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Lou Dobbs Tonight
Exporting American Jobs Overseas; Wesley Clark Now Democratic Front-Runner?
Aired September 22, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Tonight, our special report, "Exporting America." Corporations, business consultants and foreign governments conspire to send American jobs overseas.
Identify crisis: Illegal aliens are using foreign identity cards to open U.S. bank accounts and obtain state driver's licenses, with the federal government's approval.
An astonishing proposal in Congress to raise the federal tax on gasoline.
The many questions facing General Wesley Clark over his changing politics and his stance on the war against Saddam Hussein.
ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, September 22. Here now, Lou Dobbs.
DOBBS: Good evening.
President Bush tomorrow goes before the United Nations to appeal for the world's help in Iraq. The president is also expected to say the United States was right to launch the war against Saddam Hussein without the support of the U.N. Security Council. The White House hopes that speech will open a new phase in U.S. relations with the United Nations, an organization the president once said was in danger of becoming irrelevant.
Senior White House correspondent John King has the report -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, senior officials here at the White House say the speech will run about 22 minutes. They describe it as a call to action for the world to rally support now to help secure and rebuild postwar Iraq.
They also insist here that there is considerable evidence that the bitterness of the prewar debate has passed. Yet, as Mr. Bush prepares to go to the United Nations General Assembly, he is still facing stiff criticism for one of those prewar critics, the government of France. President Jacques Chirac and his ministers say that the United States should get out of Iraq now and transfer power immediately to the Iraqi Governing Council now in place.
Condoleezza Rice, the president's national security adviser, telling reporters just a short time ago, that plan is a recipe for disaster. (BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: Ambassador Bremer has been talking about a seven-step plan, a constitution, followed then by elections and then by the transfer of sovereignty. And it makes perfectly good sense to do this as soon as possible, but to do it in a way that is responsible. And I think that the -- as all of us have said, the French plan, which would somehow try to transfer sovereignty to an unelected group of people, just isn't workable.
(END VIDEO CLIP)
KING: An echo on Capitol Hill from Paul Bremer, the administration's civilian administrator on Iraq. He was up on Capitol Hill today facing a skeptical audience here at home, arguing for that $87 billion the president wants to pay for the war in Iraq and Afghanistan in the year ahead, Ambassador Bremer saying, for the United States to pull out now would simply collapse the mission at a point the Iraqis are not yet ready to take over their own government.
(BEGIN VIDEO CLIP)
PAUL BREMER, U.S. CIVILIAN ADMINISTRATION IN IRAQ: We cannot simply pat the Iraqis on the back, tell them they are lucky to be rid of Saddam and ask them to go find their place in a global market, to compete without the tools of competition. To do so would invite economic collapse, followed by political extremism and a return to terrorism.
(END VIDEO CLIP)
KING: It was a year ago at the General Assembly that the president rallied support for a tough new resolution sending in weapons inspectors and putting Saddam Hussein on notice.
He did not, of course, in the end, get Security Council blessing for the war. The president now is seeking a new resolution that would invite more international troops, perhaps as many as 15,000, to help the Americans on the ground. More importantly, many aides say he wants tens of billions of dollars from other nations around the world to help with the reconstruction.
Still opposition from France, Germany, Russia and others skeptical about the U.S. plan, but, Lou, as the president prepares to go to New York, senior officials here say they sense an opening to negotiate. They say, though, it will probably say several weeks. And they note that, even President Chirac, who has said, as of now, he opposes the U.S. effort, has also said he would not veto a new resolution -- Lou.
DOBBS: John, this appears, at least on the surface, to be a high-risk strategy for the White House, going before the U.N. in public asking for help that it has been denied to this point by those very same countries that make up the Security Council. How concerned is the White House about these risks, political, and very specifically in terms of the economic help? KING: Well, they believe there are risks, but they also believe, in some ways, the president has no choice and, in other ways, the members of the United Nations have no choice, in the sense that the war is over and Iraq is what it is. It is an oil-rich country going through a very difficult transition.
The U.N. secretary-general, Kofi Annan, even today saying he is still disappointed the war took place in the first place, but it is time to move on, time to try to shape a consensus. So there is, if you will, the political dynamic that the United Nations wants to get back into the game of Iraq, if you will. And also, for this president here at home, he's at the lowest point of his presidency in terms of public approval. Congress will not allow the United States to pay all the money it will take for this project. It says it must get international help, this administration.
So the president, yes, there are risks, Lou, but the president will try to make his case tomorrow.
DOBBS: John, thank you very much -- John King, senior White House correspondent.
Iraqi terrorists today attacked the United Nations in Baghdad for a second time in two months. A suicide bomber killed himself and an Iraqi security guard. But that attack was far less damaging than the bombing that killed the U.N.'s envoy in Iraq last month.
Walter Rodgers reports from Baghdad.
(BEGIN VIDEOTAPE)
WALTER RODGERS, CNN CORRESPONDENT (voice-over): There was another loud explosion in Baghdad, then the wail of sirens, fire and rescue vehicles rushing again to the United Nations headquarters here -- the familiar burned-out hulk of a suicide bomber's car and a charred corpse. An Iraqi security guard was also killed trying to stop the suicide bomber.
CAPT. SEAN KIRLEY, U.S. ARMY: He wasn't going to get in. And I think he realized that. And his targets -- his -- he changed his target.
RODGERS: Since the far more deadly bombing of the same U.N. building August 19, when 23 people died, U.S. and coalition forces pushed the U.N. security perimeter much further back. Still, if you were among the 18 or 19 wounded, this car bomb was terrifying.
UNIDENTIFIED MALE (through translator): We were passing by in our car in front of the United Nations headquarters when suddenly I fainted. And then I don't remember anything.
RODGERS: After the second attack on the United Nations compound in Baghdad, officials here and in New York are reconsidering the level of the U.N.'s commitment in Iraq. That safety review puts in doubt the future of the U.N.'s vaccination, water-purification and other programs here. ANTONIA PARADELA, U.N. SPOKESWOMAN: We are seeing an increase of security incidents. And we are worried that these might hamper a vital U.N. operations in Iraq.
RODGERS (on camera): This latest attempt to bomb U.N. headquarters is yet another fiery reminder that the United Nations label gives no one immunity in Iraq and that this remains a high-risk war zone for anyone who lives or works here.
Walter Rodgers, CNN, Baghdad.
(END VIDEOTAPE)
DOBBS: An update now on the number of service men and women killed and wounded in Iraq. Central Command reports, 304 Americans have been killed by hostile fire and accidents since the war against Saddam Hussein began in March, 191 deaths in combat, 113 by accident. Another 1,616 have been wounded, all but 320 of them by hostile fire.
The Pentagon has launched a large-scale investigation into security at the U.S. Naval base in Guantanamo Bay, Cuba. This follows the arrest of a Muslim chaplain in the U.S. Army suspected of espionage and treason. More than 600 al Qaeda and Taliban members and supporters are being held at the base.
Pentagon correspondent Barbara Starr reports.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Sources tell CNN that, after the arrest of Islamic Army Chaplain Captain James Yee, the government launched a broader investigation of possible security breaches at the U.S. Naval facility at Guantanamo Bay, Cuba, where more than 600 detainees, including suspected al Qaeda, are being held.
Investigators are trying to find out if Yee had help in getting access to classified information about the prison and the detainees and whether any sensitive data was divulged. It was Yee's suspicious behavior in recent weeks that drew the attention of federal agents, sources say. The Islamic Army chaplain has not been charged, but is now suspected of treason and espionage.
After his arrest, officials were stunned to find the Army officer had been in touch with radical Muslims already under surveillance. Yee has appeared on television discussing Islam.
CAPT. JAMES YEE, U.S. ARMY: Islam is a big representer of justice. I mean, anyone who commits a crime has to be brought to justice, whether he's Muslim or not.
STARR: Yee, a Chinese-American, graduated from West Point in 1990 and served as a missile officer during the first Gulf War. He then left the Army, converted to Islam, and moved to Syria to study for four years, before returning to the U.S. and rejoining the Army as a Muslim cleric. Yee's family is not talking. He was taken into custody on September 10, when he returned from the Naval base where he had been posted since November.
(on camera): Yee appeared before military magistrate on September 15 with two defense attorneys. He's now being held at the Naval brig in Charleston, South Carolina. The U.S. military has 120 days to charge him.
Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
DOBBS: Coming up, "Exporting America": American companies and consultants teaming up with foreign governments to ship American jobs overseas. Peter Viles has the special report.
Then: why any illegal alien with an I.D. card can enjoy the privileges of citizenship in this country. Bill Tucker will have the story. It seems unbelievable, but is U.S. government policy.
And defending Israel: Attorney Alan Dershowitz joins us to talk about his new book, "The Case For Israel."
(COMMERCIAL BREAK)
DOBBS: Coming up: The president's job approval rating is at an all-time low. And there is a new front-runner for the 2004 Democratic presidential nomination. Senior political analyst Bill Schneider joins us.
(END VIDEO CLIP)
DOBBS: U.S. corporations are sending American jobs overseas at such a rapid rate that this country's economy is facing a crisis of historic proportions. Corporate America likes to call it global outsourcing or offshoring. Here, we call it "Exporting America."
Tonight, Peter Viles reports on how corporate America, business consultants and foreign governments are working together to export American jobs overseas.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): Ever wonder why the U.S. economy isn't creating any new jobs? Well, it is. We just like to export them to the rest of the world. This is an outsourcing expo in New York City last week. The Romanian government was there looking for jobs to take back home.
COSTIN LIANU, ROMANIAN GOVERNMENT REPRESENTATIVE: The educated labor force in Romania, it's relatively cheaper than in USA.
VILES: Bulgaria was also there with the same sales pitch, cheap labor. STEVE KEIL, CEO, WIZCOM: The USA, for a programmer, would be about five times as much for an average programmer. Very good programmers in the U.S. I think would probably be getting eight to 10 times as much as a Bulgarian programmer.
VILES: China was also there with a competitive angle: Our labor is cheaper than India's.
CHANG YUN, CHINA CHAMBER OF INTERNATIONAL COMMERCE: Definitely, compared with the India supplier, I think the labor costs are lower in China.
VILES: In the United States, jobs are scarce, but giving them away is a thriving business. When "CIO" magazine surveyed information technology executives, 89 percent said they've shipped some work to India. Business consultants such as IBM and Accenture are now in the global outsourcing business. But the driving force, according to one consultant, is cost-cutting by American CEOs.
