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CNN LOU DOBBS MONEYLINE
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Aired February 28, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Friday, February 28. Here now, Lou Dobbs.
LOU DOBBS, HOST: Good evening. Tonight, the United States and the United Nations face a fundamental question -- will Iraq destroy its Al Samoud missiles? The Baghdad government says it will. The Bush administration does not believe Baghdad. We begin our coverage tonight with Chris Burns at the White House -- Chris.
CHRIS BURNS, CNN WHITE HOUSE CORRESPONDENT: Good evening, Lou. The White House saying that even if Saddam Hussein went ahead and started destroying those Al Samoud missiles, which exceed the U.N.'s mandate for only up to 93 miles range for any missiles like that, that that is not nearly enough. That there are also tons of VX nerve gas agents, as well as plenty of anthrax that Iraq has yet to fess up to that, that the U.S. alleges that they still have. Here's White House spokesman Ari Fleischer.
(BEGIN VIDEO CLIP)
ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: President Bush has always predicted that Iraq would destroy its Al Samoud 2 missiles as part of their games of deception. I think when you summarize Iraq's statement in principle, they will destroy their missiles, the Iraqi actions are propaganda, wrapped in a lie inside a falsehood.
(END VIDEO CLIP)
BURNS: But this news from Iraq is being welcomed by the French, by other countries, even by Hans Blix, calling that as a significant advance in the disarmament. This comes as bad news to U.S. efforts to push through an U.N. resolution, especially as Russia has now suddenly said that they do hold out the possibility that they could veto in the name of international stability.
Ari Fleischer coming back and saying, wait a minute, the game is not done yet. These talks and lobbying are going on. Plenty of countries will say plenty of things, and this is only yet another step. He says reporters shouldn't look at this as a baseball game, but should look at the final score.
Meanwhile, look ahead to tomorrow, as well, on Turkey. Turkey's parliament is supposed to vote on whether the U.S. can station more than 60,000 troops there, looking toward northern Iraq -- Lou.
DOBBS: Chris, thank you very much. Chris Burns, reporting from the White House.
The chief U.N. weapons inspector Hans Blix said the Iraqi decision to destroy its missiles is real disarmament if it happens. Blix has already submitted a written report that criticizes the Iraqi government and its apparent failure to disarm to the Security Council, but Blix said he might re-write the report in light of the Iraqi missile decision. Michael Okwu has the latest for us from the United Nations -- Michael.
MICHAEL OKWU, CNN CORRESPONDENT: Lou, good evening to you. The Security Council has received those Blix reports about a little over an hour ago. Now, that report is fairly critical of the Iraqis when it comes to issues dealing with disarmament. But he's already made it very clear that with the acceptance of -- by the Iraqis to destroy these missiles, that he may very well revise that particular report, and certainly he may do this before his oral report, which we expect will be given to the council sometime next week.
Now, the news has already affected an already fractured Security Council. France said that it showed that inspections were working, and today, fiery language from the Russian foreign minister.
(BEGIN VIDEO CLIP)
IGOR IVANOV, RUSSIA'S FOREIGN MINISTER (through translator): Russia has the right of veto. If the interest of international stability demands it, Russia, of course, will exercise its right.
(END VIDEO CLIP)
OKWU: It's still not very clear how the other smaller nations on the council, Lou, will vote on this. Some of those diplomats came before our cameras today and said that they would really like for the United States and the other powers on the council to come together. They're now trying to put a little bit of pressure on the big states to have a meeting of the minds.
But the missile issue is something of a wild card, Lou. If, in fact, Iraq starts to dismantle these weapons, the United States might have a much more difficult position to make on the council. But clearly, the U.S. would make the argument that it's not just about missiles, that there are a whole host of obligations that the Iraqis have failed to comply with, dating back to the early 1990s -- Lou.
DOBBS: Michael, it's worth pointing out here that the missiles are actually turned out to be something of a side show, Hans Blix turning to the Al Samoud missile, it was discovered quite by accident, and really had very little to do with the overall weapons inspection process, looking for weapons of mass destruction. Isn't that correct?
OKWU: Well, Lou, I can almost hear U.S. officials saying right now what they've been saying for the better part of the last month or so, which is that all along they have been expecting the Iraqis to play a cat and mouse game, that they expect them to sort of drag their heels, and then, eventually make some sort of public relations statement and then offer some sort of cosmetic olive branch, as far as they're concerned. So the United States is not going to change their position on this and they're still trying to woo more than nine votes on the council. They feel confident that perhaps they can get that.
DOBBS: Michael Okwu at the United Nations, thank you.
Turning to the other international crisis facing the world, North Korea. The Bush administration today said it has detected activity at the North Korean nuclear reprocessing facility at Yongbyon, saying the activity could eventually lead to the production of an additional five to eight nuclear weapons. U.S. intelligence says North Korea already has one or two weapons.
Earlier this week, the United States said North Korea had restarted its nuclear reactor at Yongbyon.
From international crisis to bureaucratic confrontation within the Pentagon now. The military and civilian leadership of the Defense Department are involved a very public fight over how many troops would be needed to occupy post-war Iraq. The dispute involves the Army chief of staff and the deputy defense secretary. Senior Pentagon correspondent Jamie McIntyre reports.
