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LOU DOBBS TONIGHT

Free Trade Protests in Miami; Congress Moves Closer to Medicare Reform

Aired November 20, 2003 - 18:00   ET

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

LOU DOBBS, CNN ANCHOR: Tonight: protests in Miami, as government ministers talk about free trade in the Americas. Police use batons and pepper spray on protesters. John Zarrella reports; 700,00 illegal aliens enter this country every year, some carrying deadly diseases. Congressman Tom Tancredo will tell us why the federal government must take action now.
Pop star Michael Jackson has been arrested in California. The cable news networks have devoted hours of programming to the story. We have just reported ours.

Congress moves closer to a vote on the most sweeping Medicare reform bill ever. I'll be joined by the powerful chairman of the powerful chairman of the House Ways and Means Committee, Congressman Bill Thomas.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, November 20. Here now, Lou Dobbs.

DOBBS: Good evening.

Radical Islamist terrorists linked to al Qaeda today killed at least 27 people, they wounded 450 others in almost simultaneous bomb attack against British targets in Turkey; 17 people were killed at the British Consulate in Istanbul, 10 at the Turkish headquarters of the HSBC Bank. Shortly after those attacks, a telephone caller claiming to represent al Qaeda and the Turkish radical Islamist group the Great Eastern Islamic Raiders Front admitted responsibility.

These are the third sets of attacks blamed on al Qaeda terrorists in Turkey and Saudi Arabia in less than two weeks.

Mike Boettcher, who has been reporting on the al Qaeda network for some time, reports now from Istanbul -- Mike.

MIKE BOETTCHER, CNN NATIONAL CORRESPONDENT: Well, Lou, it was 11:00 on a busy Thursday morning; 1,000 people had gone to work in this building behind me, the HSBC Bank. At the same time, about four kilometers away, the British consul had arrived to work, was going through the security check when cars at both locations drove up and exploded bombs, killing 27 and wounding more than 450.

Tonight, the investigation still continues in Istanbul. And CNN has learned from coalition intelligence sources that this appears to be a classic case of al Qaeda sleeper cells. And the investigation leading to that fact goes back to the bombings, the twin bombings, on Saturday against the two synagogues in Istanbul as well.

Now, one of those bombers last Saturday has been traced going through Iran, Chechnya, and also Bosnia. He returned back here more than a years ago, more like two years ago. The other had visited Pakistan and Afghanistan. In all of those locations, these two men were meeting al Qaeda officials, according to coalition intelligence officials who we've spoken to in the past few days.

And that seems to be the key, why you hear top officials in the coalition, Jack Straw, for example, Tony Blair, others, saying, this is international terrorism. They believe it is al Qaeda. There as close, Lou, to 100 percent that it is an al Qaeda attack that they can get -- Lou.

DOBBS: Mike, these are devastating attacks. The Turkish government, what has been their reaction? These attacks today, and, as you referenced, the attacks against those synagogues, how is the Turkish government responding?

BOETTCHER: Well, the Turkish government, the prime minister has addressed the people of Turkey this evening. And he said, this is not just an attack against Turkey. This is an attack against the international community.

And, of course, Turkey has been integral in the coalition against terrorism, also becoming integral in the efforts in Iraq and in elsewhere in the world. Now, this is not a new tactic for al Qaeda to go after the economy. And this actually derives from Ayman al- Zawahiri, the No. 2 in al Qaeda, who started these economic sorts of attacks back in Egypt, when he killed all of those tourists in Luxor or planned the killing of those tourists in Luxor. This is definitely an attack, No. 1, against British symbols. But, No. 2, it's an economic attack against the government of Turkey.

And we'll see how that plays out.

DOBBS: And, as we should reference also, the Turkish government is an Islamist government. The response of the military in Turkey?

BOETTCHER: Well, the response of the military -- I know the intelligence community in this country, they're very good at tracking terrorist cells. They have had a lot of experience in terms of dealing with Kurdish terrorist groups. And they have been integral with al Qaeda.

That is where the key is, not so much with the military. It's with their intelligence community here that's really digging deeper now and trying to find other, perhaps, sleeper cells in this country. The sleeper cell network here goes back many, many years. It was set up by Abu Zubaydah, one of al Qaeda's top officials who is now in custody.

And they had a series of safe houses here in the late '90s, where people were pass through going either to Afghanistan or out of Afghanistan. So they have been trying to unravel this network for quite some time. And, obviously, they have more work to do. DOBBS: Indeed. Mike Boettcher, reporting from Istanbul, Turkey, thank you very much.

There was also more death and destruction in Iraq today. Terrorists killed an American soldier and two civilians in separate attacks in Ramadi, 60 miles west of Baghdad. The insurgents and terrorists also killed at least five people in a bomb attack against the offices of a pro-American Kurdish group in Northern Iraq.

Walter Rodgers reports from Baghdad.