FRAN KARAMOUZIS, GARTNER INC.: There's a huge amount of companies where, from the top, from the boardroom level, the CEO level, have sort of dictated to many of their I.T. managers or application managers or CIOs, their technology group in general, you will send X amount of dollars or people offshore. Now, that's kind of not spoken about openly in a public press. But I talk to many, many clients where that is an edict from the top and not necessarily widely publicized.
VILES: Sometimes, it is publicized. Delta Airlines announced it is building new call centers in the Philippines and India. Motorola says it will invest $10 billion in China by the year 2006. Wal-Mart buys $12 billion worth of Chinese goods every year. If it were a nation, it would be China's eighth biggest trading partner.
And Oracle announced it will double employment in India to 6,000 people. Said Oracle CEO Larry Ellison said -- quote -- "It is not just us. A lot of other companies, like General Electric and Microsoft, are doing this as well." Increasingly, out-of-work Americans are blaming corporate America for exporting their jobs.
JOHN BAUMAN, ORGANIZATION FOR THE RIGHTS OF AMERICAN WORKERS: It is deliberate and proactive, because what they're doing is, they're looking at the bottom line. They're saving literally millions of dollars, which is bottom-line savings. But the impact to our country with trickle-down spending is horrendous.
(END VIDEOTAPE)
VILES: As this becomes a bigger political issue, corporate America is cautiously fighting back. A new report from the influential consulting firm Mackenzie argues that so-called offshoring -- that's sending jobs offshore -- creates more wealth than the United States than it destroys and is therefore good in the long run for the U.S. economy -- Lou.
DOBBS: That's been a precept in the discussion of free trade for some time and comparative advantage. Where are they getting their information, however? The Commerce Department and others are keeping very rigorous track, I'm sure, of the impact.
VILES: Commerce is not keeping rigorous track of the impact. This is a proprietary study that looks at how much is saved by putting that job somewhere else and how much can be gained for the company, for the consumer, through cheaper goods.
But here is the leap of faith, the thought that, somehow, the American economy is so resilient and so full of innovation, we can come up with better jobs. But the data does show, people who lose their job because of this generally don't get another job that pays as much.
DOBBS: All we have to do is look at what is happening with income in this country and the number of people, discouraged workers, and what is happening in every industry across the board. It is frightening, as you have just reported.
VILES: As many as half a million information technology workers out of work right now.
DOBBS: Peter Viles, thank you very much.
Tomorrow night, in our series of special reports "Exporting America": CEOs, accountants, consultants, economists and politicians would just as soon you believe the United States is exporting only manufacturing jobs. Tomorrow night, we report on the exodus of white- collar jobs. And we visit one American city that has been hit hard and ask if your community could be next.
California's assembly recently passed a law approving the issuance of state driver as licenses to illegal aliens. Governor Gray Davis signed the law soon afterward. Many other states also have similar laws on their books. Incredibly, the Treasury Department says illegal aliens can use the cards, even though there are national security concerns and the risk of financial fraud.
Bill Tucker reports.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): This little piece of identification can be used as a passport to life in America and one that is not necessarily legal.
It is called a matricula consular, issued by the Mexican Consulate. The Treasury Department says the identification can be use to open a bank account. The identification is accepted by hundreds of financial institutions, including Wells Fargo.
MIRIAM DUARTE, WELLS FARGO: We're pleased with the U.S. Treasury's announcement and decision, which will allow Wells Fargo to continue to provide financial services to customers who may not have certain forms of identification to open bank accounts. TUCKER: The matricula consular can also be used to get a driver's license in more than a dozen states, open Social Security accounts, even pay taxes. People using the card are never asked about their legal status by a financial institution. And when they retire, they can go back to their country of birth and collect Social Security.
PETER DUIGNAN, HOOVER INSTITUTE: There is no incentive to become legal, to become a citizen.
TUCKER: About 1.5 million matricula have been issued so far. They are accepted as identification by police departments across the United States. U.S. Immigration and Customs Enforcement says, while use of the cards are widespread, they don't make an immigrant legal.
MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: When it is accepted by banks and by police departments and by state governments, it becomes the vehicle for a kind of piecemeal amnesty, a de facto illegal alien amnesty. And it makes it much more difficult to catch these people.
TUCKER: In other words, potential employees with Social Security numbers, bank accounts and driver's license give an employer little reason to question their legal status.
(END VIDEOTAPE)
TUCKER: Now, critics of immigration policy say it is not the immigrants who created the problem. They point to a system that creates the opportunity for exploitation -- Lou.
DOBBS: Bill, thank you. That raises the issue, is there any official U.S. policy about to change here?
TUCKER: They are currently within the Homeland Security Council in the White House considering how they want to deal with this issue of matricula, because Mexico is not the only country that issue these kinds of identification.
DOBBS: Bill, thank you very much -- Bill Tucker.
That brings us to the topic of tonight's poll. The question: Should illegal aliens be given state driver's licenses and Social Security cards, yes or no? Please cast your vote at CNN.com/Lou. We'll have the results later in the show.
Coming up: The latest polls show the president's popularity at an all-time low. The same poll shows a new Democratic front-runner. Senior political analyst Bill Schneider joins us.
Polls also showing a rise in support for Governor Gray Davis. Rusty Dornin joins us from California. She'll have a report on the very latest on the California recall.
And later: Our borders remain open to illegal aliens, drug traffickers and terrorists. Casey Wian reports from the Mexican border.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Hurricane Isabel left a trail of death and destruction across seven states and the nation's capital. At least 36 people were killed by the storms. A massive cleanup effort is under way along much of the East Coast. Still tonight, more than one million residents are without power.
The storm caused extensive damage from Pennsylvania to North Carolina. North Carolina, Virginia and Delaware and Washington, D.C., all were declared major disaster areas. President Bush today traveled through Richmond, Virginia, for a briefing on damage and recovery efforts.
The latest CNN/"USA Today"/Gallup poll shows the president's approval rating at an all-time low. That same poll shows a new addition to the Democratic field posing a serious threat to the rest of the Democrats and that two Democratic candidates now would beat the president if the elections were held today.
Senior political analyst Bill Schneider joins us from Washington.
Bill, this is rather stunning.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: It certainly is, Lou.
Take a look at these figures that show the trend in the approval rating for President Bush over the last few months. Back in April, he was at 71 percent approval. And now he's dropped -- as you see that top number -- to 50 percent; 50 percent is the break-even point. If a president dips below 50 percent, he's in trouble.
He's lost particular support among men, about 17 percent just in the last month among men, so that now the gender gap doesn't even exist anymore. He is no better regarded by men than by women. That's a dangerous sign for this president.
DOBBS: And, Bill, the difference being Republican men, Democratic men? What is the breakout?
SCHNEIDER: It is all men, Lou.
And there's a reason for that. Men are very sensitive to the jobs issue. And with over two million jobs having been lost since 2000, men are getting very angry with Bush, because they supported the tax cut policy, but they don't see the payoff in terms of the job generation that was promised. And that's really making a difference. By the way, I can tell you that, at this point in 1991, the year before his first and only reelection campaign, his father was at 66 percent approval.
So he's significantly in worse shape than his father was at this point before his catastrophic reelection.
DOBBS: And Iraq, the dismal performance of the administration in the rebuilding phase in Iraq has not played into this -- these poll results at all, based on the survey?
SCHNEIDER: Oh, they both polled -- have come into this poll -- these polls results, because people are becoming much more critical of the Iraq involvement. In fact, right now, Americans are split over whether the war in Iraq was even worthwhile.
Just two weeks ago, something like 60 percent of Americans thought it was worth going into Iraq and fighting to overthrow Saddam Hussein. Now Americans are divided. I think one reason is, that speech the president gave to the American people on September 7, in which he quoted -- he cited an $87 billion bill for the reconstruction of Iraq was massively unpopular. Americans are asking, why are we spending $87 billion in Iraq, when that money is badly needed in the United States?
DOBBS: Bill, Wesley Clark, the newest member of the Democratic candidates for the Democratic nomination, Wesley Clark leading the way?
SCHNEIDER: That's exactly right.
DOBBS: That's remarkable.
SCHNEIDER: Bush is sinking. Clark is surging. It looks like he declared his candidacy at exactly the right moment in this race, when Bush looked vulnerable and Democrats had been casting about desperately for someone who can win.
Look at this. He's leapt, vaulted to the top of the list, above Dean, Kerry, Gephardt, Lieberman, all better-known candidates. Clark is No. 1, because Democrats look at this former supreme allied commander and they see a candidate who looks like a winner. And, indeed, in this poll and in some others, he comes -- he does better than any other Democrat in running against President Bush. And this poll, it is virtually a statistical tie, but he leads Bush by three points, which means he looks like he could just barely beat President Bush.
DOBBS: Now, we should point out, none of this is within the realm of the margin of error.
SCHNEIDER: That's right.
DOBBS: It is also fair to say, is it not, as we discussed these polls and what they lead us to infer, Bill, it is a highly volatile period, is it not?
SCHNEIDER: It is highly volatile. And Americans, really, about half of them say they don't know anything about General Clark. He's just beginning to be investigated.
The press has uncovered some damaging information about his military career, which was very controversial. At the Pentagon, there were questions about his judgment when he was the allied commander in Kosovo and advised the military effort in Bosnia. Some of these stories are beginning to be discussed.
But what Americans see right now, particularly Democrats, is somebody who can win, particularly somebody who can appeal to men. He looks very good on paper. On Thursday night, he's going to enter his first debate. That is going to be his political debut against the other Democrats discussing not military policy, but the economy. And a lot of Democrats want to see, what is it he has to say about how he's going reconstruct the economy? Because we don't know.
DOBBS: Bill Schneider, thank you very much.
SCHNEIDER: Sure.
DOBBS: In California today, federal judges on the 9th Circuit Court of Appeals fired questions at the attorneys defending the delay in the recall of Governor Gray Davis. At issue, the use of controversial punch card ballots in certain California counties, all of this coming as a new poll suggests for that recall is waning.
Rusty Dornin joins us now from San Francisco -- Rusty.
RUSTY DORNIN, CNN CORRESPONDENT: Well, Lou, any lawyer who walks into a federal appeals court is going to expect some very tough questions. But this was a very feisty panel. And they really peppered both sides with a lot of questions.
In fact, it seemed at some times that neither side could really get their point across. And while the 9th Circuit Court is considered the most liberal in the nation, this particular en banc panel of judges is considered moderate, to even conservative. There is a Reagan appointee. There is a Bush appointee, even a Carter appointee. The rest were appointed by President Clinton.
Now, while there were a lot of interruptions, each side did have a chance to get across their bottom line.
