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LOU DOBBS TONIGHT

Mounting Debate About Options Available to U.S. With Military in Iraq; Turmoil in Iraq Overshadowing President Bush's Efforts to Focus on Other Issues

Aired November 4, 2003 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU DOBBS, HOST: Good evening. Tonight, the coalition is at a crossroads in Iraq. Terrorist attacks escalate, but the Pentagon insists no more troops are necessary. Senator John Warner, the chairman of the Armed Services Committee, joins us tonight, as do General David Grange and General Don Shepperd to give us their assessments of U.S. military policy in Iraq.
Americans go to the polls today in state and local collections. Democratic Party Chairman Terry McAuliffe will be our guest. And I'll be joined by Roger Simon of "U.S. News & World Report," and Karen Tumulty of "TIME" magzine.

One-third of the inmates now serving time in federal prisons come from some other country -- one-third. The cost to taxpayers, $1.5 billion. Bill Tucker will have the report.

In our special report tonight, "Wasted Minds, Our Failing Schools," overcrowded schools and a shortage of teachers threatening the education of an entire generation. Kitty Pilgrim reports.

And the sun has fired three more giant flares into space headed toward Earth, just days after two massive solar storms hit the planet. We'll tell you tonight the impact of these unprecedented solar storms here on Earth.

In Baghdad tonight, an image of smoke over the center of Baghdad. An image broadcast to the world by the Arab television network Al Jazeera. An image suggesting coalition forces may be, once again, on the defensive.

This video shows the coalition's headquarters under attack in Baghdad for a second straight night. Four coalition personnel were wounded. It is not tonight clear whether the casualties were civilians or troops.

Earlier, terrorists killed an American soldier and wounded two others. And a British Marine was killed in action, as well. There's now a mounting debate about the options available to the United States. Do we have enough men and women in uniform to provide reinforcements or rotation for American troops already in Iraq?

Senior Pentagon correspondent Jamie McIntyre joins me now. Jamie, this is a very difficult period, to say the very least, for U.S. troops in Iraq. Give us the latest in terms of force levels and how many of those troops are actually in combat prepared to go into combat and Iraq?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, right now the United States has 132,000 troops out of the 1.4 million in the active duty force. But, of course, with Turkey now saying that it's not going to send troops anytime soon to Iraq, the U.S. is under the gun again to mobilize more reserves.

I mean, there's no doubt that the U.S. is stretched thin. Just take a look, for instance, in 1991, when the U.S. Army was fighting the Persian Gulf War, they had sent the equivalent of eight divisions to Iraq and still had 10 divisions left at home. Now the entire Army is only 10 divisions total, and only one division right now, the 1st Cavalry Division at Ft. Hood, Texas, is complete and ready for deployment on short notice. The rest are -- the Army, with the exception of a few brigades, are deployed or earmarked to replace soldiers either in Iraq or Afghanistan, Europe or Korea.

So the U.S. is tapped out. However, it does have options if it needs to increase force levels. One thing it could do, for instance, is it could increase the length of stay of troops already there, now have to serve a year, they could go to two years. If they really needed to, they could scare up more troops, but they're trying to maintain the force levels there without what they call breaking the force -- Lou.

DOBBS: Jamie, the troops that are there of the 130,000, the best assessment of how many of them are support, military support, and how many are actually carrying M-16s, real boots on the ground, if you will?

MCINTYRE: Well, I asked that question today at the Pentagon and nobody seemed to have the ratio handy. But the ratio of support to combat troops usually is somewhere in the area of almost one to one or sometimes two to one. But there are -- you know, U.S. troops are almost all in the line of fire, whether they're support troops or whether they're combat troops. Those boots on the ground are almost all armed and in a dangerous situation.

DOBBS: There's no question that all of them obviously are in combat. But I was speaking in the determine terms of the ability to move into an aggressive posture and actually carry out combat operations.

With that ratio, they could have as few as 50,000 to 60,000 combat troops that are available for aggressive, initiatives that could be taken against the enemy as the administration is now calling those attacking American forces. Is there a concern there in the Pentagon that the United States has moved to entirely to great a defensive posture?

MCINTYRE: Well, they're trying to avoid that. They're trying to keep the pressure on. They know that the answer is not to hunker down and try to take a defensive posture. The Pentagon is insistent that if the General Abizaid wanted another division of troops there tomorrow, he would have it. They insist that they still believe the answer is increasing the number of Iraqis. But there's a lot of criticism about, even though the number of Iraqi forces, either police or military or border patrol, is increasing, that they're not that well equipped.

They don't have the cars, the communications equipment. Sometimes they don't even have the weapons to really be an effective force. So that seems to be one area where the Pentagon is lagging.

DOBBS: And this one division that could be brought up tomorrow, if only the 1st Cavalry's available to -- in the United States, where would they find that extra division?

MCINTYRE: Well, they could -- as I said, they could extend the stay. They could send a Marine division back, which is one of the things they're considering right now, to relieve the stress on the Army. And of course they could activate more reserves over time. The U.S. does has options, but they're trying to exercise those judiciously.

