. trace: that is off the table. democrats say they do not want to do that. 56% of americans are against it. the unions are against. >> that is why the push is on to get this done rapidly. forget about doing it right. we have to get it done quickly because we have midterm elections to win. that is exactly the wrong approach. that will lead us to significant trouble with trying to do

something this big in the short a period of time. trace: the public aoption looks like it is front and center again. it is probably going to happen. how much does that hurt the private insurance companies? >> it is hard to say. i'm not here to defend private insurance companies. they are responsible for some of the problems that we have. without the private sector, doctors' offices cannot function at this point based on medicare and medicaid reimbursement. if you go to the public plan, what is the reimbursement going to be like? it is anybody's guess. the only ways to control the cost is to ratchet down. trace: there are a lot of variables. thank you. >> thank you. martha: president obama is in

italy today, but he may not like what is happening in ohio. we will show you what we're talking about in just a second. a d.c. train operator doing something very dangerous and a passenger caught it all on video. if you're like a lot of people, you have high blood pressure... and you have high cholesterol. you've taken steps to try and lower both your numbers. but how close are you to your goals? there may be more you can do. only caduet combines two proven medicines... in a single pill to significantly lower...

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which beneful prepared meals. tonight? roasted chicken recipe? - savory rice and lamb stew. - [ barks ] you're right. tonight is a beef stew kind of night. [ announcer ] beneful prepared meals. another healthful, flavorful beneful. trace: we have brand new information on three big stories. first, g8 summit. major garrett is traveling with the president. >> g8 nations agreed to reduce greenhouse gas emissions by 80% by 2015. that is part of a plan they say will reduce global temperature rises by 3.6 degrees fahrenheit over the same period. a lot of details need to be worked out, but the obama administration says it is part of an emerging global consensus to do something about global warming. back to you. trace: thank you.

veterans having trouble returning from iraq and afghanistan. >> some veterans of iraq and afghanistan have trouble readjusting to civilian life. a group of local district attorney's working to offer mental-health and substance- abuse counseling to veterans who are nonviolent offenders and are not a threat to the community. there's no evidence that veterans are more likely to commit crimes, but if they do, help may be waiting. trace: back to washington, d.c., and a train operator busted on the cellphone video camera. what is up? >> this video surfaced on youtube. and metro spokesman said the man was suspended for five days without pay. the fatal d.c. metro crash last

month was not due to texting, but two recent crashes were. trace: i will be looking at the conductor when i get on the train today. martha: during elections, ohio can be the states that the sites the presidency. when you watch that state on election night, a lot of times you know how things are believed. a poll shows is losing ground -- president obama is losing ground in ohio. that is a pretty big drop. we are wondering what is going on here. doug and brad, welcome.

if you are the president's pollster, and you look at the situation, it is no big deal because it is just one state. >> barack obama is starting to inherit george bush's economic problems. people see it as the problems of this administration, not the prior administration. the stimulus has not started to work. martha: joe biden will talk about the stimulus program in ohio tomorrow. so far, the president has had to correct him twice in the past few days. >> you have to get health care passed and the climate bill passed. there has been a lot of spending and little progress. martha: put yourself in their shoes at the white house. what do you think is the best strategy? do you get the president out with the people? do you do the kind of town hall meetings that we saw with health

care? what do you do to get the president back where he was? >> i would keep the vice president in washington. i would announce that i'm not going ahead with health care. i am not going ahead with climate change aggressively until this economy turns around. the president has to take the bull by the horns. he has to let people throughout the country know that his main focus is the economy. once that is on track, we will broaden the scope and look at other areas. martha: focus, focus, focus. that is what you believe president obama should do. >> to bring the vice president back to washington -- how problematic is it that vice president joe biden keeps going on tv, and the president has literally had to correct his statement twice. >> they are not going to pull

him out. they just have to keep him on message. they cannot pull back and unilaterally disarm on health care and climate change. they need progress. they need legislation. martha: climate changes something that a lot of people are becoming suspicious of. i have heard all these reports from the epa. how difficult is it? when you look at the global situation, how difficult is it to get people to pay attention to you about climate change? >> you are not going to get people to focus when they have lost their jobs and their future is uncertain. they want to hear how the president will help them get food on the table. people are not interested in climate change. they are not interested in health care. martha: i am struck by this.