(BEGIN VIDEO CLIP)
MARK ROSENBAUM, ACLU ATTORNEY: One out of every 25 minority voters who vote in those six counties will not have their votes counted. It's like putting a sign up there: Every 25th person doesn't need to vote.
JUDGE ANDREW KLEINFELD, U.S. 9TH CIRCUIT COURT: If we do split it, then don't we throw away the half million or so absentee ballots that have already been cast on these issues and thus disenfranchise a half million people?
CHUCK DIAMOND, ATTORNEY: You don't stop an election. You don't prevent everybody from voting because some of the people who do vote may have their votes counted erroneously.
(END VIDEOTAPE) DORNIN: Now, a decision is expected within the next 48 hours. But, as you know, time is running out. The October 7 election, the candidates are still campaigning. But the absentee ballots must be in by September 30 -- Lou.
DOBBS: Rusty, thank you very much -- Rusty Dornin reporting from San Francisco.
Still ahead here: defending Israel. Attorney, Harvard law professor, author of "The Case For Israel," Alan Dershowitz joins us.
And gasoline prices in this country are already near record highs. Some in Congress want you to pay even more. Lisa Sylvester reports on the emerging battle over what some think is a very good idea to raise taxes.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Alan Dershowitz says Israel is the victim of false accusations on a number of political and social issues, but says Israelis are bogged down in too much infighting to make a coherent case for their own defense. He's taken up the cause.
Attorney, Harvard law professor, author Alan Dershowitz lays out the defense in the book "The Case For Israel" and is with us now.
Alan, good to have you with us.
ALAN DERSHOWITZ, AUTHOR, "THE CASE FOR ISRAEL": Thank you very much.
DOBBS: The idea that Israel needs defense here, do you really believe that?
DERSHOWITZ: Oh, I wish it weren't the case. This is the one book I wish I didn't have to write.
But on college campuses around America, Israel is being singled out for divestiture, boycott, not for criticism. Everybody should be critical of every country.
DOBBS: Right.
DERSHOWITZ: But for unique condemnation.
At the U.N., most of the votes against any single country have been against Israel. All through Europe, Israel is on the defensive.
DOBBS: But that's sort of part of the -- that's the furniture in the house. The United Nations is what it is. It has a 50-year history of this. Why should it be of concern to you now?
DERSHOWITZ: Because there is a concerted effort on American college campuses to try to create a generation of American students who will be next generation's leaders, who have the kind of knee-jerk opposition to Israel of the kind that one sees in France and around the world.
And we have to fight that with the truth. In "The Case For Israel," though targeted most specifically at young people and college students, is out there for everybody to read and see what the facts are. I don't think you have to make the case for Israel. It makes the case for itself, as long as you present the facts.
DOBBS: And you advance the theory that is hardly new, that two states are really the solution.
DERSHOWITZ: Sure.
DOBBS: And Palestine, Israel living side by side. The road map to peace is now, at the very least, in a pause because of all the recent violence. What is the solution here? Because you and I and everyone watching and listening to you know that we have a 50-year history of this madness. What is the solution?
DERSHOWITZ: The solution is the same it was in 1917, when a small Jewish homeland was offered and the Palestinians rejected it; 1937, 1947, when the United Nations partitioned Palestine, so that the Jews would have a state where they had the majority and the Palestinians where they had a majority, 2000 and 2001.
Israel always has accepted the two-state solution. The Palestinians have always rejected it and used terrorism against civilians. And when the Palestinians want their own state more than they want to see the end of a Jewish state, there will be a two-state solution.
DOBBS: To be absolutely accurate here -- and I know that's your first concern -- the idea that Arafat rejected the proposition put forth, it was only 97 percent of the solution. It did leave three. It was, by the definition of Israel, a generous, but by the Palestinian side, an incomplete offer.
DERSHOWITZ: Well, the U.N., in 1967, after the Six-Day War -- I know; I helped Justice Goldberg draft that -- said that Israel should give back not all, but most of the territories. That's been the United States' position. That's been England's position.
DOBBS: But not Israel's.
DERSHOWITZ: No, most; 97 is most. And when you add to the 97 percent the complete Gaza, it's a lot.
DOBBS: You would agree that it is a bit like rat poison. It's 98 percent oatmeal, it's that 2 percent that gets you.
DERSHOWITZ: No, but Israel is prepared to give back, even...
DOBBS: But listen to the language that you use. Israel is prepared.
DERSHOWITZ: Right. Right.
DOBBS: That's a condescending approach here, I think. And, frankly, I think that there has to be some sort of mechanism that creates some parity here in these negotiations.
DERSHOWITZ: There is no parity. There is no parity. You have an established democratic state that's been in existence for many years. And then you have a group of people who are trying, by terrorism...
DOBBS: Alan, I understand that. And so does everyone listening.
DERSHOWITZ: Parity and even-handedness is not...
DOBBS: How do we get to a solution? Because simply looking down and saying, this is the way it is going to be has not worked. There has to be a solution. The United Nations has been a miserable failure. It is inept in every respect.
DERSHOWITZ: Right.
DOBBS: The United States has been absolutely incapable of brokering...
DERSHOWITZ: Well, one solution that is off the table is that you create a state as a reward for terrorism. And that's what the Palestinians have been seeking.
DOBBS: Oh, absolutely.
DERSHOWITZ: So you condition. My proposal in the book is, Israel makes a schedule for eliminating and dismantling the settlements and ending the occupation, but it is conditional on best efforts by the Palestinians to end terrorism. That is President Bush's proposal.
DOBBS: But that is the president's proposal. That is the road map.
DERSHOWITZ: What is wrong with it?
DOBBS: In my judgment, the only thing that is wrong with it is that we can't find two parties to come to a table and bargain in complete good faith.
DERSHOWITZ: But if one of the parties won't..
DOBBS: And the fact that the world community tolerates this...
DERSHOWITZ: That's the problem.
DOBBS: Six-and-a-half million people live in Israel; 20 percent of them are Arab.
DERSHOWITZ: Right.
DOBBS: The Palestinians have been all but abandoned by their own people, if you will.
DERSHOWITZ: Right.
DOBBS: This is a role for the United Nations. This is a role for the United States. But it seems we have a cottage industry -- well, it's more than a cottage industry. We have an industry supporting the status quo that is bloody. It is deadly.
DERSHOWITZ: Reasonable people could agree or disagree about many solutions. What you can't disagree about is that Israel today is being singled out for blame for a complex problem that it has tried to solve over and over again.
DOBBS: Oh, no, no.
(CROSSTALK)
DERSHOWITZ: And when the other side wants its own state more than they want to see the end of the Jewish state, there will be a two-state solution. The United States must support Israel's fight against terrorism.
DOBBS: Well, Israel is our principal ally. It is our friend. That has been loudly declared. And I presume and hope it will continue to be so.
DERSHOWITZ: So do I.
DOBBS: The fact of the matter is, the Arab states there have to provide significant impetus to whatever negotiations.
DERSHOWITZ: I think Saudi Arabia is the key to the solution. And Prince Bandar of Saudi Arabia was very interested in seeing the Clinton-Barak proposal accepted. Arafat pulled out.
(CROSSTALK)
DOBBS: Forgive me, Alan. This is history.
DERSHOWITZ: But history two years ago.
(CROSSTALK)
DOBBS: But it is history. It is recent history, but it is history. We have a road map in place. We have an opportunity, do we not, that still exists to reach a negotiated peace here?
DERSHOWITZ: A negotiated peace that results from terrorism would actually be worse than no peace at all.
DOBBS: No, no, no, I didn't say that. The terrorism -- to the Palestinians, the Israelis are terrorists.
DERSHOWITZ: But they're not, because they don't kill civilians deliberately.
DOBBS: You're talking public relations.
DERSHOWITZ: Right.
DOBBS: I'm talking about trying to reach a peace here and the idea that one wants to be more blameless than the other. There is no question that the Palestinian terrorists who attack innocent men, women and children on the streets of Jerusalem and throughout Israel are terrorists.
DERSHOWITZ: But with due respect, Lou, your question is almost as if we were asked, how are we going to come to peace with al Qaeda? They're blowing up our people and we're bombing them. It is a cycle of violence. The answer is, we're right. They're wrong.
DOBBS: Then what are you going to do about it?
DERSHOWITZ: And Israel has to remain strong. It has to be generous in peace offers.
DOBBS: Well, "The Jerusalem Post" called for all-out war, the death of Arafat.
DERSHOWITZ: I don't agree with that. Look, if Arafat were to be struck by lightning or slip on a banana peel, nobody would shed any tears.
DOBBS: But the Israelis complain about the leadership. They complain about the
(CROSSTALK)
DERSHOWITZ: He is a horrible barrier to peace.
DOBBS: OK. All of that is fine, but that is the reality. What is the solution?
(CROSSTALK)
DERSHOWITZ: Well, here is my proposal, that Israel continue to isolate Arafat, make generous offers to end the settlements and end the occupation, conditioned on Palestinian best efforts toward ending terrorism.
If they don't make best efforts to end terrorism, there should not be a Palestinian state. If they do, there should be. The only state ever built on terrorism was Algeria. We don't want to see that experience repeated in the Middle East.
DOBBS: But states have been created out of simple imperative, whether it be by the United Nations or the United States recognizing an independent state in Israel. Why could the same not occur? And why should there be less standing for Palestinians, simply because the United States and the United Nations have not yet added their imprimatur to that definition?
DERSHOWITZ: Well, remember, the United States and the United Nations have not created a Tibetan state, a Kurdish state, an Armenian state. The Palestinians will get a state when they stop using terrorism.
DOBBS: OK. Alan, I think that this is a terrific book.
DERSHOWITZ: Well, thank you.
DOBBS: I think the defense of Israel is appropriate, given what you're saying. I would like to see us be defending a peace with a solution.
DERSHOWITZ: Before you can get to a peace, you have to clear the air of all the lies and the accusations. The lies against Israel are a barrier to peace. And that was my job in writing "The Case For Israel."
DOBBS: Alan Dershowitz, good to have you us.
DERSHOWITZ: Thank you so much.
DOBBS: Thank you.
Tonight's thought is on what constitutes a good defense, against even terrorism. It is theory that is centuries old, our quote tonight from Roman poet Ovid: "Isn't the best defense," Ovid asked, "always a good attack?"
Coming up next: a proposal gaining support on Capitol Hill, fueling outrage across a good part of the country. Lisa Sylvester will report on the latest efforts to pump consumers for even more cash.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Gasoline prices all across the country spiked to record- high averages of $1.74 for unleaded regular this summer. Now some in Congress think that you should pay even more. They want to raise the federal gasoline tax.