(BEGIN VIDEOTAPE)
JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): Whether or not the Turkish parliament allows 62,000 U.S. troops into Turkey when it votes Saturday, the Pentagon says it's ready to execute the war plan.
GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: We will have U.S. forces in northern Iraq one way or the other.
MCINTYRE: With more than 200,000 U.S. troops in the region, the U.S. says it's ready to strike at any time. But if it waits to position troops in Turkey, that will still take several more weeks. As for how many U.S. troops stay in Iraq, the Pentagon continues to downplay the estimate of several hundred thousand offered by the Army chief of staff in congressional testimony this week.
PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: The notion of hundreds of thousands of American troops is way off the mark.
MCINTYRE: Privately, Pentagon officials were fuming that General Erik Shinseki's comments fueled criticism the Pentagon was understating what it would take to occupy post-war Iraq. But publicly, Defense Secretary Rumsfeld insisted it was an honest difference of opinion.
DONALD RUMSFELD, DEFENSE SECRETARY: First of all, people are entitled to their own opinions.
QUESTION: Is General Shinseki in any trouble? You're his boss.
RUMSFELD: No, come on. Absolutely not. No. What are you trying to do? Stir up trouble? MCINTYRE: General Shinseki is a short timer, due to retire this summer. His aides insist the general sticks by his estimate, and independent analysts say the number may depend on when and how you count the troops, which will peak right after the war and then gradually be drawn down.
MICHAEL O'HANLON, BROOKING INSTITUTION: In that sense, it's possible that Rumsfeld and Shinseki are both right, that Shinseki will be right for the first year, and then Rumsfeld will be right for years two, three and thereafter.
(END VIDEOTAPE)
MCINTYRE: Well, that may be true, but of course, the Pentagon is run by the civilians, so in the bottom line, Rumsfeld is by definition right. Now, Pentagon sources say that Rumsfeld is supposed to be sitting down with all the chiefs tomorrow. One aide predicted it might be a little cool in the meeting room, but doesn't expect that Rumsfeld is going to hold any grudge, even though Shinseki's estimate hasn't been very helpful to the Pentagon's cause -- Lou.
DOBBS: Jamie, it will either be cool or very hot. Jamie, thanks very much. Jamie McIntyre, our senior Pentagon correspondent.
More than 200,000 U.S. troops are now deployed to the Persian Gulf. Forty thousand British troops are either there or on the way. More American soldiers are being deployed every day. Today, members of the 101st Airborne Division, the Screaming Eagles, headed to the Persian Gulf. The division specializes in air assault, flying into combat with helicopters. It's expected to play a key role in any conflict with Iraq.
Last night, we reported to you how the children of the Army National Guard and Reserve in Maine have been harassed by teachers opposed to war in Iraq. Tonight, we have another story that you may find difficult to believe. The U.S. Appellate Court today refused to reconsider ruling that shocked the nation last June and was condemned by both the president and Congress. The ruling declared the Pledge of Allegiance unconstitutional because it contains the words, "under God." Joining me now is CNN legal analyst Jeffrey Toobin. And Jeffrey, as we look at this decision by what's been framed as the most liberal appellate court in the country, it's really remarkable.
JEFFREY TOOBIN, CNN LEGAL ANALYST: It's astonishing, and I think it's a big surprise, because this decision was not just condemned by politicians -- remember, the Senate came out 99-0 against it, as well as the president. But I think most legal scholars thought it was an unsound decision. Yet, the three-judge panel's decision from June was ratified by the full 9th Circuit Court of Appeals, so the practical effect means this will go into law unless the United States Supreme Court steps in and reverses it.
DOBBS: And what would be your judgment? I know that you and most legal experts didn't think that this thing would stand, and do you think the Supreme Court will step up? TOOBIN: Well, with the knowledge that I was wrong about the full 9th Circuit, I do believe that this case is such a high profile case and deals with such a fundamental issue that the Supreme Court returns to year after year, which is the First Amendment, free exercise, free establishment clauses. I think they will take the case and I think reverse it, but it is surprising to me that this court hasn't done it.
DOBBS: Remarkable in this case, Jeffrey, to me is the other issue -- this became a child custody issue, as well. And the mother in this case, not the father who originally brought the action, now says that the daughter is not offended and is in no way hurt by the Pledge of Allegiance.
TOOBIN: Michael Newdow not only doesn't have a majority who is the plaintiff in the case, the father doesn't have a majority in the country, he doesn't have a majority in his own family.
He brought it essentially on his own. He's a doctor and a lawyer. He brought it on his own. No one paid attention. No one gave it really much chance of succeeding. This court shocked the nation in June and now they shocked the nation again by letting it stand.
I should say, however, it's been stayed. So kids can continue to say "under God" until it's all over. But, you know, that may end soon.
DOBBS: But it's all over when the court either decides to hear the case or not to hear the case?
TOOBIN: Exactly.
DOBBS: How soon do you expect that to occur?
TOOBIN: Well, if they take the case, they may decide to take it by the end of June which is when their term ends. I don't think there's a chance they will actually hear the case if they decide to take it until next October so this issue likely to be around for possibly another year.
DOBBS: Astounding. Jeffrey Toobin, as always, thanks for being here.
Well coming up next, one of the government's most heavily criticized agencies today joined the new Department of Homeland Security. We have that story and a great deal more still ahead. Stay with us.