DOBBS: Jamie, thank you very much. Jamie McIntyre, our senior Pentagon correspondent. Thank you.

President Bush today stuck to his message that the United States will not retreat from Iraq, a message he's repeated several times in recent days. President Bush brushed off a question from a reporter who are asked whether major combat has returned to Iraq.

Senior White House correspondent John King has the report -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, a powerful reminder today of how the turmoil in Iraq is overshadowing or at least competing with the president's efforts to focus on other issues. He was in California to get a firsthand look at the devastation of the wildfires, to promise any federal help that could be of any assistance.

But it was not long after the president toured this devastated residential area here that Mr. Bush faced questions from reporters for the first time in several days. Of course he was asked about the recent attacks in Iraq. Mr. Bush at one point in his said the terrorists will not get what they want, that the United States will not leave.

At another point, he was asked if believes Saddam Hussein was in any way responsible for the recent attacks. The president had first suggested yes, then said he's not sure.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm sure he's trying to stir up trouble. As I've said, Saddam loyalists, those are the people that the torturers and murderers and thugs that used to benefit from Saddam Hussein's regime are the ones -- some of the ones creating havoc, trying to create the conditions so that we leave, testing our will. And I'm sure that, you know, I don't know -- look, I can't tell you what he's doing. All I can tell you is he's not running Iraq.

(END VIDEO CLIP)

KING: Mr. Bush said that years from now the world will look back and say, thank goodness America stayed the course in this central front, as he calls it, in the war on terrorism. Another national poll out today, Lou, saying the president's approval rating for his handling of the situation in Iraq has dropped below 50 percent.

It is one year from today, of course, that the voters decide whether Mr. Bush gets a second term. White House aides readily concede that they need to get the security situation in Iraq improved and improved soon -- Lou.

DOBBS: And of course that is with a view to the presidential election, one year away now. Is the White House at this point suggesting any sort of new initiative? The president had alluded to new tactics in Iraq a week ago, as you reported. Any sign of what those that's tactics might be, any change in strategy?

KING: The most immediate tactical change we keep hearing about, Lou, is accelerating the speeding of the training and the deployment of Iraqi police and Iraqi security forces, perhaps even re- commissioning some of the Iraqi army that was disbanded immediately after major combat operations ended several months ago. No other major tactical shifts.

The administration continues to insist it believes it has enough troops on the ground. That of course subject to great debate here in Washington and elsewhere. It continues to believe that the best way to improve the security situation is to put more Iraqis on the front lines. The administration sticking to that position, despite some substantial criticism from key members of Congress.

DOBBS: John, thank you very much. John King, our senior White House correspondent.

A 13-term Republican congressman and a former aide to Defense Secretary Donald Rumsfeld today accused the White House of making a huge mistake in its strategic assumptions about Iraq. Congressman Jim Leach of Iowa said the White House is wrong to believe that Iraq will be a bull work for a continuing American presence in the Middle East. Congressman Leach said the United States should announce, "a decisive withdrawal of military forces in Iraq by the end of next year."

The escalating terrorist campaign against coalition forces, Iraqis and international organizations raises new questions about the tactics and the strategy of the military in Iraq, of course. Those attacks also raise questions about the number of troops, American troops in Iraq. Another critical issue, whether the Army is simply big enough to fight the wars in Iraq and Afghanistan while still deterring other potential aggressors around the world. I'm now joined by CNN military analysts, General David Grange and General Don Shepperd. General Grange joining us from Chicago, General Shepperd tonight from Denver.

Gentlemen, good to have you with us.

The essential question seems to be right now, is it possible to forget nation building, forget restoring security to Iraq? Do we have the ability to assure our young men and women in uniform in Iraq that there will be a maximum level of security?

Let me start, if I may, with you General Shepperd.

MAJ. GEN. DON SHEPPERD, U.S. AIR FORCE (RET.): Well, Lou, this is a relative term when you talk about security in Iraq. It is really a tough neighborhood.

I agree that we do have the number of troops there to do the mission that we are required to do right now. But on the other hand, the attacks on the U.S., the attacks on Baghdad, the lobbing of grenades, lobbing in of mortars and this type of thing are going to continue as long as we're there. So if you're look fog a security situation that appears to get slowly better, I don't think you're going to see it until the day we leave, Lou.

DOBBS: General Grange?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, I think right now is a critical period with just the way the enemy's watching television, looking at polls, they're taking advantage, they smell blood in the situation right now. I think there ought to be a surge in certain types of units into Iraq to take the place of Iraqi forces until they're trained up to take it on themselves.

It's a critical period. We ought to surge the effort for the main effort which is Iraq.

DOBBS: Another division? How many troops would you suggest, General?

GRANGE: Well, I would suggest several more battalions of infantry and peak time troops, especially infantry, with any kind of support that's required to sustain them because that's what you need right now in some of these areas.

DOBBS: General Shepperd, you don't see the need for those troops. You've spent some time there recently. I guess the question has to be, why not?

SHEPPERD: Well, let me tell you, Dave Grange is a real soldier, and he's been there. And I've just been on a recent visit to Iraq and we still disagree.