Lisa Sylvester reports from Washington.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Gas prices in Chicago topped $2 a gallon. A good chunk of that, 37 cents, goes to federal and state taxes.
UNIDENTIFIED MALE: It is a ripoff that we are paying so much money for gas. We're paying almost $2.50 a gallon, and for what? I remember when gas was 99 cents a gallon.
SYLVESTER: There may be a few roadblocks convincing taxpayers to support an increase in the federal gas tax. Congress is considering raising the federal gas tax by 6 cents, to 24.4 cents, and to index it to the rate of inflation, on top of state taxes. The extra money would pay for road improvements. But opponents say taxpayers are already paying too much.
PETE SEPP, NATIONAL TAXPAYERS UNION: Drivers already pay roughly $30 billion a year in federal gasoline taxes. That ought to be enough to at least give them a decent federal interstate highway system with maintenance costs.
SYLVESTER: According to the Department of Transportation, about one out of every three major roads are in poor or mediocre condition. Lousy roads and congestion cost the average commuter more than $1,100 a year. And the average driver loses a week and a half of work sitting in gridlock.
Republican Congressman Tom Petri says the tax increase is really a user fee.
REP. THOMAS PETRI (R), WISCONSIN: There is no free lunch. And I think, at the end of day, none of us want to pay. Obviously, we would like someone else to pay for things and consume it.
SYLVESTER: But critics say there are other ways to pay for projects without pinching consumers at the pump, for instance, toll roads and privately financed roads.
(END VIDEOTAPE)
SYLVESTER: Bipartisan support is building in Congress to increase the federal gas tax. But lawmakers are on a collision course with the White House, which opposes the tax increase -- Lou.
DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting from Washington.
A reminder now to vote in tonight's poll. Should illegal aliens be given state driver's licenses and Social Security cards, yes or no? Cast your vote at CNN.com/Lou. And we'll have the results coming up a little later in the show.
Coming up: shattered confidence in the world's largest and most prestigious stock market. Former chairman and CEO of PaineWebber Donald Marron joins us. he says investors need protection. He joins us next to tell us how.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The New York Exchange has chosen a replacement, a temporary replacement, for Dick Grasso, who resigned last week following the outrage over his $141 million pay package. John Reed, the former chairman and co-CEO of Citigroup, heads the exchange until a permanent leader is found. Reed left Citigroup in 2000 after a power struggle with CEO Sandy Weill.
Reed was chairman and co-CEO during the period in which Citigroup helped Enron hide more than $8 in debt from investors. Citigroup paid more than $100 million to settle Enron-related charges with SEC.
My guest tonight says the New York Exchange needs a major restructuring if it is to continue as a regulator in the industry. Joining us now, the former chairman and CEO of PaineWebber, Donald Marron.
Good to have you with us, Don.
DONALD MARRON, FORMER CHAIRMAN & CEO, PAINEWEBBER: Nice to be here, Lou.
DOBBS: Let's go right down the line. Appropriate that Dick Grasso resigned?
MARRON: I don't know any of the real details. But, given all the furor, I think it was.
DOBBS: Appropriate for this board to come under strict review for its actions in compensating the man who was running a not for profit, quasi-regulatory institution and making this kind of money in excess of $20 million a year?
MARRON: I think you've raised a big issue. Is it not-for-profit or is it a regulator, and should the two be separated?
DOBBS: Well, actually, it is definitely not for profit. It is definitely quasi-regulatory. And whether it be separated from that role, Don, let me ask you. Should it?
MARRON: Well, I think the exchange is in three businesses. It is a regulator. That's crucial. It is a market maker, very important all over the country. And it is also now a competitor, getting order flow, getting more listings. Those latter two combined are a business. You could separate the business from the regulatory side.
DOBBS: And, in your judgment, should it be?
MARRON: I think it should be looked at.
The exchange, in my view, has worked extremely well. It has a very fine board. The world has gotten more complicated. This is a time to take a look at many different things for the future.
DOBBS: Would those things include -- well, let me ask you this. What other industry has self-regulation, the car industry, the boat industry? When one steps back from this industry -- and you, as one of the pillars of that industry, you have to ask yourself, why should it be self-regulating, and particularly in case of the New York Exchange?
MARRON: Well, in part, because this industry is both self- regulating and is regulated by the government. In fact, I remember, at PaineWebber one week, they came in and told me there were 16 different regulators on the premises.
DOBBS: Right. Well, how about one, something called the Securities and Exchange Commission?
MARRON: Yes. Well, there is no doubt about that. I think we would all like less regulations in terms the number of regulators.
DOBBS: What about the specialist system itself, under attack, under investigation, and now squarely in the crosshairs of scrutiny because of all that has come with the Grasso controversy?
MARRON: No question.
The real issue there is the quality of the markets. What's changed in the last couple of years is, the individual is now the leader in the markets. In the year 2000, there was more money in 401(k)s than there was in pension plans. The real issue for us today is to make sure the confidence of those individuals is maintained in these markets. Everything has to be focused on that. Everything has to be communicated that we care about them first and that we're doing all the things we can to help their ability to deal in these markets.
DOBBS: And which the specialist system, do you to think it will be changed here?
MARRON: Well, I think the specialist system has worked very well. The exchange has gotten bigger. Markets have worked well in all kinds of areas. But the reality is, today, obviously, everything is going to be looked at.
DOBBS: Including the change in the composition of the board?
MARRON: Well, I think the board is full of extraordinary, very able people. I think the board issue is not the major issue here at all. The major issue is, what is the role of the stock exchange going to be going forward, regulator, market maker and business? And how is this going to be seen by the millions of Americans who now have their future in their own hands?
We have become a nation of pension-fund managers individually. And that money is invested in the New York Stock Exchange stocks. They need confidence. And you'll give them to them, and the industry will, and this new appointment will also.
DOBBS: Don Marron, as always, good to have you with us.
MARRON: Nice to see you.
DOBBS: Thanks, Don.
Tonight's quote is on excessive CEO pay packages: "Like the children of Lake Woebegone, who are all above average, too many companies want to be above average in compensation" -- that from SEC Chairman William Donaldson.
When we continue: the results of tonight's poll and starting the week with a sell-off on Wall Street. Christine Romans will have the market for us -- that and a great deal more still ahead.
Please stay with us.
(COMMERCIAL BREAK)
DOBBS: The results of our poll question: Should illegal aliens be given state driver's licenses and Social Security cards? Twelve percent of you have voted yes; 88 percent have voted no.
A sharp sell-off today on Wall Street, the Dow suffering its biggest one-day decline in nearly two months. The Dow fell 109 points, the Nasdaq down more than 31, the S&P 500 off almost 13 1/2.
Christine Romans here now with the market.
All of this because of?
CHRISTINE ROMANS, CNN CORRESPONDENT: Currency. It's one of those rare days when it is the U.S. dollar that starts to light a fire under stocks.
A tough day in the stock market. Traders blamed it on a weaker dollar today and a stronger yen. Communique from the G7 hinted Japan may refrain from buying dollars so vigorously. Lou, Japan spent about $80 billion in the first seven months of this year buying U.S. dollars to keep its yen weak and help its exporters, $80 billion. Compare that with what the U.S. is spending in Iraq. You can see just how aggressive that intervention has been.
DOBBS: Those exports have got to be pretty profitable for the Japanese.
(LAUGHTER)
ROMANS: I guess so.
OK, so these currency moves riled stocks, though the stock market volume was barely more than 1.2 billion shares. And market veteran Larry Wachtel was unfazed.
(BEGIN VIDEO CLIP)
LARRY WACHTEL, PRUDENTIAL FINANCIAL: This is month No. 7 of the bow -- the Wilshire index has appreciated by $3 trillion; 90 percent of the stocks on the New York Stock Exchange are selling above their 30-day moving average. If they choose to shake the Dow out by 110 points, so be it.
(END VIDEO CLIP)
ROMANS: So be it. And stocks have climbed steadily since last October's low. The Dow and the S&P up more than 30 percent, Nasdaq up 69 percent, cyclicals up 50 percent. And look at semiconductors, up 83 percent. In fact, Lou, the S&P 500 has been up every month since February.
And with a little over a week left in this month, the S&P 500 is poised for its first higher September since 1998. It has been a very, very good run. Larry Wachtel, a lot of other market veterans, are not worried about 110 points down today.
DOBBS: Now, when you look at that at look at 69 percent higher, my gosh, what a year it has been. It's been quite a year.
(CROSSTALK)
DOBBS: Thank you, Christine.
ROMANS: You're welcome.
DOBBS: Christine Romans.
Let's take a look at some of your thoughts now.
Willie Washington of Houston, Texas, wrote about our special reports on "Exporting America," saying: "I'm very concerned with the fact that American companies are so willing to export jobs for the sole benefit of lifting stock prices. I have two major problems with the idea: first, the problem of national security; second, the problem of a diminished tax base."
Ann of Jacksonburg, West Virginia, saying: "Thank you once again for being one the first news programs to show the total casualties of American soldiers, along with the numbers injured. Your show is always on top of what the American public needs to be made aware of."
And many of you wrote about our report last week on the wounded service men and women who are asked to pay for their own food while recovering in military hospitals.
Roy of Blue Springs, Missouri, said: "I can't imagine our country being so free at spending on other countries and not having the decency to take care of our own soldiers fighting for our safety. Maybe Congress should vote to take their food bill out of the $87 billion supposedly needed to rebuild Iraq."
Janie Valdez of Watsonville, California, said: "After my two sons joined the military, I was outraged to find they had to pay for their uniforms and other accessories. What an injustice, when our military serve our country with duty, pride, patriotism and courage."
And, finally many of you wrote in asking how you could help Army Specialist Hilario Bermanis. He became an American citizen after losing three of his limbs while fighting in Iraq.
And now here is how you can help disabled veterans from the war against Saddam Hussein, such as Hilario Bermanis. A check or a money order can be made out to: VA GPF 7024. Send it to Department of Veterans Affairs, General Post Fund 7024. That's 810 Vermont Avenue Northwest (002C). That's Washington, D.C. 20420. That money goes towards scholarships for all disabled veterans from the war against Saddam Hussein.
We love hearing from you. We thank you for sharing your thoughts. E-mail us at LouDobbs@CNN.com. That's our show for tonight. Thanks for being with us. Tomorrow night, in "Exporting America," a look at a city hard-hit by jobs being shipped overseas. Former White House adviser David Gergen joins me to talk about Iraq and the president's address to the United Nations. And California state Treasurer Phil Angelides is our guest, the first to call for Dick Grasso's resignation from the New York Exchange. Please join us.