(BEGIN VIDEOTAPE)

WALTER RODGERS, CNN SR. INTERNATIONAL CORRESPONDENT (voice-over): In Ramadi, an hour west of Baghdad, the target was thought to be the home of a major tribal leader.

But the powerful car bomb exploded and blew up part of another sheik's home. Both sheikhs survived, but more than a few civilians were less fortunate. This kind of violence is commonplace in the so- called Sunni Muslim triangle. Witness the bullet holes and blood in the ambulance that rushed to the scene to help. Even ambulances are not immune in Iraq.

"There was a lot of shooting," this ambulance attendant said, "trying to answer the call. The sheik's security guards were shooting at us." In Northern Iraq, Kirkuk, another vehicle rigged with powerful explosions created more death outside the top Kurdish Party offices. And because the bomb went off near two schools, children were among the victims in this oil-producing center.

Qubad Talabani is the son of a major Iraqi political figure.

QUBAD TALABANI, PATRIOTIC UNION OF KURDISTAN: But we are appalled at what has happened, because those that have been killed are innocent civilians, women and children.

RODGERS: U.S. soldiers here to protect the Iraqis are clearly not yet equal to the task. And a top general said he thinks Iraqi insurgents are behind the blasts, recruiting outside the country for suicide bombers, this to thwart the American efforts.

BRIG. GEN. MARTIN DEMPSEY, 1ST ARMORED DIVISION: When they want to discredit it, I think they go outside to get a volunteer, a jihadist, call them what you want, a foreigner, to come in and drive the car.

(END VIDEOTAPE)

RODGERS: The U.S. military now says it has reduced attacks on the coalition 70 percent over the course of the last week during Operation Iron Hammer. What is unclear, however, is whether the insurgents have been permanently put out of business or whether they have just temporarily gone to ground -- Lou.

DOBBS: Walt, those -- that reduction in the attacks against U.S. forces, is it -- is there a visible change in the atmosphere in Baghdad itself, both among U.S. forces and the Iraqis?

RODGERS: I think so, at least this week. And I think we have to take the Army at its word here.

But, to be very brief, the Army has said all along there are 5,000 hard-core militants out there. We haven't seen 5,000 body bags. There's still a guerrilla war going on -- Lou.

DOBBS: Walt, thank you very much -- Walter Rodgers reporting from Baghdad.

With U.S. forces under attack in Iraq each day, you might think most Iraqis want U.S. troops out of their country. But it turns out, the opposite is true, at the least according to a new and widely respected opinion poll conducted by Baghdad University. The poll shows almost 72 percent of Iraqis want the United States to stay in Iraq, at least for a while. That's nearly 30 percentage points higher than the last survey conducted in June. This poll also shows 63 percent of Iraqis approve of the Iraqi Governing Council that was appointed by the coalition.

A rising number of American troops in Iraq are reservists and members of our National Guard. They are not active-duty soldiers. By next spring, reservists and Guardsmen will account for 37 percent of the total military force in Iraq, compared to 22 percent now.

Our senior Pentagon correspondent, Jamie McIntyre, has the report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, just this week, orders went out to another 15,000 reservists to prepare for duty in Iraq next year.

This is part of the Pentagon's overall plan to reduce the number of troops in Iraq from about 130,000 to 105,000. But, as you said, the mix will be changing. While there will be fewer troops, about 11,000 more of them will be from the Guard and Reserve. That's in part because the U.S. is now using what they call enhanced separate brigades. These are front-line combat troops, instead of just the support troops that many of the Guard and Reserve troops function, have provided up to now.

The Army is well aware that its force is stressed, and the Guard and Reserve forces in particular. And in congressional testimony this week, the Army chief of staff, General Peter Schoomaker, worried out loud that this could affect retention and recruitment down the road.

(BEGIN VIDEO CLIP)

GEN. PETER SCHOOMAKER, ARMY CHIEF OF STAFF: We exceeded every category of retention, with the exception -- in all components, with the exception of the Army Reserve. We don't know what the future might hold. And we're running models. And we're taking a look at -- from history and everything else, trying to figure out what this may portend for the future. I think our experience tells us that the longer we operate at the tempos we have, the greater the challenge will be in this.

(END VIDEO CLIP)

MCINTYRE: Now, the Army is also finding another problem as they are calling up more reservists for duty. And that is, many of them are reporting unfit to serve. They have a real medical and dental readiness issue. It's not often you hear the Army talk about dental readiness.

But what they're finding is, with some of these soldiers not getting physicals except every five years, many of them have shown up and cannot be deployed because they're medically undeployable. General Schoomaker says that this is a real problem that they also have to address, as they're relying more and more on Reserve troops.

But, again, as you said, Lou, the headline here is that, as the number of troops go up in Iraq, the number of the -- the percentage of reservists and Guard troops will increase -- Lou.

