Homeland Security Director Michael Chertoff was interviewed by Kyra Phillips this afternoon. Transcript follows…

KYRA PHILLIPS, CNN ANCHOR: You remember what airports were like before 9/11. You could walk up to the arrival gate even if you didn’t have a plane ticket and now the Transportation Security Administration is running a test in Detroit, at the Dallas/Ft. Worth airport also. Guests at hotels inside those airports are being allowed to go through checkpoints without boarding passes and if the experiment is successful, well, it could lead to letting other non-passengers pass through security.

They’re keeping air travel safe to keeping dirty bombs out of the cargo containers to keeping terrorists from crossing our border. It’s all under the watch of security of homeland — the Department of Homeland Security rather, Michael Chertoff. He’s the secretary obviously of that department and joins us for an interview today.

Nice to have you with us.

MICHAEL CHERTOFF, DEPARTMENT OF HOMELAND SECURITY SECRETARY: Nice to be here, Kyra.

PHILLIPS: Easy job, right? You only have to protect all of us from basically everything in this country?

CHERTOFF: Well, we cover virtually in the air, on land, and at sea. But lucky for me, I’ve got almost 200,000 really dedicated colleagues to work with me on it.

PHILLIPS: Well, let’s get down to business. I have a lot of questions to ask you about — particularly today, we saw the front page of “USA TODAY” and we’ve seen it on the wires. The TSA experimenting with, you know, Gatorade still can’t get through, but hey, grandma might be able to greet us at the gate. Should we take this seriously? Could it go back to the old days?

CHERTOFF: Well, it’s not going to go back to the old days. Job one is always protect the American public and protect those who fly, but we’re also always looking to see if we can adjust to make things a little bit more convenient for travelers and for those who greet travelers.

So this is an experiment, we’re going to see how it works. One of the things we want to be careful about is we don’t want to overburden the system particularly during those periods of time when is there a lot of travel like we had at Thanksgiving. So we’re going to watch and be careful, but the number one requirement is that it not compromise our security.

PHILLIPS: So, little by little, could we see this happening in other airports? Because right now, it’s Dallas/Ft. Worth and Detroit — they are sort of playing with it.

CHERTOFF: Well, we’re going to have to see how it works out first. We’re going to have to evaluate how it does with respect to security but also …

PHILLIPS: Jamming up the lines?

CHERTOFF: We don’t want to jam the lines up. So, once we’ve evaluated that we can make a decision about whether or how to go forward.

PHILLIPS: All right — speaking of decisions. I want to ask you about this ruling that a federal judge by the name of Richard Leon made talking about — well he came forward and said, look, thousands more displaced families, they are living in apartments. FEMA either cut off the aid with little explanation or no explanation.

Now, I understand, FEMA has been ordered by this judge to reinstate the aid and pay months back — or pay months of back rent. FEMA is appealing this ruling. Why? Tell me what you think about that?

CHERTOFF: Well, let me explain what the challenge is. The challenge is at the same time that you want to make sure you get as much aid to people as they need, you also want to make sure they’re eligible. And you may remember Kyra, there were some stories recently about people who were not eligible for aid who got it.

So, we’ve got to find a way to reconcile these two conflicting requirements. On the one hand, getting the assistance to people who are deserving, while making sure that they are in fact deserving.

And what we’re trying to do here in the wake of what was the largest mass migration in American history, is to make sure we have a way to validate that the people getting the money are really entitled to it.

PHILLIPS: The judge, of course has disagreed, though, with the fact that — with the appeal. And he is saying that the inconsistency amounted to a denial of the due process rights of evacuees and so he has ordered FEMA now to clarify the eligibility requirements and immediately restore these families to the program. Can you immediately do anything when it comes to FEMA?

CHERTOFF: Well, of course, I mean, you know obviously, we’re going to do what a court says. Now as you pointed out FEMA is looking at an appeal and obviously courts of appeal exist to review what trial judges do.

We want to however be good customer — provide good customer service. So, if there is more we need to do to make sure we are being clear, we ought to get that done and that’s been my instruction to FEMA.

Obviously, we are going to pursue the legal questions where they have to be pursued, but we also want to make sure we’re doing the right thing. We don’t want to have deserving people kicked out, but we also don’t want to have people ripping off the program.

