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Lou Dobbs Tonight
Rumsfeld Memo Questions Progress in War on Terror; Interview With Senator Dianne Feinstein
Aired October 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.
ANNOUNCER: From Washington, this is LOU DOBBS TONIGHT for Wednesday, October 22. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening from the nation's capital.
Tonight: One high-ranking member of the Bush administration is obviously trying to confront the reality that has been the subject of the administration's public-relations campaign for the past week and a half. In a memorandum leaked to "USA Today," Defense Secretary Donald Rumsfeld expressed dissatisfaction about the progress of the war on terror and radical Islamists.
In the same memo, Secretary Rumsfeld also warned that the United States faces what he termed a long, hard slog in Iraq and Afghanistan. Secretary Rumsfeld also said the Pentagon is having mixed results in the fight against al Qaeda.
Senior Pentagon correspondent Jamie McIntyre joins me now.
Jamie, this memo is, in many ways, the most explosive leak in the almost three years of this administration, isn't it?
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, it's clearly a leak that Rumsfeld didn't want. He said, if he wanted this memo published, he would have issued a press release about it.
And critics are using it to seize upon what they see as a difference between what Rumsfeld is saying publicly and what he's telling his top deputies in private. But Rumsfeld insists that this memo, which raises more questions than makes statements, is really just a reflection of his management style, of the way he likes to drop what he calls snowflakes, little pointed memos on his staff, to try to get them to think in big ways about old problems.
The memo does reflect some level of dissatisfaction with the progress of the war. A long, hard slog is how Rumsfeld portrays the prospects in Iraq and Afghanistan, although he does say the U.S. will win in both of those countries. He also said, "We have not made truly bold moves." There, he's referring to transforming the Pentagon into something that's more capable of fighting terrorism.
And he also complained -- quote -- "We lack metrics" -- or measures -- "to know if we are winning or losing the global war on terrorism. But he says that refers to the sort of macro picture. He says they have lots of measures of how they're doing on things in the short term. Now, Rumsfeld also insists that this is just part of his effort to constantly push his staff to just look at things in a way where they can come up with innovative answers and part of his own impatience with how things go. He's not a patient man. He wants to see results.
Here's how he explained it on Capitol Hill.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, SECRETARY OF DEFENSE: Sometimes, that's good. And sometimes, one needs to say to a big institution, hey, wait a minute, let's lift our eyes up and look out across the horizon and say, are there questions that we ought to be asking ourselves? Are there things that we ought to think about ways to do differently? And I do it periodically. It happened that I was thinking about the global war on terror.
(END VIDEO CLIP)
MCINTYRE: Now, critics on Capitol Hill were saying that this memo clearly shows that the administration is in denial or not admitting some of the real problems that they face. But the White House today voiced support for Rumsfeld, saying that these kinds of tough questions are exactly the kind that the secretary should ask -- Lou.
DOBBS: Lots of questions raised by that memorandum, Jamie. For example, he said the United States is just getting started, as he termed it, in the battle against Ansar al-Islam, a group with links to al Qaeda, which the coalition had reported been broken up in the war against Saddam in March and April.
MCINTYRE: Well, again, that's a reflection of reality on the ground. In Iraq, they are finding more evidence of this group, Ansar al-Islam, mentioned by General Sanchez today, the general in charge.
In the memo, he ticks off, he says that the Pentagon has made reasonable success in getting Iraqi leaders, mixed results with al Qaeda, putting a lot of pressure on them, but not really having broken up al Qaeda. And then he says, as you said, they're just getting started with some groups like Ansar al-Islam. And, basically, he's asking in this memo his top people to come back with him with new ideas, new approaches, so that they can get a better handle on this.
DOBBS: And, Jamie, the perhaps central issue that the secretary raised, and that being, namely, that the United States must deploy billions of dollars in the fight against terror and radical Islamists, while those radical Islamists have to spend only millions, that is a centerpiece of the advantage that the terrorists, the radical Islamists, hold.
But this seems to be a self-evident, if you will, observation that one would have assumed the Pentagon and this administration would have been dealing with much earlier than now, more than two years after September 11. MCINTYRE: Well, none of these issues are things that the Pentagon is just dealing with now for the first time. They are issues that they have been wrestling with the whole time. And this memo to Rumsfeld's top aides is, again, just to try to get them to go back and come back with him with perhaps new ideas on how to attack these old problems.
DOBBS: Perhaps not new problems, but, certainly, the secretary expressing some dissatisfaction shared by many in this town and around the country. And that is a lack of progress in a number of areas which he mentions, Mohammad Omar, the head of the Taliban, Osama bin Laden, and, of course, the elusive Saddam Hussein.
Jamie McIntyre, our senior Pentagon correspondent -- thank you, Jamie.
In Iraq today, evidence to support the secretary's contention that the coalition faces a long, hard slog. The commander of U.S. troops in Iraq said terrorists have intensified their attacks against coalition forces over the past three weeks. General Ricardo Sanchez said the average number of attacks has now increased to 20 to 25 a day.
Previously, General Sanchez said the daily average was between 15 and 20. Sanchez also said some Iraqi terrorist groups have links to al Qaeda.
(BEGIN VIDEO CLIP)
LT. GEN. RICARDO SANCHEZ, U.S. COMMANDER IN IRAQ: We do have some al Qaeda suspected linked personnel that are in our custody. And we're still trying to work to establish the positive links to that organization.
(END VIDEO CLIP)
DOBBS: In the latest violence, terrorists today wounded five American soldiers in two separate attacks against military convoys. Three members of the 82nd Airborne were slightly wounded near Fallujah. Two other soldiers were wounded in a bomb attack in Baghdad.
And tonight, President Bush is in Australia, one of this country's closest allies in the war against terror and radical Islamists, global terrorism also the top of the agenda in the president's visit to Indonesia.
Senior White House correspondent John King has the report.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): Warships on alert off the coast of Bali, this stop designed to send a message to terrorists who claim Islam is inspiration.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Murder has no place in any religious tradition, must find no home in Indonesia.
KING: The extraordinary security included some 5,000 troops and police, reflecting the Indonesian government's assessment of an imminent terrorist threat. Mr. Bush was on the ground just a few hours, but considered it crucial to offer support and encouragement to President Megawati Sukarnoputri.
BUSH: Under her leadership, Indonesia is hunting and finding dangerous killers.
KING: Mr. Bush visited Indonesia two months a hotel bombing in Jakarta and a year after the Bali nightclub bombing that killed more than 200. Anti-American sentiment runs deep in the majority Muslim nation of 210 million people. And President's Megawati political will to stand with the United States against al Qaeda and other terror networks has, at times, been questioned.
BALBINA HWANG, HERITAGE FOUNDATION: Now I think she has shown some more proactive leadership. But, clearly, there is more work that needs to be done in Indonesia.
KING: In this meeting with Indonesian religious leaders, Muslim clerics complained, the United States' policy in the Middle East is biased towards Israel. Mr. Bush countered by saying he is the first U.S. president to publicly embrace a Palestinian state. But, in private and later in public, he did not shy away from criticizing the Palestinian leadership.
BUSH: There needs to be leadership willing to fight off the terror that is trying to prevent the state from emerging.
KING: A top al Qaeda operative known as Hambali, now in U.S. custody, is a suspect in several Indonesian terror attacks. And Indonesian officials say Mr. Bush promised they would eventually be allowed to interrogate him.
From Bali, it was off to Australia, the sixth and final stop of the president's overseas trip.
(on camera): As he flew here, the president told reporters on Air Force One, the Muslim clerics in Indonesia were direct, but polite, and that he hoped the session helped prove his respect for Islam and helped refute their perception that Americans believe Muslims are terrorists.
John King, CNN, Canberra, Australia.
(END VIDEOTAPE)
DOBBS: Tonight, growing speculation that Saudi Arabia is trying to acquire nuclear weapons. The head of Israeli military intelligence said, Saudi Arabia wants Pakistani nuclear warheads because of the potential nuclear threat from Iran.
Today, Saudi officials tried to refute that statement. The Saudi defense minister said, no military agreements were concluded with Pakistan when the Saudi crown prince visited Islamabad last weekend seeking, according to "The New York Post" and "The Washington Times," to trade oil, cheap oil, for nuclear weapons.
As the White House tries to convince other nations to help pay for the reconstruction of Iraq, back at home, it's facing political problems in Congress over just that issue. Democrats, joined by a handful of Republicans, want some of that aid given as a loan, instead of an outright grant.
Peter Viles is here now and has the story for us -- Pete.
PETER VILES, CNN CORRESPONDENT: Lou, there is no question the president is going to get almost all of the $87 billion that he asked for.
But Congress is asking some tough questions here, including, if we can find $20 billion to rebuild Iraq, why can't we find $1 billion to improve veterans health care?
(BEGIN VIDEOTAPE)
VILES (voice-over): Call it the $87 billion headache. Congress is showing signs of sticker shock and even rebellion.
First, the Senate voted to make half of the $20 billion in Iraq reconstruction money a loan, rather than an outright grant. The White House threatened to veto any loan requirement. But that didn't stop 84 Republicans in the House from endorsing that loan requirement in a nonbinding vote. Republican leaders, however, are backing the president.
REP. TOM DELAY (R-TX), MAJORITY LEADER: You cannot do it through a loan process. It just -- it's sort of like swimming out to a drowning person and handing them a 16-pound bowling ball. You have to have stability. You have to have an economy that can sustain the democracy.
VILES: But there's another disagreement. The Senate voted $1.3 billion the White House never asked in additional funding for veterans health care benefits, to hold down co-payments for drugs and doctors visits, also to allow reservists to buy health insurance through the military's TRICARE program.
The White House, in a sharply worded letter to Congress, said it -- quote -- "strongly opposes these provisions, which it noted are not directly related to ongoing military operations in Iraq."
SEN. BARBARA MIKULSKI (D), MARYLAND: Guess what? Last night, the administration had the gall to say that they objected. They objected to this money. Well, we object to them. We object to their approach to veterans health care. We object to their platitudes without performance.