DOBBS: Putting further pressure on an already-strained Reserve and National Guard corps. Thank you very much, Jamie McIntyre, our senior Pentagon correspondent.

President Bush today spent his third day in London. And he quickly condemned the terrorists responsible for the bomb attacks in Istanbul. While the president was speaking today, tens of thousands of protesters took part in an anti-American demonstration in central London. Scotland Yard estimated, 70,000 people took part in the march, far fewer than one million people who took part in an anti-war demonstration back in February.

Senior White House correspondent John King is in London with the president tonight and joins me now -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And, Lou, that bombing in Istanbul and the war in Iraq dominating the discussions between President Bush and his top ally, the British prime minister, Tony Blair, those discussions at 10 Downing Street.

At a news conference with reporters after, both leaders, as you noted, condemned the bombing. Both leaders also said it was critical to the broader war on terrorism that the effort in Iraq continue, Tony Blair talking about combating the fanatics who are trying to undermine the coalition, President Bush promising to carry through the mission in Iraq to the end, defending his decision to go to war, also promising that coalition troops would leave only after a new Iraqi government was up and running and secure.

And, in that conversation, the president even raised the possibility, remote as it might be, that the United States could ultimately actually increase the number of U.S. troops in Iraq.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We could have less troops in Iraq. We could have the same number of troops in Iraq. We could have more troops in Iraq, what is ever necessary to secure Iraq.

(END VIDEO CLIP)

KING: Now, a senior administration official later saying that the current plan does envision drawing down U.S. troops, but did say that the president would rely on the advice of military commanders in Iraq, who, at the moment, do not believe any more troops more necessary. And as the president was here for these discussions today, British protesters on the streets of London by the tens of thousands making clear that they oppose the war Iraq, many delivering a very personal message criticizing Mr. Bush.

At one point, even a statue erected, very much like that statue of Saddam Hussein pulled down in Baghdad some months ago, some of these protesters making clear, they would like to see Mr. Bush meet the same fate as the former Iraqi president. Still, overall, White House officials say they believe this trip has been a success. They say the meetings with Prime Minister Blair went well. Tonight, Lou, the president hosting a dinner here in London in honor of the queen.

DOBBS: John, thank you very much -- John King, senior White House correspondent, traveling with President Bush.

The president's sharp criticism of the new Israeli security barrier being built in the West Bank today provoked an angry and defiant response from Israel's government. Yesterday, the president said Israel must not prejudice peace talks with the Palestinians by constructing walls and fences. But today, Israel said it has the right to take unilateral steps to protect its citizens from Palestinian terrorists.

The Sharon government has already rebuffed the United Nations on the same issue. It's unclear tonight whether the United States will tolerate open defiance from a government representing 6.5 million people who depend upon the United States for their support and security. That government is also facing unprecedented criticism within Israel from four retired heads of the Shin Bet security service. The four say Israel faces a catastrophe if there is no peace deal with the Palestinians.

Coming up next here: The battle over free trade and fair trade turns violent in Florida. John Zarrella reports from Miami.

Then, our special report, "Broken Borders" -- tonight, illegal aliens crossing our borders, some of them bringing with them potentially dangerous diseases. Congressman Tom Tancredo is taking action to protect those borders. He's our guest.

And Congressman Bill Thomas, the powerful chairman of the House Ways and Means Committee, joins us tonight. Will be talking about a $400 billion Medicare reform bill that could come to a vote as soon as tomorrow.

(COMMERCIAL BREAK)

DOBBS: Miami police today used batons and pepper spray to control protesters and demonstrators trying to disrupt a free trade meeting. Officers in riot gear pushed back the crowd after protesters tried to tear down a fence surrounding the conference center.

John Zarrella reports from Miami -- John.

JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: Lou, it is a relatively quiet here now on Biscayne Boulevard in downtown Miami.

Off to my left a few blocks down, the Intercontinental Hotel, where trade ministers from 34 nations are meeting, trying to hammer out an agreement which would create the largest free trade area in the world, stretching literally from the Arctic to the Antarctic, affecting some 800 million people.

But all of what those ministers were doing was overshadowed by the protests. This afternoon, right here behind me on streets, police using pepper spray, firing into the crowds, moving the protesters back. They had gotten too close again to the trade center area.

And this was just one of several skirmishes today, the first erupting earlier this morning, around 10:00 a.m. this morning, when some of the protesters, using grappling hooks, tried to throw those grappling hooks over the fence and pull that fence down that surrounds the compound where the Free Trade Area of the Americas meetings are going on.

Tear gas -- or pepper spray, rather -- fired into the crowd, the crowd actually picking up some pepper spray themselves, firing some canisters back at the police. Then they continued, the police, to move that line of protesters down Biscayne Boulevard, where there was basically a standoff all afternoon.