Now let me tell you why we disagree. I don't think there's any reasonable number of troops that you could get there that would make any difference in the security situation. Most important, the senior commanders that we've talked to on our trip said no. What we need is we need different kinds of troops. We don't need more infantry.

We need intelligence personnel to give us the actionable intelligence. They stopped the big raids covering big areas. They've gone to going after the targets that they're after. They'll go out on a raid for 18 people and coming back having gotten five. So they need a different mix of troops, not just more numbers, is what they're telling us, Lou.

DOBBS: General, as we report each evening, and too many evenings, that another American soldier has died, that more Iraqis have died because of these attacks, the idea that this country does not have the force and the force of will to contain the situation that is certainly one of our making -- the United States prosecuted this war against Saddam Hussein -- don't we have a responsibility to put in more troops even if it is -- even if it requires extraordinary measures to bring order to post-Saddam Iraq, General Grange?

GRANGE: Yes, I believe we do. You see, I agree with Don that we're not going to have a perfect, secure environment. And intelligence is key. But you always need more intelligence.

What you really need to do is gain information, gain trust, have an effect in certain parts of the area where you have a relentless pressure on the enemy where he can't breathe, where he cannot move at will. You're always going to have some of it, but it can be reduced, at least during the next six months or so during this critical period politically, militarily, informationally around the world.

DOBBS: You gentlemen, in your careers, both served at the height of command in the U.S. military. It almost appears to some that there is a rationalization in the suggestion by the Pentagon that they do not want more troops in Iraq. As Jamie McIntyre, our senior Pentagon correspondent, just reported here, out of 10 divisions only one remains, and that in the United States, that's the 1st Cavalry.

Is this in some way a rationalization that we simply don't have the forces required to carry out U.S. geopolitical initiatives, U.S. foreign policy -- General Shepperd?

SHEPPERD: No, I don't think so. I don't think it's a rationalization at all. I think the man that would be asking for more troops if he needed them is John Abizaid. And he would talk straight; he would not roll over at any kind of rationalization or political pressure from the Pentagon or Washington.

What the troops are saying over there is we don't need them. And I saw, and the people I talked to believe, that the real solution is to get the Iraqis trained. That's where our efforts should be going in, to train them as rapidly as possible, to turn it over to them, and then get out.

The war part of it was easy. Running a country and making in into a Western-style democracy is really tough and may be a too tall order, Lou.

DOBBS: General Shepperd, right now, is it also tough to determine what is nation building and what is war with this level of guerrilla activity going on.

SHEPPERD: Yes, indeed. I can tell you the troops over there think they're at war. Major combat may be over, but when they're out on a patrol, their in great danger.

They are not dispirited, they believe in the mission. That's the impression I got. On the other hand, they're definitely at war in their own minds.

DOBBS: General Grange, your thoughts?

GRANGE: Well, this is a critical piece, a main effort for the United States of America. It has to be won. And if this -- if it needs to be resourced more right now until other conditions are met -- for instance, a bigger Iraqi force -- then do what you have to do to win it now. Don't screw around with it.

DOBBS: General Grange, General Shepperd, we thank you both very much, gentlemen. Thank you.

The chairman of the Senate Armed Services Committee, Senator John Warner, says the United States must stand firm in Iraq. And eventually he says we will overcome the attacks against American troops.

Senator Warner joins us now from Washington. Senator Warner, of course, the chairman of the Armed Forces Committee.

Senator, good to have you with us.

SEN. JOHN WARNER (R-VA), ARMED FORCES COMMITTEE: Lou, my privilege.

DOBBS: This stage of the war -- and it is without question as the generals -- General Shepperd and General Grange pointed out is a war because our forces are under fire -- is there any way in which we can regain the advantage in Iraq in what is fundamentally a guerrilla war?

WARNER: Lou, very clearly, from the young soldiers down in the street, be they American, or coalition forces, they're at war. And so I think we back home must be very conscious of their risk and their sacrifices and that of the burden on their families.

Just today, just an hour or so ago, I was at Arlington Cemetery attending a funeral for a young captain from my state with his family. Those of us here in the Congress, I tell you most sincerely, are very concerned about our families and our troops. But we have absolutely, I assure you, conviction that we'll see this through because we fortunately have the finest troops in the world, the best trained and the best equipped.

I've been to Iraq, like both of your distinguished visitors preceding me, and they're going to carry this war back to those insurgents and those terrorists, and they're doing it in increasing numbers of operations and taking risks. Let us not lose confidence in the ability of our armed forces. Let's listen to the senior officers when they say, at this time, we don't need more divisions.

Let us stay the course as we are now embarked. And the key to this, if I may say, start thinking out of the box. One of the great gains that we've had under the leadership of the president and Secretary Rumsfeld is an increased reliance on the use of Iraqis in the police, in the security, in the border patrol in manning the security at the power stations, and the ways to...

DOBBS: Senator Warner?

WARNER: Yes?

DOBBS: I'm sorry to interrupt you. But in the interest of time, you said, think out of the box. Secretary of Defense Rumsfeld has been talking about thinking out of the box since he took the office of secretary of defense with the onset of this administration. The fact is, as Jamie McIntyre, our senior Pentagon correspondent, just reported, as generals Grange and Shepperd just discussed, the fact is, we have half the size of the Army that we did 12 years ago when we were in the Persian Gulf War.