from what we have learned about president obama on the campaign trail is that he appears to be pragmatic. how much of an ideologue is he? how committed is key to these ideas of bigger government and the kind of things we are sayeeing and put forth? will he change gears? >> he has got to make deals. he has got to do it incrementally. he has to move away from the ideological left. he does that, you can circumvent the problem sbrad spoke of. he has a core democratic constituency, especially in the house. martha: if you are him, are you going to hunker down on the health care bill? would you say, do this first? >> healthcare is more important

than climate change. we can create jobs and the stimulus is producing results. martha: what would you tell them to focus on? >> do not let the inmates run the asylum. take it back into control of the white house. martha: 13 points down in ohio. you both agree that with your attention if you were in the west wing right now. thank you very much. trace: the 40th anniversary of neil armstrong's walk on the moon. you could forget it? the summer of love. in a few moments, we will talk to the last aster not to set foot on the moon, gene cernan. that was back in 1972. we want to hear from you. should the united states and a manned mission back to the moon?

you can post to answers on the blog at foxnews.com/livedesk or twitter us at twitter.com/livedesk. martha: watch this. wait until you see what happened, when we come back. but with aleve, i don't have to worry about my knees hurting. only two aleve can stop pain all day. that would take three times as many tylenol arthritis pain. aleve works for me.

trace: did you see this last night? check this out. he breaks his baseball bat and it flies into the crowd. watch this. caught it. and he is still on his cell phone. he never put down the cell phone. there it goes. bingo. nice grab. that is your catch of the day. you can get constant updates on foxnews.com. >> this allows any fox news channel field staff to post news directly and instantaneously to the web. it is somewhat of a look behind the curtain for people who want

to know what is happening. trace: what is this? >> this came in from a photographer. it is about a new initiative in michigan. it is not just postings. they have video. there's a full slide show. this is a way for people to see this kind of information before we get a chance to package it into a story. trace: very nice. robert lee, a chicago newsroom photographer, one of the best. when in rome, get yourself gelato. that is exactly what sasha, malia, and grandma did today. they are tied in along with the president as he meets with world leaders at the g8 summit.

he was the last person to walk on the moon. astronauts gene cernan -- astronaut gene cernan. it is our must see that of the day. back with gene cernan in three minutes. are you receiving a payout from a legal settlement or annuity over 10 or even 20 years? call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today.

>> that is one small step for man, one giant leap for mankind. martha: they are such moving boards every time you hear them. one of the most iconic to declarations in u.s. history.

we are approaching the 40th anniversary of apollo 11. apollo 10 also made history. it was the first time that american tv audiences were treated to the live pictures of space. one of the men on that mission was gene cernan. he was the last person to walk on the service of the moon on apollo 17 in 1972. -- lock on the surface of the move -- walk on the surface of the moon on apollo 17. >> ♪ much to my surprise, this is a neat way to travel. ♪ martha: pasto gene cernan said

he believed the u.s. would send astronauts back to the moon. your live in history. it is a moment that makes so many americans so proud. as you said, we leave as we can, and we shall return with peace and hope for all men can't -- for all mankind. did you know then in some way that might be a long time before we went back? >> i never anticipated it. i thought we would go back to the moon in the following decade. i predicted that -- my timetable has been wrong for the last 40 years. there's no question in my mind. i do not care what the economy looks like, what the future looks like, what the administration believes is the right thing to do, we will go back to the moon.