Police are reporting this evening no less than 40 arrests during the day today here in Miami. Many of the those arrested, police say, are -- quote -- "anarchists," some of the 2 percent of the troublemakers that they expected here in Miami. About 10,000 people did gather here today for a sanctioned AFL-CIO rally. That went off without incident early this afternoon.

But both before and after that rally, some of the -- quote -- "anarchists" did cause trouble. And police did move in and, as we have seen on all of these pieces of videotape shot throughout the day, had to disperse the crowds, Lou, did not want those people in downtown Miami after the sun went down this evening -- Lou.

DOBBS: And, John, no serious injuries reported?

ZARRELLA: No serious injuries among the police, no serious injuries among protesters that we have heard at this point. But, again, no less than -- and you can see behind me right now many of the field force members who have been involved in the actions all day pulling back here down Biscayne Boulevard. But no, Lou, no reports of any serious injuries -- Lou.

DOBBS: John, thank you very much, as always -- John Zarrella. Those trade talks in Miami mark a continuation of a trade policy that has spanned three presidencies. Presidents Bush, Clinton, and now Bush again have all preached the virtues of free trade and the evils of protectionism, as if those were the only positions available.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Behind the barricades and the protests in Miami, the Bush administration made a simple argument: More free trade means more opportunity for America's workers.

DON EVANS, COMMERCE SECRETARY: American workers have nothing to fear and much to gain. American workers have much to gain from trade agreements that will open additional markets to the products and services that they produce and provide.

VILES: And, in Washington, Alan Greenspan made a similar point. Protectionism is a dark cloud, he said.

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: Some clouds of emerging protectionism have become increasingly visible on today's horizon.

VILES: And both Evans and Greenspan agreed that that half- trillion dollar trade deficit is not really a big problem. But what's missing is an honest discussion of the way these trade agreements really work, the way they impact the American economy, and why big American companies desperately want more of them.

To start, they're not just trade agreements. They're investment agreements, putting in place regional ground rules and guarantees that make it easier for multinational companies to comparison-shop for new factory locations. This helps explain why foreign investments in Mexico more than quadrupled in the decade after NAFTA was signed. Mexico wasn't seen as a market, so much as a factory.

ROBERT SCOTT, ECONOMIC POLICY INSTITUTE: These are trade and investment agreements. They're designed to provide protections for investors to allow them to invest in foreign countries, particularly Mexico and Canada under NAFTA, in order to take advantage of cheap wages and lower production costs in those locations. And it allows companies to massively offshore production.

VILES: To put it another way, why would American businesses want to cut tariffs on Brazilian Goods? Because, someday, they might have factories in Brazil.

(END VIDEOTAPE)

VILES: Those Miami talks concluded tonight, a day ahead of schedule, with an agreement that falls far short of the sweeping deal that was originally envisioned, to the disappointment of, among other, those large American multinationals -- Lou. DOBBS: And I suspect that a lot of people can be breathing a sigh of relief that those talks didn't go any farther than they did.

VILES: And there will come a time when Congress will get to vote on this agreement.

DOBBS: That time will come, but with hopefully a lot better understanding of the issues.

VILES: We would hope a real debate would take place.

DOBBS: Imagine that, of these important national issues.

Peter Viles, as always, thank you, sir.

Coming up next, our "Broken Borders," our special report -- illegal aliens flooding across our borders in some cases carrying dangerous diseases. Kitty Pilgrim will report. And Congressman Tom Tancredo of Colorado, the author of a new bill to protect our borders, is our guest tonight.

And we'll be joined by General David Grange. "Grange On Point" tonight: why American troops in Iraq may be at a dangerous disadvantage by following basic rules of engagement in what is now clearly a guerrilla war. General David Grange on point coming up.

(COMMERCIAL BREAK)

DOBBS: Tonight, in our special report "Broken Borders": the spread of disease by some illegal aliens crossing our borders and animals crossing as well, federal and local governments paying a huge price, not just in law enforcement, but in additional health care costs.

Kitty Pilgrim reports on the threat to public safety.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Meet a tick cowboy. He is hired by the Department of Agriculture to patrol the U.S. border, looking for illegal animals infested with what's called fever ticks.

EDWIN BOWERS, USDA FEVER TICK ERADICATION PROGRAM: They eradicated the fever tick from the United States, but Mexico is still fever-tick infested. We maintain this quarantine doze to keep the ticks from being reintroduced on stray or smuggled Mexico livestock.

PILGRIM: Jack Gilpin is a supervisor for the USDA Patrol along the Rio Grande.

JACK GILPIN, USDA MOUNTED PATROL: If you'll notice, where we're standing, between here and the river, there's no fence. So, if the guy that works in this area in this case, Eddie Dillard (ph), if he caught a Mexico horse or cow anywhere between here and that water, this whole pasture that we're standing in here, which is approximately 600 acres, would all be quarantined.