Our generals in Iraq wanted more forces. There's one division left at the 1st Cav...

WARNER: Well, there's the Marines over there.

DOBBS: I'm talking about the United States Army. And the United States Army has the mission right now in Iraq, as you well know, Senator. Is there -- given the fact we have troops in over 100 countries, is it not time for us all to think out of the box, good Americans all, all supportive of our troops, all behind this president, and this country and its foreign policy and say, do we have sufficient resources to protect our young men and women in uniform? And to carry out the mission that is determined foreign policy in the United States right now?

WARNER: That issue is before the Senate House Armed Services Committee conference, in which I'm actively participating. And we're looking at increasing the size of our military forces. But mind you, those individuals that might be accessed here in the next 6 to 12 months need a period of training.

So it's not likely that they hopefully would fit into the Iraqi situation because I'm hopeful we can reduce the number of forces shortly. When I say think out of the box, let's challenge the Iraqi people to begin to form a government with the assistance of, say, a coalition of nations, Russia, China, European nations, the U.N., come together and show how we can put an Iraqi government in place earlier than trying to go out and elect one, because I don't think we can establish the electoral process. We've got to move quickly like we did in Afghanistan.

DOBBS: And Senator, of course we're still trying to extricate U.S. troops from Bosnia and Kosovo.

WARNER: That is correct. DOBBS: Again, when we were told that that commitment would be over shortly some five years ago.

WARNER: I remember that very well.

DOBBS: Senator John Warner, we thank you very much. We appreciate you being here. I hope you'll come back soon.

WARNER: You bet.

DOBBS: Thank you, sir.

That brings us to tonight's poll question on the media's coverage of this ongoing war in Iraq. Do you believe the media is failing you in its responsibility to keep you informed of the realities in Iraq, yes or no? Cast you vote please at cnn.com/lou. We will have the results for you later in the show.

Still ahead: target Wal-Mart. Federal prosecutors tell the world's largest retailer it is now under investigation for alleged hiring illegal aliens. Peter Viles reports.

One-third of the inmates in our federal prisons come from another country. The cost, staggering. Bill Tucker reports.

And the federal government spends $21,000 of your money for every household in this country. You won't believe what some of your money is paying for. Think watermelon promotion board, and that's just the beginning.

And we will continue. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: We want to update you now on what is shaping up to be to be a major government crackdown on corporate America's hiring of illegal aliens. Wal-Mart is now the target of an investigation that's already led to the arrest of hundreds of illegal aliens who clean the floors at Wal-Mart.

Peter Viles is here now and has the report for us Pete.

PETER VILES, CNN CORRESPONDENT: Lou, this investigation dates back to 1998. And it appears now that finally it is closing in, not just on those illegal workers, but on Wal-Mart itself.

(BEGIN VIDEOTAPE)

VILES (voice-over): Bad news in Bentonville, Arkansas. Wal-Mart confirming that federal prosecutors have told the company it is a target in the investigation that already resulted in the arrest of (AUDIO GAP) "investigating whether Wal-Mart violated federal immigration laws in connection with third party cleaning contractors."

In raids late last month, workers were arrested at 61 Wal-Mart stores in 21 states. Most of the workers were not Wal-Mart employees, they worked for subcontractors who cleaned the stores at night. But the investigation has included wiretaps of Wal-Mart executives and search warrants of Wal-Mart's Arkansas headquarters. Critics of America's lax immigration enforcement cheered the news as a sign perhaps the government is finally waking up to the costs of illegal immigration.

PHIL KENT, AMERICAN IMMIGRATION CONTROL FEDERATION: Polls show that a large majority of American people -- and it cut as cross all political and demographic lines -- are sick and tired of illegal immigration. They want it severely curbed. They are sicked and tired of businesses exploiting cheap labor.

And Wal-Mart stands accused of exploiting cheap labor. It's got to stop. This is a high profile case.

VILES: If Wal-Mart or its executives are indicted, the company will likely face civil lawsuits as well under federal racketeering laws.

CRAIG NELSEN, FRIENDS OF IMMIGRATION LAW ENFORCEMENT: Any competitor or worker who was harmed due to Wal-Mart's use of illegal cheap foreign labor to drive down wages has standing to bring charges against -- to bring a suit against Wal-Mart.

VILES: Wal-Mart says it is conducting its own investigation and it is not yet aware of any illegal behavior by its own employees.

(END VIDEOTAPE)

VILES: Important footnote here. This investigation being led by the U.S. attorney in central Pennsylvania. So if charges are brought against Wal-Mart, the company probably will not have the benefit of a home state jury, Lou, back in Arkansas.

DOBBS: We're only talking about several hundred illegal aliens here.

VILES: Right.

DOBBS: An investigation that has taken this long to come to this point, that doesn't sound very promising for a successful, vigorous, aggressive prosecution against those other businesses who are doing exactly the same thing.