For all of us here, good night from New York.
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Aired September 22, 2003 - 18:00 ET
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LOU DOBBS, CNN ANCHOR: Tonight, our special report, "Exporting America." Corporations, business consultants and foreign governments conspire to send American jobs overseas.
Identify crisis: Illegal aliens are using foreign identity cards to open U.S. bank accounts and obtain state driver's licenses, with the federal government's approval.
An astonishing proposal in Congress to raise the federal tax on gasoline.
The many questions facing General Wesley Clark over his changing politics and his stance on the war against Saddam Hussein.
ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, September 22. Here now, Lou Dobbs.
DOBBS: Good evening.
President Bush tomorrow goes before the United Nations to appeal for the world's help in Iraq. The president is also expected to say the United States was right to launch the war against Saddam Hussein without the support of the U.N. Security Council. The White House hopes that speech will open a new phase in U.S. relations with the United Nations, an organization the president once said was in danger of becoming irrelevant.
Senior White House correspondent John King has the report -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, senior officials here at the White House say the speech will run about 22 minutes. They describe it as a call to action for the world to rally support now to help secure and rebuild postwar Iraq.
They also insist here that there is considerable evidence that the bitterness of the prewar debate has passed. Yet, as Mr. Bush prepares to go to the United Nations General Assembly, he is still facing stiff criticism for one of those prewar critics, the government of France. President Jacques Chirac and his ministers say that the United States should get out of Iraq now and transfer power immediately to the Iraqi Governing Council now in place.
Condoleezza Rice, the president's national security adviser, telling reporters just a short time ago, that plan is a recipe for disaster. (BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: Ambassador Bremer has been talking about a seven-step plan, a constitution, followed then by elections and then by the transfer of sovereignty. And it makes perfectly good sense to do this as soon as possible, but to do it in a way that is responsible. And I think that the -- as all of us have said, the French plan, which would somehow try to transfer sovereignty to an unelected group of people, just isn't workable.
(END VIDEO CLIP)
KING: An echo on Capitol Hill from Paul Bremer, the administration's civilian administrator on Iraq. He was up on Capitol Hill today facing a skeptical audience here at home, arguing for that $87 billion the president wants to pay for the war in Iraq and Afghanistan in the year ahead, Ambassador Bremer saying, for the United States to pull out now would simply collapse the mission at a point the Iraqis are not yet ready to take over their own government.
(BEGIN VIDEO CLIP)
PAUL BREMER, U.S. CIVILIAN ADMINISTRATION IN IRAQ: We cannot simply pat the Iraqis on the back, tell them they are lucky to be rid of Saddam and ask them to go find their place in a global market, to compete without the tools of competition. To do so would invite economic collapse, followed by political extremism and a return to terrorism.
(END VIDEO CLIP)
KING: It was a year ago at the General Assembly that the president rallied support for a tough new resolution sending in weapons inspectors and putting Saddam Hussein on notice.
He did not, of course, in the end, get Security Council blessing for the war. The president now is seeking a new resolution that would invite more international troops, perhaps as many as 15,000, to help the Americans on the ground. More importantly, many aides say he wants tens of billions of dollars from other nations around the world to help with the reconstruction.
Still opposition from France, Germany, Russia and others skeptical about the U.S. plan, but, Lou, as the president prepares to go to New York, senior officials here say they sense an opening to negotiate. They say, though, it will probably say several weeks. And they note that, even President Chirac, who has said, as of now, he opposes the U.S. effort, has also said he would not veto a new resolution -- Lou.
DOBBS: John, this appears, at least on the surface, to be a high-risk strategy for the White House, going before the U.N. in public asking for help that it has been denied to this point by those very same countries that make up the Security Council. How concerned is the White House about these risks, political, and very specifically in terms of the economic help? KING: Well, they believe there are risks, but they also believe, in some ways, the president has no choice and, in other ways, the members of the United Nations have no choice, in the sense that the war is over and Iraq is what it is. It is an oil-rich country going through a very difficult transition.
The U.N. secretary-general, Kofi Annan, even today saying he is still disappointed the war took place in the first place, but it is time to move on, time to try to shape a consensus. So there is, if you will, the political dynamic that the United Nations wants to get back into the game of Iraq, if you will. And also, for this president here at home, he's at the lowest point of his presidency in terms of public approval. Congress will not allow the United States to pay all the money it will take for this project. It says it must get international help, this administration.
So the president, yes, there are risks, Lou, but the president will try to make his case tomorrow.
DOBBS: John, thank you very much -- John King, senior White House correspondent.
Iraqi terrorists today attacked the United Nations in Baghdad for a second time in two months. A suicide bomber killed himself and an Iraqi security guard. But that attack was far less damaging than the bombing that killed the U.N.'s envoy in Iraq last month.
Walter Rodgers reports from Baghdad.
(BEGIN VIDEOTAPE)
WALTER RODGERS, CNN CORRESPONDENT (voice-over): There was another loud explosion in Baghdad, then the wail of sirens, fire and rescue vehicles rushing again to the United Nations headquarters here -- the familiar burned-out hulk of a suicide bomber's car and a charred corpse. An Iraqi security guard was also killed trying to stop the suicide bomber.
CAPT. SEAN KIRLEY, U.S. ARMY: He wasn't going to get in. And I think he realized that. And his targets -- his -- he changed his target.
RODGERS: Since the far more deadly bombing of the same U.N. building August 19, when 23 people died, U.S. and coalition forces pushed the U.N. security perimeter much further back. Still, if you were among the 18 or 19 wounded, this car bomb was terrifying.
UNIDENTIFIED MALE (through translator): We were passing by in our car in front of the United Nations headquarters when suddenly I fainted. And then I don't remember anything.
RODGERS: After the second attack on the United Nations compound in Baghdad, officials here and in New York are reconsidering the level of the U.N.'s commitment in Iraq. That safety review puts in doubt the future of the U.N.'s vaccination, water-purification and other programs here. ANTONIA PARADELA, U.N. SPOKESWOMAN: We are seeing an increase of security incidents. And we are worried that these might hamper a vital U.N. operations in Iraq.
RODGERS (on camera): This latest attempt to bomb U.N. headquarters is yet another fiery reminder that the United Nations label gives no one immunity in Iraq and that this remains a high-risk war zone for anyone who lives or works here.
Walter Rodgers, CNN, Baghdad.
(END VIDEOTAPE)
DOBBS: An update now on the number of service men and women killed and wounded in Iraq. Central Command reports, 304 Americans have been killed by hostile fire and accidents since the war against Saddam Hussein began in March, 191 deaths in combat, 113 by accident. Another 1,616 have been wounded, all but 320 of them by hostile fire.
The Pentagon has launched a large-scale investigation into security at the U.S. Naval base in Guantanamo Bay, Cuba. This follows the arrest of a Muslim chaplain in the U.S. Army suspected of espionage and treason. More than 600 al Qaeda and Taliban members and supporters are being held at the base.
Pentagon correspondent Barbara Starr reports.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Sources tell CNN that, after the arrest of Islamic Army Chaplain Captain James Yee, the government launched a broader investigation of possible security breaches at the U.S. Naval facility at Guantanamo Bay, Cuba, where more than 600 detainees, including suspected al Qaeda, are being held.
Investigators are trying to find out if Yee had help in getting access to classified information about the prison and the detainees and whether any sensitive data was divulged. It was Yee's suspicious behavior in recent weeks that drew the attention of federal agents, sources say. The Islamic Army chaplain has not been charged, but is now suspected of treason and espionage.
After his arrest, officials were stunned to find the Army officer had been in touch with radical Muslims already under surveillance. Yee has appeared on television discussing Islam.
CAPT. JAMES YEE, U.S. ARMY: Islam is a big representer of justice. I mean, anyone who commits a crime has to be brought to justice, whether he's Muslim or not.
STARR: Yee, a Chinese-American, graduated from West Point in 1990 and served as a missile officer during the first Gulf War. He then left the Army, converted to Islam, and moved to Syria to study for four years, before returning to the U.S. and rejoining the Army as a Muslim cleric. Yee's family is not talking. He was taken into custody on September 10, when he returned from the Naval base where he had been posted since November.
(on camera): Yee appeared before military magistrate on September 15 with two defense attorneys. He's now being held at the Naval brig in Charleston, South Carolina. The U.S. military has 120 days to charge him.
Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
DOBBS: Coming up, "Exporting America": American companies and consultants teaming up with foreign governments to ship American jobs overseas. Peter Viles has the special report.
Then: why any illegal alien with an I.D. card can enjoy the privileges of citizenship in this country. Bill Tucker will have the story. It seems unbelievable, but is U.S. government policy.
And defending Israel: Attorney Alan Dershowitz joins us to talk about his new book, "The Case For Israel."
(COMMERCIAL BREAK)
DOBBS: Coming up: The president's job approval rating is at an all-time low. And there is a new front-runner for the 2004 Democratic presidential nomination. Senior political analyst Bill Schneider joins us.
(END VIDEO CLIP)
DOBBS: U.S. corporations are sending American jobs overseas at such a rapid rate that this country's economy is facing a crisis of historic proportions. Corporate America likes to call it global outsourcing or offshoring. Here, we call it "Exporting America."
Tonight, Peter Viles reports on how corporate America, business consultants and foreign governments are working together to export American jobs overseas.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): Ever wonder why the U.S. economy isn't creating any new jobs? Well, it is. We just like to export them to the rest of the world. This is an outsourcing expo in New York City last week. The Romanian government was there looking for jobs to take back home.
COSTIN LIANU, ROMANIAN GOVERNMENT REPRESENTATIVE: The educated labor force in Romania, it's relatively cheaper than in USA.
VILES: Bulgaria was also there with the same sales pitch, cheap labor. STEVE KEIL, CEO, WIZCOM: The USA, for a programmer, would be about five times as much for an average programmer. Very good programmers in the U.S. I think would probably be getting eight to 10 times as much as a Bulgarian programmer.
VILES: China was also there with a competitive angle: Our labor is cheaper than India's.
CHANG YUN, CHINA CHAMBER OF INTERNATIONAL COMMERCE: Definitely, compared with the India supplier, I think the labor costs are lower in China.
VILES: In the United States, jobs are scarce, but giving them away is a thriving business. When "CIO" magazine surveyed information technology executives, 89 percent said they've shipped some work to India. Business consultants such as IBM and Accenture are now in the global outsourcing business. But the driving force, according to one consultant, is cost-cutting by American CEOs.