PILGRIM: Tick-infested cattle can devastate a herd. Cattle sicken and die in three days. A single tick can lay 3,000 eggs.

Any American cattle in the area have to be inspected and disinfected. Other kinds of smuggled animals have caused severe disease in this country. Just this year, exotic animals smuggled from Africa infected American prairie dogs, which then affected humans with so-called monkeypox; 37 cases were confirmed.

But it's not just animals. People crossing borders without health records or surveillance pose health issues also. Not all countries have the stringent immunization and disease testing requirements of the United States.

DR. PHYLLIS KOZARSKY, EMORY UNIVERSITY: Diseases, and particularly infectious disease, know no borders. And the geographic boundaries are not realistic when we think about transmission of disease.

PILGRIM: Here is an example. TB has been on the decline in the United States since 1953. Last year, the Centers for Disease Control found, more than half of all cases of TB in the U.S. were in foreign- born people. The rate of TB in foreign-born people is eight times higher than among people born in the United States.

The CDC says, in its current surveillance report, the top five countries of origin of TB cases, Mexico, the Philippines, Vietnam, India and China.

(END VIDEOTAPE)

PILGRIM: Now, screening at the border for disease works. In cases like SARS and mad cow disease, Border Control contained the outbreak. But it's the illegal crossings of humans and animals that pose a very big danger -- Lou.

DOBBS: Kitty, thank you very much -- Kitty Pilgrim.

My next guest is an outspoken critic of the Bush administration's lack of a national immigration policy. He introduced border enforcement legislation this week on Capitol Hill. It is known as the Be Real Act.

And joining me now, Republican from Colorado, Congressman Tom Tancredo.

Good to have you with us, Congressman.

REP. TOM TANCREDO (R), COLORADO: Lou, it's a pleasure.

DOBBS: Your legislation that you've introduced, how will that protect our borders?

TANCREDO: Well, it's a pretty comprehensive bill, Lou. And it recognizes one fact. And that is this, that the primary responsibility of the federal government of the United States is not to educate anybody's children. It is not to build anybody's roads or provide social service benefits. The primary responsibility for this government is to provide security for this nation, for its people and its property.

And so my bill does a lot of things. It starts with a significant increase in the number of Border Patrol authorized, actually 20,000 authorized. It authorizes the president, encourages the president to use the military on the border. It doubles the number of people...

DOBBS: Has...

TANCREDO: I'm sorry. Go ahead.

DOBBS: Has the Homeland Security Department, the president, the white house embraced this idea, the additional help that you're suggesting?

TANCREDO: No, sir, they have not. It's going to have to be something we will probably force -- have to force upon them if we get it at all. But you know, it's just one of those things, Lou, where it's so common sense. Why in the world would we spend so much time and energy and thank god in a way we do, we spend so much time and energy identifying people in this country who have come here to do us great harm? Well, we have been told over 200 plots have been thwarted inside the United States by people in the Justice Department and the good work they do. But why in the world would we not try to stop them at our border? I mean, just the section you had on right before I came on about diseases, I have been on the border so many times, I've seen exactly what we're talking about here. It is absolutely ludicrous for us to continue to have a policy of open borders when we face the dangers we face by having people cross and animals cross without our knowledge.

DOBBS: (UNINTELLIGIBLE) their legislation, the backing of the National Farm Bureau, what's your thought about that legislation?

TANCREDO: No, sir. You cannot have a guest worker program in this country that does what theirs do. First of all, what theirs does is to create a -- an amnesty for people here illegally. There should never be amnesty connected to any sort of guest worker program. Also you can't have a guest worker program unless you secure the border. It's just crazy. Why would anybody go through the work of coming through a guest worker, why would any employer hire a guest worker constrained by the laws if you still have people streaming across the border illegally and you can still hire them illegally? You have to enforce the board somewhere the internal laws of the United States, immigration laws. And you have to put people in jail if they continue to hire people illegally. You have to fine them. You have to aggressively go after them. So, my bill actually adds thousands of people to that task also. The internal enforcement of our immigration laws. DOBBS: Congressman, what is the reluctance, what you're saying makes perfect sense that you cannot have a national immigrant policy if you do not have the capacity, the will and the means to control national borders, north and south, our seaports?

What is the reluctance of the part of Congress to deal with what seems to all of a sudden assure you judging by the reaction of our audience, they consider it common sense as well, why isn't Congress grasping that?

TANCREDO: Lou, we're confronted by something here, the perfect storm of opposition. What I mean by that is this. On the one side we have the Democratic party that looks at massive immigration, both legal and illegal as a source of voters, potential voters. On the other side we have the Republican party that sees massive immigration, legal and illegal, as a source of cheap labor. We, the president also now saying this is a wedge issue, I'm going after this in the next campaign, we're going to carve out a niche out of the constituency we don't have very often. Well, when you've got the Republican party, the Democratic party, and the president all opposed to actually doing anything significant about border security, it's hard to get there. Even though you've got 70 percent of the people in this country, poll after poll after poll will tell you, and they -- and it go as cross all ethnic lines. They want border security.