VILES: And we have no indication from homeland security that there is any widespread look at this problem. Even in this case, it started, as you say, in 1998. It was a state investigation, eventually turned over to federal authorities. They still say, we turned this over to the I.N.S.

Well, the I.N.S. doesn't exist anymore. So it's now -- the ICE has it.

DOBBS: And it's still -- unfortunately, even in these serious issues, we have to remember still occasionally your government at work. Peter Viles, thank you very much. And by the way, you were the one who said 1998, not me.

Pete, thanks.

Well, coming up, we're going to take a further look at the impact of illegal aliens. And it is an expensive proposition, particularly in our nation's prisons. Illegal aliens, those citizens -- noncitizens taking up a third of the cells in our federal penitentiaries. Bill Tucker will have the report.

And wasted minds, our special report on failing schools. Tonight, too man many students, not enough teachers. A story of supply and demand that is crippling the education of perhaps an entire generation. Kitty Pilgrim will report.

And the race for the White House. The issues facing President Bush and the nine Democratic candidates for their party's knowledge nation and the election that is only a year away. Two leading political analysts join me, two of the best political reporters in the country.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The great American giveaway. Tonight, we focus on illegal aliens. There are now an estimated 10 million illegal aliens in this country; some estimates even higher.

Those illegal aliens are also an increasing part of America's prison population and its burden to taxpayers. The cost to taxpayers is simply astonishing. Bill Tucker's here tonight with a report -- Bill.

BILL TUCKER, CNN CORRESPONDENT: Lou, the costs exceed $1.4 billion, and that's just the cost to hold them in prison. And while they were in prison, you'd think we'd identify which ones are illegal aliens. We don't.

(BEGIN VIDEOTAPE)

TUCKER (voice-over): One-third of the people in federal prisons are not United States citizens. Incredibly, there's no system currently in place to identify how many of those prisoners are also illegal aliens. Yet immigration offenses are the third most common reason people go to jail.

STEVEN CAMAROTA, CENTER FOR IMMIGRATION STUDIES: By not really collecting this data carefully and not identifying these people, we are almost certainly releasing thousands of illegal aliens who have committed crimes back into our communities, because really we just haven't made an effort to identify them.

TUCKER: And 50,000 criminal aliens have had just that experience. They did their time, and instead of being deported at the end of their sentence, they were simply released back onto the street. Part of the problem is that states are not required to enforce immigration law, meaning no communication between the states and the feds.

DAN STEIN, FED FOR AMERICAN IMMIGRATION REFORM: There's a big problem. In this area of immigration enforcement, as there is in most, there's a breakdown between state and federal cooperation and enforcement.

TUCKER: But there are efforts to change that. In the House Judiciary Committee, there's a bill sponsored by Representative Charlie Norwood of Georgia. It has 110 co-sponsors. It would require state and local cooperation with federal law enforcement in order for the states to get federal funds that help offset state incarceration costs.

(END VIDEOTAPE)

TUCKER: And at the federal level, the Bureau of Immigration and Customs Enforcement are as ICE, as they like to be known, has began a series of pilot programs to identify illegal aliens in the federal prison system so they will be deported when released. The holds, however, do remain at the state level, Lou.

DOBBS: Well, it doesn't sound like it's quite perfect at the federal level either, but that's an astonishing number, 30 percent of the entire prison population, not from this country?

TUCKER: Not from this country, and no way to know whether they're illegal or not.

DOBBS: Incredible. The more we dig into this story, the more astonishing. Thanks very much, Bill Tucker.

From "The Great American Giveaway" now to election politics 2004, presidential elections now one year away. Joining me to talk about the issues, Roger Simon, political editor, "U.S. News and World Report," Karen Tumulty, national political correspondent with "Time" magazine. Good to have you both here. The president's approval ratings for Iraq, down below 50 percent. How important? Karen?

KAREN TUMULTY, TIME MAGAZINE: It's extremely important, which is exactly why we hear the president now talking a lot more about the economy. But the fact is that they have some problems on the ground that they've got to solve, and they've got to solve pretty quickly because the Republican plan all along has been to run this election on national security.

DOBBS: And it appears, Roger, in tonight in Boston, it appears that Democrats have shifted that strategy. Now the election from their viewpoint is all about Iraq, is that right?

ROGER SIMON, U.S. WORLD AND NEWS REPORT: It is. Going into this race, the Democrats thought that they would yield Iraq as an issue to the president, that national -- opposing the president on national security would not play well with the American people, that they would fight him on domestic issues. Well, that's turned around. Howard Dean made a huge success by fighting the president on Iraq, and the rest of the Democrats have followed. DOBBS: Let me ask you this, both of you, because you just said, Roger, Howard Dean has posted a huge success. In a primary system, he is -- the Democratic primary system, he is moving solidly and into the lead, but that is not exactly representative of the broader voting American public. Is it, Karen?

TUMULTY: No, it's not. But interestingly enough, both parties have made the calculation that this is in fact an election that is probably going to be decided by which side gets their own base out in the end, their most die-hard, committed supporters, as the country gets more polarized. It's looking like there are fewer and fewer of those swing voters out there to be gotten.

DOBBS: Do you agree, Roger?