(COMMERCIAL BREAK)
DOBBS: President Bush today said there's no guarantee that another terrorist attack can be prevented in this country. But the president said the federal government is doing everything possible to defeat the enemy.
President Bush told staff at the new Homeland Security Department that the new agency will create a more united defense of America. Tomorrow, the department's first full day. The department has 170,000 employees from more than 20 government agencies.
One of those agencies is the heavily criticized Immigration and Naturalization Service. Just this week, the Justice Department said the INS failed to deport illegal aliens including suspected terrorists. Homeland Security Correspondent Jeanne Meserve has the report.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: The Immigration and Naturalization Service is broken.
UNIDENTIFIED MALE: The INS is in a free fall.
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Now, Washington won't have the INS to kick around anymore. Years of criticism about the agency's personnel and practices reached a crescendo after the terrorist attacks when it became clear the agency didn't keep track of who was in the country.
Just this week, a Justice Department report criticized the INS for not being able to find hundreds of thousands of it has ordered deported.
REP. GEORGE GEKAS (R), PENNSYLVANIA: Mismanagement was, even for Washington standards, enormous and historic. And so, yes, it had to go and I'm glad it's gone.
MESERVE: The agency is being carved up. Its service and enforcement functions split and incorporated separately into the new Department of Homeland Security.
ASA HUTCHISON, UNDERSECRETARY, HOMELAND SECURITY: This will make it safer from the beginning and will continue to make improvements that will add to the protection of America.
MESERVE: The consolidation of data bases and a more cohesive chain of command will quickly make the border more secure, says Hutchison.
But there are skeptics.
GEKAS: Just simply changing the lines on paper and the boxes that indicate supervisory responsibilities really won't help anything.
MESERVE: Even some inside the agency say reorganization won't address some underlying problems, chronic under staffing and a schizophrenic national immigration policy set by Congress.
BILL YATES, INS IMMIGRATION SERVICES: We can't decide whether or not we're a nation that wants to open our doors and welcome immigrants or we want to close doors and be very restrictive and that certainly has made our job a lot more difficult. MESERVE: The INS has a tradition, 112 years long, and some employees have careers that span decades. Some of them are asking, now what?
YATES: People are wondering, you know, where do I fit in? Will I have a job next year or year after? Who's going to be my boss?
MESERVE (on camera): Yates, a 29-year veteran of the INS says there's some excitement at being a part of something, new but in this post-9/11 world, even a fresh start not likely to stop the scrutiny.
Jeanne Meserve, CNN, Washington.
(BEGIN VIDEOTAPE)
DOBBS: Turning from Homeland Security to economic security, New Jersey and other states considering banning the outsourcing by government agencies to foreign companies. Lawmakers say a ban would keep jobs in this country and keep tax dollars at home, as well. Bill Tucker has the report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNNfn CORRESPONDENT (voice-over): Chances are that customer support voice is half a world away. Literally. The simple reason, money. It's cheaper to do business outside of the United States. Savings of 30 to 40 percent typical in India for operating call centers tech support and back office processing.
But there is a building backlash. Maryland, Wisconsin, Missouri and Connecticut are considering legislation that would ban outsourcing to countries outside of the United States. In New Jersey, there's a bill which has passed the Senate unanimously and now awaits a vote in the state assembly.
SHIRLEY TURNER, NEW JERSEY STATE SENATE: We need to do all that we can to put people to work and to generate more tax revenue for our government. And also, to keep the consumer spending money to stimulate our economy.
TUCKER: But at the corporate level, more and more work is being sent overseas. The workers are well trained, the turnover is low and in many cases, speak English, they're given additional training to eliminate accents.
Citicorp, General Electric, American Express are just a few of the companies with extensive back office operations and employees overseas.
REGGIE AGGARWELL, INDIAN CEO HIGH TECH COUNCIL: The pay is so much higher than a typical job, that they end of staying there longer. So it's really driven by the fact they can do it for cheaper costs and they have less churn, so that's, of course, makes it more efficient.
TUCKER: The potential extra costs could be a problem for states where budgets are being slashed. (END VIDEOTAPE)
TUCKER: And while business organizations which represent overseas outsourcing companies say they're not worried about the movement at the state level, they have hired public relations specialists Hill and Nolton (ph) to fight the movement -- Lou.
DOBBS: It's quite an interesting point that Senator Turner makes. There may be these savings, but there's the offset in terms of providing training to Americans here at home.
TUCKER: Exactly. As long as there's a welfare to work requirement, these jobs offer an excellent entry level job for those workers. easy to train.
DOBBS: Bill Tucker, thank you.
Still ahead here, terrorists attack the U.S. consulate in Karachi, Pakistan today. Police say there may be a connection with events in Afghanistan. Two policemen are dead in that incident.
Old Europe standing firm against the United States. Tim O'Brien will have a special report for us tonight -- Tim.
TIM O'BRIEN, CNNfn CORRESPONDENT: Lou, what's really behind the rift between the United States and Europe? Is it just U.S. policy on Iraq? Tonight some thoughts that it may go far deeper than that.
DOBBS: Thank you, Tim.
Foreign policy expert, author Robert Kagan will be here to talk about the Trans Atlantic divisions that go back father than you might think and perhaps will extend farther into the future.