DOBBS: Congressman Tom Tancredo, we thank you.

TANCREDO: So do I.

DOBBS: We thank you for being with us. And we will follow your legislation very, very closely.

TANCREDO: Thank you.

DOBBS: Following up now on a report that we brought to you on this broadcast just last month, "Exporting Jobs," in this case, outsourcing work for the state government of Indiana. The States Department of Workforce development awarded $15 million contract to an Indian company to do consulting work. Ironically the goal of that work was to find employment for the jobless residents of Indiana. After a sharp criticism from us and from many of the state's own lawmakers, we are happy to report the governor of Indiana today decided to pull that contract.

Next, "Grange on Point." Tonight, playing by the rules. American troops in Iraq constrained by rules of engagement while enemy insurgents and terrorists face no such limits about General David Grange, "On Point" next.

(COMMERCIAL BREAK)

DOBBS: "Grange on Point." Iraqi insurgents and U.S. Soldiers don't play by the same rules of warfare. You could seen say for the insurgents there are no rule. Our troops are constrained by values. Joining me to talk about this issue, and it's an important one General David Grange. General good to see you. Playing by the rules is part of our history. Is there some way in which we can make a compromise, an ethical, responsible compromise when confronted with insurgents and terrorists?

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: No. What's happened, Lou, is these dirty wars, like Somalia and Iraq right now, you're fighting non-state actors, your fighting people that really don't really answer to anyone. They could give a hoot about Geneva Convention or the law of armed conflicts, rules that were written after World War II, after a conventional war. Of course this is a guerrilla war and you're fighting people that don't care. At the same time you have U.S. Forces, British forces, Polish forces that are a value based military that live with certain principles ingrained in their training. And it's hard to adapt that fighting to your force.

DOBBS: Difficult. What is the appropriate response on the part of the U.S. military when confronted with terrorists, with guerrilla war?

GRANGE: Well, what they do at the lowest level is they establish what's known as rules of engagement. In other words, you know, the younger the junior G.I. on the street doesn't really think about the Geneva Convention except for the principles ingrained in them during training. They think about the rules of engagement established by their commanders for that particular environment that situation at hand. And they're adapting somewhat. Though they're always maintain the moral high ground. In other words, you always worry about noncombatants. You worry about, collateral damage to medical facilities and religious establishments. And so you have that disadvantage. But you have to live with it because the type of military you have.

DOBBS: And today, another American killed, more attacks. Have you at this point arrived at a conclusion, personally, individually, as to whether or not the United States needs to bring in more troops?

We are watching what seems to some certainly to be a bit of a shell game in the force levels in Iraq, rotating out, that being the plan to rotate out regular army, and to rotate in more guardsmen, more reservists to the point that almost 40 percent of the Pentagon's plan right now, next year will be 40 percent of that force will be reservists and national guard?

Well, there being rode hard and put away wet, no doubt about it. What the insurgents are doing right now, they're attacking several things. Their strategy is attack the U.S. strategy which is the establishment of a Democratic nation in the middle of the Middle East to influence change. Number two, the attack of alliances, for instance, Italians, the Pols and Brits as well as Iraqis that want the change or international organizations like the U.N., the Red Cross, so they're attacking those alliances. And finally, they're attacking, of course, U.S. forces as well.

So, if that strategy of theirs swells to a point where they get nationalistic support from the Iraqi people, they have a chance of winning, because in the 20th Century a nationalistic guerrilla warfare has never been beaten. So, the U.S. must be very careful that that doesn't get out of hand and continue to put the pressure on, adapt to the situation where they can, if they need more troops to do it, then just do it. Don't be at a disadvantage during this very critical time.

DOBBS: And I -- one has to believe beyond the politicians the general staff in Iraq, Centcom has to be pleased with the University of Baghdad survey, this poll out today, showing significant support on the part of the Iraqi people, at least at this juncture for the U.S. presence in Iraq. General David Grange, as always, thanks for being here.

GRANGE: My pleasure, Lou.

DOBBS: Tonight's quote is in reaction to the bombings in Istanbul that targeted British sites and left 27 people dead. "Once again we must affirm that in the face of this terrorism there must nobody holding back, no compromise, no hesitation in confronting this menace and attacking it wherever and whenever we can and defeating it utterly." British Prime Minister Tony Blair.

Coming up next, House Ways and Means Committee Chairman Bill Thomas joins us to talk about medicare reform and a vote that could come as soon as tomorrow.

And we'll share some of your thoughts about our special report, "Broken Borders" and the flood of illegal aliens crossing in to our country. That and a great deal more still ahead.

