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Lou Dobbs Tonight

Pakistan Exporting Nuclear Weapons?; President Bush Proposes Changes in Immigration Policy

Aired January 06, 2004 - 18:00   ET

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

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


LOU DOBBS, CNN ANCHOR: Tonight: new concerns that one of America's closest allies in the war on radical Islamist terror may be exporting nuclear weapons technology to rogue states. Senior White House correspondent John King reports.
In what appears to be a significant political gamble, President Bush may be fighting members of his own party when he announces sweeping changes in U.S. immigration policy. Lisa Sylvester reports.

In "Exporting America" tonight, we go to a city in the Midwest facing now a huge rise in unemployment, as the community's biggest employer ships hundreds of jobs to Mexico. Peter Viles with a special report.

And, with less than 10 months to go to the election, the latest opinion polls show President Bush is well ahead of his would-be Democratic rivals.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, January 6. Here now, Lou Dobbs.

DOBBS: Good evening.

The White House today called on Pakistan to live up to its promises to stop the spread of weapons of mass destruction. The White House statement reflects new concerns about nuclear proliferation, after published reports that Pakistan supplied Libya with nuclear weapons technology. Pakistan strongly denies any involvement in nuclear transfers. U.S. officials, however, fear individual Pakistani scientists may have helped Libya for personal gain.

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

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Lou, two Bush administration officials telling CNN tonight that the Bush administration has come to the conclusion that centrifuges and other nuclear technology and nuclear technical assistance provided to Libya did, indeed, come from Pakistan.

Now, officials say there is no evidence at all that Pakistan's president, Pervez Musharraf, knew anything about these transfers, but they do say it is now a point of urgent concern and urgent conversations with the government of Pakistan. In the past, of course, the United States has complained about transfers of technology to Iran and to North Korea, Secretary of State Powell today rejecting the notion that perhaps the United States government was somehow being soft on President Musharraf because of his support in the war on terrorism.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We have been interested in proliferating activities on the part of any nation that would create instability or allow rogue nations to develop nuclear weapons. I have discussed this issue on a number of occasions with President Musharraf and other Pakistani leaders. And, as you know, President Musharraf has announced that he will be looking into it himself very thoroughly.

(END VIDEO CLIP)

KING: Now, this U.S. conclusion is based on a review provided by Libya, access to Libya's program provided by the Libyan government.

U.S. officials, though, say a number of questions still remain to be answered. Lou, the top priority is putting together a timeline of when these technology transfers took place to see if any of them took place in the last year or two, after the fact when President Musharraf went on the record, saying he would crack down and try to do more to prevent such proliferation -- Lou.

DOBBS: John, let's turn to another issue for this administration, and that's how to deal with the estimated 10 million illegal aliens in this country, tomorrow, the president to make a major policy speech on the issue. What's the White House saying now, John?

KING: Lou, a 2:30 announcement tomorrow afternoon here at the East Room, more details of this program being made available to us tonight.

Administration officials acknowledge that those in this country now illegally, some of them will be able to come forward and join a new temporary worker program and keep their jobs and get on the path eventually to legal status here in the United States, the administration saying that those who come forward, who enter the United States illegally who come forward would get in the back of the line, if you will, for legal status in the United States, behind those from outside the country who are applying through current and new processes.

But administration critics, Lou, continue to say, this is rewarding people who broke the law and they promise to fight the president's initiative.

DOBBS: Any substantial concern at the White House that they are about to take a significant political risk with this announcement tomorrow?

KING: They administration knows much of the criticism will come from fellow Republican conservatives. But they say they do believe the president is in the majority in making this case. They are asking his allies in the business community, asking other allies in the Republican Party to speak out and support him.

They say this is a policy decision, an economic decision the president is making. But some officials, Lou, do believe there could be some political gain for this president. He received about 35 percent of the Hispanic vote in the last election. He wants more of it in the next election.

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

As John just reported, the president is likely to face a tough battle on Capitol Hill to win approval for any new immigration policy. And some of the strongest opposition will likely come from his own party.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): It's a new immigration policy the Bush administration is calling earned legality. President Bush wants to pave the way for millions of illegal aliens working in the United States to be legally recognized. It would allow illegal aliens to remain in the country as long as they had a willing employer. But the president may have a hard time selling this plan to his closest supporters, some of his fellow Republicans.

REP. ELTON GALLEGLY (R), CALIFORNIA: They will try to spin it and sell it not as an amnesty bill, but as the new politically correct term, earned legality. Now, if you earn legality through an illegal act, that's bad policy.

SYLVESTER: Those who favor loosening immigration rules argue that it's good for business owners and consumers.

DANIEL GRISWOLD, CATO INSTITUTE: I think most Republicans understand how the market works. And they want to help U.S. business to hire the workers they need and to grow.

SYLVESTER: But conservatives say, opening the door to legal aliens will lower wages for American workers, as the labor pool grows. In 1986, President Reagan signed an amnesty bill. Since then, the number of illegal aliens have grown from an estimated five million in the early '80s to as many as 12 million today.

So why would President Bush push this issue now, even though he risks alienating his conservative base? Think back to the 2000 election and all those dangling and hanging chads.

STUART ROTHENBERG, CNN POLITICAL ANALYST: If the election in 2004 is even nearly as close as 2000 was, that they're a handful of states that could well be determined by how Hispanic voters vote. States like, obviously, Florida, but also Arizona, New Mexico, Nevada, could determine the next president.

SYLVESTER: But easing immigration rules is walking a fine political line. It may curry favor among swing voters, but lose some base sport.

(END VIDEOTAPE)

SYLVESTER: There are a lot of unknowns about this earned legality program, including, how would you set up a job registry? How much would it cost to give legal status to illegal workers? And what would be the impact to the American worker? -- Lou.

DOBBS: Lisa Sylvester, thank you very much.

Well, while millions of illegal aliens are taking jobs in this country, hundreds of thousands of jobs are being shipped to cheap foreign labor markets. Tonight, in our special report, "Exporting America," we look at how this economic crisis is playing out in one American city.

Galesburg, Illinois, is the birthplace of poet Carl Sandburg and, for many years, the site of a large Maytag plant. In fact, Maytag once was the city's largest employer. Now Maytag is closing its factory and moving most of the work to a new plant in Mexico. And Galesburg is bracing for an unemployment rate of 20 percent and an uncertain future.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Galesburg, Illinois, where the name Maytag used to mean quality products and good jobs. But now the jobs, all 1,600, are leaving. Jackie Cummins lost hers in September. And the jobs are not coming back.

JACKIE CUMMINS, LAID-OFF MAYTAG WORKER: Just leave us stranded. We don't have anywhere to go and nothing to do. There are no jobs left here. So, if we want to move, that's our only option.

VILES: Scott Ward hasn't lost his job yet, but he knows he will.

SCOTT WARD, MAYTAG WORKER: You can't go to work knowing that you do a good job every day. And, if you're in manufacturing, knowing that you're making a good product, that's not what is going to keep your job here. You have to understand that they can move to Mexico or to the Pacific Rim and have your job done for pennies-on-the-hour wages.

CUMMINS: Put your coat on.

VILES: And that's what really hurt. Jackie Cummins made $15 an hour, but Maytag is building a new refrigerator factory in Reynosa, Mexico, where workers are paid less than $1 an hour. Maytag says it was a tough decision, but that -- quote -- "Some move offshore was inevitable" because of pressure from cheaper refrigerators made in Asia and from bargain-hunting American consumers.

Union leader Dave Bevard blames Maytag, blames corporate America, blames American trade policy. DAVE BEVARD, PRESIDENT, MACHINIST UNION LOCAL: If you get rid of the middle class in this country, you have destroyed the basic foundation of this country. And that's little by little what they are doing. Free trade is a failure. Let's say it out loud. Let's say it loud and clear. Free trade is a failure. It does not open markets. It does not help people.