PHILLIPS: All right. Speaking of ripping off the program. The report by congressional investigators was released. FEMA says that out of the $7 billion in emergency aid that was given to individuals after Katrina and after Rita, 290 million dollars was unjustified.

However, congressional investigators are saying that that’s grossly underestimated and that actually it’s at least $1 billion dollars.

CHERTOFF: Well, I think what they did is they sampled and I think what they said, it could be more than that. And I’m not sure I necessarily agree with the sampling and with the extrapolation from the sampling, but the bottom line is this — it’s the very same point I made a couple of moments ago.

We’ve got to balance between the desire to get the aid out quickly and the desire to make sure that we’re not having the public lose money. One of the things we did in the wake of Katrina was build a system that would give us a lot more visibility to who is applying and a lot more ability to check.

So in the future, we will be able to be in a position to have much better control over the money. The problem is we’re still living with a legacy of decisions that were made frankly at a time of extreme emergency where there were a million and a half people, who had moved out of New Orleans in a matter of days. People who were desperate for money and we were trying to make decisions that were humane, recognizing that there was going to be a risk that some people would rip off the system.

PHILLIPS: But, let me ask you, because the report even revealed that even this year, money was going to the wrong people and fraud was still taking place. So, obviously, what you’re working on is still not working. So do you think FEMA should even be under Department of Homeland Security? Maybe FEMA should be separate from DHS?

CHERTOFF: Well, let’s separate a couple of questions. First of all, a lot of the legacy we’re dealing with from Katrina is the result of decisions that were made, essentially getting us off on the wrong foot.

And once that happens, it’s very difficult to correct the legacy problem. What we have done is put measures in place going forward to allow us to make sure it doesn’t happen again.

Second question you raise is whether FEMA, which is an emergency agency designed to deal with events over a period of a couple of months, should be in the position of providing huge amounts of assistance over a period of years or whether that ought to be, perhaps, something that another department takes over at some point, that there is a handoff when you get to long-term recovery.

That’s an issue which when the White House did its Katrina lessons learned, they raised about whether at some point emergency becomes recovery and we ought to have a handoff and something we can talk to Congress about, but in the meantime, as we’re following through on our responsibilities, we have to do the best to make sure that we are recovering the money where it was unjustifiably given out and building systems to prevent problems like this in the future.

PHILLIPS: Do you really think you can recover that money?

CHERTOFF: I think there’s a lot of money we will recover. I don’t necessarily as I say, agree with the a billion dollars. There are a lot of judgment calls. For example, sometimes you have families which are separated and so you may wind up giving money members of the same family, but they may not be living together, maybe they are separated or divorced.

So those are judgment calls in which one person might say that was unfair and another person might say that’s called for. And what we’re going to do is work through those. But nobody can say they were satisfied how this turned out.

I just have to emphasize Kyra, that we had never built a system at FEMA for the kind of million and a half person mass migration that we faced after Katrina. And so, basically, they were asked to build a system from scratch in a matter of a week and not surprisingly there were some problems in the way that happened.

PHILLIPS: But, and I just have to ask you again, because I don’t know if I really got a clear answer. You’re saying that possibly you could discuss it with Congress. You’re not 100 percent sold that FEMA should be under DHS.

CHERTOFF: Well, no, no, no. I completely — FEMA has to be in DHS.

PHILLIPS: All right. It has to be under your control?

CHERTOFF: We have to be able to integrate the full spectrum of prevention, protection, and response, so that we can provide seamless activity in an emergency.

What I suggested which is what the White House raised, is the possibility that when you move from emergency to long-term recovery, kind of years of social services, whether those particular functions ought to perhaps be in hands of a department like HUD or HHS where they basically do social services work.

So, that wouldn’t be removing FEMA, it would be focusing FEMA on its core mission which is emergency, rather than the long-term recovery issue which at least in the exceptional circumstance, can go on for a matter of years.

PHILLIPS: Let’s talk border security and port security after a quick break. Sound OK?

CHERTOFF: Great.

PHILLIPS: All right, we will be right back with the Secretary of Department of Homeland Security Michael Chertoff.