SEN. PATRICK LEAHY (D), VERMONT: I can't understand this. For Iraq, the administration wants millions of dollars in this new bill for a new zip code system. But when it comes to filling the health insurance gaps facing our Guard and Reserves, the White House only wants zip. And it's wrong. It's absolutely wrong.
(END VIDEO CLIP)
VILES: Now, that zip code request, $9 million to modernize the Iraq postal system, became something of a symbol of unnecessary spending in Iraq. But it was, in fact, removed from the bill that passed the Senate -- Lou.
DOBBS: And it appears that that is going to be constructed as a loan, at least as it stands now, that $10 billion of that 20?
VILES: That's what the Senate passed. Republican leaders are confident that they can get it out in conference committee and it will go to the president as an outright grant.
DOBBS: OK. We can't wait to find out. All right, Peter Viles.
Later here, I'll be talking about that Iraq spending bill, the likelihood of whether that money will be a loan or a grant, Secretary Rumsfeld's memo leaked on the war on terror and Iraq. We'll also be discussing the strength of this economy and other issues with the Senate majority leader, Bill Frist.
The cost of rebuilding Iraq is also a subject under discussion at an international conference that will begin in Spain tomorrow. The United States and its allies are donating billions of dollars for Iraqi reconstruction. But France, Germany and Russia, all outspoken critics of the U.S.-Iraqi policy, refused to give any money directly to Iraq.
Sheila MacVicar reports from Madrid.
(BEGIN VIDEOTAPE)
SHEILA MACVICAR, CNN SR. INTERNATIONAL CORRESPONDENT (voice- over): All smiles here, but the start of a winning streak or a short- lived victory for Colin Powell? Last wee, the U.S. secretary of state secured hard-won approval for the U.N. Security Council resolution on Iraq's future. Now comes the slippery task of securing hard-to-come cash at the Iraq donor conference in Madrid.
The U.S. secretary of state has made clear he's looking for as much money as he can get. But as much money as he can get is a far cry from the $36 billion that the World Bank estimates Iraq needs, above and beyond the $20 billion already pledged by the United States. An optimistic prediction is that donors will agree to give a combined $5 billion in Madrid. But no money is expected from Russia. And France and Germany are not expected to contribute anything more than the $232 million granted through the European Union. Also, the leading war skeptics will not send any high-level diplomats to Madrid.
EDDIE O'SULLIVAN, "MIDDLE EAST ECONOMIC DIGEST": They're demonstrating they are still not content with the new resolution. It doesn't give them even the minimum of what they want politically. And by sending low-level diplomats, it's showing a clear signal to the United States and to the outside world that something more needs to be done if they want the rest of the world to make a major contribution to reconstruction.
MACVICAR: There are some donations trickling in. Japan is pledging $1.5 billion and will send its foreign minister to Madrid. Britain, the United States's strongest ally, has promised nearly $1 billion. And Spain, the conference host, has pledged $300 million.
(on camera): Barring something that looks like a miracle, the U.S. will come away from here far short of the money it says it needs to rebuild Iraq. But, slowly, the donations are starting to come in. U.N. Secretary-General Kofi Annan will make a previously unscheduled visit here on Thursday. And the U.N. World Bank trust fund for Iraq, one that is completely separate from the Pentagon's, will be open and taking donations.
Sheila MacVicar, CNN, Madrid.
(END VIDEOTAPE)
DOBBS: Coming up next: controversial visa programs that allow foreign students and workers to take the jobs of Americans. Lisa Sylvester tonight reports. And Senator Dianne Feinstein of California joins us to share her proposals on this building issue.
And an impending threat to American intelligence-gathering capabilities. National security correspondent David Ensor reports on the dangers of a spy satellite gap.
And "America's Bright Future," our series of special reports this week on some of this country's most remarkable young people -- tonight, a teenage novelist, Casey Wian with the story.
Please stay with us.
(COMMERCIAL BREAK)
DOBBS: Tonight, our special report "The Great American Giveaway." Tonight, we're looking at college tuitions. A number of states not only allow illegal aliens to attend their universities, but they allow them to pay less in tuition.
Lisa Sylvester is here tonight with the report -- Lisa.
LISA SYLVESTER, CNN CORRESPONDENT: Lou, states are required by law to provide an elementary and a high school education to illegal aliens. But the question now, are illegal aliens also entitled to a college education?
(BEGIN VIDEOTAPE)
SYLVESTER (voice-over): There are 64,000 student enrolled at Northern Virginia Community College. School officials estimate, as many as 100 are not legal residents.
For Virginia's attorney general, that's 100 too many. He's issued a rule advising all state colleges and universities to deny admission to people who cannot prove their immigration status. JERRY KILGORE, VIRGINIA ATTORNEY GENERAL: We've just always said that it's not too much to ask of someone, before they take advantage of the benefits of this society, that they prove they have obeyed the laws.
MACVICAR: Virginia is the only state in the country to take such action. Several states have been moving in the other direction, not only admitting aliens, but also granting them lower in-state tuition rates. Illegal immigrants are eligible for in-state tuition in eight states. As many as 20 others are considering doing the same.
But critics say the policy works against American citizens.
MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: A U.S. citizen from a different state applying to William & Mary or University of Virginia has to pay a much higher rate than an illegal immigrant who happens to have set up resident within the state of Virginia.
MACVICAR: Civil rights groups are pushing for more benefits for illegal aliens, filing a lawsuit protesting Virginia's no-admissions policy. The Mexican American Legal Defense and Educational Fund says, making education affordable and accessible increases the country's tax base and lowers public spending.
TISHA TALLMAN, MEXICAN AMERICAN LEGAL DEFENSE AND EDUCATIONAL FUND: The bottom line is, if we invest in all of our children, it's going to produce economic benefits for our community. And it's also just sound policy.
(END VIDEOTAPE)
SYLVESTER: Republican Senator Orrin Hatch has sponsored a bill that would give all illegal students right to college in-state tuition and access to hundreds of millions of dollars in federal Pell grants, provided they can show they have been in the country for at least five years. But opponents are saying that this essentially puts American citizens and illegal aliens on the same footing and it's essentially the U.S. government would say it's OK to break the law -- Lou.
DOBBS: In this instance, it's not really putting them on equal footing. They're actually giving advantage to illegal aliens...
SYLVESTER: They are.
DOBBS: ... over, again, hard-working, middle-class American families, who don't have the representation.
SYLVESTER: Indeed. And that's one of the very controversial things about the Orrin Hatch bill, is whether or not it would essentially give access, not just access to illegal aliens, but also the tuition breaks.
DOBBS: Lisa Sylvester, thank you very much.
While the United States gives away education to illegal aliens, many U.S. companies continue to give away thousands and thousands of American jobs, exporting them overseas, as we've been reporting here for months.
In addition, many companies recruit overseas workers to come to this country to fill high-skilled positions on what is purportedly a temporary basis.
My next guest wants future U.S. trade agreements to exclude the visa program that allows foreign workers to take those jobs away from Americans.
Senator Dianne Feinstein joins us tonight from Capitol Hill.
Senator, good to have you with us.
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Good to be here, Lou. Thank you.
DOBBS: You have been at the forefront of the issue of the relationship between immigration and trade. And what many of our viewers and I would hazard to guess that most Americans don't realize is that the U.S. trade representative in effect has the ability to set immigration policy, and greater power than the U.S. Senate, for example.
FEINSTEIN: Yes, that's right. I didn't really understand that until this Chilean-Singaporean trade agreement which essentially provided that nearly 7,000 people, not necessarily from those two countries, but working for companies owned by either Singaporean people or Chilean people could come here under what's called an L- visa.
Now, the plenary power for immigration, which means the ability to make law with respect to immigration, rests with the Congress of the United States, not with an appointed trade representative. And we can't change those trade bills with fast track. Those bills go through the way they see it takes place, and that's the case.
I think that's wrong. There are apparently 73,000 people that have come in under NAFTA in this same way. We have a big H-1B workers program, a big L-visa program.
So we're taking a large number of foreign workers every year.
And I think during good days -- good economic times -- that may be acceptable to people. But I can tell you in San Jose, which is the heart of Silicon Valley, you have 7 percent unemployment, you have 70,000 high-tech workers without a job. And what happens is, the company will hire an H-1B foreign worker at a third the cost, and that American worker hits the bricks.
That's wrong.
DOBBS: Senator, you're showing some considerable political courage in even taking up this issue, as you well know, because when one talks about this issue, and confronts it directly, they're accused of being xenophobic, they're accused of being racist. And the simple fact is, none of our -- or almost none of our politicians have wanted -- our elected officials have wanted to deal with this issue. But the facts are incontrovertible.
We are losing American jobs to foreign workers through the H-1B and L-1 programs.
FEINSTEIN: Well, there's another problem. I think the one negative economic indicator in this recovery is jobs. And two things are going on. One is downsizing, and the other is outsourcing.
So American companies are doing both. And in the outsourcing, they're sending jobs abroad, hiring people abroad. And I think we have to watch this very carefully because it's very strange with the indicators as they are that the job market is actually declining. There are fewer jobs today, permanent jobs.
DOBBS: And yet, Senator, we will hear economists say, and many representatives of multinationals, that what we're talking about is higher productivity. We're talking about greater efficiency.
But, Senator, I wonder if perhaps you, like me, find it interesting that when we hear these remarks about productivity, we hear about efficiency, whether we're talking about outsourcing or bringing in H-1B or L-1 visa holders, that the result is lower labor costs to those corporations in every instance.
Have we reached the point where corporate America thinks it can continue to -- let me put it politely -- kid the American people and our lawmakers that productivity and efficiency is a sufficient guise for what they're really saying is, "cheap labor"?
FEINSTEIN: I don't think so anymore. The H-1 visa (ph) the last year was $197,000. This October, a few days ago, it dropped down to $65,000 for the year. There's been some talk of raising it up, but I think in view of the sentiments that you're expressing, people on the Hill are beginning to realize, "Oh, oh, let's just leave it where it is. Let's not touch it."