VILES: For now, Galesburg is bracing itself. The plant is scheduled to close late this year.

BOB SHEEHAN, MAYOR OF GALESBURG, ILLINOIS: A little bit of depression, bewilderment, anger, some optimism, certainly a lot of resolve to say, we're going to get through this. And we will. I don't know how fast it will happen. I don't know how quickly it will. But we will find a way to reinvent ourselves.

VILES: The local jobless rate right now, 9 percent. There are fears it may rise to 20 percent.

(on camera): At the heart of this story is a broken promise. Free trade agreements promised workers at plants like this one a chance to export their products to new markets around the world. But the reality is, the only thing being exported from this city is American jobs.

Peter Viles, CNN, Galesburg, Illinois.

(END VIDEOTAPE)

DOBBS: And tonight's thought is on business and the love of work and its source, somewhat ironic in this case.

"In all business, there is a factor which cannot be compensated for in dollars and cents or computed by any measure. It has no relation or connection with the mercenary and is represented only by the spirit of love which the true craftsman holds for his job and the things he is trying to accomplish" -- those words from Frederick Louis Maytag, the founder of the company that still bears his name, even in that factory in Illinois.

Well, we've been reporting here for months on the huge number of American jobs being shipped overseas, particularly to India. Today, "The Times of India" newspaper carried a headline boasting -- quote -- "Silicon Valley Falls to Bangalore." "The Times of India" says Bangalore now has 150,000 information technology engineers and says that is 20,000 more than are now employed in Silicon Valley, California.

Coming up next, for the Democrats in the race for the White House, it looks to be a place for second place. Senior political analyst Bill Schneider will report.

And the Army gives Vice President Cheney's former company a pass. senior Pentagon correspondent Jamie McIntyre reports.

And amnesty for millions of illegal aliens? One former Immigration and Naturalization senior agent says, it is altogether the wrong answer for America.

(COMMERCIAL BREAK)

DOBBS: On the campaign trail this evening during the Democratic candidate's debate today on National Public Radio, Howard Dean accused President Bush of allowing North Korea to become a nuclear power.

Dean, who picked up former Senator Bill Bradley's endorsement today, also used the radio debate to fend off attacks from rivals on Medicare, promising not to cut the program. Democrats used much of today's debate to criticize the president on national security, Congressman Gephardt promising that, if elected president, he would work on a missile defense shield that would amount only to research for the foreseeable future.

Senator John Kerry said the president has been neglecting the issue of nuclear proliferation.

The newest CNN/"USA Today"/Gallup poll shows Howard Dean's lead as the front-runner for the Democratic presidential nomination slipping a bit. The survey also looked at President Bush's handling of the economy, Iraq, his chances of beating a Democrat in November.

And our senior political analyst, Bill Schneider, reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): It's election year. Do you know where your president is? We do, 60 percent. That's President Bush's job rating right now.

How good is that? Let's look at where previous presidents facing reelection have been at this point.

Bush's father was at 46 percent in January 1992. He lost. But so did Jimmy Carter, who started out his 1980 re-election campaign on a high of 56 percent because of the Iran hostage crisis. Ronald Reagan was at 52 percent going into his re-election in 1984. He made it. But so did Bill Clinton, even though he started 1996 at 42 percent.

If you're a Republican, you look at these figures and say, look at that, Bush is doing better than all of them, woo-hoo, to which a Democrat might respond, oh, it's just a temporary bounce Bush is getting from the capture of Saddam Hussein. In fact, President Bush gets his highest marks on Iraq, 61 percent approval. The president's overall rating on world affairs is the highest it's been since the major fighting in Iraq last spring.

And the president's ratings on domestic issues are not far behind. Fifty-four percent approve Bush's handling of the economy, the highest in more than a year.

Is the President vulnerable on anything? Yes. Only 43 percent give the President good marks on health care. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm pleased that all of you are here to witness the greatest advance in health care coverage for America's seniors since the founding of Medicare.

SCHNEIDER: But seniors are not all that thrilled with the Medicare Reform Bill, or the prescription drug plan. And the front- runner for the Democratic nomination is a physician. Speaking of Howard Dean, let's see how he's doing.

Dean is still the front-runner, but not by much. General Wesley Clark is catching up with him. Clark is the only Democratic candidate to show momentum in the past month. The attacks on Dean from his fellow Democrats could be taking a toll on the front-runner.

Here's where the presidential race stands right now: a blowout. President Bush leads Howard Dean by more than 20 points.

(END VIDEOTAPE)

SCHNEIDER: Ever hear the Latin phrase vox populi vox dei? It means, the voice of the people is the voice of God.

Well, you know, this poll backs up what Pat Robertson said the lord told him was going to happen. Reverend Robertson has his sources and we have ours -- Lou.

(LAUGHTER)

DOBBS: But I see you quoting both.

Bill, this endorsement today by Bradley for Dean likely to boost his numbers any?

SCHNEIDER: Well, they represent a similar kind of constituency. I call it the high-minded voters, educated, upper-middle-class professionals who are very liberal in their views.

So I don't think it brings a lot to Dean. But it does show that, look, you had two guys, Gore and Bradley, competing in 2000. And they have both endorsed Howard Dean. Howard Dean says he's running against the Democratic Party establishment and the establishment is embracing him. They don't seem to want to fight back.

DOBBS: You know, you're using the expression high-minded voters. I suppose there are a number of groups out there who would like to be considered in that high-minded group as well, Bill. You can spread that across the political spectrum, can you not?

SCHNEIDER: Well, you could.

Of course, everyone thinks he or she is a high-minded voter. But these people take great pride in it and believe they are good government people, they vote on the issues, and, sometimes, they are better than other voters. I don't know about that, but that's their self-conception.

(CROSSTALK)

DOBBS: By better, Bill, do you mean you tend to agree with their vote more often than not?

(LAUGHTER)

SCHNEIDER: No, I'm describing a self-conception among those voters. Sometimes, they are called Starbucks voters or the latte drinkers. We don't know.

DOBBS: Bill Schneider, thank you very much.

SCHNEIDER: OK.

DOBBS: Well, tonight's quote is from a political television advertisement that will begin airing in Iowa tomorrow. And we want to quote one line from it: "Howard Dean should take his tax-hiking, government-expanding, latte-drinking, sushi-eating, Volvo-driving, "New York Times"-reading, Hollywood-loving, left-wing freak show back to Vermont, where it belongs."

Now, that is from an advertisement promoted, sponsored and paid for by the Club for Growth, starting in Iowa tomorrow, and quite an interesting collection of modifiers.

We received hundreds of e-mails from you on our reports, "Exporting America" and "Broken Borders." Many of you are writing in about the president's sweeping changes that are expected in his immigration policy announcement tomorrow.

Elizabeth Perez of Los Angeles wrote to say: "Lou, I am an Hispanic immigrant and went through the legal process of becoming a naturalized citizen. Most of us who are here legally resent the constant influx of illegal immigrants."

Richard Chapman of Newman, Georgia, wrote: "The enormous flood of illegal aliens to the United States has put a real pinch on American businesses that must compete with other companies that hire illegal aliens. That's driving down wages for everyone in this country."

And on the government's new program to photograph and fingerprint millions of foreign visitors, Mike of Dayton, Ohio: "Why check fingerprints, when we let thousands pour across our borders and then give them a pat on the back and say, good job?"

And on "Exporting America," from T.C. Gardner in Amarillo, Texas: "If this continues, we will end up with a government by the corporations, for the corporations, instead of a government by the people for the people. There will only be two classes of people, the very rich and the very poor."

Send us your thoughts. E-mail us at LouDobbs@CNN.com.

Coming up next, the Army backs Halliburton, despite a $60 million discrepancy. Senior Pentagon correspondent Jamie McIntyre reports. And ratings on the rise for the president and on the decline for the Democrats front-runner. Three of this country's top political journalists join us.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq today, thousands of former Iraqi soldiers took part in a protest in Basra, demanding pensions and other payments. Iraqi police, guarding a bank, opened fire on the protesters when they tried to force their way into the building. Witnesses said at least two people were wounded. The protesters fled when British troops arrived on the scene.