(COMMERCIAL BREAK)

DOBBS: The Secret Service today order White House staff and visitors to leave the White House after radar indicated an aircraft may have entered restricted airspace. The air force in fact, scrambled 2 F-16 aircraft to investigate. The pilots found nothing.

The Secret Service called off the evacuation, told staff to return to their desks. Officials said the radar must have picked up a flock of birds. They also said the radar may have been disrupted by disturbances in the atmosphere. President Bush, obviously not in the White House at the time, he is in London.

On Wall Street today, markets unnerved after the incident at the White House for a brief while. More defections as well from Putnam investments and fraud charges against two mutual fund veterans. The crime blotter in full heat.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: Absolutely. The SEC and the New York attorney general filing charges against founders of Pilgrim Baxter, Gary Pilgrim and Harold Baxter today, Lou.

The charges allege Pilgrim and his wife invested in a hedge fund called Appalachian Trails and then let it market time in the company's mutual funds. And a friend of Baxter's is charged with giving inside information and allowing that friend to market time. And as Congress and the SEC move to prevent this kind of behavior, worry grows about unintended consequences. Will a rift between the SEC and state regulators delay any industry-wide settlement? And will the rush to impose a hard 4:00 p.m. trade deadline hurt smaller mutual fund and 401(k) investors who have to get their orders in well below 2:00 to get the days price.

Meanwhile, state treasure and pension fund officials aren't satisfied with the big board's reforms passed by its members. California's Treasurer Phil Angelides has asked the SEC, Lou, to finish the job, separate regulatory and business arms of the big board and get better public representation on the board.

And finally, the average American worker can expect a raise next year of 3.3 percent, Lou. That's about a percentage point ahead of what people are expecting for the inflation rate next year, but it's the fourth year in a row below 4 percent for raises.

DOBBS: The pressure on wages in this country has been extraordinary and let's hope that it is ended -- that that forecast doesn't hold up. Angelides, the California state treasurer, taking on this 98 percent approval vote from the New York Stock Exchange membership. Bill Donaldson saying it's just ducky, let's try it. I mean, this is crazy.

ROMANS: Phil Angelides is essentially beseeching the SEC to come out and you know work hard and do something drastic for the New York Stock Exchange.

DOBBS: This market has been down five of six days and people better wake up on Wall Street and Washington to the fact this has been going on for two years. People are getting a belly full and it's time to do the responsible, the right thing. It's beyond me why that is not occurring to anyone.

ROMANS: Indeed.

DOBBS; Except for, I must say, Elliot Spitzer, the New York Attorney General, thank goodness. Christine Romans, thanks.

Let's take a look at some of your thoughts now. Many have written in about our series of special reports, "Broken Borders."

"Lou, you are very quick to bring the worst aspect of immigration, but have you considered the most labor intensive jobs in this country are performed by illegal aliens. Why don't you show the side of immigration that positively impacts the economy by providing labor for the menial jobs that are turned down by everyone else." That from Gabrial Diaz.

From Mount Shasta, California, "Dear Lou, how can anyone protest your focus on the illegals. I'm truly perplexed. Do these people understand the difference between legal and illegal? This is not race baiting, nor is it bias, it is protecting our borders from criminals," Howard Bartley. From Las Vegas, Nevada, "I'm tired of you making this very complex issue so one sided. These immigrants are just trying to make some money to feed their families." That from Marisa.

From Laredo, Texas, "You don't say you're fair and balanced, you demonstrate it by the content of your programming every night." That from Tony Hearn.

And from Raleigh, North Carolina, "Kudos for tackling the immigration problem with what appears to be an attitude that it truly seeking truth and a positive solution." Indeed, we are. That from Jane Jarvis.

We love hearing from you. Sent us our thoughts loudobbs@CNN.com. Please include your name and hometown.

(COMMERCIAL BREAK)

DOBBS: Hillary the hawk? That's how it seemed at a Senate Armed Services Committee hearing. Senator Clinton ripped into a Pentagon recommendation yesterday to cut costs by shutting down dozens of schools and low cost shops for GI families who live on base. The former first lady won praise from no other, no less than General Peter Schoomaker, the new Army chief of staff. The general called it "a great point" and he said it's absolutely important to boost soldier morale by improving benefits.

Opponents of Democratic presidential frontrunner Howard Dean have been quick to criticize Dean's latest proposal to re-regulate a number of American industries. Retired Army General Wesley Clark called Dean's plans a, quote, "major departure from the proven economic strategy." Senator Joseph Lieberman warns Dean's plan would, quote, "give us a treacherous trifecta of policies that turn back the economic clock. Either he doesn't know how to turn the economy around, or this is another reckless mistake." A Dean's spokesman responded to critics, saying Democrats who are not concerned with protecting the average American are truly out of touch.