you will see human beings go to mars. martha: i hope so. i believe so much in the american passion for exploration. i worry now that that sense of desire is not backed up by what it takes to make that kind of commitment, given everything else that is going on in the world. why should americans look at the situation and say this really matters? >> going back to the moon is important for a lot of reasons. we could talk about technology, world leadership, or the jobs it creates. i am passionate about its impact on education. we need to reinvigorate the mines and dreams -- minds and dreams of our young kids. back to apollo, everybody dreams of going to the moon. they became doctors, dentists,

astronomers, and we need to reach an stilt that into -- we need to show that to our young kids today. it is the young men and women who are doing a wonderful job up there. everybody remembers john glenn and neil armstrong. not many people can tell you the others. martha: one reason that might be is the distance. you guys went 200 plus miles away. -- 200,000 plus miles away. talk to me about what it is like to be that far away from home. >> we started at 25,000 miles for over. we were captured by another body

in the universe. we were literally part of the moon. our reality was out there. you could cover it up with something smaller than the palm of your hand. will gain on the move -- walking on the moon is extraordinary. we could talk about that for a lifetime. the memory i come back with is to look back at the firsearth. it is surrounded by the blackest black you can conceive in your mind. earth moves with logic, purpose, and beauty beyond conception. when you are on the moon, you cannot take your eyes off of it.

in one sense, it is a security blanket. i'm here in a science-fiction world. you pinch yourself and you ask yourself, do i really appreciate this moment? i sat on - god's front porch. you have to let your imagination wonder. that is why we need to go back. we need to inspire kids. martha: i think about the beginnings of the right stuff with a crash after crash and the persistence and the desire on the part of all those people not to give up. at a minimum, mars is 36 million miles apart from earth. we're both rotating around the

sun. i cannot fathom how you get that far. >> it is going to be a long trip. it will get a lot shorter as we get smarter. that is why we need to go back to the moon. it cost going back to the moon one penny out of every $1 of our tax dollars. martha: i will pay for 25 people. >> i am ready to go back if you will go with me. martha: i would go with you in a heartbeat. gene cernan, thank you very much. you are an american hero. thank you. gene cernan is one of the stars of the upcoming fox special that is not to be missed. you should watch it and make sure that your kids see it. it airs friday, july 17 at 10:00

p.m.. it is going to be wonderful. gene cernan, you are truly one of the strongest voices for the future of the space program. thank you. trace: he was on god's front porch. terrific interview. the stage is being set in washington premiere days away for the senate confirmation hearings for supreme court nominee sonia sotomayor. there are concerns coming to light about her past rulings. the national rifle association and other groups are weighing in.

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[captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- trace: welcome back to the "live desk." this is where the news begins. i am trace gallagher. $787 billion of your tax money is already on the pipeline. we're hearing about a second stimulus package. with the deficit carleegreen, te president's economic adviser says we should be better prepared to spend more. steny hoyer says we should be open to the possibility. here is the deputy director of

the office of management and budget and a house hearing today the. >> the administration is talking about a second stimulus premier focus on implementing the recovery act that congress has already passed. trace: fox news senior political analyst brit hume is with us now. 10% of the stimulus has been spent. we do not know where that stimulus has been spent. they are talking about more stimulus to refers round did not create the jobs they anticipated. -- they are talking about more stimulus. the first round it did not create the jobs. >> it is unlikely there will be a second stimulus package. i will say this to you. only a fraction of the money has been spent.

that goes to the argument of whether you should ever do stimulus of this kind because it takes a long time to get the money allocated out to wherever it is going and actually spent. often the recession is over before the money is spent. to some extent, the money is wasted. that is the argument against the stimulus. the problem is now affecting the economy now. we're not getting a kick out of this that we had hoped to. in large measure, the money is not being spent. setting that aside for a moment, none of this is an argument for a new stimulus package, which would face the same problems. it would be starting later. you would have to wait a long time for the money to be spent. the problem the administration has is that it has to seem sensitive to the politicians on capitol hill to the fact that the unemployment rate continues to rise. you do not want to sound like