On Wall Street today, stock prices ended modestly higher. We'll tell you how the market performed over the week and the month and do that will be Christine Romans.
And talking about the market and an economy that's doing better than many people think. We'll be talking with Steve Forbes of "Forbes" magazine, Rik Kirkland, the managing editor of "Fortune, Jim Ellis Of "BusinessWeek". They'll be here to tell us what the future holds. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Stories making news tonight around the world. The president of the Philippines said the military there has 90 days to wipe out the radical Islamist terrorist group Abu Sayyaf, and the president said commanders who fail to do that will be replaced. The order not connected to a plan for 1,700 U.S. Special Forces to support Philippine troops.
Two Pakistani police officers were shot and killed today outside the U.S. consulate in Karachi, Pakistan. One gunman was arrested. No Americans were injured in the attack. Israeli Prime Minister Ariel Sharon today began a second term in office. Sharon's new coalition controls 68 of the 120 seats of parliament. Sharon said his cabinet would lay down strict negotiating terms with the Palestinians before agreeing to vote on Palestinian statehood.
France today welcomed Iraq's agreement to scrap its Al Samoud missiles, that in contrast to the United States, which said Iraq is simply stalling for time. The disagreement only one of many that's driving a wedge between the United States and certain European countries. Tim O'Brien reports.
(BEGIN VIDEOTAPE)
O'BRIEN (voice-over): Here's a scene that would have been unthinkable if not impossible 20 years ago when Germany relied on the U.S. for its defense. The country's leader, Gerhard Schroeder, running for election opposing the United States and winning.
PHILIP GORDON, BROOKINGS INSTITUTION: During the Cold War, we knew we needed the Europeans because we were in a Cold War struggle over Europe with the Soviets, and they certainly needed us because of our defense role during the Cold War. And now, that glue just isn't there anymore, and I think that's one of the major explanations for what we're seeing today.
O'BRIEN: The breakup of the Soviet Union has emboldened European allies to challenge the United States not only on Iraq but on other longstanding differences, the death penalty, genetically modified food, and a host of environmental issues like global warming.
Whether it was in Vietnam, Somalia or any other troubled spot, Europe often objected to the United States' use of force, and some Europeans now worry that their objections count even less that the U.S. as the world's sole remaining superpower feels it can throw its weight around the world.
STEPHEN RICHTER, PUBLISHER, THE GLOBALIST: They're convinced that the essence of America will cure the rest of the world, and nobody in Europe, for good historic reasons, because they've seen it before with the failure of Germany throughout the entire 20th century, is convinced of that.
O'BRIEN: Richter argues that the cooling of the Atlantic alliance is not so much because of the demise of the Soviet Union but rather what Europeans see as the eagerness of the United States to resort to force.
(END VIDEOTAPE)
O'BRIEN: Germany has been one of this country's strongest post- war allies. Our friendship with France goes back even before the revolutions, ours and theirs. That there is now a rift is obvious. The harder question's how deep will it get? How long can it last? Lou.
DOBBS: Tim, thank you very much. Tim O'Brien.
My next guest agrees that a rift between the United States and Europe has been building for some time. Robert Kagan's book "Of Paradise and Power," (UNINTELLIGIBLE), and it's a likely future. He's also a policy analyst at the Carnegie Endowment for International Peace. Good to have you with us.
ROBERT KAGAN, AUTHOR, "OF PARADISE AND POWER": Thank you. Good to be here.
DOBBS: The split that has obviously occurred, both within Europe, within NATO, and between France, Germany and the United States is powerful, is it not?
KAGAN: It is. It's deep. It's been growing for sometime, and the Iraq crisis has cast the harshest possible light on it.
DOBBS: As we look at this, even some commentators are talking about this is a fight between Europe and the United States over international policy. But it has really coalesced to simply a relationship between France and Germany, an axis, if you will, in exact opposition to the United States. Why have those two countries come together in opposition?
KAGAN: Well, in fairness, although, you know, there have been some countries that have signed up with the United States, and like Tony Blair's Great Britain and Spain, as well, you have to realize that France and Germany, their governments really speak for the broad array of European public opinion in all countries, and ...
DOBBS: Do you really believe that?
KAGAN: Well, the polls demonstrate it every day. I mean, Tony Blair has some serious difficulties because of the stand that he's very courageously taken, but, yes, I live in Europe and I have to say that really does express European opinion.
DOBBS: We should point out, Robert Kagan lives in Brussels.
KAGAN: Yes. And that is European public opinion, and I think that, you know, you have to take seriously the fact that France and Germany believe, they sincerely believe that they're leading Europe to oppose actions by the United States that they think are dangerous and wrong, morally wrong.
DOBBS: And morally wrong in what sense?
KAGAN: Well, their view of international order as it has evolved over the past decade, certainly partly is a product of their own experiences with two world wars that they were both involved in, is that we really should be moving beyond military power. Europeans deeply believe that right now, and they see the United States' willingness to use military power as a threat to their vision of international order.
DOBBS: When you say their vision, it is hard to think, and you and I are guilty of something here --talking about France and Germany when perhaps we should be talking about the (UNINTELLIGIBLE) Jacques Chirac and apply whatever label you would like to Gerhard Schroeder. These two men have very different political positions, very different political philosophies and ideologies within their own countries, yet they're the principal exponents of opposition. What particularly are they trying to advance in those two different ideologies as it relates to the United States?