FRAN KARAMOUZIS, GARTNER INC.: There's a huge amount of companies where, from the top, from the boardroom level, the CEO level, have sort of dictated to many of their I.T. managers or application managers or CIOs, their technology group in general, you will send X amount of dollars or people offshore. Now, that's kind of not spoken about openly in a public press. But I talk to many, many clients where that is an edict from the top and not necessarily widely publicized.
VILES: Sometimes, it is publicized. Delta Airlines announced it is building new call centers in the Philippines and India. Motorola says it will invest $10 billion in China by the year 2006. Wal-Mart buys $12 billion worth of Chinese goods every year. If it were a nation, it would be China's eighth biggest trading partner.
And Oracle announced it will double employment in India to 6,000 people. Said Oracle CEO Larry Ellison said -- quote -- "It is not just us. A lot of other companies, like General Electric and Microsoft, are doing this as well." Increasingly, out-of-work Americans are blaming corporate America for exporting their jobs.
JOHN BAUMAN, ORGANIZATION FOR THE RIGHTS OF AMERICAN WORKERS: It is deliberate and proactive, because what they're doing is, they're looking at the bottom line. They're saving literally millions of dollars, which is bottom-line savings. But the impact to our country with trickle-down spending is horrendous.
(END VIDEOTAPE)
VILES: As this becomes a bigger political issue, corporate America is cautiously fighting back. A new report from the influential consulting firm Mackenzie argues that so-called offshoring -- that's sending jobs offshore -- creates more wealth than the United States than it destroys and is therefore good in the long run for the U.S. economy -- Lou.
DOBBS: That's been a precept in the discussion of free trade for some time and comparative advantage. Where are they getting their information, however? The Commerce Department and others are keeping very rigorous track, I'm sure, of the impact.
VILES: Commerce is not keeping rigorous track of the impact. This is a proprietary study that looks at how much is saved by putting that job somewhere else and how much can be gained for the company, for the consumer, through cheaper goods.
But here is the leap of faith, the thought that, somehow, the American economy is so resilient and so full of innovation, we can come up with better jobs. But the data does show, people who lose their job because of this generally don't get another job that pays as much.
DOBBS: All we have to do is look at what is happening with income in this country and the number of people, discouraged workers, and what is happening in every industry across the board. It is frightening, as you have just reported.
VILES: As many as half a million information technology workers out of work right now.
DOBBS: Peter Viles, thank you very much.
Tomorrow night, in our series of special reports "Exporting America": CEOs, accountants, consultants, economists and politicians would just as soon you believe the United States is exporting only manufacturing jobs. Tomorrow night, we report on the exodus of white- collar jobs. And we visit one American city that has been hit hard and ask if your community could be next.
California's assembly recently passed a law approving the issuance of state driver as licenses to illegal aliens. Governor Gray Davis signed the law soon afterward. Many other states also have similar laws on their books. Incredibly, the Treasury Department says illegal aliens can use the cards, even though there are national security concerns and the risk of financial fraud.
Bill Tucker reports.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): This little piece of identification can be used as a passport to life in America and one that is not necessarily legal.
It is called a matricula consular, issued by the Mexican Consulate. The Treasury Department says the identification can be use to open a bank account. The identification is accepted by hundreds of financial institutions, including Wells Fargo.
MIRIAM DUARTE, WELLS FARGO: We're pleased with the U.S. Treasury's announcement and decision, which will allow Wells Fargo to continue to provide financial services to customers who may not have certain forms of identification to open bank accounts. TUCKER: The matricula consular can also be used to get a driver's license in more than a dozen states, open Social Security accounts, even pay taxes. People using the card are never asked about their legal status by a financial institution. And when they retire, they can go back to their country of birth and collect Social Security.
PETER DUIGNAN, HOOVER INSTITUTE: There is no incentive to become legal, to become a citizen.
TUCKER: About 1.5 million matricula have been issued so far. They are accepted as identification by police departments across the United States. U.S. Immigration and Customs Enforcement says, while use of the cards are widespread, they don't make an immigrant legal.
MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: When it is accepted by banks and by police departments and by state governments, it becomes the vehicle for a kind of piecemeal amnesty, a de facto illegal alien amnesty. And it makes it much more difficult to catch these people.
TUCKER: In other words, potential employees with Social Security numbers, bank accounts and driver's license give an employer little reason to question their legal status.
(END VIDEOTAPE)
TUCKER: Now, critics of immigration policy say it is not the immigrants who created the problem. They point to a system that creates the opportunity for exploitation -- Lou.
DOBBS: Bill, thank you. That raises the issue, is there any official U.S. policy about to change here?
TUCKER: They are currently within the Homeland Security Council in the White House considering how they want to deal with this issue of matricula, because Mexico is not the only country that issue these kinds of identification.
DOBBS: Bill, thank you very much -- Bill Tucker.
That brings us to the topic of tonight's poll. The question: Should illegal aliens be given state driver's licenses and Social Security cards, yes or no? Please cast your vote at CNN.com/Lou. We'll have the results later in the show.
Coming up: The latest polls show the president's popularity at an all-time low. The same poll shows a new Democratic front-runner. Senior political analyst Bill Schneider joins us.
Polls also showing a rise in support for Governor Gray Davis. Rusty Dornin joins us from California. She'll have a report on the very latest on the California recall.
And later: Our borders remain open to illegal aliens, drug traffickers and terrorists. Casey Wian reports from the Mexican border.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Hurricane Isabel left a trail of death and destruction across seven states and the nation's capital. At least 36 people were killed by the storms. A massive cleanup effort is under way along much of the East Coast. Still tonight, more than one million residents are without power.
The storm caused extensive damage from Pennsylvania to North Carolina. North Carolina, Virginia and Delaware and Washington, D.C., all were declared major disaster areas. President Bush today traveled through Richmond, Virginia, for a briefing on damage and recovery efforts.
The latest CNN/"USA Today"/Gallup poll shows the president's approval rating at an all-time low. That same poll shows a new addition to the Democratic field posing a serious threat to the rest of the Democrats and that two Democratic candidates now would beat the president if the elections were held today.
Senior political analyst Bill Schneider joins us from Washington.
Bill, this is rather stunning.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: It certainly is, Lou.
Take a look at these figures that show the trend in the approval rating for President Bush over the last few months. Back in April, he was at 71 percent approval. And now he's dropped -- as you see that top number -- to 50 percent; 50 percent is the break-even point. If a president dips below 50 percent, he's in trouble.
He's lost particular support among men, about 17 percent just in the last month among men, so that now the gender gap doesn't even exist anymore. He is no better regarded by men than by women. That's a dangerous sign for this president.
DOBBS: And, Bill, the difference being Republican men, Democratic men? What is the breakout?
SCHNEIDER: It is all men, Lou.
And there's a reason for that. Men are very sensitive to the jobs issue. And with over two million jobs having been lost since 2000, men are getting very angry with Bush, because they supported the tax cut policy, but they don't see the payoff in terms of the job generation that was promised. And that's really making a difference. By the way, I can tell you that, at this point in 1991, the year before his first and only reelection campaign, his father was at 66 percent approval.
So he's significantly in worse shape than his father was at this point before his catastrophic reelection.
DOBBS: And Iraq, the dismal performance of the administration in the rebuilding phase in Iraq has not played into this -- these poll results at all, based on the survey?
SCHNEIDER: Oh, they both polled -- have come into this poll -- these polls results, because people are becoming much more critical of the Iraq involvement. In fact, right now, Americans are split over whether the war in Iraq was even worthwhile.
Just two weeks ago, something like 60 percent of Americans thought it was worth going into Iraq and fighting to overthrow Saddam Hussein. Now Americans are divided. I think one reason is, that speech the president gave to the American people on September 7, in which he quoted -- he cited an $87 billion bill for the reconstruction of Iraq was massively unpopular. Americans are asking, why are we spending $87 billion in Iraq, when that money is badly needed in the United States?
DOBBS: Bill, Wesley Clark, the newest member of the Democratic candidates for the Democratic nomination, Wesley Clark leading the way?
SCHNEIDER: That's exactly right.
DOBBS: That's remarkable.
SCHNEIDER: Bush is sinking. Clark is surging. It looks like he declared his candidacy at exactly the right moment in this race, when Bush looked vulnerable and Democrats had been casting about desperately for someone who can win.
Look at this. He's leapt, vaulted to the top of the list, above Dean, Kerry, Gephardt, Lieberman, all better-known candidates. Clark is No. 1, because Democrats look at this former supreme allied commander and they see a candidate who looks like a winner. And, indeed, in this poll and in some others, he comes -- he does better than any other Democrat in running against President Bush. And this poll, it is virtually a statistical tie, but he leads Bush by three points, which means he looks like he could just barely beat President Bush.
DOBBS: Now, we should point out, none of this is within the realm of the margin of error.
SCHNEIDER: That's right.
DOBBS: It is also fair to say, is it not, as we discussed these polls and what they lead us to infer, Bill, it is a highly volatile period, is it not?
SCHNEIDER: It is highly volatile. And Americans, really, about half of them say they don't know anything about General Clark. He's just beginning to be investigated.
The press has uncovered some damaging information about his military career, which was very controversial. At the Pentagon, there were questions about his judgment when he was the allied commander in Kosovo and advised the military effort in Bosnia. Some of these stories are beginning to be discussed.
But what Americans see right now, particularly Democrats, is somebody who can win, particularly somebody who can appeal to men. He looks very good on paper. On Thursday night, he's going to enter his first debate. That is going to be his political debut against the other Democrats discussing not military policy, but the economy. And a lot of Democrats want to see, what is it he has to say about how he's going reconstruct the economy? Because we don't know.
DOBBS: Bill Schneider, thank you very much.
SCHNEIDER: Sure.
DOBBS: In California today, federal judges on the 9th Circuit Court of Appeals fired questions at the attorneys defending the delay in the recall of Governor Gray Davis. At issue, the use of controversial punch card ballots in certain California counties, all of this coming as a new poll suggests for that recall is waning.
Rusty Dornin joins us now from San Francisco -- Rusty.
RUSTY DORNIN, CNN CORRESPONDENT: Well, Lou, any lawyer who walks into a federal appeals court is going to expect some very tough questions. But this was a very feisty panel. And they really peppered both sides with a lot of questions.
In fact, it seemed at some times that neither side could really get their point across. And while the 9th Circuit Court is considered the most liberal in the nation, this particular en banc panel of judges is considered moderate, to even conservative. There is a Reagan appointee. There is a Bush appointee, even a Carter appointee. The rest were appointed by President Clinton.
Now, while there were a lot of interruptions, each side did have a chance to get across their bottom line.