you are not open at least to any idea that might help the situation. you are hearing that they are open to the idea and willing to discuss the idea. there's not really any money to spend, anyway. the president also wants to do $1 trillion health care reform package and so on. the government is busted. it would no doubt interfere with other priorities. there's no chance it will happen. trace: if you placate one side, don't you alienate the other side? we have not even got in the first part of the stimulus. >> if you are against further stimulus, and the administration says it is open to it, that my were you. it would really bother you if the administration started making proposals. i do not expect that to happen. it is possible that as the money gets spent that it will have

some stimulus effect. there are all kinds of questions about whether the debt that is incurred will do more harm than good in the long run. in the near term, there is likely to be some positive effect in terms of consumer demand and spending in the economy that might get things moving a little bit. that is above administration is banking on -- that is what the administration is banking on. martha: i want to talk to you a little bit about joe biden. the president has had to correct statements that joe biden has made. joe biden said we misread the economy. president obama said we did not really misread the economy. he will be speaking in cincinnati tomorrow. what do you think is going on here? >> what comes into play -- i

have known joe biden ever since he was a senator. i once wrote an article about him. the editor at the time put it over line on the cover of the magazine sarah palin's, "-- saying, "shut up, biden." he often says things he should not say. he has always been this way. i do not expect him to change. what you see is what you get. that is the way joe biden is. martha: it did not work when they put that on the cover of the magazine. i do not think it will work now either. >> about that story, when i interviewed him for the article, he was resistant because i was a

correspondent for abc news at the time. he said i never covered him. i never covered him because i could never get a sound bite to air, or one that made any sense. he asked why i never covered him. that is what i said. i said, i think you are a wind bag. he laughed. he said that i may be right about that could be agreed to do the interview. we have gotten along ever since. -- he said that i may be right about that. martha: that is a good story. thank you very much. trace: there is talk of a such a stimulus. stu varney, we have spent a 10% of the street they are talking about around two. -- we have spent 10% of this.

they are talking about round two. >> where's the money coming from? what about the deficit? we have never been there before. the idea that we will borrow more money is being greeted with dismay in the financial markets. and voters, by the way. it does not look good. martha: there are those out there that believe that the less you mess with the economy, the better. >> you have bart orrowed an enormous amount of money. that does damage to the underlying economy for years to come. it was the nature of the original stimulus plan -- that is the problem.

it was all about government social spending. it was not designed to create jobs. where are all the shovel-ready projects? if you look at a breakdown of the first stimulus plan, 24% of the near $800 billion was for actual spending on projects which may create jobs through the rest was social spending. aid to education, aid to the states, backing up social spending. that does not create jobs. trace: now we are hearing that is more of a trickle. >> look what the chinese did. look what the french did. they put stimulus money it right to work and created jobs. what did we do? the exact opposite.

trace: stu varney, thank you. he ran into the newsroom and put a microphone on. >> i hate to be so negative. thank you. trace: thank you. sarah palin has now gone fishing. what she hoping to catch? what is he hoping to have in the net? we will tell you what a new poll has to say about her political future. >> i do not know what the future holds. i want to work for people, for the right things. those principles that built america. those who are inspired by the values of america and will not apologize for the values that we hold americans. y doing it. gecko vo: businessmen say "hard work equals success." the world's most successful businessgecko.

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trace: in the top box, google taking on microsoft. it will launch a new computer operating system, a direct challenge to the microsoft windows operating system. google says this will be rolled out in the second half of 2010. in the middle box, the top commander in afghanistan says he needs more afghan forces if he is going to be successful in the new battle to secure helmand province. he says he does not have enough civilians to work on the big construction projects. in bottom box, the next chapter

in the michael jackson saga. where to bury him? the family would need special permission to bury him on the grounds of his neverland ranch. the whole thing is still up in the air, as is the investigation. [applause] >> we are really pleased to have her. martha: last week she announced she was stepping down as governor of alaska. sarah palin is still a factor in presidential politics, according to the polls. her resignation led to speculation that she is clearing a path to run for the white house. others call this a huge, career and a mistake.