KAGAN: Well, again, I have got to say, Gerhard Schroeder speaks for the average person in Germany, left, right and center. And Chirac is enjoying popularity in France over this position that he's never enjoyed before. So it isn't just two men and two ideologies. I really think that the key thing is, they are expressing European concerns about American poller.
Now, I happen to think they're mistaken. I think they are irrationally concerned, but they are sincerely trying to hem in American power. The truth -- the unfortunate truth is they are more worried about the United States than they are about Saddam Hussein.
DOBBS: And, before we go -- I want to go back to this point, because I find it fascinating. Gerhard Schroeder in the last poll I saw has 22 percent support within Germany. He has an economy that's running apart. Yet you feel he speaks for the German people.
KAGAN: On this issue.
DOBBS: Oh, OK, I understand.
KAGAN: On this issue, on the issue of Iraq. On the economy? The Germans are unhappy with him, and they also were very unhappy with the way he handled that NATO dispute over providing help to Turkey. That made Germans very nervous.
DOBBS: And what should be the U.S. response to what's obviously a divergence in both philosophy, ideology and direction?
KAGAN: I think right now, our best response is to move forward and conduct an effective operation in Iraq and conduct an effective effort to rebuild Iraq afterwards. That's going to be the best answer to some of the critics in Europe today, and it will help Tony Blair and it will help the Spanish prime minister and it will help the Italian prime minister, as well.
DOBBS: International policy, as almost everything else, nothing succeeds like success.
KAGAN: Exactly. That's the situation right now.
DOBBS: Robert Kagan, we thank you for taking the time. Good to see you.
KAGAN: Thank you.
DOBBS: Coming up next, with the war against Iraq seeming to become more likely with each passing day, the stock market is close to a four-month low. Oil has shot to a 12-year high. Tonight I'll be joined by editors of the three most respected financial magazines in the country, Steve Forbes of "Forbes," Rik Kirkland of "Fortune" and Jim Ellis of "BusinessWeek."
And later, our "CEO of the Week" whose company feeds America a bowl at a time. Not only are his products in your cupboard, the odds are good you've enjoyed one today. Stay with us.
(COMMERCIAL BREAK)
DOBBS: These are the top stories we're following tonight: Iraq says it will begin to destroy it's Al-Samoud missiles tomorrow. Those missile could be armed with chemical or biological warheads and, at any rate, exceed the U.N. limits. The White House accused Saddam Hussein of a deception wrapped in a lie.
A federal appelate court today said it will not reconsider its ruling declaring the Pledge of Allegiance to be unconstitutional because the pledge contains the words "under God." The case may now be heard by the Supreme Court.
And the Department of Homeland Security officially opens for business tomorrow, merging more than 20 government agencies, combining 170,000 federal employees.
On Wall Street today, stocks closed slightly higher, but the modest gains not enough to lift the markets on the week. The Dow down 2 percent. The Nasdaq, the S&P 500 down 1 percent on the week.
Christine Romans now with the market -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, the third losing month in a row for the Dow and the S&P 500, but the Nasdaq ending February more than 1 percent higher.
Among the month's best stocks: National Semiconductor, Louisiana Pacific, Williams Companies and Analog Devices. The losers: El Paso, Circuit City, Goodyear and Sears. Now, a rally for mutual funds heavy in natural resources, thanks to oil prices at 12-year highs, of course. Real Estate neutral funds also really strong this week, but gold funds down more than 7 percent in February, some profit-taking there. Overall, investors still paralyzed, Lou. Big Board volume is down 10 percent from January and well below last years's level -- Lou.
DOBBS: And the month of February a tough one for everyone. Any indication about next week?
ROMANS: Next week, we've got the big purchasing managers report, Lou, and then we end the week with the jobs number. And there are seven, seven, central bank meetings next week. A lot of analysts say that's important, but the most important: Iraq. You can see, today, we had strong economic data in the GDP, but Iraq pretty much just hijacking everything here.
DOBBS: Well, I'm really excited about the central bankers. I'm going to be thinking about that all weekend. (LAUGHTER)
DOBBS: Christine Romans, thank you very much.
Well, as Christine reported, stocks down for a third straight month, mostly on concerns about a possible war with Iraq. But, certainly, that is not the only factor influencing this market and this economy.
Now three of the best and brightest in financial journalism or in just about any other subject you would care to think of, our "Editors Circle" tonight comprised of Steve Forbes for "Forbes," Rik Kirkland of "Fortune," Jim Ellis of "BusinessWeek."
Good to have you back.
Let me turn to you first, Rick.
This market backing off again. Are you putting it squarely on the issue of uncertainty about Iraq?
RICHARD KIRKLAND, "FORTUNE": I think so. I just don't -- I mean, every sign you get, if you parse through all the economic data, suggests we're continuing seeing signs of gradual recovery in the real economy. And that should normally lead you to see the market moving upward. But nobody is making any bets, because that big uncertainty is hanging over it.
DOBBS: All and a great deal -- you can almost imagine some people expressing disappointment when the GDP numbers were revised to 1.4 percent for the fourth quarter, couldn't you, Steve?