Now in the interests of full disclosure, I have to tell you that I'm a co-sponsor of the Dream Act, which is what you just opened your segment with. And this is a little different. And I just want a moment to make that case.
DOBBS: We'll give you a -- well, I was about to be too generous because my producer would murder me. You have a moment, Senator.
FEINSTEIN: All right. The moment is this. These are students who are sixteen who have been in this country at least five years. They graduate from high school.
Now, they are here -- they have been here, some of them, since they were 1 or 2 years old. The question really becomes: Is America better off if those students are able to get an education and go to college? And that's the in-state tuition issue.
I have a family, for example, that I'm trying to help in the Central Valley of California, here for 20 years -- mother, good mother; housewife; five children, three born here, but two brought over. They are...
DOBBS: Senator, if I may interrupt you, there's no doubt -- and we understand you come from the state of California where illegal immigration is a third of the problem at least in this entire country of 700,000 a year.
FEINSTEIN: It's a big problem.
DOBBS: We're not talking about in any way -- when we talk about this issue -- and I don't believe anyone is -- a heartless look at people, good people, who are here who need some help, who require frankly some study on the part of our policy-makers.
FEINSTEIN: Good, I'm glad to hear that.
DOBBS: But let me say further that don't you think that our immigration policy should begin with an intelligent and broad approach to make a determination?
FEINSTEIN: Absolutely.
DOBBS: It seems irrational for the United States Senate, the United States Congress and this president not to address the issue of a general immigration policy.
FEINSTEIN: Well, my view is this: There is no country that takes more immigrants a year than the United States, more than all of the other industrialized countries put together.
DOBBS: Absolutely.
FEINSTEIN: And we do so legally. Therefore everything we do should be to create -- not to create a magnet for illegal immigration. And I believe that very strongly. We're a nation of the laws. We shouldn't selectively enforce the laws. We shouldn't turn our back on this law or that law.
DOBBS: Senator, which is precisely what this country's doing. Our borders -- we have 700,000 illegal aliens at the least crossing our borders in a time of a national security threat, that is, the war on terror.
We have -- at this estimate, the most current estimate -- 10 million illegal aliens living in this country. We gave an amnesty in 1986. We have a situation in which we have not made a determination about -- we don't even know what the impact is from the U.S. government on the labor market. We have a number of myths floating around, but we don't have certainty.
That just seems, does it not to you, to be intolerable?
FEINSTEIN: Well, the problem is, you've got to have infrastructure for people too. When classrooms get up at 40, 50 a class, and schools up -- elementary schools 1,000-plus students. Homes, people cannot find jobs, they cannot find...
DOBBS: You're describing your state.
FEINSTEIN: I am, exactly -- then what develops in the people is a backlash, and that's what we've got to avoid. And that's why sound immigration policy, based on the economics of the times, makes a great deal of sense.
DOBBS: Senator, you make a great deal of sense. I hope you'll come back soon to talk about this very important issue.
FEINSTEIN: I'd love to. Thank you.
DOBBS: Senator Dianne Feinstein, thank you.
That brings us to the subject of tonight's poll question. Do you think illegal aliens should have the right to demand in-state tuition at our colleges and universities, yes or no? Please vote at CNN.com/Lou. We'll have the results later in the broadcast.
Coming up here: What will it take to spur growth for American companies and to create jobs for millions of Americans who are out of work? Congressman Bill Thomas, the chairman of the House Ways and Means Committee, says he has the answer. And he joins us next to talk about his answer and a few others. Stay with us, please.
(COMMERCIAL BREAK)
DOBBS: We've been reporting for months about the exporting of America, exporting jobs from this country. One bill now before the House of Representatives may provide some relief to one of the hardest hit industries: manufacturing.
House Ways and Means Committee Chairman Bill Thomas proposing more tax breaks for American manufacturers, including an across-the- board tax cut for many multinational corporations based in this country.
And the chairman joins us now.
Congressman Thomas, good to have you here.
REP. BILL THOMAS (R-CA), CHAIRMAN, WAYS & MEANS COMMITTEE: Good to be here. And welcome to Washington.
DOBBS: Thank you, sir.
The legislation that you have proposed, the jobs protection legislation, is in competition with the jobs creation legislation advanced by some of your colleagues. Is it, in your judgment, absolutely necessary for American manufacturers to have that support?
THOMAS: Well, let's start with the genesis of the bills. And that is the United States being told that what we were doing, because of our antiquated system to try to make us competitive, we could no longer do.
We have to answer a number of questions. We have legislation that answers problems that stem from the 1960s laws. For example, when U.S. companies do business in Europe, we tax them as though Germany still had the deutsch mark and France still had the French franc, not as a unified market that they truly are.
Those things need to change. But more important than all of that is that we address the problem in this country of all corporations, manufacturers included, being taxed at some of the highest rates worldwide and make sure that they not only stay here but when stay here, they're viable, i.e., they can do what they want to do: producing jobs.
DOBBS: In both your bill and competing legislation, the idea is that U.S. manufacturers would not have to, in effect, pay the same level of taxes on income earned abroad as in this country. It would avoid penalties by the World Trade Organization.
In point of fact, is anybody looking at this to say, "What is the appropriate level of taxation against manufacturers? Is there an appropriate, discreet difference between depreciation, tax advantages on plants and equipment built overseas versus here?"
Do you propose considerable tax relief, $128 billion over 10 years?
THOMAS: Actually, it's a little bit less than that now as we're getting the bill ready to move. But we're addressing manufacturers and all corporations, especially small corporations. The fundamental change is reducing the tax on the corporations so they can retain more of their earnings to reinvest it.
But when you look at the way the United States taxes corporations, one, the way they tax it, we're at a disadvantage, and the level at which we tax is at a disadvantage if you compare us with other countries. We're just not competitive.
DOBBS: Well, you know, we keep hearing we're not competitive in so many ways, Mr. Chairman. But we seem to keep doing all right. And manufacturers, service industries, at the end of the day, irrespective of those tax advantages or disadvantages, we've got a half trillion dollar trade imbalance in this country, a half trillion dollars.
Is there some measure by which you can incentivize manufacturers, other companies, that can effectively export from their American base with American jobs, rather than incentivize companies to export both their plants, their equipment and ultimately jobs?
THOMAS: No. You hit the nail on the head. The reason companies are leaving is because if they act like a foreign company, even though they stay in the U.S., they get taxed differently. We have to change the unfair rules. And then we have to say, just because you look good -- we're the world's largest importer and the world's largest exporter. And I know a lot of people who'll tell you, just before they fall over from a heart attack, "I feel real good."
It is very, very serious. We had advantages a decade ago, even five years ago. We have to make sure that we can keep companies in America, and let them, if they choose, to sell abroad.
There's a reason it's DaimlerChrysler and not ChryslerDaimler. It's our tax code.
DOBBS: And it's kind of interesting to see that even the Daimler in front of Chrysler doesn't seem to be making much of a difference in their performance.
Mr. Chairman, it's good to have you with us. And I hope that we can continue to talk about this important issue. And I wish you luck as you move this legislation through.
THOMAS: I'd still rather have it ChryslerDaimler.
DOBBS: Yes, you and me -- well, I'd better not say that. Oh, well, I'll say it. It would mean a far happier result in those capital flows.
Good to have you with us, Bill Thomas.
THOMAS: Thank you.
DOBBS: Bill Thomas.
Tonight, we continue our series of special reports on the future of this country's spy satellites. Some experts are warning now of a possible satellite gap. With the current generation of spy satellites aging, the timetable slipping for the next generation of technology, and launch technology itself in question. National security correspondent David Ensor is here with the report -- David.
DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, it is a problem that worries many key lawmakers and more than a few in the intelligence community, too. Unless existing surveillance satellites all long outlast their shelf life, some experts expect a dip in the nation's capability to watch adversaries from space. If that happens, the question will be how long will it last and how bad will it be?
(COMMERCIAL BREAK)
ENSOR (voice-over): As U.S. intelligence showed off at a recent trade fair, America's spy satellites were crucial in Iraq and Afghanistan. Keeping and improving the strategic advantage they provide could be critical. But critics, including the Pentagon's own Defense Science Board, warn that the program to field the next generation of satellites is behind schedule, over budget and as the board said bluntly, quote, "not executable."
STEVEN AFTERGOOD, FEDERATION OF AMERICAN SCIENTISTS: Not executable is a fancy way of saying it won't work. And, of course, that's a serious problem.
LOREN THOMPSON, LEXINGTON INSTITUTE: We're facing the possibility of a spy satellite gap. If our existing satellites stop working before the new ones are in orbit, then, of course, we're going to have a problem collecting this type of intelligence.
ENSOR: Knowledgeable sources say the program has suffered satellite failures, drastic cost overruns, launch failures, all of which would have been front page news if they had been public, but the estimated $25 billion program is top secret, and intelligence chiefs have worked hard to keep many of the problems out of the public eye.
KEITH HALL, V.P., BOOZ ALLEN HAMILTON: I don't think there's much of a risk of the nation going blind.
ENSOR: Former National Reconnaissance Office director Keith Hall says there may be a reduction in spy satellite capability for a while, but he says there will still be enough. Hall headed the NRO back in the '90s, when Boeing's bid on the massive contract to build the next generation of satellites was accepted. All the pressure then, he says, was to cut costs.
HALL: In order to free up the funds to do the development work, we had to stop buying the older satellites.
ENSOR: The current NRO director and undersecretary of the Air Force, Peter Teets, was unavailable for an interview. But after scaling down and adding $4 billion to the budget of what is the most expensive intelligence program in history, he recently said that, quote, "I have reasonable confidence we're going to have a successful program."
(END VIDEOTAPE)
ENSOR: Once the future imagery architecture satellites do finally go up over the next six to eight years, according to sources, the nation will have more and better eyes and ears in space, and it will be able to spy on more of the globe simultaneously, much more of the time -- Lou.
DOBBS: I'm not sure that I'm comforted by the head of the NRO saying he has reasonable confidence. I'd like to hear a little stronger statement.
ENSOR: It wasn't a ringing endorsement.