(COMMERCIAL BREAK)

PHILLIPS: Continue our conversation with the secretary of the Department of Homeland Security, Michael Chertoff. I want to ask you about border security, my first question. In a report to Congress this week, your department said that it has, quote, “effective control,” unquote, of just — of the 284 miles — of the 2,000-mile long border with Mexico. That’s less than 15 percent.

The report also said that DHS can’t even adequately define what effective control means. So if you’re having trouble defining the problem of illegal immigration, how can you control it?

CHERTOFF: Let me tell you what we meant. First of all, there’s, obviously, a segment of the border that is virtually impassible so we don’t really worry about that. We define effective control as the ability to know who is crossing border and to intercept them with virtual certainty.

Then there’s another, larger chunk of the border where we have a very good handle who comes across, but our ability to intercept is not as good as we would like it because there are issues with the landscape or ability to transport people as quickly as we need to transport them.

What is difficult about defining effective control is, of course, you don’t know what you don’t know. We do have systems in place to measure the number of people we think are coming across the border.

PHILLIPS: What type of systems?

CHERTOFF: Well, we have actually gotten, for example, sometimes count tracks, footprints, and we are able to extrapolate from that on the border what we think the traffic is as opposed to what we’re catching.

But where we want to go with a new program that we have called SPI-Net, which is a high-tech program, is to deploy a system of ground radar and sensors so that we will literally be able to get an accurate count of everybody who crosses the border because the sensors will record it.

Once we have that in place, we have, in effect, the denominator and the equation that measures what percentage of people we’re capturing, and our program, our plan, is to deploy a good deal of this — in fact, virtually all of this — in the traveled sections of the border over the next couple of years.

PHILLIPS: Within a couple of years?

CHERTOFF: Yes.

PHILLIPS: That’s a lot of money.

CHERTOFF: It’s a lot of money and it’s going to be a lot of effort including the effort of the Border Patrol which we’re doubling in size from where it was before the president came in office. But if the public is serious, as the president is, about getting control of the border, then we do have to make the investment. Now, we’re doing some other things as well, Kyra. We ended catch and release at the border. We no longer release people we catch at the border which was a huge turnaround from a year ago.

We are significantly increasing our interior enforcement against businesses that willfully violate the law by hiring illegals. Last year, we had criminal charges against 716 individuals or companies, as compared to 127 the year before.

PHILLIPS: Do you fine them or close them down?

CHERTOFF: Well, we actually prosecute them and if they’re convicted, they wind up paying fines or going to jail. And with that, that certainly will close somebody down. So we are much more vigorous on the enforcement side and much tougher than we’ve ever been before.

This is part of a multiprong strategy to do something that’s never been done in 30 years, which is turn the situation and the border around and get it to where the public has a right to expect it to be.

PHILLIPS: Port security — quickly, our waterways, a lot of concern about the ships coming in and out of the U.S. and cargo. Can it all be screened? Once again, this is a multimillion dollar project.

CHERTOFF: Well, we have information about every shipment that comes out. The high-risk shipments we actually physically open up and inspect or we X-ray. More important, or equally important, we have radiation detection equipment — because that’s what we’re mostly worried about — at most of our ports right now. About 80 percent of the cargo coming in, in containers, is going through those detection monitors. And by the end of next year, we will be virtually at 100 percent.

Now, we’re actually now working with our foreign partners to put some of that detections overseas so we can actually screen or scan for radiation before a container is loaded on a ship bound for the U.S., which is what we announced yesterday.

So we’re pushing the layers of protection out, working with our partners so that we can stop radioactive material even before it gets on the way to come into the United States.

PHILLIPS: What if you find a nuke? Do you turned them around, send them back or do you act on it?

CHERTOFF: Well, what we would do if we found an alarm — and we’ve had some instances where there have been alarms, they’ve never turned out to be a real nuke — is we will stop a ship cold in the water with the Coast Guard or the Navy, and we will board it and we will open it right there, if necessary.

We’re not going to play games with the American public. We want to have a balanced but we want to have a very effective security program against the kind of weapon of mass instruction which is the nightmare scenario for the American people.

PHILLIPS: DHS secretary, you’ve got a lot on your plate. Michael Chertoff, thanks for stopping by and talking with us.