STEVE FORBES, "FORBES": Well, I think it just underscores everything is focused on Iraq. And as soon as the war starts, you'll probably see the market rally. The uncertainty is over. People can look to the future again.
DOBBS: Jim, your thoughts on this market?
JIM ELLIS, "BUSINESSWEEK": I'm a little contrarian on that. I actually think that Iraq...
DOBBS: I was counting on you, Jim.
ELLIS: Well, thank you.
I think that Iraq really is sort of casting a pall over the markets. I think that a lot of people want to see something. And a lot of people will want to start moving a little money once that's over. I still think that we're not going to see some giant pop after Iraq is settled, simply because there are still some things overhanging the market.
Valuations, on historical basis, are still rather high. And, also, we still haven't gotten a lot of sort of top-line growth out there for -- that's going to make a lot of companies feel good about doing new investments. They're using Iraq as a pretty good excuse right now for not doing anything. But, also, you have got to worry about, where's the sales growth that really is going to fuel corporate action?
(CROSSTALK)
DOBBS: I'm sorry. Go ahead.
KIRKLAND: No, I don't disagree with that. I think the valuation issue, though, is a separate one. The market's going to get some kind of a relief rally. I think you would probably even agree with that.
ELLIS: Oh, yes.
KIRKLAND: But then you get back to the debate of, how good are earnings going to be? And when I say we're getting growth, we're not getting that V-shaped rocket-like recovery in the real economy.
FORBES: Given the way companies have cut and given the advances that companies like HP have made in some new technological advances that can save 20 percent on your own system, you're going to have to start popping some money. And I think you're starting to see signs of it already. And once Iraq is out of the way, people are going to say, we've got to take the risk, got to roll the dice.
KIRKLAND: Yes, but business confidence you really want to see come back, not consumers. Consumers can be shaky, but they're going to keep spending
(CROSSTALK)
FORBES: CEO confidence comes when the economy and the markets start to turn. Then the animal spirits start to return. But they're a lagging indicator.
DOBBS: CEOs should be leaders. They are always out there exhorting their followers to do better, be more productive, and then they cower like dogs with a little adversity?
FORBES: Well, that's because we only come out every two weeks as a magazine. And they need reinforcement.
(LAUGHTER)
DOBBS: Well, speaking of pops, Rik, we've seen oil prices move up here to $40 a barrel. We've got consumer confidence at a nine-year low, investor confidence at a -- what is it? -- effectively a seven- year low since the records were kept.
These are powerful indications that we've got a lot of work to do in this economy. Can this president, can this Congress do anything to drive confidence, besides proposing, as the president has and as the Democrats have, economic growth plans?
KIRKLAND: I think those measures you just cited are mostly measures of mood. And the mood of anybody who's paying attention to the news is little anxious right now.
But I think the president -- I mean, the president's approach is the right one, in that, whether you agree with a specific policy or not, you're doing something to make sure the economy continues to progress once we get through this war. But nothing's going to change that consumer anxiety or that business seizing-up of spending until we get this uncertainty of Iraq moved. It's just as simple as that.
FORBES: That's true. But when it happens, I think we're going to be surprised about the move in the market.
And then we're going to -- I think the president, if he moves on the getting the dividend plan through, which I think he will, if that looks like it's seeing the light of day, then I think people are going to say, good, positive things are happening.
DOBBS: Well, one of the positive things happening apparently was -- and one can argue about this -- but a global settlement with Wall Street firms and Eliot Spitzer on the issue of the conflict with Wall Street analysts. That appears to be in jeopardy as we wrap up this week.
We have the Justice Department indicting four mid-level executives at Kmart. What's the atmosphere, in your judgment, in corporate America right now? How strong is the regulatory, if you will...
FORBES: Well, that's -- now, that's a real danger, going overboard, courts and regulators confusing genuine fraud, which there's been a lot out there, with risks that go wrong. You make an honest business mistake, you now land yourself in court. And the regulators and attorneys general are going to want to say, ah, if you went down, you obviously did something wrong. They're after a cheap headline. Very real danger.
ELLIS: But I think that, at the same time, we have to be very careful, because a lot of the sort of consumer sort of reticence to -- or the small investor reticence to participate in the market now is because so many people thought that they were sort of fooled over the last few years, that the fraud has basically scared people away.
We need that liquidity, even at the margin. And until they're convinced that the administration is serious about sort of rooting that sort of evil out of the system, we're not going to have some great sort of comeback with a lot of investors.
DOBBS: This is a horrible balancing act right now, because, as Jim points out, you have to have that prosecution and vigorous prosecution. As Steve points out, you also have to unfettered, if you will, innovation. You've got to have risk-taking. What's the solution here?
KIRKLAND: You have also got to deal with the trial lawyers and the plaintiffs bar. And that's the other thing this week.
The latest rulings that came down suggested these IPO cases, for example, are going to continue to feed -- we may end up having a huge settlement from Wall Street, taking more money out of those firms to settle those, because the courts are suggesting this is not going to go away. So I don't think there is any simple -- I don't see any magic bullet here. I think time wounds all heals and heals all wounds.
(LAUGHTER)
DOBBS: I like that.