Elsewhere in Iraq, insurgents today killed two French civilian contractors and wounded a third near the town of Fallujah, west of Baghdad. The contractors were working on reconstruction projects for American companies. They were the first French citizens to be killed in Iraq since the start of the war against Saddam Hussein in March.

The U.S. Army has decided to allow Halliburton to continue supplying gasoline to Iraq, even though Pentagon auditors say the company may have overcharged the military by $60 million. The Army Corps of Engineers, officially responsible for the contract, says Halliburton followed correct procedures and negotiated the best price for the gasoline.

Senior Pentagon correspondent Jamie McIntyre has the report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, Halliburton claimed from the beginning that it had a good defense against the allegation that it may have overcharged the U.S. government some $61 million for gasoline purchased from Kuwait.

Now it appears the Army Corps of Engineers is siding with the oil services company once run by Vice President Dick Cheney. The Army granted a waiver last month to Kellogg, Brown & Root, relieving the Halliburton subsidiary of the requirement to submit data on the cost of gasoline it bought for distribution in Iraq.

The waiver says -- quote -- "Kellogg, Brown & Root services obtained adequate price competition for the delivery of gasoline to Iraq and made an award to the lowest price offerer." Pentagon auditors, noting that fuel from Turkey was cheaper by more than $1 a gallon, questioned whether KBR adequately shopped around for the best price. But the company insists, it was its suggestion to buy cheaper gas from Turkey, saving the U.S. government some $100 million in the process.

On its Web site, Halliburton posted a press release that says -- quote -- "The facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms in ways completely consistent with government procurement policies." It should be noted that even the Pentagon auditors who questioned the price of gasoline never suggested Halliburton got any excess profit from the deal, only that the government may have paid too much to a Kuwaiti supplier. Nevertheless, critics are fuming. Senator Joe Lieberman, a Democratic presidential hopeful, quickly issued a statement accusing the Army Corps of siding with Halliburton against the interests of U.S. taxpayers, saying its actions were -- quote -- "indefensible and smacks of a cover-up."

Lieberman charged that the corps is attempting to let Halliburton and itself off the hook by claiming, Halliburton prices were reasonable, despite all evidence to the contrary. The Pentagon, Lieberman says, seems to think it can make this controversy, including its own role in the affair, disappear with the stroke of a pen. And, Lou, needless to say, neither Halliburton, nor the Corps of Engineers see it that way -- Lou.

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

Coming up next, Karen Tumulty, Ron Brownstein, Roger Simon, three of the country's best political journalists, join us to give us their thoughts about a political scene that is heating up quickly.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, Democratic presidential front-runner Howard Dean today won a key endorsement from former presidential candidate Bill Bradley.

And now to talk about that and a lot of other developments in the race for the White House, I'm joined by Karen Tumulty, "TIME" magazine's national political correspondent, Roger Simon, political editor for "U.S. News & World Report," and Ron Brownstein, national political correspondent, "Los Angeles Times."

Thank you all for being here. Happy new year.

(CROSSTALK)

DOBBS: And Howard Dean gets more, gets more help from bill Bradley.

How important, Karen?

KAREN TUMULTY, "TIME": You know, I don't think this adds a whole lot in terms of support. The type of voter who was supporting Bill Bradley against Al Gore in 2000 was probably already with Howard Dean right now.

The real endorsement right now that everyone is looking for and watching, the man who is under a lot of pressure is Iowa Senator Tom Harkin. And that is one that going into this Iowa caucus could mean a lot. And the Dean people are working him hard. DOBBS: Roger, Ron, I would assume, given -- and I'm just saying I would assume that Harkin would be, if you will, a soul mate for Howard Dean?

RON BROWNSTEIN, CNN POLITICAL ANALYST: Both Howard Dean and Dick Gephardt in different ways I think appeal to Tom Harkin.

On the one hand, he has been very clear in his conversations with me and his other journalists that he admires what Howard Dean has done in bringing in new people to the party. On the other hand, the kind of lunch-bucket populism that Dick Gephardt talks about is probably closer to where Harkin is than Dean's more cultural liberalism.

I think he's sort of torn. And on the other hand, Lou, he's got one other consideration. In a state like Iowa, the winner is probably only going to have 30, 35 percent of the vote, which means about two- thirds of Tom Harkin supporters are going to be with somebody else. And that has to give you some pause about really endorsing any of them.

ROGER SIMON, "U.S. NEWS & WORLD REPORT": Harkin made a strange statement when he talked about endorses Dean or Gephardt. He praised Dean but then he said but maybe would want someone of a more middle class background. People don't really get to pick their background. Dean was born into the family he was born into and John Kennedy was born into his and Dick Gephardt was born into his. I just thought it was an odd statement to make. The fact is not the background you are born into but whether you have sympathy.

DOBBS: When you talk about backgrounds it is however almost overwhelming when we look at the fact we have a president who graduated from Yale, the frontrunner right now is from Yale. Who's mother was quoted as saying that, in trying to explain how much Howard Dean is a man of the people, that in their family they didn't treat the servants like servants.

Is there any possibility that a middle class American who is not an attorney can run for president?

I realize it's a little late in the process to bring it up, but these are hardly representative candidates of the population of the United States.

BROWNSTEIN: It depend how you look at it. Certainly people from diverse backgrounds. Dick Gephardt more modest background. Wesley Clark a more modest background and a different pedigree for running. One thing we've seen in the last several years, and Arnold Schwarzenegger in his own way demonstrates despite his wealth, which is what the public's definition of what is acceptable credentials for high office is somewhat different from the political establishment and the media. Whether it's been business executives or Schwarzenegger from outside the system voters have been willing to sort of expand the definition of what they will accept. You do, I think, have the opportunity, in the presidential race, as Wes Clark is showing. He has never been elected to anything and he is probably in many ways the number two candidates. SIMON: But only two times in American history, has a major party nominated someone who is not white Anglo-Saxon Protestant. We have only had two Catholics in the whole history of this country. Only two Catholics have ever been nominate bid a major party. We elect white Anglo-Saxon Protestant males in this country. That's who we nominate, that's who elect. So I think your point is well taken, Lou. It's from a very narrow range.

TUMULTY: Although this year it does seem to be incredibly (UNINTELLIGIBLE). Because if it does come down to dean and bush, we're looking at one guy who is grandmother was a bridesmaid in the other guy's grandmothers wedding. So we are talking about a very small strata of society here.

DOBBS: Well, strata of society may not change appreciable soon but if President Bush has his way and it appears that he is going to advance tomorrow, a major change in immigration policy, how significant a political risk is the president taking?

Let's turn to you, Ron.

BROWNSTEIN: I think it is a risk. Both ends of the equation that he's dealing with are controversial at this point. The general assumption has been the only way to do either some kind of earned legalization for illegal immigrants who are here now or a guest worker program that business wants is to do them both together or do a coalition that will bring together Republicans and Democrats, business and labor. The problem is each end of the that equation is very controversial right now. At a time when we have a net loss of job under President Bush a lot of people are going to ask why do we need a guest worker program to bring in more foreign workers. At a time when we have all the security concerns there are going to be a lot of people especially conservatives, asking why do we want to legalize people who enter the country illegally. So, he's going to have to thread the needle. But I'm told from the White House it is going to be an ambitious proposal and there may be some unhappy conservatives tomorrow.

DOBBS: Unhappy conservatives and that middle class we're talking about who are struggling to find representation. Economically, this is pressuring wages at the lower end of the income scale in this country. The middle class facing another squeeze.

Is there a possibility in your judgment, Karen, that this could become more than simply an issue of between conservatives and liberals but rather go straight to the heart of the middle class?