DOBBS: David Ensor, thank you very much. Look forward to your report tomorrow.
Coming up next -- the leading Republican in the Senate, majority leader Bill Frist joins us to talk about jobs, Iraq, a great deal more. Up next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: My next guest, the Senate majority leader. And among his top priorities, to pass a comprehensive energy bill, jobs, and strengthen this economy. And that is just the beginning of a very full agenda for the majority leader. Senator Bill Frist joins us now.
Mr. Leader, good to have you with us.
SEN. BILL FRIST (R-TN), MAJORITY LEADER: Lou, great to be with you.
DOBBS: Senator, what is the most -- in your judgment, right now -- the most likely outcome on the energy legislation that has been before this Congress in one form or another for two years?
FRIST: Well, you know, it is an important bill, because we really don't have a comprehensive energy policy, so I'm very excited. We're in conference right now. It's likely to go through our committee structure early part of next week and be on the floor of the United States Senate at the end of next week.
And that will be it. We should pass it through the United States Congress by the end of -- by next Friday, a week from Friday.
DOBBS: Medicare, prescription drugs. It's been one of your focuses, your priorities. Is it going to be a reality?
FRIST: It is going to be a reality. And I've been in the United States Congress now for eight years, the United States Senate. And ever since I've been there, it's been a goal of mine to see a comprehensive modernization of Medicare and at the same time add what seniors deserve, if we're going to really give them health-care security, and that is affordable access to prescription drugs.
We tried it before. The House has passed it, the Senate has not passed it until this year. Now, we've done that. It's in conference. We're slugging it out every day. I'll be going back over to the Capitol in a few minutes and working another three hours, and we're going to get it done.
That'll probably be about two to three weeks before we're going to have that back to the floor.
DOBBS: And the cost?
FRIST: $400 billion. Right now, one of the real advantages we had this time around is that Democrats, Republicans, the administration, the president, all said that this is going to be a $400 billion expansion. And it is a huge expansion of Medicare, the largest in its history, about $400 billion.
DOBBS: We have a presidential threat of veto of a bill that was sought eagerly by this administration, about $86 billion now, over the issue of whether $10 billion is a loan or a grant to Iraq.
Did that surprise you?
FRIST: The veto threat -- the question of veto? No, it didn't
The president of the United States has been very firm. When he -- about three and a half weeks ago -- called and said, "Bill, I've got a bill coming over here in the next couple of days. It's going to be" -- I thought it would be $55 billion, $60 billion -- "$87 billion." I said, "OK, Mr. President, we'll do our best."
We were able to deliver that last week, a great victory. The president from day one has been very firm that it is in the best interests of the Iraqi people, of the global community including the United States to, right now, this time around, make it a grant, not a loan. He hasn't deviated from that.
DOBBS: He hasn't deviated. Do you think it's smart politics to veto a legislation over $10 billion when you've sought $86 billion?
FRIST: Well, I'm not sure. I'm not sure whether it's going to get that far because I think we can make it a full grant. And right now, the Senate spoke that, "Yes, we can make it loans." The House and their votes say they're not loans. We're in conference. We'll see what the outcome is.
I think the president wants to establish a platform now that he thinks he knows is in the best interests of the Iraqi people. And he feels very strongly that it should be grants, and I tend to agree with him.
DOBBS: The long, hard slog that Secretary Rumsfeld referred to in the memorandum linked to USA Today, that was quite a dispassionate and darker view of the situation than had been advanced by the administration.
FRIST: Well, I was just with Secretary Rumsfeld about 45 minutes ago. We just spent an hour where he had the opportunity to brief with General Myers about half of the United States Senate. We talked about the memo, saw the memo itself. And I think it's very important to talk to people who have actually seen and read that memo and not just report what people have said that have read that memo.
The memo itself posed very large questions. It was for the people who work with him. The questions that we all think, all ask about, very appropriate, the sort of questions are important for us to ask as Americans.
DOBBS: I'm amongst those, Mr. Majority Leader, who has also read the memo. It is striking to me in a number of respects.
One, Ansar al-Islam, referring to that issue, specifically: Did he talk to you about that?
FRIST: We didn't talk specifically about that, but I saw the memo where...
DOBBS: The construction is that this defense secretary is disappointed in what has been done, suggesting that more is to come, suggesting that we have not measured our success in the war against terror and radical Islamists.
These are troubling and... FRIST: They're big, natural questions. And he described very vividly that he received information from a number of people over the last several weeks and based that and wanted to pose these very large questions for his subordinates to ask as they go through their planning sessions for the future.
DOBBS: These are the kind of questions that will you and the Senate also lead the way in asking as well of our military and intelligence operations?
FRIST: Absolutely. I mean, I think that these are big questions that the American people deserve both answers to and will continue to ask as we go down this path of fighting for really the first time the true terrorists around the world.
DOBBS: And those true terrorists are radical Islamists in every case. Do you think that there is a time when people start acknowledging that as well?
FRIST: I think there'll be continued discussion as we go forward. I think we're going to see this war on terrorism unfold both in the weeks and months and years ahead. And it will be chapter by chapter, a story that has yet to be told.
DOBBS: Senator Frist, we thank you very much. Senate majority leader, thank you.
FRIST: Good to be with you.
DOBBS: Good to be with you.
Coming up next, America's bright future tonight, we introduce you to the teenage author of a "New York Times" bestseller as we focus this week on the young people who will light up our future years. Stay with us.
(COMMERCIAL BREAK)
DOBBS: In our series of special reports this week highlighting America's bright future, a group of young men and women who represent the very best of our youth. We introduce you tonight to Christopher Paolini, who is already a novelist by the age of 15 and a shining example of what make this country's future so bright.
Casey Wian has his story from Paradise Valley, Montana.
(BEGIN VIDEOTAPE)
CHRISTOPHER PAOLINI, AUTHOR: You need a book signed?
CASEY WIAN, CNNfn CORRESPONDENT (voice-over): Christopher Paolini's debut novel, the fantasy thriller "Eragon", is No. 3 on "The New York Times" children's best-seller list. Most bright 19-year-olds are in college, but Paolini is a publishing phenomenon.
PAOLINI: I did not expect the book to be published. And I certainly didn't expect it to debut on "The New York Times" best- seller list. Everything that's happened with the book has just been extraordinary and completely unexpected.
WIAN: You might say the same about his upbringing. Christopher and his younger sister, Angela, were home schooled by their parents in this house in Montana's Paradise Valley.
C. PAOLINI: If I had not been home schooled I wouldn't have "Eragon," give me the time to explore my own interests and the time to dream. I didn't have every minute scheduled with activities.
WIAN: Christopher earned a high school diploma at 15, then began what would become three years of work on "Eragon."
TALITA PAOLINI, MOTHER: I think the first time we realized Christopher had something special was when we had us read his manuscript, which we had not seen.
KENNETH PAOLINI, FATHER: We made a decision as a family to put every -- every resource that we had available into the publishing, the designing, the printing, the publishing and the marketing and promotion of Christopher's book.
WIAN: Christopher, also a talented artist, drew "Eragon" original cover with help from his sister, who inspired one of the books' characters.
ANGELA PAOLINI, SISTER: His success is in part the success of our entire family.
WIAN: Their parents decided to self-publish and the family traveled to schools and bookstores, selling copies by the mini-van full.
K. PAOLINI: We recouped the investment the first month.
WIAN: Mainstream publishers noticed and the Paolini's last year signed a mid-6-figure deal with Kanopf, which trimmed and repackaged "Eragon" as a hardcover.
C. PAOLINI: Well, I just hope people are going to enjoy "Eragon." It's a great story with duels and dragons and battles and villains and romance and all of the good stuff a story needs.
WIAN: "Eragon"'s just a start. Part two of Paolini's fantasy trilogy in the works, and this month, Fox bought the movie rights. College will have to wait.
Casey Wian, CNN, Paradise Valley, Montana.
(END VIDEOTAPE)
DOBBS: Coming up next, Christine Romans with the market.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The results now of our poll question tonight, "Do you think illegal aliens have the right to demand in state tuition at our colleges and universities?" Five percent of you said yes; 95 percent said no.
A major sell-off on Wall Street today; the Dow tumbling almost 150 points, the Nasdaq fell almost 43, the S&P 500 off nearly 16.
Christine Romans is -- Christine Romans -- easy for me to say -- is here with the market -- Christine.
CHRISTINE ROMANS, CNNfn CORRESPONDENT: Well, it was the worst day for stocks in about a month, Lou, and this was the best volume or the worst volume depending on how you look at it, since about the beginning of September.
A disappointing batch of earnings today, starting with Merck. It'll cut 4,400 jobs and lower earnings targets. Schering-Plough also disappointed. J.P. Morgan revenue up $7.5 billion was shy of Wall Street hopes and DuPont shareholders were disappointed it didn't raise targets in light of a better economy.
But make no mistake, Lou. It's the best quarter in three years. S&P 500 profit growth is expected to be 18.6 percent. Now, the 248 companies that have already reported show 22.5 percent growth, a boost today thanks to Lucent and Time Warner -- Lucent's first profit in three years. Time Warner profit of about 12 cents.
Now it's been a month since the CEO pay scandal erupted at the big board and a week since news of misconduct by NYSE floor firms and the value of a seat on the stock exchange has tumbled 27 percent. Two seats sold this week for $1.35 million. That's down from $1.85 million just a month ago.
DOBBS: That's a pretty precipitous decline.
In terms of this market, we're seeing a remarkably robust earnings season. This is really a nice setup going into the end of the year.
ROMANS: It really is. It's been, you know, 20 percent best since the second quarter of 2000.
DOBBS: All right. Christine Romans, thank you very much.
ROMANS: You're welcome.
DOBBS: That's our show for tonight. Thank you for being with us.
Tomorrow night here, we will not be here. We'll be back in New York. And in our special report, "America's Bright Future," we'll introduce you to an enterprising woman who was not yet a teenage when she founded her very own successful magazine. Please join us tomorrow. For all of us here in Washington, good night. Thanks for being with us.