Well, if we're going to close on something so profound, let me turn to the most -- an even more profound subject as an indicator. We know what is a lagging indicator. We know those are CEOs. We know that hemlines supposed to be traditionally. And I know you have a passionate interest in this particular indicator, Rik. Why don't you give us your best forecast here?
KIRKLAND: I just think -- I think as long as the pantsuit isn't coming back, we're going to avoid a double-dip. That's the only thing I'm sure of.
(LAUGHTER)
DOBBS: Jim, any thoughts on that one?
ELLIS: Well, living here in the Northeast, with the weather as cold as it is, I cannot imagine short skirts. Won't happen.
KIRKLAND: That's bad for the market, Jim.
FORBES: It's an issue I'd rather skirt, but...
(LAUGHTER)
DOBBS: And with that, Steve Forbes gets the last word.
Jim Ellis, Steve Forbes, Rik Kirkland, gentlemen, thanks for being here.
FORBES: Thank you.
DOBBS: And as we reported tonight, the U.S. appellate court today refusing to reconsider its ruling that declared the Pledge of Allegiance unconstitutional because it contains the words "under God." That is the topic of our MONEYLINE poll question: Do you agree with the U.S. appellate court decision that the Pledge of Allegiance is unconstitutional? Vote at CNN.com/MONEYLINE. We'll have the preliminary results coming right up.
And now the final results of yesterday's poll question: Should elementary school teachers express their political views in the classroom? Thirteen percent of you said yes. And this highly scientific poll leaves no doubt as to your thinking, 87 percent saying no.
We received a barrage of e-mails from you on this subject. We'll have some of your thoughts, share them, later in the broadcast.
Coming up right after the break: breakfast, lunch and dinner. His company feeds America, fattens the coffers of charities. Our "CEO of the Week" is next.
Also, the latest warning from the surgeon general disappoints both cops and donut shops.
And the Food and Drug Administration today said a leading diet drug must now carry warning labels, but that may be just the beginning of restrictions for ephedra -- that and more when we continue.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The Food and Drug Administration today decided to order warning labels on all diet products that contain ephedra. That follows the death of a professional baseball player almost two weeks ago. Ephedra is believed to have contributed to the death of Steve Bechler. The new warning labels will include death as a possible adverse affect of the drug.
Stories "Across America" tonight: In Robert Blake's murder hearing today, the lead detectives admitted bringing an author to the scene of the crime. The author was allowed to view evidence. Blake's attorneys said that could have contaminated evidence. Blake is accused of murdering his wife almost two years ago.
A man convicted of funneling money to the Lebanese militant group Hezbollah was sentenced to 155 years in prison today. Mohamad Hammoud is the first person to be convicted under a law that prohibits aiding terrorists. Hammoud was convicted in the case of a group that sold cigarettes in Michigan without paying state taxes, the money then sent on to the Hezbollah.
San Francisco's police chief, the assistant chief, and eight officers have been indicted for allegedly covering up a brawl. The charges stem from an incident last November. Three off-duty officers are accused of attacking two men and stealing their food. One of the officers said to be involved in the brawl is the son of the assistant police chief.
Turning now to our "CEO of the Week," the $10.5 billion company is in almost every aisle of the grocery store. On average, Americans eat something from this company at least three times a week every week of their lives, General Mills' Steve Sanger is our "CEO of the Week."
(BEGIN VIDEOTAPE)
STEVE SANGER, CHAIRMAN & CEO, GENERAL MILLS: This is one of the best parts about working here.
DOBBS (voice-over): Even after working at General Mills for nearly three decades, Steve Sanger appreciates a good cookie. He recently completed the biggest deal of his career, the merger with Pillsbury, that doubled the size of General Mills. Sanger says the deal is already paying off.
SANGER: For the last nine months now, we have been performing at or ahead of the Street's expectations.
DOBBS: Over the past two years, the S&P has declined 32 percent, General Mills' stock only 6 percent. The board of General Mills is independent and the company is a powerhouse of brands. One of its products is consumed in this country 100 million times each day. Sanger pushes to improve even the most successful brands.
SANGER: I think we have improved Yoplait maybe four times in the past 10 years in terms of flavor improvements. And we recently made Honey Nut Cheerios more healthy by adding more soluble fiber to that, so it's more effective at helping to lower your cholesterol.
DOBBS: General Mills also works to better its communities. Last year, the company gave more than $66 million to charity. One of its principal causes is its Box Tops For Education program.
SANGER: Consumers clip out the box tops symbol and collect them at their schools and then the schools can send in for cash. Today, there's over 70,000 schools participating in this program. And we have given more than $75 million to education since 1996.
(END VIDEOTAPE)
DOBBS: Steve Sanger of General Mills, our "CEO of the Week," our congratulations.
A reminder now to vote in our poll tonight. The question: Do agree with the U.S. appeals court decision that the Pledge of Allegiance is unconstitutional? Cast your vote at CNN.com/MONEYLINE. We'll have the preliminary results coming up here in just a matter of moments.
Still ahead: Fox the winner in the winter sweeps. Jan Hopkins will report on the company behind Fox -- Jan.
JAN HOPKINS, CNN CORRESPONDENT: Lou, News Corp. seems to be on a roll, but we'll look at some issues that could become problems in the future -- Lou.