TUMULTY: Well, of course, what the big demographics of it, the Bush administration is looking at here, Hispanics which are, you know, very much a part of the growing population, not just in the southwest but in a lot of Midwestern cities throughout the south. These are voters that the White House thinks they really need to make inroads with if they are going to win. And there is just no other issue where the rubber really hits the road with Hispanics than this one. So...

DOBBS: Is that really true. Because what we have heard here, is we have been reporting on this issue, Karen, is the idea of making a connection between quote "Hispanics and Latinos" in this country and illegal immigrants or illegal aliens doesn't hold up. Hispanic and Latino legal immigrants are as offended by illegal immigration as any other part of our society.

TUMULTY: Well, all you have to do is look at what happened in California with prop 187 and you see how much of a visceral reaction this issue, however, does bring out with Hispanic voters.

BROWNSTEIN: There is, but I think, Lou, there is some ambivalence even in the Hispanic community because of the economic competition that is created. As I say, one of the things that's going to be difficult for President Bush here is that what is going to take to attract labor, Democrats and organized Latino groups is a very generous program of moving people here illegal toward legal status. But if he goes in that direction obviously there are going to be a lot of conservative and maybe even many mid Americans -- middle class Americans who don't like it. So it's one of these things where it simply may not be possible to square the circle and get this done. We'll see tomorrow exactly where he comes out at his opening bid.

DOBBS: And Roger, the final question, John Kerry, he is calling companies exporting jobs overseas to cheap foreign labor markets Benedict Arnold companies.

Is this issue starting to take on some traction?

SIMON: Well, he certainly wants it to. The solution he has for the outsourcing of American jobs, especially in telecommunications though, is not a very strong one. He wants a law that says when a company switches your phone I inquiry to a foreign country you're notified of it. Well, I don't think most people are going to care. It doesn't stop people that are going to do it. If have you a computer question and are told your call is being switched to New Delhi, you only care if your computer question is being answered.

DOBBS: Roger Simon, Karen Tumulty, Ron Brownstein we thank you always. Good to talk with you.

TUMULTY: Thank you, Lou.

DOBBS: Senate Majority Leader Bill Frist is in Mexico. He's meeting with members of the legislature there and Mexican law enforcement officials. Frist and Mexican officials talked about, of course, immigration, trade, the drug war and the war on terror. The Senate Republican leader will meet with President Vincente Fox tomorrow in advance of the president's trip to Mexico next week and as we reported earlier, tomorrow is also the day President Bush will unveil his immigration proposals. Mr. Bush meets with President Fox at the summit of the Americans which will be held in Monterey, Mexico next week.

That brings us to the topic of "Tonight's Poll." Ahead of that immigration initiative tomorrow to come from the White House. The question should Mexico reform its own political and economic policies as a condition of any liberalized U.S. immigration policy, yes or no? Cast your vote as cnn.com/lou. We'll the results later in the show.

Coming up next, a controversial proposal. Our next guess says it amounts to amnesty for illegal aliens. Michael Cutler is a former special agent for the Immigration and Naturalization Service. He joins us. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush is about to present his plan to fix immigration laws in this country. But my guest says, we still haven't learned the lessons of the last immigration reform, so called.

Michael Cutler is former senior special agent for Immigration and Naturalization Service. And he joins us. 1986 immigration reform, about three and a half million illegal aliens...

MICHAEL CUTLER, FORMER SENIOR SPECIAL AGENT FOR INS: There abouts.

DOBBS: ... were granted amnesty.

CUTLER: Yes.

DOBBS: Now we have an estimated somewhere around 10 to 12 million in this country.

CUTLER: That's right.

DOBBS: How is that working out?

CUTLER: I think we're creating another nightmare for ourselves. Somebody wants to find insanity is doing the same thing and same way and expecting a different outcome. Certainly that situation now from where I see it.

DOBBS: Our distinguished panel of political journal is addressed the political motivations or at least some of them involved. The idea of matching so-called willing workers with willing employers.

We know there are plenty of willing employers in this country who will hire low wage illegal aliens irrespected of their status.

What does that expression mean to you?

CUTLER: It's hard to comprehend it. Because the policy of immigration enforcement was based on the idea of employer sanctions. The magnet that draws the alien across the border was the prospect of finding employment. So, now we seem to be sending the very confused message.

Well, if you have a job, come on over and that's what's been drawing them in the first place. So I don't understand how this is going to discourage a human tidal wave if this becomes the way we do business. DOBBS: What will be the impact, do you think, on the spirit, if you will, of those who protect our borders. The border patrol, immigration control, customs, what in the world -- would they just throw their hands up?

CUTLER: I've been talking to some of the folks and they are ready to jump out the window. Nobody could believe this is happening. You know, you would think we would learn from our mistakes and especially at a time when we have great concern over who we're letting into the country and other issues that revolve around this whole immigration problem.

To send this very mixed message that on the one hand we don't want you to run the border, but on the other hand, if you do, we'll let you work here and we'll do everything we can to make it convenient for you. How does that discourage people from coming here?

DOBBS: The other part of this is that the administration seems, if I can use the expression, hellbent on providing amnesty. Providing a matching willing workers and employers which is, to me, just simply a code for we're going to let business, whether they be agribusiness or corporations or small business, hire whom they want at whatever wage they basically want. And saying they want to protect their social benefits of illegal aliens while the middle class is getting hammered in this country.

CUTLER: The thing that's amazing to me is when I worked on narcotics investigations, that was part of the drug task force for a number of years, we would seize the assets of people that gained these assets by breaking the law.

Now we were dealing with drug dealers, but we would take their houses, their bank books, their jewelry, their airplanes because these were ill gotten goods. So now we're talking about protecting money that's earned by people who got the money by breaking the law. It just seems to fly in the face of the way we do business as law enforcement officers.

DOBBS: The consequences of crossing a border illegally in this country is almost nothing. In other countries in Europe, for example, it is a very serious matter, as you well know. But the idea, again, that we can't come up with an intelligent and honest response to border security, to me, is absolutely baffling.

Because we're effectively, it seems to me, saying citizenship -- American citizenship -- doesn't mean much. Cross our borders illegally, do whatever is necessary, for the Yankee dollar we'll forget and forgive.

CUTLER: It seems that way. It seems that we are willing to sell citizenship, in effect, by doing this. We have cheapened what it means.

DOBBS: What would make sense, in your judgment?

CUTLER: We need to have meaningful strategy for interior enforcement. We keep talking about the border but half the illegal aliens don't run the border. They come through ports of entry. The terrorists came through ports of entry.

There's a fraud problem where people are filing applications for citizenship, for residency, and according to the general accounting office, the level of fraud is astronomical because there's nobody out there to do investigations, to determine that there's any kind of legitimacy to the applications that are being filed.

So you need to look at it from an enforcement tripod perspective. The inspectors have to enforce the laws at ports of entry, the border patrol agents between ports of entry, and you need enough special agents to go out there and enforce the laws from within the interior and then you would have a possibility of success. But you know, a tripod on two legs falls over.

DOBBS: You work on these issues all the time and you have a sense of what is happening in Washington.

CUTLER: Yes.

DOBBS: If the president's proposals are as dramatic as we are hearing they may well be, is it your judgment that Congress is prepared to accept them and put them into law?

CUTLER: I think that there's a lot of people on both sides of the aisle that have some real concerns where this is going to go. This one is a rough call. I don't know.

DOBBS: Are you astounded that more people aren't just picking up the phones, calling their congressmen or senators and saying what in the world are you people thinking about?

CUTLER: This is supposed to be a government by the people and 70 percent of Americans when polled said they want tighter immigration enforcement yet neither side of the aisle wants to deliver it.

I think the public does need to be heard. They need to -- in that movie network where the guy got up and said I'm angry as hell and I won't take it anymore. The public needs to make their elected representatives do what they are supposed to do and that is represent them.