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Interview With Senator Dianne Feinstein>
Aired October 22, 2003 - 18:00 ET
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ANNOUNCER: From Washington, this is LOU DOBBS TONIGHT for Wednesday, October 22. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening from the nation's capital.
Tonight: One high-ranking member of the Bush administration is obviously trying to confront the reality that has been the subject of the administration's public-relations campaign for the past week and a half. In a memorandum leaked to "USA Today," Defense Secretary Donald Rumsfeld expressed dissatisfaction about the progress of the war on terror and radical Islamists.
In the same memo, Secretary Rumsfeld also warned that the United States faces what he termed a long, hard slog in Iraq and Afghanistan. Secretary Rumsfeld also said the Pentagon is having mixed results in the fight against al Qaeda.
Senior Pentagon correspondent Jamie McIntyre joins me now.
Jamie, this memo is, in many ways, the most explosive leak in the almost three years of this administration, isn't it?
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, it's clearly a leak that Rumsfeld didn't want. He said, if he wanted this memo published, he would have issued a press release about it.
And critics are using it to seize upon what they see as a difference between what Rumsfeld is saying publicly and what he's telling his top deputies in private. But Rumsfeld insists that this memo, which raises more questions than makes statements, is really just a reflection of his management style, of the way he likes to drop what he calls snowflakes, little pointed memos on his staff, to try to get them to think in big ways about old problems.
The memo does reflect some level of dissatisfaction with the progress of the war. A long, hard slog is how Rumsfeld portrays the prospects in Iraq and Afghanistan, although he does say the U.S. will win in both of those countries. He also said, "We have not made truly bold moves." There, he's referring to transforming the Pentagon into something that's more capable of fighting terrorism.
And he also complained -- quote -- "We lack metrics" -- or measures -- "to know if we are winning or losing the global war on terrorism. But he says that refers to the sort of macro picture. He says they have lots of measures of how they're doing on things in the short term. Now, Rumsfeld also insists that this is just part of his effort to constantly push his staff to just look at things in a way where they can come up with innovative answers and part of his own impatience with how things go. He's not a patient man. He wants to see results.
Here's how he explained it on Capitol Hill.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, SECRETARY OF DEFENSE: Sometimes, that's good. And sometimes, one needs to say to a big institution, hey, wait a minute, let's lift our eyes up and look out across the horizon and say, are there questions that we ought to be asking ourselves? Are there things that we ought to think about ways to do differently? And I do it periodically. It happened that I was thinking about the global war on terror.
(END VIDEO CLIP)
MCINTYRE: Now, critics on Capitol Hill were saying that this memo clearly shows that the administration is in denial or not admitting some of the real problems that they face. But the White House today voiced support for Rumsfeld, saying that these kinds of tough questions are exactly the kind that the secretary should ask -- Lou.
DOBBS: Lots of questions raised by that memorandum, Jamie. For example, he said the United States is just getting started, as he termed it, in the battle against Ansar al-Islam, a group with links to al Qaeda, which the coalition had reported been broken up in the war against Saddam in March and April.
MCINTYRE: Well, again, that's a reflection of reality on the ground. In Iraq, they are finding more evidence of this group, Ansar al-Islam, mentioned by General Sanchez today, the general in charge.
In the memo, he ticks off, he says that the Pentagon has made reasonable success in getting Iraqi leaders, mixed results with al Qaeda, putting a lot of pressure on them, but not really having broken up al Qaeda. And then he says, as you said, they're just getting started with some groups like Ansar al-Islam. And, basically, he's asking in this memo his top people to come back with him with new ideas, new approaches, so that they can get a better handle on this.
DOBBS: And, Jamie, the perhaps central issue that the secretary raised, and that being, namely, that the United States must deploy billions of dollars in the fight against terror and radical Islamists, while those radical Islamists have to spend only millions, that is a centerpiece of the advantage that the terrorists, the radical Islamists, hold.
But this seems to be a self-evident, if you will, observation that one would have assumed the Pentagon and this administration would have been dealing with much earlier than now, more than two years after September 11. MCINTYRE: Well, none of these issues are things that the Pentagon is just dealing with now for the first time. They are issues that they have been wrestling with the whole time. And this memo to Rumsfeld's top aides is, again, just to try to get them to go back and come back with him with perhaps new ideas on how to attack these old problems.
DOBBS: Perhaps not new problems, but, certainly, the secretary expressing some dissatisfaction shared by many in this town and around the country. And that is a lack of progress in a number of areas which he mentions, Mohammad Omar, the head of the Taliban, Osama bin Laden, and, of course, the elusive Saddam Hussein.
Jamie McIntyre, our senior Pentagon correspondent -- thank you, Jamie.
In Iraq today, evidence to support the secretary's contention that the coalition faces a long, hard slog. The commander of U.S. troops in Iraq said terrorists have intensified their attacks against coalition forces over the past three weeks. General Ricardo Sanchez said the average number of attacks has now increased to 20 to 25 a day.
Previously, General Sanchez said the daily average was between 15 and 20. Sanchez also said some Iraqi terrorist groups have links to al Qaeda.
(BEGIN VIDEO CLIP)
LT. GEN. RICARDO SANCHEZ, U.S. COMMANDER IN IRAQ: We do have some al Qaeda suspected linked personnel that are in our custody. And we're still trying to work to establish the positive links to that organization.
(END VIDEO CLIP)
DOBBS: In the latest violence, terrorists today wounded five American soldiers in two separate attacks against military convoys. Three members of the 82nd Airborne were slightly wounded near Fallujah. Two other soldiers were wounded in a bomb attack in Baghdad.
And tonight, President Bush is in Australia, one of this country's closest allies in the war against terror and radical Islamists, global terrorism also the top of the agenda in the president's visit to Indonesia.
Senior White House correspondent John King has the report.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): Warships on alert off the coast of Bali, this stop designed to send a message to terrorists who claim Islam is inspiration.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Murder has no place in any religious tradition, must find no home in Indonesia.
KING: The extraordinary security included some 5,000 troops and police, reflecting the Indonesian government's assessment of an imminent terrorist threat. Mr. Bush was on the ground just a few hours, but considered it crucial to offer support and encouragement to President Megawati Sukarnoputri.
BUSH: Under her leadership, Indonesia is hunting and finding dangerous killers.
KING: Mr. Bush visited Indonesia two months a hotel bombing in Jakarta and a year after the Bali nightclub bombing that killed more than 200. Anti-American sentiment runs deep in the majority Muslim nation of 210 million people. And President's Megawati political will to stand with the United States against al Qaeda and other terror networks has, at times, been questioned.
BALBINA HWANG, HERITAGE FOUNDATION: Now I think she has shown some more proactive leadership. But, clearly, there is more work that needs to be done in Indonesia.
KING: In this meeting with Indonesian religious leaders, Muslim clerics complained, the United States' policy in the Middle East is biased towards Israel. Mr. Bush countered by saying he is the first U.S. president to publicly embrace a Palestinian state. But, in private and later in public, he did not shy away from criticizing the Palestinian leadership.
BUSH: There needs to be leadership willing to fight off the terror that is trying to prevent the state from emerging.
KING: A top al Qaeda operative known as Hambali, now in U.S. custody, is a suspect in several Indonesian terror attacks. And Indonesian officials say Mr. Bush promised they would eventually be allowed to interrogate him.
From Bali, it was off to Australia, the sixth and final stop of the president's overseas trip.
(on camera): As he flew here, the president told reporters on Air Force One, the Muslim clerics in Indonesia were direct, but polite, and that he hoped the session helped prove his respect for Islam and helped refute their perception that Americans believe Muslims are terrorists.
John King, CNN, Canberra, Australia.
(END VIDEOTAPE)
DOBBS: Tonight, growing speculation that Saudi Arabia is trying to acquire nuclear weapons. The head of Israeli military intelligence said, Saudi Arabia wants Pakistani nuclear warheads because of the potential nuclear threat from Iran.
Today, Saudi officials tried to refute that statement. The Saudi defense minister said, no military agreements were concluded with Pakistan when the Saudi crown prince visited Islamabad last weekend seeking, according to "The New York Post" and "The Washington Times," to trade oil, cheap oil, for nuclear weapons.
As the White House tries to convince other nations to help pay for the reconstruction of Iraq, back at home, it's facing political problems in Congress over just that issue. Democrats, joined by a handful of Republicans, want some of that aid given as a loan, instead of an outright grant.
Peter Viles is here now and has the story for us -- Pete.
PETER VILES, CNN CORRESPONDENT: Lou, there is no question the president is going to get almost all of the $87 billion that he asked for.
But Congress is asking some tough questions here, including, if we can find $20 billion to rebuild Iraq, why can't we find $1 billion to improve veterans health care?
(BEGIN VIDEOTAPE)
VILES (voice-over): Call it the $87 billion headache. Congress is showing signs of sticker shock and even rebellion.
First, the Senate voted to make half of the $20 billion in Iraq reconstruction money a loan, rather than an outright grant. The White House threatened to veto any loan requirement. But that didn't stop 84 Republicans in the House from endorsing that loan requirement in a nonbinding vote. Republican leaders, however, are backing the president.
REP. TOM DELAY (R-TX), MAJORITY LEADER: You cannot do it through a loan process. It just -- it's sort of like swimming out to a drowning person and handing them a 16-pound bowling ball. You have to have stability. You have to have an economy that can sustain the democracy.
VILES: But there's another disagreement. The Senate voted $1.3 billion the White House never asked in additional funding for veterans health care benefits, to hold down co-payments for drugs and doctors visits, also to allow reservists to buy health insurance through the military's TRICARE program.
The White House, in a sharply worded letter to Congress, said it -- quote -- "strongly opposes these provisions, which it noted are not directly related to ongoing military operations in Iraq."
SEN. BARBARA MIKULSKI (D), MARYLAND: Guess what? Last night, the administration had the gall to say that they objected. They objected to this money. Well, we object to them. We object to their approach to veterans health care. We object to their platitudes without performance.