-- career-ending mistake. take a look at the bras andpoll. our own mike huckabee, the former governor of arkansas, is not too far behind at 22%. we are pleased that your back with us to talk about this. doug, she is very good at keeping herself on tv. she was out there on the boat. what do you think? >> she is good at getting attention. i'm not sure anybody knows quite what she is saying. she talks about working for republicans in standing up for america, but it is not clear what causes she is advancing,

and what she's going to do to keep herself viable. martha: she says that she talks the talk and walks the walk. she said she is all about efficiency in government bureaucracy is a leadinweighings down. >> she better not be president then. you are faced with the exact same things but times 100. if she has the leadership qualities that everybody thinks she is, she could have been one of the most successful lame- duck governors but alaska ever had. she has the public's attention, but that is not enough to get the nomination. you have to be nominated in order to go to the electorate's. martha: some people will say that is the politics of the old way, that you have to run for office and do your job, and work

your way through the system. she is saying that she will not work through the system. she has a book coming out. people are talking about a talk- show deal. >> good luck to her. i hope she finds what she is looking for. i do not know what she is looking for. i think sarah palin needs to bunkered down and figure out what she wants to do, and tell the american people. the road to the white house is not via a talk show or book. martha: let's pull up the poll numbers. they look at president obama in community service and then in the senate for a short time. he was extremely popular on tv and giving speeches. maybe there is more than one way to skin a cat.

>> barack obama stayed in the game. he was and is a respected lawmaker. he did not quit. he did write books. he did write articles. barack obama has great respect for the congress and served with distinction. sarah palin made a misjudgment. she needs to figure out who she is and what she stands for. martha: brad, jeb bush is out there with an article in "esquire" magazine. >> i know what he has done for florida. he has an outstanding individual, both as a governor and as a person. he would be unbelievable for our party, but for his last name, that still may hurt his chances to become a nominee. >> i think he is going to try to do lit.

martha: it will be very interesting. thank you very much, gentlemen. trace: confirmation hearings begin on monday for supreme court nominee sonia sotomayor. some conservatives expressing concerns that her personal feelings could influence this. >> are the days now gone where judges should see that taking office is a commitment to set aside their personal experiences and views? gone are the days when judges even aspire to be impartial. trace: a lot of senators have been highly critical of sonia sotomayor's speeches. the question is, would they vote against her? (announcer) roundup extended control

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trace: conservatives turning up the heat on the supreme court nominee sonia sotomayor as the senate judiciary committee prepares for her confirmation hearing on monday. if confirmed, judge sonia sotomayor will become the first hispanic justice on the high court. the nra is raising questions about her record. the 19 member of the senate judiciary committee, jeff sessions -- the bernanke member of the senate judiciary committee, judge sessions. -- dave ranranking member of the senate judiciary committee, jeff sessions. would you really go as far to not vote for her? >> this nominee has a record of

ruling on some very important cases. some of them are quite controversial. she would need to answer this. she has repeatedly suggested that a judge is correct to allow their personal bias and even prejudice to have them affect her decision making process. those are things she has been criticized about, not her personally. she is an engaging person with a good background and a good record of experience. i think she has to answer, like any nominee, these tough questions. trace: you have said she is entitled to a fresh start and that she has to convince you. does she have to change your mind about her views? >> i think we need to talk about that. we need to ask what she meant by some of these statements, what

she meant by some of the rulings, and let her have a chance to explain them. some of these things are troubling. i do not believe anybody should be confirmed as a judge anywhere that does not believe in treating every party before the court impartially and fairly. the idea that you can bring your personal prejudices or background and gender and allow that to affect how you rule is contrary to the american system of justice. it will be a good hearing. i think those things need to be talked about. trace: the national rifle association is coming out and saying, "judge sonia sotomayor has said that the second

amendment does not apply to states." gun rights groups are irate about this. what do you tell them, if you vote in favor of judge sonia sotomayor? >> this is a big issue. the supreme court has left open the case of whether or not the second amendment applies to estates. that means that if it does not apply to states, that any city, county, or state government can prevenprohibit all firearms. it would be a very bad thing. she has ruled that it does not apply to the states, based on prior precedent. i'm not sure that is correct. it raises questions. when this issue will come before the supreme court -- it will definitely be something she will need to talk about because she has ruled on this already. martha: i respect that you are