DOBBS: That would be an interesting approach. Michael Cutler, thank you very much for being here.

CUTLER: Thank you for having me again. Good to see you.

DOBBS: Coming up next, the broken promises of free trade. I'll be joined by Nobel Prize winning economist Josef. He says the very peace and prosperity of the western hemisphere are now at risk. He joins us next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The NASDAQ is now at its highest level in two years. The dollar is at another record low against the Euro. Christine Romans is here with the market and more -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: And that falling dollar has been a boom for the metals market. Blue gold at the highest since 1988. Platinum at a 24-month high and silver, copper and other industrial metals booming as the U.S. recovery moves overseas.

Corporate corruption also moving overseas. The accounting hold for Parmalat, that's the Italian dairy company. It could be on par with WorldCom. Banks and creditors nervous to say the least. The SEC is investigating and the lawsuits are already flying and prosecutors want to know, what role, if any, U.S. banks played in this fraud.

And an alleged bribery ring between IBM executives and South Korean officials in a case involving state contracts for service of computers. IBM Korea, Lou, says it does not condone such behavior and has fired some staff involved in that case.

Meanwhile in New York, jury selection began today in the Martha Stewart insider trading case. Her trial begins January 12 and opens a busy season of executives on trial.

Former WorldCom and Adelphi executives head to court next month. CreditSuisse FirstBoston's Frank Quattrone will be retried in March. Enron's former CFO faces the music next year. Tyco's former general counsel will be tried in March and the trial with old chief Dennis Kozlowski is expected to wrap up later this month.

A witness testified that Kozlowski used $5 million of Tyco money to buy a very big diamond ring for Kozlowski's wife.

DOBBS: So he used all of the company's five million to buy that one ring?

ROMANS: Well I'm not sure, but I'm telling you something, it's been interesting twist and turns. That should wrap up later are this month.

DOBBS: Three people in jail, it's over two years since Enron. Big investigation, prosecution, you have a lot of interesting things. Christine Romans, thanks.

Taking a look now at the news in brief tonight. A woman's winter coat triggered a terror scare on a Delta flight from Paris to Cincinnati. The woman was taken off the plane before it left France because of suspicious wires sticking out of her coat.

The government and aviation security sources say U.S. fighter jets escorted the flight part of the way to Cincinnati. U.S. officials determined the woman was not a threat at all. The wires were part of a heater built into the jacket. Now that's some jacket.

DNA tests have confirmed with a high degree of certainty that the first case of mad cow disease in this country originated in Canada. Agricultural officials say the infected cow in Washington state came from a dairy farm in Alberta. And a winter storm has hit the pacific northwest with record cold temperature. Falling snow, treacherous driving conditions. Parts of Oregon and Washington have been brought to a standstill tonight. The storm is being blamed for one death in Seattle.

And NASA today released the clearest image yet of Mars taken by the Spirit rover. The stunning image shows (UNINTELLIGIBLE) rocks dotting the Martian landscape. NASA says the red, orange, pink colors in the picture appear as they would to the naked eye. Spirit is expected to send back more color pictures of Mars over the coming days before it begins roving around the Gusev crater where it landed flawlessly, perfectly three days ago.

Well, turning now from the scientific wonders of Mars to trade tension in this hemisphere. My guest tonight says free trade agreements that this is country is pursuing in Central and South America could, in fact, be doing more harm than good. I'm joined by a Nobel laureate, professor of economics at Columbia University, Joseph Stiglitz, and a former chairman of the Council Economic Advisers under President Clinton, chief economist for the World Bank, always a busy man. And today, in your op-ed piece in "The New York Times," you suggest that NAFTA has hurt Mexico more than helped it. Why?

JOSEPH STIGLITZ, FORMER CHIEF ECONOMIST, WORLD BANK: Well, it didn't live up to its promise. A lot of people thought that it was going to be the magic bullet that would lead Mexico to prosperity. In fact, the gap between the United States and Mexico has actually grown in the decade. Real wages in Mexico have actually fallen, and the growth in Mexico in the last decade is much poorer than it was in the decades after, say, 1948.

DOBBS: Yet we have a huge trade deficit with Mexico. They have been the beneficiary in the trade balance with this country. Why?

STIGLITZ: Well, one of the concerns about these trade agreements is that they focus only on two countries. The trading regime that we have is a global trading regime. You can't look at the balance between any two countries. If you look at really the relationship between Mexico and the United States, what you see is that Mexico is being hurt by our huge subsidies for agriculture.

DOBBS: Well, let's be honest. Mexico is being hurt, because it doesn't have the developed infrastructure, it does not have the investment that is necessary to drive a modern country. It is not organized for transparency and terrific market conditions. That NAFTA can't solve or anything else.

STIGLITZ: Exactly. So the point exactly the point I was making. It's not a magic bullet. Mexico can't compete...

DOBBS: Yet it was sold on the basis that this is going to drive jobs in the United States. It's going to create wealth in Mexico. When did we figure it all out?

STIGLITZ: Well, a lot of us knew that it was not going to be the magic bullet, and that it was being oversold. We were worried. On the other hand, there was a debate on the other side that was underselling it. They said that jobs -- the sucking sound of jobs that we were going to lose, Ross Perot talked about that. There wasn't -- remember, after NAFTA was signed, unemployment in the United States fell. It fell to 3.8 percent.

DOBBS: You don't really think that was because...

STIGLITZ: No, no. No, no. The point I'm making is that when you have the economy managed well, it can create jobs even though we're reshifting our economy, losing some low quality jobs and gaining high quality jobs.

DOBBS: Well, you have been a proponent of free trade, and a vigorous one. Wouldn't you have...

STIGLITZ: But fair trade.

DOBBS: Fair trade. You have been a vigorous advocate, also, of concern for illegal immigration into this country. You want humane treatment. Most of us do. The fact is, we're looking at a situation that we have not considered before. We are seeing labor being transported all over the world, along with capital and technology. And we've got people saying, well, you can't be protectionist, you would simply disrupt the world economy. They are looking at it as if we have to have free trade, monolithically, blindly in one direction. What do you think is going to happen?

STIGLITZ: Well, I think one of the things that those of us who were advocates -- are advocates of free trade was that we need assistance for people who are going to be losing jobs. There's no way of hiding that.

But the other thing we have to do at a global level is make sure that we have fair trade agreements, and the problem is United States has been advocating unfair trade agreements.

DOBBS: When you say unfair, I get the feeling you are talking about it's unfair to the countries we are dealing with, rather than the United States.

STIGLITZ: That's absolutely true.

(CROSSTALK)

DOBBS: And I'm sitting here arguing with a Nobel laureate economist, professor. And I have to say to you, we're watching hundreds of thousands of high valued jobs being transferred, along with capital and production facilities, overseas. No one ever anticipated that situation, did they?

STIGLITZ: We did. We anticipated...

DOBBS: You forgot to tell me.

STIGLITZ: Well, what we anticipated is that at the same time we would also be creating new jobs, and we did when the economy was well managed. We did create new jobs in the '90s.

DOBBS: Wait a minute. Well managed economies? Wait a minute. You're going too far for me now.

STIGLITZ: What we were talking about is we had macro policies.

DOBBS: You mean like under the Clinton administration?

STIGLITZ: Exactly.

DOBBS: Exactly. I wondered where we were going with that.

STIGLITZ: That's where we're going.

DOBBS: Isn't that the president who signed NAFTA, though?

STIGLITZ: That's right. That's right. But so the point I'm making is that right now we're confusing two separate issues. We have unemployment, because the president, President Bush, decided to push a tax cut for upper income Americans rather than the kind of stimulus that the country needed and would have gotten us out of the economic downturn far quicker than it did. We've lost three million jobs in the last three years. We should have been creating...

DOBBS: And $1.5 trillion in stimulus isn't enough to drive it, you think?

STIGLITZ: We're finally getting it up. But...