SEN. PATRICK LEAHY (D), VERMONT: I can't understand this. For Iraq, the administration wants millions of dollars in this new bill for a new zip code system. But when it comes to filling the health insurance gaps facing our Guard and Reserves, the White House only wants zip. And it's wrong. It's absolutely wrong.
(END VIDEO CLIP)
VILES: Now, that zip code request, $9 million to modernize the Iraq postal system, became something of a symbol of unnecessary spending in Iraq. But it was, in fact, removed from the bill that passed the Senate -- Lou.
DOBBS: And it appears that that is going to be constructed as a loan, at least as it stands now, that $10 billion of that 20?
VILES: That's what the Senate passed. Republican leaders are confident that they can get it out in conference committee and it will go to the president as an outright grant.
DOBBS: OK. We can't wait to find out. All right, Peter Viles.
Later here, I'll be talking about that Iraq spending bill, the likelihood of whether that money will be a loan or a grant, Secretary Rumsfeld's memo leaked on the war on terror and Iraq. We'll also be discussing the strength of this economy and other issues with the Senate majority leader, Bill Frist.
The cost of rebuilding Iraq is also a subject under discussion at an international conference that will begin in Spain tomorrow. The United States and its allies are donating billions of dollars for Iraqi reconstruction. But France, Germany and Russia, all outspoken critics of the U.S.-Iraqi policy, refused to give any money directly to Iraq.
Sheila MacVicar reports from Madrid.
(BEGIN VIDEOTAPE)
SHEILA MACVICAR, CNN SR. INTERNATIONAL CORRESPONDENT (voice- over): All smiles here, but the start of a winning streak or a short- lived victory for Colin Powell? Last wee, the U.S. secretary of state secured hard-won approval for the U.N. Security Council resolution on Iraq's future. Now comes the slippery task of securing hard-to-come cash at the Iraq donor conference in Madrid.
The U.S. secretary of state has made clear he's looking for as much money as he can get. But as much money as he can get is a far cry from the $36 billion that the World Bank estimates Iraq needs, above and beyond the $20 billion already pledged by the United States. An optimistic prediction is that donors will agree to give a combined $5 billion in Madrid. But no money is expected from Russia. And France and Germany are not expected to contribute anything more than the $232 million granted through the European Union. Also, the leading war skeptics will not send any high-level diplomats to Madrid.
EDDIE O'SULLIVAN, "MIDDLE EAST ECONOMIC DIGEST": They're demonstrating they are still not content with the new resolution. It doesn't give them even the minimum of what they want politically. And by sending low-level diplomats, it's showing a clear signal to the United States and to the outside world that something more needs to be done if they want the rest of the world to make a major contribution to reconstruction.
MACVICAR: There are some donations trickling in. Japan is pledging $1.5 billion and will send its foreign minister to Madrid. Britain, the United States's strongest ally, has promised nearly $1 billion. And Spain, the conference host, has pledged $300 million.
(on camera): Barring something that looks like a miracle, the U.S. will come away from here far short of the money it says it needs to rebuild Iraq. But, slowly, the donations are starting to come in. U.N. Secretary-General Kofi Annan will make a previously unscheduled visit here on Thursday. And the U.N. World Bank trust fund for Iraq, one that is completely separate from the Pentagon's, will be open and taking donations.
Sheila MacVicar, CNN, Madrid.
(END VIDEOTAPE)
DOBBS: Coming up next: controversial visa programs that allow foreign students and workers to take the jobs of Americans. Lisa Sylvester tonight reports. And Senator Dianne Feinstein of California joins us to share her proposals on this building issue.
And an impending threat to American intelligence-gathering capabilities. National security correspondent David Ensor reports on the dangers of a spy satellite gap.
And "America's Bright Future," our series of special reports this week on some of this country's most remarkable young people -- tonight, a teenage novelist, Casey Wian with the story.
Please stay with us.
(COMMERCIAL BREAK)
DOBBS: Tonight, our special report "The Great American Giveaway." Tonight, we're looking at college tuitions. A number of states not only allow illegal aliens to attend their universities, but they allow them to pay less in tuition.
Lisa Sylvester is here tonight with the report -- Lisa.
LISA SYLVESTER, CNN CORRESPONDENT: Lou, states are required by law to provide an elementary and a high school education to illegal aliens. But the question now, are illegal aliens also entitled to a college education?
(BEGIN VIDEOTAPE)
SYLVESTER (voice-over): There are 64,000 student enrolled at Northern Virginia Community College. School officials estimate, as many as 100 are not legal residents.
For Virginia's attorney general, that's 100 too many. He's issued a rule advising all state colleges and universities to deny admission to people who cannot prove their immigration status. JERRY KILGORE, VIRGINIA ATTORNEY GENERAL: We've just always said that it's not too much to ask of someone, before they take advantage of the benefits of this society, that they prove they have obeyed the laws.
MACVICAR: Virginia is the only state in the country to take such action. Several states have been moving in the other direction, not only admitting aliens, but also granting them lower in-state tuition rates. Illegal immigrants are eligible for in-state tuition in eight states. As many as 20 others are considering doing the same.
But critics say the policy works against American citizens.
MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: A U.S. citizen from a different state applying to William & Mary or University of Virginia has to pay a much higher rate than an illegal immigrant who happens to have set up resident within the state of Virginia.
MACVICAR: Civil rights groups are pushing for more benefits for illegal aliens, filing a lawsuit protesting Virginia's no-admissions policy. The Mexican American Legal Defense and Educational Fund says, making education affordable and accessible increases the country's tax base and lowers public spending.
TISHA TALLMAN, MEXICAN AMERICAN LEGAL DEFENSE AND EDUCATIONAL FUND: The bottom line is, if we invest in all of our children, it's going to produce economic benefits for our community. And it's also just sound policy.
(END VIDEOTAPE)
SYLVESTER: Republican Senator Orrin Hatch has sponsored a bill that would give all illegal students right to college in-state tuition and access to hundreds of millions of dollars in federal Pell grants, provided they can show they have been in the country for at least five years. But opponents are saying that this essentially puts American citizens and illegal aliens on the same footing and it's essentially the U.S. government would say it's OK to break the law -- Lou.
DOBBS: In this instance, it's not really putting them on equal footing. They're actually giving advantage to illegal aliens...
SYLVESTER: They are.
DOBBS: ... over, again, hard-working, middle-class American families, who don't have the representation.
SYLVESTER: Indeed. And that's one of the very controversial things about the Orrin Hatch bill, is whether or not it would essentially give access, not just access to illegal aliens, but also the tuition breaks.
DOBBS: Lisa Sylvester, thank you very much.
While the United States gives away education to illegal aliens, many U.S. companies continue to give away thousands and thousands of American jobs, exporting them overseas, as we've been reporting here for months.
In addition, many companies recruit overseas workers to come to this country to fill high-skilled positions on what is purportedly a temporary basis.
My next guest wants future U.S. trade agreements to exclude the visa program that allows foreign workers to take those jobs away from Americans.
Senator Dianne Feinstein joins us tonight from Capitol Hill.
Senator, good to have you with us.
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Good to be here, Lou. Thank you.
DOBBS: You have been at the forefront of the issue of the relationship between immigration and trade. And what many of our viewers and I would hazard to guess that most Americans don't realize is that the U.S. trade representative in effect has the ability to set immigration policy, and greater power than the U.S. Senate, for example.
FEINSTEIN: Yes, that's right. I didn't really understand that until this Chilean-Singaporean trade agreement which essentially provided that nearly 7,000 people, not necessarily from those two countries, but working for companies owned by either Singaporean people or Chilean people could come here under what's called an L- visa.
Now, the plenary power for immigration, which means the ability to make law with respect to immigration, rests with the Congress of the United States, not with an appointed trade representative. And we can't change those trade bills with fast track. Those bills go through the way they see it takes place, and that's the case.
I think that's wrong. There are apparently 73,000 people that have come in under NAFTA in this same way. We have a big H-1B workers program, a big L-visa program.
So we're taking a large number of foreign workers every year.
And I think during good days -- good economic times -- that may be acceptable to people. But I can tell you in San Jose, which is the heart of Silicon Valley, you have 7 percent unemployment, you have 70,000 high-tech workers without a job. And what happens is, the company will hire an H-1B foreign worker at a third the cost, and that American worker hits the bricks.
That's wrong.
DOBBS: Senator, you're showing some considerable political courage in even taking up this issue, as you well know, because when one talks about this issue, and confronts it directly, they're accused of being xenophobic, they're accused of being racist. And the simple fact is, none of our -- or almost none of our politicians have wanted -- our elected officials have wanted to deal with this issue. But the facts are incontrovertible.
We are losing American jobs to foreign workers through the H-1B and L-1 programs.
FEINSTEIN: Well, there's another problem. I think the one negative economic indicator in this recovery is jobs. And two things are going on. One is downsizing, and the other is outsourcing.
So American companies are doing both. And in the outsourcing, they're sending jobs abroad, hiring people abroad. And I think we have to watch this very carefully because it's very strange with the indicators as they are that the job market is actually declining. There are fewer jobs today, permanent jobs.
DOBBS: And yet, Senator, we will hear economists say, and many representatives of multinationals, that what we're talking about is higher productivity. We're talking about greater efficiency.
But, Senator, I wonder if perhaps you, like me, find it interesting that when we hear these remarks about productivity, we hear about efficiency, whether we're talking about outsourcing or bringing in H-1B or L-1 visa holders, that the result is lower labor costs to those corporations in every instance.
Have we reached the point where corporate America thinks it can continue to -- let me put it politely -- kid the American people and our lawmakers that productivity and efficiency is a sufficient guise for what they're really saying is, "cheap labor"?
FEINSTEIN: I don't think so anymore. The H-1 visa (ph) the last year was $197,000. This October, a few days ago, it dropped down to $65,000 for the year. There's been some talk of raising it up, but I think in view of the sentiments that you're expressing, people on the Hill are beginning to realize, "Oh, oh, let's just leave it where it is. Let's not touch it."