looking at this very much through the prism of your chairmanship and your duty to make a judgment on this judge. as a republican, i'm curious of your thoughts of what some in your party, and jeb bush is one that comes to mind, who feels that the republican party has lost a lot of ground with hispanics. what do you think about the ramifications for republicans in general of giving this judge a tough time? >> this judge needs to be treated fairly. i am committed to that. she needs to be treated respectfully. she has a long record and she deserves that respect. this is the only chance the american people have to be able to look at her and see what she is about and what she thinks before she is given a lifetime appointment. we have a constitutional duty to ask tough questions. that is something we have to do.

trace: thank you, sir. >> thank you. martha: florida's natural beauty versus the need for alternative energy resources, the debate about natural gas. trace: that is live in south florida. @=h 90s slacker hip-hop. ♪ singer: buckle up, everybody 'cause we're taking a ride ♪

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♪ so sing the lyrics with me: ♪ when your debt goes up your score goes down ♪ ♪ when you pay a little off it goes the other way 'round ♪ ♪ it's just the same for everybody, every boy and girl ♪ ♪ the credit roller coaster makes you wanna hurl ♪ ♪ so throw your hands in the air, and wave 'em around ♪ ♪ like a wanna-be frat boy trying to get down ♪ ♪ then bring 'em right back to where your laptop's at... ♪ ♪ log on to free credit report dot com - stat! ♪ vo: free credit score and report with enrollment in triple advantage. trace: brand new information on three big stories. catherine herridge is following major security flaws in federal buildings. >> the federal protective service that is in charge of protecting the government side says money and manpower are the problem. they do not have enough inspectors to train security guards and properly oversee their work. investigators were able to smuggle in bomb components.

some of those buildings had the highest security levels in the country. trace: in london, where the h1n1 virus is extraordinarily prevalent. >> cases have tripled to 7500. 8 deathsw. -- deaths are at 8. they said that if the pace continues, they will reach 100,000 new cases per day. a star of the new "harry potter" movie has it as well. trace: thank you. the administration thinks czarz rs are a good thing. >> aides say there is a great deal of coordination necessary to streamline the process and get the job done.

republicans call this a major power grab by the white house and says the czars should be subject to senate confirmation. trace: nation's hospitals agreed to pony up for the president's health-care plan, giving up $155 billion in future medicare and medicaid payments. vice president joe biden announced this this morning. he says he expects this to be passed by august. >> reform is coming. it is on track. it is coming. we have tried for decades to fix a broken system. we have never been this close. trace: chief political correspondent carl cameron is following this in washington. this must have been a sacrifice for the hospitals. >> republicans on capitol hill say they were bullied by the administration. republicans argue that the health care is not debated and

it is not bipartisan. they say they're not given a seat on the table. they say -- the argument is that the hospitals were bullied into this and that the $155 billion that would be saved will essentially be spent elsewhere. it is not a savings. it is a transfer from one health care account to the next. trace: any closer to a deal? >> it is interesting. as the vice president said, they are making progress and closer to effort, that is not the case on capitol hill. there is reason to believe things are slipping further away. democratic majority leader harry reid has ordered max baucus to stop courting republican help,

and to stop trying to talk about paying for this by taxing health benefits. in short, the democratic majority leader is telling the one committee left where republicans are allowed to participate, to stop letting republicans participate. looks like things are getting more difficult for democrats. liberals want a public options. there are conservative democrats that are scared about how much this will actually cost. they're not able to bring the price down. trace: carl cameron, thank you. martha: from all over the world, people flocked to florida. an energy bill in the senate could allow oil drilling off the shores of florida. some fear that will jeopardize the tourism business. phil keating, how much oil is out there? >> there's a lot of natural gas