DOBBS: Joseph Stiglitz, I am going to ask you to please come back. Can we ask you to come back soon?

STIGLITZ: Sure.

DOBBS: In the next few days?

STIGLITZ: Sure.

DOBBS: Because we really -- our audience is terribly interested, we're all interested in the future of this economy and the pressures that are on our hardworking middle class.

STIGLITZ: I understand that. I understand that impact.

DOBBS: So if you will, please come back soon. It's great to see you.

STIGLITZ: Nice to be here.

DOBBS: Professor Joseph Stiglitz.

A reminder now to vote on our poll. The question tonight, should Mexico reform its political and economic policies as a condition of any liberalized U.S. immigration policy? Give us your thoughts, as to yes or no. Cast your vote at cnn.com/lou. We will have the results in just a few moments. And next, a lotto controversy draws to a dramatic conclusion. We'll have that story and much more to come. But first, "Exporting America." Each night here, we build on the list of American countries that our staff has confirmed to be exporting jobs to cheap overseas labor markets. Tonight's addiction to that list include department store chain Marshall Fields, Storage Technology Corporation, Sykes Enterprises, a direct marketing firm, Target, Tecumseh, a machine manufacturer, and VA Software. Those are the additions tonight.

One company our staff confirmed last month, EarthLink, today announced a plan to restructure its call center operations; 1,300 jobs will be cut at the Internet service provider in this country. EarthLink, of course, will outsource most of those jobs to companies based in, well, some places here, but India and the Philippines. We will, of course, update the list each evening. Please continue to send us the names of those companies you don't see on our list. If you can see this moving by so quickly. We're going to try to slow that down. Please, our e-mail address, loudobbs@cnn.com. We'll be right back. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results of our poll. Eighty-four percent of you say Mexico should reform its political and economic policies as a condition of any liberalized U.S. immigration policy. Sixteen percent said it should not.

Finally tonight, after days of controversy, there is a winner in that $162 million Mega Millions lotto jackpot. Rebecca Jemison of South Euclid, Ohio came forward today to claim her prize as the sole winner. This just days after a Cleveland woman filed a police report claiming to have lost the winning ticket. Jemison was quick to respond to skeptics.

(BEGIN VIDEO CLIP)

REBECCA JEMISON, MEGA MILLIONS WINNER: Wow. First of all, I want to clear up a few things that have came out in the press. One of the them is that -- for one, I've been playing these numbers for approximately about two years. One thing I wanted to make clear when I hear people say, luck, luck, luck. Luck had nothing to do with this. This is truly a blessing, truly a blessing.

(END VIDEO CLIP)

DOBBS: A blessing indeed. Jemison opted, by the way, for the lump sum. After taxes, that single payout amounts to just about $67 million.

That's our show for tonight. We thank you for being with us. Tomorrow on "Exporting America," we focus on how some Americans are fighting to stop companies from shipping their jobs to cheap foreign labor markets. Congressman James Kolbe and (UNINTELLIGIBLE) face off over the president's proposed immigration policy. Please join us. For all of us here, good night from New York. Anderson Cooper 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





Proposes Changes in Immigration Policy>


Aired January 6, 2004 - 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: new concerns that one of America's closest allies in the war on radical Islamist terror may be exporting nuclear weapons technology to rogue states. Senior White House correspondent John King reports.
In what appears to be a significant political gamble, President Bush may be fighting members of his own party when he announces sweeping changes in U.S. immigration policy. Lisa Sylvester reports.

In "Exporting America" tonight, we go to a city in the Midwest facing now a huge rise in unemployment, as the community's biggest employer ships hundreds of jobs to Mexico. Peter Viles with a special report.

And, with less than 10 months to go to the election, the latest opinion polls show President Bush is well ahead of his would-be Democratic rivals.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, January 6. Here now, Lou Dobbs.

DOBBS: Good evening.

The White House today called on Pakistan to live up to its promises to stop the spread of weapons of mass destruction. The White House statement reflects new concerns about nuclear proliferation, after published reports that Pakistan supplied Libya with nuclear weapons technology. Pakistan strongly denies any involvement in nuclear transfers. U.S. officials, however, fear individual Pakistani scientists may have helped Libya for personal gain.

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

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Lou, two Bush administration officials telling CNN tonight that the Bush administration has come to the conclusion that centrifuges and other nuclear technology and nuclear technical assistance provided to Libya did, indeed, come from Pakistan.

Now, officials say there is no evidence at all that Pakistan's president, Pervez Musharraf, knew anything about these transfers, but they do say it is now a point of urgent concern and urgent conversations with the government of Pakistan. In the past, of course, the United States has complained about transfers of technology to Iran and to North Korea, Secretary of State Powell today rejecting the notion that perhaps the United States government was somehow being soft on President Musharraf because of his support in the war on terrorism.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: We have been interested in proliferating activities on the part of any nation that would create instability or allow rogue nations to develop nuclear weapons. I have discussed this issue on a number of occasions with President Musharraf and other Pakistani leaders. And, as you know, President Musharraf has announced that he will be looking into it himself very thoroughly.

(END VIDEO CLIP)

KING: Now, this U.S. conclusion is based on a review provided by Libya, access to Libya's program provided by the Libyan government.

U.S. officials, though, say a number of questions still remain to be answered. Lou, the top priority is putting together a timeline of when these technology transfers took place to see if any of them took place in the last year or two, after the fact when President Musharraf went on the record, saying he would crack down and try to do more to prevent such proliferation -- Lou.

DOBBS: John, let's turn to another issue for this administration, and that's how to deal with the estimated 10 million illegal aliens in this country, tomorrow, the president to make a major policy speech on the issue. What's the White House saying now, John?

KING: Lou, a 2:30 announcement tomorrow afternoon here at the East Room, more details of this program being made available to us tonight.

Administration officials acknowledge that those in this country now illegally, some of them will be able to come forward and join a new temporary worker program and keep their jobs and get on the path eventually to legal status here in the United States, the administration saying that those who come forward, who enter the United States illegally who come forward would get in the back of the line, if you will, for legal status in the United States, behind those from outside the country who are applying through current and new processes.

But administration critics, Lou, continue to say, this is rewarding people who broke the law and they promise to fight the president's initiative.

DOBBS: Any substantial concern at the White House that they are about to take a significant political risk with this announcement tomorrow?

KING: They administration knows much of the criticism will come from fellow Republican conservatives. But they say they do believe the president is in the majority in making this case. They are asking his allies in the business community, asking other allies in the Republican Party to speak out and support him.

They say this is a policy decision, an economic decision the president is making. But some officials, Lou, do believe there could be some political gain for this president. He received about 35 percent of the Hispanic vote in the last election. He wants more of it in the next election.

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

As John just reported, the president is likely to face a tough battle on Capitol Hill to win approval for any new immigration policy. And some of the strongest opposition will likely come from his own party.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): It's a new immigration policy the Bush administration is calling earned legality. President Bush wants to pave the way for millions of illegal aliens working in the United States to be legally recognized. It would allow illegal aliens to remain in the country as long as they had a willing employer. But the president may have a hard time selling this plan to his closest supporters, some of his fellow Republicans.

REP. ELTON GALLEGLY (R), CALIFORNIA: They will try to spin it and sell it not as an amnesty bill, but as the new politically correct term, earned legality. Now, if you earn legality through an illegal act, that's bad policy.

SYLVESTER: Those who favor loosening immigration rules argue that it's good for business owners and consumers.

DANIEL GRISWOLD, CATO INSTITUTE: I think most Republicans understand how the market works. And they want to help U.S. business to hire the workers they need and to grow.

SYLVESTER: But conservatives say, opening the door to legal aliens will lower wages for American workers, as the labor pool grows. In 1986, President Reagan signed an amnesty bill. Since then, the number of illegal aliens have grown from an estimated five million in the early '80s to as many as 12 million today.