Republican congressional leaders are pushing to move ahead a $400 billion Medicare reform bill to the House floor perhaps as early as tonight. That sweeping legislation has been in conference since July. Democrats have sharply criticized the nation's largest lobby group, the AARP, for endorsing that bill earlier this week. They say the plan would threaten traditional Medicare, it would raise costs for the elderly.

Joining me now to talk about this issue, Republican Congressman Bill Thomas of California, the powerful chairman of the Ways and Means Committee.

Good to have you with us, Mr. Chairman.

REP. BILL THOMAS (R-CA), CHAIRMAN, WAYS & MEANS COMMITTEE: Nice to see you, Lou.

DOBBS: At this point, that $400 billion legislation, give or take a few billion dollars, I guess you can say in Washington, how close are you to a vote? And do you have the votes?

THOMAS: Well, we're in the process of building the votes. It's actually $394 billion. We were authorized to spend $400 and we didn't spend it all.

You're also right in your description, Lou, that it is Medicare reform. The current system can't sustain itself in terms of cost. It seems kind of contradictory to say that we're also adding the new prescription drug benefit. But frankly, seniors need prescription drugs under the national health care program. That means the compromise that was reached between the Republicans and the Democrats was to make sure that we have a better modernized Medicare in terms of services, but we begin to look at ways in which we can share the costs of the program with the beneficiaries, and that we can put into at least a test mode the ability to have the taxpayers pay the least costly delivery structure of Medicare, not the most costly.

DOBBS: This prescription drug benefit, frankly, the AARP said they're going to endorse this proposal, and they have, simply because they think it's the only thing possible in the next several years. Do you agree?

THOMAS: Oh, I absolutely agree. The House had passed for three consecutive Congresses a prescription drug modernization bill. The Senate never had. The Senate finally was able to pass it. You just described a conference, which was a very difficult one, frankly the most difficult I've been on, and I was privileged to chair it, for almost four months.

We came to a bipartisan agreement. All we have to do is get a majority of the House and the majority of the Senate to say yes. What we will have done was modernize Medicare, provide seniors with prescription drugs, and created a cost-sharing and cost containment structure to make sure that that more than 140 million taxpayers currently paying the Medicare costs will have a program when they're ready to try to use it as well.

DOBBS: And at this point, and I talked with you enough to know, Congressman Thomas, that when you make a certain statement, there are -- some things follow. When you were talking about this vote, are you having more difficulty in winning votes from conservatives or more difficulty in winning votes right now from Democrats?

THOMAS: Well, both, actually. Because this is a true compromise. It expands an entitlement. A number of conservatives are very concerned. Because it contains some cost containment and some cost-sharing structures, a number of liberal Democrats don't want to have that kind of a change be placed in Medicare.

So interestingly, both ends of the political spectrum are the ones that are not as happy as they would like to be, because it isn't the usual partisan politics war. It is the mass center that we're trying to get to agree to provide this product. It is overdue, but the structure needs to be reformed, as well.

It is what I would call a classic compromise, where both sides got a little bit of what we think we need, and it deserves to go to the president's desk for his signature.

DOBBS: Will it pass? In the House?

THOMAS: I have done a lot of legislation and we've won by one or two or three votes. And so if you ask me if I think I can pass it, you're asking me, would I bet against myself? And I guess my answer would be I wouldn't bet against myself.

DOBBS: And they think that Medicare legislation is complicated, we'll be diagramming that answer, Congressman, for a little while here.

THOMAS: Lou, it deserves to pass and we're going to do everything to pass it, because the taxpayers deserve it and the seniors deserve it.

DOBBS: Congressman Bill Thomas, chairman of the House Ways and Means Committee, thanks for being here.

THOMAS: Thank you.

DOBBS: Coming up next, a critical eye on CBS and some recent programming decisions that are at the very least questionable. We'll have the story. Much more still ahead.

(COMMERCIAL BREAK)

DOBBS: Some soul searching going on in executive suites over at CBS. What exactly is and is not morally appropriate to put on the air these days? First came the flap over the bizarre CBS miniseries, "The Reagans." It featured the 40th president condemning AIDS victims and referring to himself as the Antichrist. Reagan admirers succeeded in pressuring CBS to scrap it.

Then, CBS postponed its music special "Michael Jackson Number One," which was set to air next week. They decided the show was inappropriate, given the new charges against the -- Jackson. Why did CBS plan a Michael Jackson special in the first place?

And hold off on presenting CBS any wholesomeness awards quite yet. That famous TV eye was filled wide open last night for the Victoria's Secret fashion show. Swimsuit supermodel Heidi Klum hosted it.

The conversation in those executive suites still goes on. Tonight's thought is on the media. "What the mass media offer is not popular art, but entertainment, which is intended to be consumed like food, forgotten and replaced by a new dish." That from W.H. Auden.

That's our show for tonight. Thanks for being with us. For all of us here, good night from New York. "ANDERSON COOPER 360" coming up 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 Medicare Reform>


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