and oil off the coast. is currently forbidden in florida to drill with then 145 miles of the coast line. at minimum, experts say there is at least enough to supply energy to 100 homes for 30 years. oil industry experts say there are two million cubic feet of natural gas alone. if this amendment was passed as it is right now, that would allow drilling within 45 miles of the tampa bay area coast line, and within 10 miles of the pensacola coast line. martha: i would expect you could see the drilling on a clear day. what is this fight really coming down to in florida? is it really about the environment? >> it is certainly an

environmental issue. these are the tourists from all over the country. i just spoke to people from st. louis. it is $65 billion a year to the economy. however, it is also in national security issue. those are supports drillings. this is the best way to get our dependence on foreign oil. opponents say it is a national security issue and that the navy and air force used that area annually to do training. it depends on how you want to view it. martha: the oil drillers will tell you that the amount that ever leaks is so minuscule. florida does have a past with battles bills -- bad oil spills. >> yes, 30 miles of the speeches

were blackened with oil after three ships collided with each other. two were carrying oil. it dumped 300,000 gallons of oil into the ocean. it was a test case on how to clean up fast. it was a pretty good clean up job. but also points out what the oil industry executives say. it is not the pipelines that are risky. it is the actual shipping that is the most risky. martha: it is a fascinating debate. thank you very much, phil keating. if you were watching yesterday, it was by any standard quite an event. the golden casket laid out and covered in flowers. when it was all over for michael jackson's service, where did that casket go? it is a mystery. nobody is talking.

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martha: take a look at our boxes. this is an unbelievable story. in the top box, former figure skating champion nicole bobek. she is now believed to be part of a new jersey methamphetamine

circle. she is facing 10 years behind bars. in the middle box, we all drink bottled water. now a visiting in the hot seat on capitol hill. lawmakers discussed industry regulation. in our mental groups and the government accountability office -- bar mental groups and the governement accountability office say nobody knows what is going into those bottles trivial talk about that in just a moment. in bottom box, it has been a while since we have talked about governor rod blagojevich. his former chief of staff is changing his plea to guilty on charges of wire fraud. prosecutors are expected to recommend a 35-month prison sentenced to his chief of staff. trace is hanging out with the judge. trace: this show is called

"freedom watch." to the mystery over michael jackson. where the body is going to be buried is one. two, the investigation. the doctor involved in this case -- we know that he did not have a license to get these drugs. if he gave this to michael jackson, are we looking at murder charges? >> probably not murder charges. we are bettino some form of negligence, which resulted in his death -- we are looking at some form of negligence. there are many health-care providers. we know that he asked nurses to give him drugs. we know that they found drugs in his body that are unlawful to administer outside a hospital. we also know that it is more likely than not that not all of the doctors knew what the other doctors were giving him.

he was almost self prescribing. the doctors went along with his demands. trace: if you inject the drug into somebody the you know you are not licensed to give, and that person dies, what are you facing? are you facing years in prison? >> it would depend on your knowledge. if your knowledge is that this person is going to die from this, that is a form of criminally negligent homicide. in california, that is 20 years. if you do not know what else is in the body, if you do not know how it will react with him, then you might owe money to the state because he is dead, but you probably cannot be prosecuted for a crime. trace: what about the toxicology reports? you have done this in court many times. what is the hold up? why don't we know more

information? >> i have often wondered that myself. i have learned this. again, i am a lawyer and a judge. there are certain things that have to be done with the tissues. the passage of time must occur in order to see how certain chemicals that are introduced into the tissues react. i do not believe that this is being held up for any nefarious purpose. our curiosity is natural and normal. we are impatient to know what killed michael jackson. the longer they take, the more accurate the report is likely to be. the government is doing one set. doctors hired by the family are doing another set. can you imagine if they come up with different results? trace: do you expect charges? >> i do expect charges in

california, yes. simply prescribing medication without a license to do so is a federal and state crime. trace: "freedom watch" on foxnews.com. martha: we are deep in conversation. we are talking a little bit about what is coming up today on "studio b." shepard: we are going to talk about sarah palin. finally somebody figured out why she is not the governor anymore. martha: you have exclusive information? shepard: the person who will come on will explain this. makes perfect sense to me. i never understood much of the whole thing. i get it now.