So why would President Bush push this issue now, even though he risks alienating his conservative base? Think back to the 2000 election and all those dangling and hanging chads.

STUART ROTHENBERG, CNN POLITICAL ANALYST: If the election in 2004 is even nearly as close as 2000 was, that they're a handful of states that could well be determined by how Hispanic voters vote. States like, obviously, Florida, but also Arizona, New Mexico, Nevada, could determine the next president.

SYLVESTER: But easing immigration rules is walking a fine political line. It may curry favor among swing voters, but lose some base sport.

(END VIDEOTAPE)

SYLVESTER: There are a lot of unknowns about this earned legality program, including, how would you set up a job registry? How much would it cost to give legal status to illegal workers? And what would be the impact to the American worker? -- Lou.

DOBBS: Lisa Sylvester, thank you very much.

Well, while millions of illegal aliens are taking jobs in this country, hundreds of thousands of jobs are being shipped to cheap foreign labor markets. Tonight, in our special report, "Exporting America," we look at how this economic crisis is playing out in one American city.

Galesburg, Illinois, is the birthplace of poet Carl Sandburg and, for many years, the site of a large Maytag plant. In fact, Maytag once was the city's largest employer. Now Maytag is closing its factory and moving most of the work to a new plant in Mexico. And Galesburg is bracing for an unemployment rate of 20 percent and an uncertain future.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Galesburg, Illinois, where the name Maytag used to mean quality products and good jobs. But now the jobs, all 1,600, are leaving. Jackie Cummins lost hers in September. And the jobs are not coming back.

JACKIE CUMMINS, LAID-OFF MAYTAG WORKER: Just leave us stranded. We don't have anywhere to go and nothing to do. There are no jobs left here. So, if we want to move, that's our only option.

VILES: Scott Ward hasn't lost his job yet, but he knows he will.

SCOTT WARD, MAYTAG WORKER: You can't go to work knowing that you do a good job every day. And, if you're in manufacturing, knowing that you're making a good product, that's not what is going to keep your job here. You have to understand that they can move to Mexico or to the Pacific Rim and have your job done for pennies-on-the-hour wages.

CUMMINS: Put your coat on.

VILES: And that's what really hurt. Jackie Cummins made $15 an hour, but Maytag is building a new refrigerator factory in Reynosa, Mexico, where workers are paid less than $1 an hour. Maytag says it was a tough decision, but that -- quote -- "Some move offshore was inevitable" because of pressure from cheaper refrigerators made in Asia and from bargain-hunting American consumers.

Union leader Dave Bevard blames Maytag, blames corporate America, blames American trade policy. DAVE BEVARD, PRESIDENT, MACHINIST UNION LOCAL: If you get rid of the middle class in this country, you have destroyed the basic foundation of this country. And that's little by little what they are doing. Free trade is a failure. Let's say it out loud. Let's say it loud and clear. Free trade is a failure. It does not open markets. It does not help people.

VILES: For now, Galesburg is bracing itself. The plant is scheduled to close late this year.

BOB SHEEHAN, MAYOR OF GALESBURG, ILLINOIS: A little bit of depression, bewilderment, anger, some optimism, certainly a lot of resolve to say, we're going to get through this. And we will. I don't know how fast it will happen. I don't know how quickly it will. But we will find a way to reinvent ourselves.

VILES: The local jobless rate right now, 9 percent. There are fears it may rise to 20 percent.

(on camera): At the heart of this story is a broken promise. Free trade agreements promised workers at plants like this one a chance to export their products to new markets around the world. But the reality is, the only thing being exported from this city is American jobs.

Peter Viles, CNN, Galesburg, Illinois.

(END VIDEOTAPE)

DOBBS: And tonight's thought is on business and the love of work and its source, somewhat ironic in this case.

"In all business, there is a factor which cannot be compensated for in dollars and cents or computed by any measure. It has no relation or connection with the mercenary and is represented only by the spirit of love which the true craftsman holds for his job and the things he is trying to accomplish" -- those words from Frederick Louis Maytag, the founder of the company that still bears his name, even in that factory in Illinois.

Well, we've been reporting here for months on the huge number of American jobs being shipped overseas, particularly to India. Today, "The Times of India" newspaper carried a headline boasting -- quote -- "Silicon Valley Falls to Bangalore." "The Times of India" says Bangalore now has 150,000 information technology engineers and says that is 20,000 more than are now employed in Silicon Valley, California.

Coming up next, for the Democrats in the race for the White House, it looks to be a place for second place. Senior political analyst Bill Schneider will report.

And the Army gives Vice President Cheney's former company a pass. senior Pentagon correspondent Jamie McIntyre reports.

And amnesty for millions of illegal aliens? One former Immigration and Naturalization senior agent says, it is altogether the wrong answer for America.

(COMMERCIAL BREAK)

DOBBS: On the campaign trail this evening during the Democratic candidate's debate today on National Public Radio, Howard Dean accused President Bush of allowing North Korea to become a nuclear power.

Dean, who picked up former Senator Bill Bradley's endorsement today, also used the radio debate to fend off attacks from rivals on Medicare, promising not to cut the program. Democrats used much of today's debate to criticize the president on national security, Congressman Gephardt promising that, if elected president, he would work on a missile defense shield that would amount only to research for the foreseeable future.

Senator John Kerry said the president has been neglecting the issue of nuclear proliferation.

The newest CNN/"USA Today"/Gallup poll shows Howard Dean's lead as the front-runner for the Democratic presidential nomination slipping a bit. The survey also looked at President Bush's handling of the economy, Iraq, his chances of beating a Democrat in November.

And our senior political analyst, Bill Schneider, reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): It's election year. Do you know where your president is? We do, 60 percent. That's President Bush's job rating right now.

How good is that? Let's look at where previous presidents facing reelection have been at this point.

Bush's father was at 46 percent in January 1992. He lost. But so did Jimmy Carter, who started out his 1980 re-election campaign on a high of 56 percent because of the Iran hostage crisis. Ronald Reagan was at 52 percent going into his re-election in 1984. He made it. But so did Bill Clinton, even though he started 1996 at 42 percent.

If you're a Republican, you look at these figures and say, look at that, Bush is doing better than all of them, woo-hoo, to which a Democrat might respond, oh, it's just a temporary bounce Bush is getting from the capture of Saddam Hussein. In fact, President Bush gets his highest marks on Iraq, 61 percent approval. The president's overall rating on world affairs is the highest it's been since the major fighting in Iraq last spring.

And the president's ratings on domestic issues are not far behind. Fifty-four percent approve Bush's handling of the economy, the highest in more than a year.

Is the President vulnerable on anything? Yes. Only 43 percent give the President good marks on health care. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm pleased that all of you are here to witness the greatest advance in health care coverage for America's seniors since the founding of Medicare.

SCHNEIDER: But seniors are not all that thrilled with the Medicare Reform Bill, or the prescription drug plan. And the front- runner for the Democratic nomination is a physician. Speaking of Howard Dean, let's see how he's doing.

Dean is still the front-runner, but not by much. General Wesley Clark is catching up with him. Clark is the only Democratic candidate to show momentum in the past month. The attacks on Dean from his fellow Democrats could be taking a toll on the front-runner.

Here's where the presidential race stands right now: a blowout. President Bush leads Howard Dean by more than 20 points.

(END VIDEOTAPE)

SCHNEIDER: Ever hear the Latin phrase vox populi vox dei? It means, the voice of the people is the voice of God.

Well, you know, this poll backs up what Pat Robertson said the lord told him was going to happen. Reverend Robertson has his sources and we have ours -- Lou.

(LAUGHTER)

DOBBS: But I see you quoting both.

Bill, this endorsement today by Bradley for Dean likely to boost his numbers any?

SCHNEIDER: Well, they represent a similar kind of constituency. I call it the high-minded voters, educated, upper-middle-class professionals who are very liberal in their views.