DOBBS: Jan, thank you -- that story and a great deal more still ahead.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Reality TV helped Fox secure the No. 1 spot in the coveted sweeps period this week, Fox only one strong component of its parent company, News Corporate; however, a heavy debt load, succession plans, and issues of governance all raising some questions about the future of News Corp.
Jan Hopkins has our report. (BEGIN VIDEOTAPE)
HOPKINS (voice-over): Fox TV's "Joe Millionaire" was a huge success. 20th Century Fox's "Daredevil" had the biggest opening ever for Presidents Day. And the last quarter, Fox's parent company reported a $200 million profit, compared to a $600 million loss a year ago. News Corp. seems to be on a roll.
MICHAEL GALLANT, CIBC WORLD MARKETS: I wouldn't say it's luck at all. All their businesses are executing very well.
HOPKINS: In a terrible year for media companies, News Corp. comes out on top. Over five years, News Corp.'s stock has been volatile, but ended up in about the same place.
The mogul behind the Australian company News Corp. is newly- minted American Rupert Murdoch. He and his family control the company.
NEIL CHENOWETH, RUPERT MURDOCH BIOGRAPHER: This is a family that owns 16 percent of the overall stock. If you take out the share of their stock that News Corp. itself owns, if you that dilute that out, their share is only about 12 percent. And that's not a -- they have 30 percent of the votes, but 12 percent isn't a lot to found a dynastic succession on.
HOPKINS: Prince Alwaleed of Saudi Arabia owns 6 percent of News Corp., but has no vote. John Malone's Liberty Media owns 18 percent and also has no vote. John Malone teamed up with Murdoch to go after DirecTV in the past. They're not together now. Both may make independent bids for DirecTV.
BLAIR LEVIN, LEGG MASON: It's two years latter. The market is very different. News Corp. is in, I think, better financial shape. They have pared down their debt and they have gotten ready to make this acquisition.
HOPKINS: News Corp.'s debt is still high at more than $7 billion. And its debt-to-equity ratio is worse than AOL's.
Other issues remain for News Corp. Has reality TV run its course? What's next? As for Murdoch, he's still going strong at 71 and expecting another child. Will one of his other children succeed him? Three now work for the company. Two are on the board of directors. Seven out of the 15 board members are company insiders, and another a former executive, a problem in this new era of corporate governance.
(END VIDEOTAPE)
HOPKINS: Some investors stayed away from News Corp., remembering when Murdoch almost lost the company. Supporters say he's learned his lesson and the company is more focused and more successful, just when its competitors are cleaning up after years of acquisitions -- Lou.
DOBBS: A remarkable comeback for Rupert Murdoch. All right, Jan, thank you very much.
Coming up next: some of your thoughts concerning the battle over Iraq being fought inside some classrooms in Maine.
And the surgeon general today delivering a stern message to this country's police officers: Stay off the donuts. I hate to hear that.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Now the preliminary results of our poll question tonight: Do you agree with the U.S. appellate court decision that the Pledge of Allegiance is unconstitutional? Forty-nine percent of you said yes; 51 percent said no. We will be able to break this near deadlock through your voting over the course of the weekend. We'll have the final results Monday evening.
Now let's take a look at your thoughts. We were flooded with e- mail regarding our MONEYLINE special report last night, the report about some teachers in Maine targeting children of reservists and National Guard with their anti-war messages.
David Whiteford in San Antonio, Texas, wrote in to say: "It is utterly outrageous that some teachers in Maine told elementary-age students that military members would be unethical for fighting in Iraq. Although I am a supporter of the First Amendment, those teachers should exercise their freedom of speech in the unemployment line."
And J. Cook in Fort Campbell, Kentucky, wrote: "As a teacher and an Army wife, I'm appalled that my colleagues in Maine would ever be so inconsiderate of the feelings of their children. The elementary classroom is no place for political opinions. This teacher, for one, is proud of our soldiers and proud to be an American now more than ever.
Michael Thigpen from Anderson, Alabama, wrote in about the market: "I am sick of hearing that the stock market is down because of war woes. This is absurd. If we as a nation have any faith in what is right, this is not a reason for the market to fall. It should rally."
Michelle Plonski in Massachusetts wrote about the space program, saying: "Someone should ask all the naysayers of NASA if they own a laptop computer, cell phone, etcetera,. Everything that makes our life easier now was dreamed and made real because of our space program. The Earth is our today and what the space program brings us is our tomorrow."
Let us have your thoughts. Please e-mail us at CNN.com/MONEYLINE. Include your name and address, please.
And finally tonight: a memo from the surgeon general that's hardly surprising. Police officers and firefighters should lay off those donuts. I suspect they mean firefighters, police officers, and some of the rest of us. Surgeon General Richard Carmona said that being overweight directly impacts job performance. Carmona also said that failing to back up a partner or respond to an emergency would be -- quote -- "a fate worse than death." And he knows what he's talking about. Carmona is a former police officer and trauma surgeon -- no mention, however, of his former donut consumption.
That's MONEYLINE for this Friday evening. Please join us Monday when we look at the fractured relationship between the United States and Germany. The German ambassador to the United States, Wolfgang Ischinger, will be our guest. Also, Florida's attorney general will be here to talk about his charges of price-gouging by the oil companies.
Thanks for being with us tonight. Have a great weekend. Join us Monday. For all of us here, good night from New York City.
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