SIMON: Yeah, I certainly do. We used to talk about a 50/50 nation. Really it's about a 48/48 nation and 4 percent deciding the outcome of the election, if not less.

DOBBS: And that 4 percent, just who are they, because it seems like everyone with whom one speaks is certainly on the air is filtering everything through an ideological filter. One can't criticize the war in Iraq without being viewed as a liberal, one can't criticize economic policy with that -- or at least some aspects of it without being criticized by some for being conservative. What is the impact on national -- this national election, Karen?

TUMULTY: Well, the impact on this national election is that basically, you know, there are fewer and fewer states up for grabs, that agree to which any states are in play at all, they're primarily, you know, in the industrial Midwest. And the other impact on this election is that there seems to be as the country gets more polarized, less and less incentive for politicians to actually get anything done in Washington as opposed to just, you know, scoring political points.

DOBBS: Roger, you get the last word.

SIMON: It's cold in Boston, Lou. But we're going to see another -- we're going to see the sixth debate in two months among the Democrats, and Americans, at least those who are following the Democrats, will get a chance to see them in action once more.

DOBBS: Remarkably, many of whom, those candidates are saying that that -- the whole process is a waste of time. I don't think I've ever seen candidates do quite that. But Roger, I know that you will make it a valuable experience in the public interest. Roger Simon, "U.S. News and World Report," Karen Tumulty, "Time" magazine, thank you both for being with us.

TUMULTY: Thank you, Lou.

SIMON: Thank you.

DOBBS: Coming up next -- your government at work. How much would you spend to advertise the new $20 bill? That's right, you've got to advertise $20 bills. How about -- well, we'll tell you the price later.

Congress has a seemingly overrun and unlimited budget. Lisa Sylvester will report on a number of interesting ways in which Congress has decided to spend your money. That story when we come back. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, your government at work. Is Washington going on another spending spree? Did it ever stop the last one? Congress approved $87 billion for the war in Iraq, for reconstruction of Iraq, so you might think Congress would be cutting back in perhaps other areas. But that's not the way our system works. Lisa Sylvester is here with a report -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Lou, politicians have certainly been going on a spending binge, but it's what they are doing with taxpayers' money that may surprise you.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): This is the new $20 bill. Looks almost like the old $20, yet the federal government is spending $32 million taxpayer dollars to advertise the new currency. Another $21 million is slated to promote the new $50 and $100. More than 200,000 taxpayer dollars paid for this peanut festival in Alabama last weekend. More than $1 billion for agriculture marketing, money that goes to trade groups such as the Watermelon Promotion Board. And $600,000 to rent a blimp for three months to fly over college football games and fares to advertise Medicare's new toll free number.

TOM SCHATZ, CITIZENS AGAINST GOVERNMENT WASTE: There's enough hot air in Washington already. We don't need to be spending $600,000 on a blimp to promote Medicare.

SYLVESTER: The spending critics call frivolous comes at a time of record deficits. Federal government spending per household is at the highest level since World War II, according to the Heritage Foundation. And it's not just defense spending on the rise. Heritage says nondefense spending is more than 16 percent of gross domestic product, a near-record high.

REP. MARK FOLEY (R), FLORIDA: We're hoping Congress can go on somewhat of a fiscal diet and start trimming their sails and stop spending so much money.

SYLVESTER: But it's hard to cut back when government agencies get attached to pet projects, like that $600,000 blimp. Medicare's administrator says it's necessary.

TOM SCULLY, CMS ADMINISTRATOR: Consumers are starved for information, and they get less information in health care than any of the part of our society and we're determined to turn that around.

SYLVESTER: That may be true. But then again, this quirky project may just be taking taxpayers for a ride. (END VIDEOTAPE)

SYLVESTER: All of the major Congressional committees were directed earlier this year to find wasteful spending in their budgets. Well, after lawmakers resisted and dragged their feet, they were able to find $85 billion in waste and fraud. So there are places to cut, assuming the will is there -- Lou.

DOBBS: And this goes back to the Grace Commission in the 1980s -- you're too young to remember it. I'm not. And the waste continues. And the innovative ways of Congress continue in all parts of the federal government.

But my favorite is the United States government advertising to the public to get them to use money.

SYLVESTER: I don't think they'll have a problem trying to convince people that a $20 is really a $20.

DOBBS: I like the blimp, too.

SYLVESTER: All right.

DOBBS: Lisa, thanks. Lisa Sylvester.

The government may be looking to cut some funds from the agency that works to predict solar flares just to show you they do cut as well. But that would also cut the system that would project a warning about such space eventualities as satellite crashes. The Space Environment Center has been busy lately after a week of unprecedented solar activity.

Three more solar flares have now erupted from the sun in less than 24 hours. That's right, three. That makes nine major eruptions on the surface of the sun in less than two weeks. Satellites and power grids could again be at risk. And again, this is unprecedented solar activity. And the most recent solar flare, so strong, that they have not just been able to gauge its strength.

Colorful auroras, of course, will be visible as a result of the solar storms at high altitudes and possibly reaching down to the southern part of the United States.