(BEGIN VIDEO CLIP)
MARK ROSENBAUM, ACLU ATTORNEY: One out of every 25 minority voters who vote in those six counties will not have their votes counted. It's like putting a sign up there: Every 25th person doesn't need to vote.
JUDGE ANDREW KLEINFELD, U.S. 9TH CIRCUIT COURT: If we do split it, then don't we throw away the half million or so absentee ballots that have already been cast on these issues and thus disenfranchise a half million people?
CHUCK DIAMOND, ATTORNEY: You don't stop an election. You don't prevent everybody from voting because some of the people who do vote may have their votes counted erroneously.
(END VIDEOTAPE) DORNIN: Now, a decision is expected within the next 48 hours. But, as you know, time is running out. The October 7 election, the candidates are still campaigning. But the absentee ballots must be in by September 30 -- Lou.
DOBBS: Rusty, thank you very much -- Rusty Dornin reporting from San Francisco.
Still ahead here: defending Israel. Attorney, Harvard law professor, author of "The Case For Israel," Alan Dershowitz joins us.
And gasoline prices in this country are already near record highs. Some in Congress want you to pay even more. Lisa Sylvester reports on the emerging battle over what some think is a very good idea to raise taxes.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Alan Dershowitz says Israel is the victim of false accusations on a number of political and social issues, but says Israelis are bogged down in too much infighting to make a coherent case for their own defense. He's taken up the cause.
Attorney, Harvard law professor, author Alan Dershowitz lays out the defense in the book "The Case For Israel" and is with us now.
Alan, good to have you with us.
ALAN DERSHOWITZ, AUTHOR, "THE CASE FOR ISRAEL": Thank you very much.
DOBBS: The idea that Israel needs defense here, do you really believe that?
DERSHOWITZ: Oh, I wish it weren't the case. This is the one book I wish I didn't have to write.
But on college campuses around America, Israel is being singled out for divestiture, boycott, not for criticism. Everybody should be critical of every country.
DOBBS: Right.
DERSHOWITZ: But for unique condemnation.
At the U.N., most of the votes against any single country have been against Israel. All through Europe, Israel is on the defensive.
DOBBS: But that's sort of part of the -- that's the furniture in the house. The United Nations is what it is. It has a 50-year history of this. Why should it be of concern to you now?
DERSHOWITZ: Because there is a concerted effort on American college campuses to try to create a generation of American students who will be next generation's leaders, who have the kind of knee-jerk opposition to Israel of the kind that one sees in France and around the world.
And we have to fight that with the truth. In "The Case For Israel," though targeted most specifically at young people and college students, is out there for everybody to read and see what the facts are. I don't think you have to make the case for Israel. It makes the case for itself, as long as you present the facts.
DOBBS: And you advance the theory that is hardly new, that two states are really the solution.
DERSHOWITZ: Sure.
DOBBS: And Palestine, Israel living side by side. The road map to peace is now, at the very least, in a pause because of all the recent violence. What is the solution here? Because you and I and everyone watching and listening to you know that we have a 50-year history of this madness. What is the solution?
DERSHOWITZ: The solution is the same it was in 1917, when a small Jewish homeland was offered and the Palestinians rejected it; 1937, 1947, when the United Nations partitioned Palestine, so that the Jews would have a state where they had the majority and the Palestinians where they had a majority, 2000 and 2001.
Israel always has accepted the two-state solution. The Palestinians have always rejected it and used terrorism against civilians. And when the Palestinians want their own state more than they want to see the end of a Jewish state, there will be a two-state solution.
DOBBS: To be absolutely accurate here -- and I know that's your first concern -- the idea that Arafat rejected the proposition put forth, it was only 97 percent of the solution. It did leave three. It was, by the definition of Israel, a generous, but by the Palestinian side, an incomplete offer.
DERSHOWITZ: Well, the U.N., in 1967, after the Six-Day War -- I know; I helped Justice Goldberg draft that -- said that Israel should give back not all, but most of the territories. That's been the United States' position. That's been England's position.
DOBBS: But not Israel's.
DERSHOWITZ: No, most; 97 is most. And when you add to the 97 percent the complete Gaza, it's a lot.
DOBBS: You would agree that it is a bit like rat poison. It's 98 percent oatmeal, it's that 2 percent that gets you.
DERSHOWITZ: No, but Israel is prepared to give back, even...
DOBBS: But listen to the language that you use. Israel is prepared.
DERSHOWITZ: Right. Right.
DOBBS: That's a condescending approach here, I think. And, frankly, I think that there has to be some sort of mechanism that creates some parity here in these negotiations.
DERSHOWITZ: There is no parity. There is no parity. You have an established democratic state that's been in existence for many years. And then you have a group of people who are trying, by terrorism...
DOBBS: Alan, I understand that. And so does everyone listening.
DERSHOWITZ: Parity and even-handedness is not...
DOBBS: How do we get to a solution? Because simply looking down and saying, this is the way it is going to be has not worked. There has to be a solution. The United Nations has been a miserable failure. It is inept in every respect.
DERSHOWITZ: Right.
DOBBS: The United States has been absolutely incapable of brokering...
DERSHOWITZ: Well, one solution that is off the table is that you create a state as a reward for terrorism. And that's what the Palestinians have been seeking.
DOBBS: Oh, absolutely.
DERSHOWITZ: So you condition. My proposal in the book is, Israel makes a schedule for eliminating and dismantling the settlements and ending the occupation, but it is conditional on best efforts by the Palestinians to end terrorism. That is President Bush's proposal.
DOBBS: But that is the president's proposal. That is the road map.
DERSHOWITZ: What is wrong with it?
DOBBS: In my judgment, the only thing that is wrong with it is that we can't find two parties to come to a table and bargain in complete good faith.
DERSHOWITZ: But if one of the parties won't..
DOBBS: And the fact that the world community tolerates this...
DERSHOWITZ: That's the problem.
DOBBS: Six-and-a-half million people live in Israel; 20 percent of them are Arab.
DERSHOWITZ: Right.
DOBBS: The Palestinians have been all but abandoned by their own people, if you will.
DERSHOWITZ: Right.
DOBBS: This is a role for the United Nations. This is a role for the United States. But it seems we have a cottage industry -- well, it's more than a cottage industry. We have an industry supporting the status quo that is bloody. It is deadly.
DERSHOWITZ: Reasonable people could agree or disagree about many solutions. What you can't disagree about is that Israel today is being singled out for blame for a complex problem that it has tried to solve over and over again.
DOBBS: Oh, no, no.
(CROSSTALK)
DERSHOWITZ: And when the other side wants its own state more than they want to see the end of the Jewish state, there will be a two-state solution. The United States must support Israel's fight against terrorism.
DOBBS: Well, Israel is our principal ally. It is our friend. That has been loudly declared. And I presume and hope it will continue to be so.
DERSHOWITZ: So do I.
DOBBS: The fact of the matter is, the Arab states there have to provide significant impetus to whatever negotiations.
DERSHOWITZ: I think Saudi Arabia is the key to the solution. And Prince Bandar of Saudi Arabia was very interested in seeing the Clinton-Barak proposal accepted. Arafat pulled out.
(CROSSTALK)
DOBBS: Forgive me, Alan. This is history.
DERSHOWITZ: But history two years ago.
(CROSSTALK)
DOBBS: But it is history. It is recent history, but it is history. We have a road map in place. We have an opportunity, do we not, that still exists to reach a negotiated peace here?
DERSHOWITZ: A negotiated peace that results from terrorism would actually be worse than no peace at all.
DOBBS: No, no, no, I didn't say that. The terrorism -- to the Palestinians, the Israelis are terrorists.
DERSHOWITZ: But they're not, because they don't kill civilians deliberately.
DOBBS: You're talking public relations.
DERSHOWITZ: Right.
DOBBS: I'm talking about trying to reach a peace here and the idea that one wants to be more blameless than the other. There is no question that the Palestinian terrorists who attack innocent men, women and children on the streets of Jerusalem and throughout Israel are terrorists.
DERSHOWITZ: But with due respect, Lou, your question is almost as if we were asked, how are we going to come to peace with al Qaeda? They're blowing up our people and we're bombing them. It is a cycle of violence. The answer is, we're right. They're wrong.
DOBBS: Then what are you going to do about it?
DERSHOWITZ: And Israel has to remain strong. It has to be generous in peace offers.
DOBBS: Well, "The Jerusalem Post" called for all-out war, the death of Arafat.
DERSHOWITZ: I don't agree with that. Look, if Arafat were to be struck by lightning or slip on a banana peel, nobody would shed any tears.
DOBBS: But the Israelis complain about the leadership. They complain about the
(CROSSTALK)
DERSHOWITZ: He is a horrible barrier to peace.
DOBBS: OK. All of that is fine, but that is the reality. What is the solution?
(CROSSTALK)
DERSHOWITZ: Well, here is my proposal, that Israel continue to isolate Arafat, make generous offers to end the settlements and end the occupation, conditioned on Palestinian best efforts toward ending terrorism.
If they don't make best efforts to end terrorism, there should not be a Palestinian state. If they do, there should be. The only state ever built on terrorism was Algeria. We don't want to see that experience repeated in the Middle East.
DOBBS: But states have been created out of simple imperative, whether it be by the United Nations or the United States recognizing an independent state in Israel. Why could the same not occur? And why should there be less standing for Palestinians, simply because the United States and the United Nations have not yet added their imprimatur to that definition?
DERSHOWITZ: Well, remember, the United States and the United Nations have not created a Tibetan state, a Kurdish state, an Armenian state. The Palestinians will get a state when they stop using terrorism.
DOBBS: OK. Alan, I think that this is a terrific book.
DERSHOWITZ: Well, thank you.
DOBBS: I think the defense of Israel is appropriate, given what you're saying. I would like to see us be defending a peace with a solution.
DERSHOWITZ: Before you can get to a peace, you have to clear the air of all the lies and the accusations. The lies against Israel are a barrier to peace. And that was my job in writing "The Case For Israel."
DOBBS: Alan Dershowitz, good to have you us.
DERSHOWITZ: Thank you so much.
DOBBS: Thank you.
Tonight's thought is on what constitutes a good defense, against even terrorism. It is theory that is centuries old, our quote tonight from Roman poet Ovid: "Isn't the best defense," Ovid asked, "always a good attack?"
Coming up next: a proposal gaining support on Capitol Hill, fueling outrage across a good part of the country. Lisa Sylvester will report on the latest efforts to pump consumers for even more cash.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Gasoline prices all across the country spiked to record- high averages of $1.74 for unleaded regular this summer. Now some in Congress think that you should pay even more. They want to raise the federal gasoline tax.