Now in the interests of full disclosure, I have to tell you that I'm a co-sponsor of the Dream Act, which is what you just opened your segment with. And this is a little different. And I just want a moment to make that case.
DOBBS: We'll give you a -- well, I was about to be too generous because my producer would murder me. You have a moment, Senator.
FEINSTEIN: All right. The moment is this. These are students who are sixteen who have been in this country at least five years. They graduate from high school.
Now, they are here -- they have been here, some of them, since they were 1 or 2 years old. The question really becomes: Is America better off if those students are able to get an education and go to college? And that's the in-state tuition issue.
I have a family, for example, that I'm trying to help in the Central Valley of California, here for 20 years -- mother, good mother; housewife; five children, three born here, but two brought over. They are...
DOBBS: Senator, if I may interrupt you, there's no doubt -- and we understand you come from the state of California where illegal immigration is a third of the problem at least in this entire country of 700,000 a year.
FEINSTEIN: It's a big problem.
DOBBS: We're not talking about in any way -- when we talk about this issue -- and I don't believe anyone is -- a heartless look at people, good people, who are here who need some help, who require frankly some study on the part of our policy-makers.
FEINSTEIN: Good, I'm glad to hear that.
DOBBS: But let me say further that don't you think that our immigration policy should begin with an intelligent and broad approach to make a determination?
FEINSTEIN: Absolutely.
DOBBS: It seems irrational for the United States Senate, the United States Congress and this president not to address the issue of a general immigration policy.
FEINSTEIN: Well, my view is this: There is no country that takes more immigrants a year than the United States, more than all of the other industrialized countries put together.
DOBBS: Absolutely.
FEINSTEIN: And we do so legally. Therefore everything we do should be to create -- not to create a magnet for illegal immigration. And I believe that very strongly. We're a nation of the laws. We shouldn't selectively enforce the laws. We shouldn't turn our back on this law or that law.
DOBBS: Senator, which is precisely what this country's doing. Our borders -- we have 700,000 illegal aliens at the least crossing our borders in a time of a national security threat, that is, the war on terror.
We have -- at this estimate, the most current estimate -- 10 million illegal aliens living in this country. We gave an amnesty in 1986. We have a situation in which we have not made a determination about -- we don't even know what the impact is from the U.S. government on the labor market. We have a number of myths floating around, but we don't have certainty.
That just seems, does it not to you, to be intolerable?
FEINSTEIN: Well, the problem is, you've got to have infrastructure for people too. When classrooms get up at 40, 50 a class, and schools up -- elementary schools 1,000-plus students. Homes, people cannot find jobs, they cannot find...
DOBBS: You're describing your state.
FEINSTEIN: I am, exactly -- then what develops in the people is a backlash, and that's what we've got to avoid. And that's why sound immigration policy, based on the economics of the times, makes a great deal of sense.
DOBBS: Senator, you make a great deal of sense. I hope you'll come back soon to talk about this very important issue.
FEINSTEIN: I'd love to. Thank you.
DOBBS: Senator Dianne Feinstein, thank you.
That brings us to the subject of tonight's poll question. Do you think illegal aliens should have the right to demand in-state tuition at our colleges and universities, yes or no? Please vote at CNN.com/Lou. We'll have the results later in the broadcast.
Coming up here: What will it take to spur growth for American companies and to create jobs for millions of Americans who are out of work? Congressman Bill Thomas, the chairman of the House Ways and Means Committee, says he has the answer. And he joins us next to talk about his answer and a few others. Stay with us, please.
(COMMERCIAL BREAK)
DOBBS: We've been reporting for months about the exporting of America, exporting jobs from this country. One bill now before the House of Representatives may provide some relief to one of the hardest hit industries: manufacturing.
House Ways and Means Committee Chairman Bill Thomas proposing more tax breaks for American manufacturers, including an across-the- board tax cut for many multinational corporations based in this country.
And the chairman joins us now.
Congressman Thomas, good to have you here.
REP. BILL THOMAS (R-CA), CHAIRMAN, WAYS & MEANS COMMITTEE: Good to be here. And welcome to Washington.
DOBBS: Thank you, sir.
The legislation that you have proposed, the jobs protection legislation, is in competition with the jobs creation legislation advanced by some of your colleagues. Is it, in your judgment, absolutely necessary for American manufacturers to have that support?
THOMAS: Well, let's start with the genesis of the bills. And that is the United States being told that what we were doing, because of our antiquated system to try to make us competitive, we could no longer do.
We have to answer a number of questions. We have legislation that answers problems that stem from the 1960s laws. For example, when U.S. companies do business in Europe, we tax them as though Germany still had the deutsch mark and France still had the French franc, not as a unified market that they truly are.
Those things need to change. But more important than all of that is that we address the problem in this country of all corporations, manufacturers included, being taxed at some of the highest rates worldwide and make sure that they not only stay here but when stay here, they're viable, i.e., they can do what they want to do: producing jobs.
DOBBS: In both your bill and competing legislation, the idea is that U.S. manufacturers would not have to, in effect, pay the same level of taxes on income earned abroad as in this country. It would avoid penalties by the World Trade Organization.
In point of fact, is anybody looking at this to say, "What is the appropriate level of taxation against manufacturers? Is there an appropriate, discreet difference between depreciation, tax advantages on plants and equipment built overseas versus here?"
Do you propose considerable tax relief, $128 billion over 10 years?
THOMAS: Actually, it's a little bit less than that now as we're getting the bill ready to move. But we're addressing manufacturers and all corporations, especially small corporations. The fundamental change is reducing the tax on the corporations so they can retain more of their earnings to reinvest it.
But when you look at the way the United States taxes corporations, one, the way they tax it, we're at a disadvantage, and the level at which we tax is at a disadvantage if you compare us with other countries. We're just not competitive.
DOBBS: Well, you know, we keep hearing we're not competitive in so many ways, Mr. Chairman. But we seem to keep doing all right. And manufacturers, service industries, at the end of the day, irrespective of those tax advantages or disadvantages, we've got a half trillion dollar trade imbalance in this country, a half trillion dollars.
Is there some measure by which you can incentivize manufacturers, other companies, that can effectively export from their American base with American jobs, rather than incentivize companies to export both their plants, their equipment and ultimately jobs?
THOMAS: No. You hit the nail on the head. The reason companies are leaving is because if they act like a foreign company, even though they stay in the U.S., they get taxed differently. We have to change the unfair rules. And then we have to say, just because you look good -- we're the world's largest importer and the world's largest exporter. And I know a lot of people who'll tell you, just before they fall over from a heart attack, "I feel real good."
It is very, very serious. We had advantages a decade ago, even five years ago. We have to make sure that we can keep companies in America, and let them, if they choose, to sell abroad.
There's a reason it's DaimlerChrysler and not ChryslerDaimler. It's our tax code.
DOBBS: And it's kind of interesting to see that even the Daimler in front of Chrysler doesn't seem to be making much of a difference in their performance.
Mr. Chairman, it's good to have you with us. And I hope that we can continue to talk about this important issue. And I wish you luck as you move this legislation through.
THOMAS: I'd still rather have it ChryslerDaimler.
DOBBS: Yes, you and me -- well, I'd better not say that. Oh, well, I'll say it. It would mean a far happier result in those capital flows.
Good to have you with us, Bill Thomas.
THOMAS: Thank you.
DOBBS: Bill Thomas.
Tonight, we continue our series of special reports on the future of this country's spy satellites. Some experts are warning now of a possible satellite gap. With the current generation of spy satellites aging, the timetable slipping for the next generation of technology, and launch technology itself in question. National security correspondent David Ensor is here with the report -- David.
DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, it is a problem that worries many key lawmakers and more than a few in the intelligence community, too. Unless existing surveillance satellites all long outlast their shelf life, some experts expect a dip in the nation's capability to watch adversaries from space. If that happens, the question will be how long will it last and how bad will it be?
(COMMERCIAL BREAK)
ENSOR (voice-over): As U.S. intelligence showed off at a recent trade fair, America's spy satellites were crucial in Iraq and Afghanistan. Keeping and improving the strategic advantage they provide could be critical. But critics, including the Pentagon's own Defense Science Board, warn that the program to field the next generation of satellites is behind schedule, over budget and as the board said bluntly, quote, "not executable."
STEVEN AFTERGOOD, FEDERATION OF AMERICAN SCIENTISTS: Not executable is a fancy way of saying it won't work. And, of course, that's a serious problem.
LOREN THOMPSON, LEXINGTON INSTITUTE: We're facing the possibility of a spy satellite gap. If our existing satellites stop working before the new ones are in orbit, then, of course, we're going to have a problem collecting this type of intelligence.
ENSOR: Knowledgeable sources say the program has suffered satellite failures, drastic cost overruns, launch failures, all of which would have been front page news if they had been public, but the estimated $25 billion program is top secret, and intelligence chiefs have worked hard to keep many of the problems out of the public eye.
KEITH HALL, V.P., BOOZ ALLEN HAMILTON: I don't think there's much of a risk of the nation going blind.
ENSOR: Former National Reconnaissance Office director Keith Hall says there may be a reduction in spy satellite capability for a while, but he says there will still be enough. Hall headed the NRO back in the '90s, when Boeing's bid on the massive contract to build the next generation of satellites was accepted. All the pressure then, he says, was to cut costs.
HALL: In order to free up the funds to do the development work, we had to stop buying the older satellites.
ENSOR: The current NRO director and undersecretary of the Air Force, Peter Teets, was unavailable for an interview. But after scaling down and adding $4 billion to the budget of what is the most expensive intelligence program in history, he recently said that, quote, "I have reasonable confidence we're going to have a successful program."
(END VIDEOTAPE)
ENSOR: Once the future imagery architecture satellites do finally go up over the next six to eight years, according to sources, the nation will have more and better eyes and ears in space, and it will be able to spy on more of the globe simultaneously, much more of the time -- Lou.
DOBBS: I'm not sure that I'm comforted by the head of the NRO saying he has reasonable confidence. I'd like to hear a little stronger statement.
ENSOR: It wasn't a ringing endorsement.