Coming up next our series of special reports, "Wasted Minds: Our Failing Schools." Overcrowding and few teachers to teach large numbers of students. Kitty Pilgrim reports.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now our special report, "Wasted Minds." Tonight, we take a look at a lack of teachers at a time when the student population is growing.

Teachers are juggling their schedules they never dreamed they would have to cope with. We now take a look at the resource crisis facing America's schools.

Kitty Pilgrim reported.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): Jupiter Community High School in Florida is a brand new building. Some class sizes have swollen to more than 40.

Lorraine Plageman has 42 kids in an honors science class.

LORRAINE PLAGEMAN, TEACHER: It means I'm staying after school until 5:00 or 6:00 at night. I'm bringing papers at home. I'm spending hours on the weekend grading papers, trying to prepare for class.

PILGRIM: In many schools, teachers deal with 100 to 200 students or more each day.

PAMELA MURACK, TEACHER: Right now I have a class size of 41 with only 32 lab spaces. Generally speaking, instead of having classes of lab groups of two, I might have classes of lab groups of four, because they're working with microscopes, you cannot put five or more on a microscope.

PILGRIM: Across the country, there is a serious issue of overcrowding. Enrollment in primary and secondary schools shot up 14 percent since 1990, and that is expected to continue over the next decade. Fifteen states are expected to have as much as 15 percent growth in their high school populations. And two states, Nevada and Arizona, are expected to grow more than 15 percent.

Some schools add mobile classrooms but have now become permanent. Others just add more desks.

Educators say teachers are under pressure to have their students perform, even as the conditions worsen.

THOMAS CARROLL, NATL. COMMISSION ON TEACHING AND AMERICA'S FUTURE: Especially under the new demands for high student achievement, they simply don't have the time to work with all of the students they have. If they have 30, 38 students in a classroom, too many students wind up falling through the cracks.

(END VIDEOTAPE)

PILGRIM: Now, discouraged teachers are leaving at the rate of a quarter million a year. The new teachers are quitting the fastest, and right now, half of new teachers are leaving within five years -- Lou.

DOBBS: Well, if that isn't a wake-up call, I don't know what is, Kitty. Thank you very much. Kitty Pilgrim reporting tonight from Washington.

Coming up next, Democratic National Committee Chairman Terry McAuliffe will be here to talk about his nine candidates for his party's nomination, the issues facing this country one year before the presidential election. Next, Terry McAuliffe joining me tonight from Philadelphia.

(COMMERCIAL BREAK)

DOBBS: Joining me now, Terry McAuliffe, chairman of the Democratic National Committee. Tonight, he's in Philadelphia, where the Democratic mayor has been fighting a close-fought contest and good to have you with us, Mr. McAuliffe.

TERRY MCAULIFFE, DNC CHAIRMAN: Lou, great to be back with you.

DOBBS: That race, how's it going to turn out? It's -- you've had the mayor being wiretapped by the U.S. Attorney, by the FBI presumably. The -- race has been a -- injected into that election, that campaign. Where do you stand tonight?

MCAULIFFE: Well, it's going to be a very close election. John Street's going to win it, re-election up here, you know, because he's been a great mayor. He has stopped the urban blight. He has brought crime down by 20 percent. He has created a lot of jobs here in Philadelphia.

This is a big race for the Democratic Party. George Bush wants to win Pennsylvania next year. It's 21 electoral votes. We're going to win here tonight, which will help us next year.

DOBBS: And you're coming off the disappointment in California. How significant do you think that will be, as well?

MCAULIFFE: Well, in all of the exit polling, in the data that we did around the recall, George Bush's re-elect was about 40 percent in California. The same issues, I think, that why Gray Davis was recalled was that we had big budget deficits, jobs weren't being created and I think that for George Bush, he's got to be concerned.

I think there's an attitude across the country, about you're not creating jobs and getting the economy go, every single incumbent should watch out. I think that's the message coming out of the California recall. Here in Philadelphia, John Street has done a great job. I think we're going to win the Allegheny County executive race, for the first time have a Democrat there. I'm cautiously optimistic but you never know until all of the vote are in, Lou.

DOBBS: You talked about jobs. The fact is a huge surprise, we knew it was going to be a strong period of growth, third quarter 7.2 percent, starting to see consumer confidence come back strongly. We're seeing investor confidence. The market's up 45 percent so far this year.

Is this taking the economy away from you and your candidates next year?

MCAULIFFE: Lou, when you and I are on the show together and you're telling me George Bush has created some jobs, listen I thought it was great we had 7.2 percent growth. But I also want to see people being employed in this country. 3 million people have lost their job. And until George Bush can get an economy that creates jobs instead of taking your tax cut and spending it which doesn't create a job, as you know, 41,000 people lost their jobs at the same time we had 7.2 percent growth, it's about jobs how do you get the economy moving again?

As you know 2.8 million manufacturing jobs, obliterated in this country. Those jobs aren't coming back. We've got to create jobs. And that's what were talking about.

DOBBS: Neither party, Democrat or Republican, is talking about how to fix our trade policies, how to stop job outsourcing 14 million jobs at risk. Neither party seems to have the guts to tackle the issue of illegal aliens and controlling our borders.