Lisa Sylvester reports from Washington.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Gas prices in Chicago topped $2 a gallon. A good chunk of that, 37 cents, goes to federal and state taxes.
UNIDENTIFIED MALE: It is a ripoff that we are paying so much money for gas. We're paying almost $2.50 a gallon, and for what? I remember when gas was 99 cents a gallon.
SYLVESTER: There may be a few roadblocks convincing taxpayers to support an increase in the federal gas tax. Congress is considering raising the federal gas tax by 6 cents, to 24.4 cents, and to index it to the rate of inflation, on top of state taxes. The extra money would pay for road improvements. But opponents say taxpayers are already paying too much.
PETE SEPP, NATIONAL TAXPAYERS UNION: Drivers already pay roughly $30 billion a year in federal gasoline taxes. That ought to be enough to at least give them a decent federal interstate highway system with maintenance costs.
SYLVESTER: According to the Department of Transportation, about one out of every three major roads are in poor or mediocre condition. Lousy roads and congestion cost the average commuter more than $1,100 a year. And the average driver loses a week and a half of work sitting in gridlock.
Republican Congressman Tom Petri says the tax increase is really a user fee.
REP. THOMAS PETRI (R), WISCONSIN: There is no free lunch. And I think, at the end of day, none of us want to pay. Obviously, we would like someone else to pay for things and consume it.
SYLVESTER: But critics say there are other ways to pay for projects without pinching consumers at the pump, for instance, toll roads and privately financed roads.
(END VIDEOTAPE)
SYLVESTER: Bipartisan support is building in Congress to increase the federal gas tax. But lawmakers are on a collision course with the White House, which opposes the tax increase -- Lou.
DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting from Washington.
A reminder now to vote in tonight's poll. Should illegal aliens be given state driver's licenses and Social Security cards, yes or no? Cast your vote at CNN.com/Lou. And we'll have the results coming up a little later in the show.
Coming up: shattered confidence in the world's largest and most prestigious stock market. Former chairman and CEO of PaineWebber Donald Marron joins us. he says investors need protection. He joins us next to tell us how.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The New York Exchange has chosen a replacement, a temporary replacement, for Dick Grasso, who resigned last week following the outrage over his $141 million pay package. John Reed, the former chairman and co-CEO of Citigroup, heads the exchange until a permanent leader is found. Reed left Citigroup in 2000 after a power struggle with CEO Sandy Weill.
Reed was chairman and co-CEO during the period in which Citigroup helped Enron hide more than $8 in debt from investors. Citigroup paid more than $100 million to settle Enron-related charges with SEC.
My guest tonight says the New York Exchange needs a major restructuring if it is to continue as a regulator in the industry. Joining us now, the former chairman and CEO of PaineWebber, Donald Marron.
Good to have you with us, Don.
DONALD MARRON, FORMER CHAIRMAN & CEO, PAINEWEBBER: Nice to be here, Lou.
DOBBS: Let's go right down the line. Appropriate that Dick Grasso resigned?
MARRON: I don't know any of the real details. But, given all the furor, I think it was.
DOBBS: Appropriate for this board to come under strict review for its actions in compensating the man who was running a not for profit, quasi-regulatory institution and making this kind of money in excess of $20 million a year?
MARRON: I think you've raised a big issue. Is it not-for-profit or is it a regulator, and should the two be separated?
DOBBS: Well, actually, it is definitely not for profit. It is definitely quasi-regulatory. And whether it be separated from that role, Don, let me ask you. Should it?
MARRON: Well, I think the exchange is in three businesses. It is a regulator. That's crucial. It is a market maker, very important all over the country. And it is also now a competitor, getting order flow, getting more listings. Those latter two combined are a business. You could separate the business from the regulatory side.
DOBBS: And, in your judgment, should it be?
MARRON: I think it should be looked at.
The exchange, in my view, has worked extremely well. It has a very fine board. The world has gotten more complicated. This is a time to take a look at many different things for the future.
DOBBS: Would those things include -- well, let me ask you this. What other industry has self-regulation, the car industry, the boat industry? When one steps back from this industry -- and you, as one of the pillars of that industry, you have to ask yourself, why should it be self-regulating, and particularly in case of the New York Exchange?
MARRON: Well, in part, because this industry is both self- regulating and is regulated by the government. In fact, I remember, at PaineWebber one week, they came in and told me there were 16 different regulators on the premises.
DOBBS: Right. Well, how about one, something called the Securities and Exchange Commission?
MARRON: Yes. Well, there is no doubt about that. I think we would all like less regulations in terms the number of regulators.
DOBBS: What about the specialist system itself, under attack, under investigation, and now squarely in the crosshairs of scrutiny because of all that has come with the Grasso controversy?
MARRON: No question.
The real issue there is the quality of the markets. What's changed in the last couple of years is, the individual is now the leader in the markets. In the year 2000, there was more money in 401(k)s than there was in pension plans. The real issue for us today is to make sure the confidence of those individuals is maintained in these markets. Everything has to be focused on that. Everything has to be communicated that we care about them first and that we're doing all the things we can to help their ability to deal in these markets.
DOBBS: And which the specialist system, do you to think it will be changed here?
MARRON: Well, I think the specialist system has worked very well. The exchange has gotten bigger. Markets have worked well in all kinds of areas. But the reality is, today, obviously, everything is going to be looked at.
DOBBS: Including the change in the composition of the board?
MARRON: Well, I think the board is full of extraordinary, very able people. I think the board issue is not the major issue here at all. The major issue is, what is the role of the stock exchange going to be going forward, regulator, market maker and business? And how is this going to be seen by the millions of Americans who now have their future in their own hands?
We have become a nation of pension-fund managers individually. And that money is invested in the New York Stock Exchange stocks. They need confidence. And you'll give them to them, and the industry will, and this new appointment will also.
DOBBS: Don Marron, as always, good to have you with us.
MARRON: Nice to see you.
DOBBS: Thanks, Don.
Tonight's quote is on excessive CEO pay packages: "Like the children of Lake Woebegone, who are all above average, too many companies want to be above average in compensation" -- that from SEC Chairman William Donaldson.
When we continue: the results of tonight's poll and starting the week with a sell-off on Wall Street. Christine Romans will have the market for us -- that and a great deal more still ahead.
Please stay with us.
(COMMERCIAL BREAK)
DOBBS: The results of our poll question: Should illegal aliens be given state driver's licenses and Social Security cards? Twelve percent of you have voted yes; 88 percent have voted no.
A sharp sell-off today on Wall Street, the Dow suffering its biggest one-day decline in nearly two months. The Dow fell 109 points, the Nasdaq down more than 31, the S&P 500 off almost 13 1/2.
Christine Romans here now with the market.
All of this because of?
CHRISTINE ROMANS, CNN CORRESPONDENT: Currency. It's one of those rare days when it is the U.S. dollar that starts to light a fire under stocks.
A tough day in the stock market. Traders blamed it on a weaker dollar today and a stronger yen. Communique from the G7 hinted Japan may refrain from buying dollars so vigorously. Lou, Japan spent about $80 billion in the first seven months of this year buying U.S. dollars to keep its yen weak and help its exporters, $80 billion. Compare that with what the U.S. is spending in Iraq. You can see just how aggressive that intervention has been.
DOBBS: Those exports have got to be pretty profitable for the Japanese.
(LAUGHTER)
ROMANS: I guess so.
OK, so these currency moves riled stocks, though the stock market volume was barely more than 1.2 billion shares. And market veteran Larry Wachtel was unfazed.
(BEGIN VIDEO CLIP)
LARRY WACHTEL, PRUDENTIAL FINANCIAL: This is month No. 7 of the bow -- the Wilshire index has appreciated by $3 trillion; 90 percent of the stocks on the New York Stock Exchange are selling above their 30-day moving average. If they choose to shake the Dow out by 110 points, so be it.
(END VIDEO CLIP)
ROMANS: So be it. And stocks have climbed steadily since last October's low. The Dow and the S&P up more than 30 percent, Nasdaq up 69 percent, cyclicals up 50 percent. And look at semiconductors, up 83 percent. In fact, Lou, the S&P 500 has been up every month since February.
And with a little over a week left in this month, the S&P 500 is poised for its first higher September since 1998. It has been a very, very good run. Larry Wachtel, a lot of other market veterans, are not worried about 110 points down today.
DOBBS: Now, when you look at that at look at 69 percent higher, my gosh, what a year it has been. It's been quite a year.
(CROSSTALK)
DOBBS: Thank you, Christine.
ROMANS: You're welcome.
DOBBS: Christine Romans.
Let's take a look at some of your thoughts now.
Willie Washington of Houston, Texas, wrote about our special reports on "Exporting America," saying: "I'm very concerned with the fact that American companies are so willing to export jobs for the sole benefit of lifting stock prices. I have two major problems with the idea: first, the problem of national security; second, the problem of a diminished tax base."
Ann of Jacksonburg, West Virginia, saying: "Thank you once again for being one the first news programs to show the total casualties of American soldiers, along with the numbers injured. Your show is always on top of what the American public needs to be made aware of."
And many of you wrote about our report last week on the wounded service men and women who are asked to pay for their own food while recovering in military hospitals.
Roy of Blue Springs, Missouri, said: "I can't imagine our country being so free at spending on other countries and not having the decency to take care of our own soldiers fighting for our safety. Maybe Congress should vote to take their food bill out of the $87 billion supposedly needed to rebuild Iraq."
Janie Valdez of Watsonville, California, said: "After my two sons joined the military, I was outraged to find they had to pay for their uniforms and other accessories. What an injustice, when our military serve our country with duty, pride, patriotism and courage."
And, finally many of you wrote in asking how you could help Army Specialist Hilario Bermanis. He became an American citizen after losing three of his limbs while fighting in Iraq.
And now here is how you can help disabled veterans from the war against Saddam Hussein, such as Hilario Bermanis. A check or a money order can be made out to: VA GPF 7024. Send it to Department of Veterans Affairs, General Post Fund 7024. That's 810 Vermont Avenue Northwest (002C). That's Washington, D.C. 20420. That money goes towards scholarships for all disabled veterans from the war against Saddam Hussein.
We love hearing from you. We thank you for sharing your thoughts. E-mail us at LouDobbs@CNN.com. That's our show for tonight. Thanks for being with us. Tomorrow night, in "Exporting America," a look at a city hard-hit by jobs being shipped overseas. Former White House adviser David Gergen joins me to talk about Iraq and the president's address to the United Nations. And California state Treasurer Phil Angelides is our guest, the first to call for Dick Grasso's resignation from the New York Exchange. Please join us.
For all of us here, good night from New York.
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