DOBBS: David Ensor, thank you very much. Look forward to your report tomorrow.
Coming up next -- the leading Republican in the Senate, majority leader Bill Frist joins us to talk about jobs, Iraq, a great deal more. Up next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: My next guest, the Senate majority leader. And among his top priorities, to pass a comprehensive energy bill, jobs, and strengthen this economy. And that is just the beginning of a very full agenda for the majority leader. Senator Bill Frist joins us now.
Mr. Leader, good to have you with us.
SEN. BILL FRIST (R-TN), MAJORITY LEADER: Lou, great to be with you.
DOBBS: Senator, what is the most -- in your judgment, right now -- the most likely outcome on the energy legislation that has been before this Congress in one form or another for two years?
FRIST: Well, you know, it is an important bill, because we really don't have a comprehensive energy policy, so I'm very excited. We're in conference right now. It's likely to go through our committee structure early part of next week and be on the floor of the United States Senate at the end of next week.
And that will be it. We should pass it through the United States Congress by the end of -- by next Friday, a week from Friday.
DOBBS: Medicare, prescription drugs. It's been one of your focuses, your priorities. Is it going to be a reality?
FRIST: It is going to be a reality. And I've been in the United States Congress now for eight years, the United States Senate. And ever since I've been there, it's been a goal of mine to see a comprehensive modernization of Medicare and at the same time add what seniors deserve, if we're going to really give them health-care security, and that is affordable access to prescription drugs.
We tried it before. The House has passed it, the Senate has not passed it until this year. Now, we've done that. It's in conference. We're slugging it out every day. I'll be going back over to the Capitol in a few minutes and working another three hours, and we're going to get it done.
That'll probably be about two to three weeks before we're going to have that back to the floor.
DOBBS: And the cost?
FRIST: $400 billion. Right now, one of the real advantages we had this time around is that Democrats, Republicans, the administration, the president, all said that this is going to be a $400 billion expansion. And it is a huge expansion of Medicare, the largest in its history, about $400 billion.
DOBBS: We have a presidential threat of veto of a bill that was sought eagerly by this administration, about $86 billion now, over the issue of whether $10 billion is a loan or a grant to Iraq.
Did that surprise you?
FRIST: The veto threat -- the question of veto? No, it didn't
The president of the United States has been very firm. When he -- about three and a half weeks ago -- called and said, "Bill, I've got a bill coming over here in the next couple of days. It's going to be" -- I thought it would be $55 billion, $60 billion -- "$87 billion." I said, "OK, Mr. President, we'll do our best."
We were able to deliver that last week, a great victory. The president from day one has been very firm that it is in the best interests of the Iraqi people, of the global community including the United States to, right now, this time around, make it a grant, not a loan. He hasn't deviated from that.
DOBBS: He hasn't deviated. Do you think it's smart politics to veto a legislation over $10 billion when you've sought $86 billion?
FRIST: Well, I'm not sure. I'm not sure whether it's going to get that far because I think we can make it a full grant. And right now, the Senate spoke that, "Yes, we can make it loans." The House and their votes say they're not loans. We're in conference. We'll see what the outcome is.
I think the president wants to establish a platform now that he thinks he knows is in the best interests of the Iraqi people. And he feels very strongly that it should be grants, and I tend to agree with him.
DOBBS: The long, hard slog that Secretary Rumsfeld referred to in the memorandum linked to USA Today, that was quite a dispassionate and darker view of the situation than had been advanced by the administration.
FRIST: Well, I was just with Secretary Rumsfeld about 45 minutes ago. We just spent an hour where he had the opportunity to brief with General Myers about half of the United States Senate. We talked about the memo, saw the memo itself. And I think it's very important to talk to people who have actually seen and read that memo and not just report what people have said that have read that memo.
The memo itself posed very large questions. It was for the people who work with him. The questions that we all think, all ask about, very appropriate, the sort of questions are important for us to ask as Americans.
DOBBS: I'm amongst those, Mr. Majority Leader, who has also read the memo. It is striking to me in a number of respects.
One, Ansar al-Islam, referring to that issue, specifically: Did he talk to you about that?
FRIST: We didn't talk specifically about that, but I saw the memo where...
DOBBS: The construction is that this defense secretary is disappointed in what has been done, suggesting that more is to come, suggesting that we have not measured our success in the war against terror and radical Islamists.
These are troubling and... FRIST: They're big, natural questions. And he described very vividly that he received information from a number of people over the last several weeks and based that and wanted to pose these very large questions for his subordinates to ask as they go through their planning sessions for the future.
DOBBS: These are the kind of questions that will you and the Senate also lead the way in asking as well of our military and intelligence operations?
FRIST: Absolutely. I mean, I think that these are big questions that the American people deserve both answers to and will continue to ask as we go down this path of fighting for really the first time the true terrorists around the world.
DOBBS: And those true terrorists are radical Islamists in every case. Do you think that there is a time when people start acknowledging that as well?
FRIST: I think there'll be continued discussion as we go forward. I think we're going to see this war on terrorism unfold both in the weeks and months and years ahead. And it will be chapter by chapter, a story that has yet to be told.
DOBBS: Senator Frist, we thank you very much. Senate majority leader, thank you.
FRIST: Good to be with you.
DOBBS: Good to be with you.
Coming up next, America's bright future tonight, we introduce you to the teenage author of a "New York Times" bestseller as we focus this week on the young people who will light up our future years. Stay with us.
(COMMERCIAL BREAK)
DOBBS: In our series of special reports this week highlighting America's bright future, a group of young men and women who represent the very best of our youth. We introduce you tonight to Christopher Paolini, who is already a novelist by the age of 15 and a shining example of what make this country's future so bright.
Casey Wian has his story from Paradise Valley, Montana.
(BEGIN VIDEOTAPE)
CHRISTOPHER PAOLINI, AUTHOR: You need a book signed?
CASEY WIAN, CNNfn CORRESPONDENT (voice-over): Christopher Paolini's debut novel, the fantasy thriller "Eragon", is No. 3 on "The New York Times" children's best-seller list. Most bright 19-year-olds are in college, but Paolini is a publishing phenomenon.
PAOLINI: I did not expect the book to be published. And I certainly didn't expect it to debut on "The New York Times" best- seller list. Everything that's happened with the book has just been extraordinary and completely unexpected.
WIAN: You might say the same about his upbringing. Christopher and his younger sister, Angela, were home schooled by their parents in this house in Montana's Paradise Valley.
C. PAOLINI: If I had not been home schooled I wouldn't have "Eragon," give me the time to explore my own interests and the time to dream. I didn't have every minute scheduled with activities.
WIAN: Christopher earned a high school diploma at 15, then began what would become three years of work on "Eragon."
TALITA PAOLINI, MOTHER: I think the first time we realized Christopher had something special was when we had us read his manuscript, which we had not seen.
KENNETH PAOLINI, FATHER: We made a decision as a family to put every -- every resource that we had available into the publishing, the designing, the printing, the publishing and the marketing and promotion of Christopher's book.
WIAN: Christopher, also a talented artist, drew "Eragon" original cover with help from his sister, who inspired one of the books' characters.
ANGELA PAOLINI, SISTER: His success is in part the success of our entire family.
WIAN: Their parents decided to self-publish and the family traveled to schools and bookstores, selling copies by the mini-van full.
K. PAOLINI: We recouped the investment the first month.
WIAN: Mainstream publishers noticed and the Paolini's last year signed a mid-6-figure deal with Kanopf, which trimmed and repackaged "Eragon" as a hardcover.
C. PAOLINI: Well, I just hope people are going to enjoy "Eragon." It's a great story with duels and dragons and battles and villains and romance and all of the good stuff a story needs.
WIAN: "Eragon"'s just a start. Part two of Paolini's fantasy trilogy in the works, and this month, Fox bought the movie rights. College will have to wait.
Casey Wian, CNN, Paradise Valley, Montana.
(END VIDEOTAPE)
DOBBS: Coming up next, Christine Romans with the market.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The results now of our poll question tonight, "Do you think illegal aliens have the right to demand in state tuition at our colleges and universities?" Five percent of you said yes; 95 percent said no.
A major sell-off on Wall Street today; the Dow tumbling almost 150 points, the Nasdaq fell almost 43, the S&P 500 off nearly 16.
Christine Romans is -- Christine Romans -- easy for me to say -- is here with the market -- Christine.
CHRISTINE ROMANS, CNNfn CORRESPONDENT: Well, it was the worst day for stocks in about a month, Lou, and this was the best volume or the worst volume depending on how you look at it, since about the beginning of September.
A disappointing batch of earnings today, starting with Merck. It'll cut 4,400 jobs and lower earnings targets. Schering-Plough also disappointed. J.P. Morgan revenue up $7.5 billion was shy of Wall Street hopes and DuPont shareholders were disappointed it didn't raise targets in light of a better economy.
But make no mistake, Lou. It's the best quarter in three years. S&P 500 profit growth is expected to be 18.6 percent. Now, the 248 companies that have already reported show 22.5 percent growth, a boost today thanks to Lucent and Time Warner -- Lucent's first profit in three years. Time Warner profit of about 12 cents.
Now it's been a month since the CEO pay scandal erupted at the big board and a week since news of misconduct by NYSE floor firms and the value of a seat on the stock exchange has tumbled 27 percent. Two seats sold this week for $1.35 million. That's down from $1.85 million just a month ago.
DOBBS: That's a pretty precipitous decline.
In terms of this market, we're seeing a remarkably robust earnings season. This is really a nice setup going into the end of the year.
ROMANS: It really is. It's been, you know, 20 percent best since the second quarter of 2000.
DOBBS: All right. Christine Romans, thank you very much.
ROMANS: You're welcome.
DOBBS: That's our show for tonight. Thank you for being with us.
Tomorrow night here, we will not be here. We'll be back in New York. And in our special report, "America's Bright Future," we'll introduce you to an enterprising woman who was not yet a teenage when she founded her very own successful magazine. Please join us tomorrow. For all of us here in Washington, good night. Thanks for being with us.
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Interview With Senator Dianne Feinstein>