what else are we going to do? that was a good tease. jessica, don't you think we should get sarah palin on? >> i'm on the phone with d.c.? -- i'm on the phone with d.c. shepard: who is it? >> hi, america. this is kimberly. shepard: that was great. you have just been on the "live desk." martha: see how well we all work together? we do. shepard: kimberly is hoping for

a car chase, just like the rest of america. co-star driving. -- go start driving. martha: the real reason sarah palin dropped out of the governor's office. we will take a quick break and . are you receiving a payout from a legal settlement or annuity over 10 or even 20 years? call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today.

trace: in the top box, an update on former nfl quarterback steve mcnair. a close friend says his wife did not know about his affair. he was found shot to death on july 4. in the middle box, north korean dictator kim jong il and a rare

public appearance he made on the anniversary of his father's death. in bottom box, the return of the swine flu. a san francisco teenager was diagnosed with a strain that was resistant to tamiflu. a protest against global warming. harris faulkner is following that. >> a bunch of guys, this sign -- hung this signed on mount rushmore. they have a bone to pick with president obama. they are doing this in order to get his attention. he is in italy at the g8.

they have people climbing up the smokestacks in italy doing the same thing, trying to get the president's attention. i listened in because they were twittering on top of mount rushmore. this is the website. i listened to what they were saying. they said, we want obama to do more. we want this. we want that. they are shouting. martha: they were twittering on top of mount rushmore? if i go to the top of mount rushmore, when the novel not be doing is using twitter -- one thing i will not be doing is twittering. the next time you reach for a bottle of water, you think it is so good for you.

there's probably nothing on the label about possible contaminants or how the water was treated. there's a call for more regulation and stricter labeling on water bottles. how about this idea? how about we go back to what we did as kids? our whole lives, we drank water out of the tap. now, if i do that, it feels strange. >> it is a $16 billion industry. this is the old issue about bottled water. they now want to look into some regulation. the reality is that we do not know anything about bottled water. where does it come from? some companies put the source on the label. you really want to know the content. one thing about tap water, you can really find out exactly what the contaminants are.

with bottled water, we do not know any information. they keep popping up. every day i see a new label. somebody needs to look at this industry. trace: william la jeunesse did a story on this a couple years ago. the stuff in the bottles is exactly the same stuff. martha: did you stop drinking it? >> at the end of the day, we keep saying it is the best thing for you. martha: it is not so great that it sits in the plastic. >> and if it is hot, and the expiration date. all these things are important to look at. this is one regulation that we should look at. martha: they have those metal things. >> to yourself a humble and the

logic -- yourself a hypoallergenic plastic bottle. trace: do not drink the water. drink the margaritas. that is the way it is in mexico. martha: thank you. trace: by the way, we just got this. there is breaking news on the statement in their case. there is brand new information on this investigation. it is next. . . kelly saunder's nature valley, the place that inspires her to go faster... and slower, elk mountains, colorado. where's yours? 100% natural nature valley granola bars.

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trace: just crossing, breaking news in the steve mcnair case. evidence has come back from the medical examiner concerning the girlfriend, the 20-year-old girlfriend that could lead them to a brand new conclusion. we are handing it over to "studio b." shepherd stepped -- shepard smith is standing by. [captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- shepard: news briefing on steve mcnair, a friend found his body over the weekend along with the body of his apparent mistress. here are pictures of each of them. the onetime football star was shot several times, the mistress was shot once. investigators say they found the gun that she just bought days before near her body.

investigators ruled the death a murder. steve mcnair is married with four children. she has not spoken since the murder. a person close to her said that she had no clue about this other woman. investigators are waiting for ballistic reports to will the case once and for all. we will bring you the news conference as it happens, live on studio b. first, an alarming new report on the security of government buildings. our investigators able to smuggle in bomb making parts and make bombs? we have the video in 30 seconds. first, three boxes full because we can. the political future of sarah palin. look at that, imperfect. that is better. you may have seen her with