Until one party does that, why should people believe either one of them?

MCAULIFFE: Well, clearly, the candidates have to get their positive message out there, how we're going to get the economy moving again. We have had debates, there's one tonight, you know, tailored to the youth, CNN has had a debate with all nine candidates. Extensive conversations about trade, what we do to get the economy moving again. We need once we have our nominee, which I told you will be the middle of March, we have eight months going forward. But listen, George Bush cannot talk about his economic track record. 3 million people have lost their job, 43 million Americans today with no health insurance at all, record budget deficits, and we have issues in Iraq. So there are a lot of issues when the American families sit down and decide 364 days today whom they're going to vote for, they'll have a Democratic alternative and they're going to want to see some growth. They are going to want to see a Democrat in office.

Terry McAuliffe, we thank you for being with us as always.

MCAULIFFE: Lou, great to be with you.

DOBBS: Thank you.

Coming up next a once celebrated CEO indicted on dozens of charges and a $3 billion scandal.

Christine Romans will have the story and other developments in what turned out to be a day of development in corporate crime. Stay with us.

(COMMERCIAL BREAK)

DOBBS: On wall street today, stocks eased and the Dow down almost 20 points. The Nasdaq fell almost 10, the S&P down nearly 6.

Christine Romans is here with the real excitement on Wall Street today.

CHRISTINE ROMANS, CNNfn CORRESPONDENT: Right, developments in the corporate crime watch. The former CEO of of Health South a once high flying CEO Richard Scrushy, the first to be indicted under Sarbanes-Oxley Act. The lasted high flying executive to face trial on charges of money laundering, fraud and conspiracy.

(END VIDEOTAPE)

ROMANS (voice-over): Accused of an elaborate accounting scream to prop up his company's stock to finance a lavish lifestyle.

CHRISTOPHER WRAY, ASST. ATTORNEY GENERAL: The magnitude of the alleged fraud is staggering. The indictment alleges that Scrushy and accomplices reported $2.7 billion, let me say that again $2.7 billion, in fictitious income over the course of the conspiracy.

ROMANS: Scrushy pleaded not guilty, surrendered his passport pilot's license and key to planes and his trial date was set for January 5th. Meanwhile, as the trial of the former CEO of Tyco continues, the far-flung empire built by Dennis Kozlowski gets pared down. Tyco will cut 207 jobs and close or consolidate 200 plants and facilities and shut 50 business lines. And in today's installment of the mutual fund mess, New York City has pulled 725 million from Putnam Investments. Putnam has now lost $4.3 billion over four days. And the SEC in Massachusetts charged several former Prudential employees with fraud for market timing. Regulators said they used false names and identifications to hide their mark timing. Their superiors encouraged the activity and ignored 10s of thousands of e-mails from mutual funds alerting them to the market timing.

(END VIDEOTAPE)

ROMANS: Lou, the U.S. Attorney will bring a second trial for former CSFB Banker Frank Quattrone and Reuters reports tonight that the New York attorney general has Deutsche Bank in its crosshairs of the ongoing investigation of late trading.

DOBBS: And it's, as you say, a mess that keeps getting bigger. Thank you, Christine. Christine Romans.

DOBBS: Taking a look at "Some of Your Thoughts," many wrote in about our report last evening on an illegal alien who is also a veteran of the war against Saddam Hussein.

From Bay Shore, New York, "Lou. The argument against Pvt. Juan Escalante becoming a U.S. citizen, after having spent his entire life in this country and serving in the Iraq war zone is ludicrous. Not only should he be given full citizenship, he should be get some kind of medal." That from, Hugh Roehrig.

From San Antonio, Texas, a different view. "Pvt. Escalante is a criminal. He is using the military to hide. If there wasn't a war he would be in jail. He committed fraud and the document he signed to join the military has been falsified." That from Pat.

"Let's see, politicians want to give driver licenses, in-state tuition and scholarships to illegals but deny this GI a bid for citizenship. What's wrong with this picture?" And from Fairfield, Ohio, "Lou, you are the lone crusader fighting the forces of corruption, hypocrisy, and greed of American corporations which seems to have overwhelmed the ordinary, hardworking, American worker, from the blue to the white collared." That from Sanjay Mukherji.

And from Topeka, Kansas, on our series of special reports "Wasted Minds: Our Failing Schools." "Lou, please stop saying failing schools. When one considers class size, teacher salary, public apathy, and media ridicule, teachers in our public schools work miracles. What's failing in our public schools in the public." Ric Palma, you have more than a valid point.

We love hearing from you, e-mail us at loudobbs@cnn.com. That's our program from this evening, thanks for being with us. Tomorrow, the man who's cleaning up Wall Street and the mutual fund industry, New York State Attorney General Eliot Spitzer. Plus Senator Jay Rockefeller of the Senate Intelligence Committee will also join us.

For all of us here have a very pleasant evening. Good night from New York. "AMERICA ROCKS THE VOTE" with Anderson Copper is Next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



Military in Iraq; Turmoil in Iraq Overshadowing President Bush's Efforts to Focus on Other Issues>


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