So I don't think it brings a lot to Dean. But it does show that, look, you had two guys, Gore and Bradley, competing in 2000. And they have both endorsed Howard Dean. Howard Dean says he's running against the Democratic Party establishment and the establishment is embracing him. They don't seem to want to fight back.

DOBBS: You know, you're using the expression high-minded voters. I suppose there are a number of groups out there who would like to be considered in that high-minded group as well, Bill. You can spread that across the political spectrum, can you not?

SCHNEIDER: Well, you could.

Of course, everyone thinks he or she is a high-minded voter. But these people take great pride in it and believe they are good government people, they vote on the issues, and, sometimes, they are better than other voters. I don't know about that, but that's their self-conception.

(CROSSTALK)

DOBBS: By better, Bill, do you mean you tend to agree with their vote more often than not?

(LAUGHTER)

SCHNEIDER: No, I'm describing a self-conception among those voters. Sometimes, they are called Starbucks voters or the latte drinkers. We don't know.

DOBBS: Bill Schneider, thank you very much.

SCHNEIDER: OK.

DOBBS: Well, tonight's quote is from a political television advertisement that will begin airing in Iowa tomorrow. And we want to quote one line from it: "Howard Dean should take his tax-hiking, government-expanding, latte-drinking, sushi-eating, Volvo-driving, "New York Times"-reading, Hollywood-loving, left-wing freak show back to Vermont, where it belongs."

Now, that is from an advertisement promoted, sponsored and paid for by the Club for Growth, starting in Iowa tomorrow, and quite an interesting collection of modifiers.

We received hundreds of e-mails from you on our reports, "Exporting America" and "Broken Borders." Many of you are writing in about the president's sweeping changes that are expected in his immigration policy announcement tomorrow.

Elizabeth Perez of Los Angeles wrote to say: "Lou, I am an Hispanic immigrant and went through the legal process of becoming a naturalized citizen. Most of us who are here legally resent the constant influx of illegal immigrants."

Richard Chapman of Newman, Georgia, wrote: "The enormous flood of illegal aliens to the United States has put a real pinch on American businesses that must compete with other companies that hire illegal aliens. That's driving down wages for everyone in this country."

And on the government's new program to photograph and fingerprint millions of foreign visitors, Mike of Dayton, Ohio: "Why check fingerprints, when we let thousands pour across our borders and then give them a pat on the back and say, good job?"

And on "Exporting America," from T.C. Gardner in Amarillo, Texas: "If this continues, we will end up with a government by the corporations, for the corporations, instead of a government by the people for the people. There will only be two classes of people, the very rich and the very poor."

Send us your thoughts. E-mail us at LouDobbs@CNN.com.

Coming up next, the Army backs Halliburton, despite a $60 million discrepancy. Senior Pentagon correspondent Jamie McIntyre reports. And ratings on the rise for the president and on the decline for the Democrats front-runner. Three of this country's top political journalists join us.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq today, thousands of former Iraqi soldiers took part in a protest in Basra, demanding pensions and other payments. Iraqi police, guarding a bank, opened fire on the protesters when they tried to force their way into the building. Witnesses said at least two people were wounded. The protesters fled when British troops arrived on the scene.

Elsewhere in Iraq, insurgents today killed two French civilian contractors and wounded a third near the town of Fallujah, west of Baghdad. The contractors were working on reconstruction projects for American companies. They were the first French citizens to be killed in Iraq since the start of the war against Saddam Hussein in March.

The U.S. Army has decided to allow Halliburton to continue supplying gasoline to Iraq, even though Pentagon auditors say the company may have overcharged the military by $60 million. The Army Corps of Engineers, officially responsible for the contract, says Halliburton followed correct procedures and negotiated the best price for the gasoline.

Senior Pentagon correspondent Jamie McIntyre has the report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, Halliburton claimed from the beginning that it had a good defense against the allegation that it may have overcharged the U.S. government some $61 million for gasoline purchased from Kuwait.

Now it appears the Army Corps of Engineers is siding with the oil services company once run by Vice President Dick Cheney. The Army granted a waiver last month to Kellogg, Brown & Root, relieving the Halliburton subsidiary of the requirement to submit data on the cost of gasoline it bought for distribution in Iraq.

The waiver says -- quote -- "Kellogg, Brown & Root services obtained adequate price competition for the delivery of gasoline to Iraq and made an award to the lowest price offerer." Pentagon auditors, noting that fuel from Turkey was cheaper by more than $1 a gallon, questioned whether KBR adequately shopped around for the best price. But the company insists, it was its suggestion to buy cheaper gas from Turkey, saving the U.S. government some $100 million in the process.

On its Web site, Halliburton posted a press release that says -- quote -- "The facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms in ways completely consistent with government procurement policies." It should be noted that even the Pentagon auditors who questioned the price of gasoline never suggested Halliburton got any excess profit from the deal, only that the government may have paid too much to a Kuwaiti supplier. Nevertheless, critics are fuming. Senator Joe Lieberman, a Democratic presidential hopeful, quickly issued a statement accusing the Army Corps of siding with Halliburton against the interests of U.S. taxpayers, saying its actions were -- quote -- "indefensible and smacks of a cover-up."

Lieberman charged that the corps is attempting to let Halliburton and itself off the hook by claiming, Halliburton prices were reasonable, despite all evidence to the contrary. The Pentagon, Lieberman says, seems to think it can make this controversy, including its own role in the affair, disappear with the stroke of a pen. And, Lou, needless to say, neither Halliburton, nor the Corps of Engineers see it that way -- Lou.

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

Coming up next, Karen Tumulty, Ron Brownstein, Roger Simon, three of the country's best political journalists, join us to give us their thoughts about a political scene that is heating up quickly.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, Democratic presidential front-runner Howard Dean today won a key endorsement from former presidential candidate Bill Bradley.

And now to talk about that and a lot of other developments in the race for the White House, I'm joined by Karen Tumulty, "TIME" magazine's national political correspondent, Roger Simon, political editor for "U.S. News & World Report," and Ron Brownstein, national political correspondent, "Los Angeles Times."

Thank you all for being here. Happy new year.

(CROSSTALK)

DOBBS: And Howard Dean gets more, gets more help from bill Bradley.

How important, Karen?

KAREN TUMULTY, "TIME": You know, I don't think this adds a whole lot in terms of support. The type of voter who was supporting Bill Bradley against Al Gore in 2000 was probably already with Howard Dean right now.

The real endorsement right now that everyone is looking for and watching, the man who is under a lot of pressure is Iowa Senator Tom Harkin. And that is one that going into this Iowa caucus could mean a lot. And the Dean people are working him hard. DOBBS: Roger, Ron, I would assume, given -- and I'm just saying I would assume that Harkin would be, if you will, a soul mate for Howard Dean?

RON BROWNSTEIN, CNN POLITICAL ANALYST: Both Howard Dean and Dick Gephardt in different ways I think appeal to Tom Harkin.

On the one hand, he has been very clear in his conversations with me and his other journalists that he admires what Howard Dean has done in bringing in new people to the party. On the other hand, the kind of lunch-bucket populism that Dick Gephardt talks about is probably closer to where Harkin is than Dean's more cultural liberalism.

I think he's sort of torn. And on the other hand, Lou, he's got one other consideration. In a state like Iowa, the winner is probably only going to have 30, 35 percent of the vote, which means about two- thirds of Tom Harkin supporters are going to be with somebody else. And that has to give you some pause about really endorsing any of them.

ROGER SIMON, "U.S. NEWS & WORLD REPORT": Harkin made a strange statement when he talked about endorses Dean or Gephardt. He praised Dean but then he said but maybe would want someone of a more middle class background. People don't really get to pick their background. Dean was born into the family he was born into and John Kennedy was born into his and Dick Gephardt was born into his. I just thought it was an odd statement to make. The fact is not the background you are born into but whether you have sympathy.

DOBBS: When you talk about backgrounds it is however almost overwhelming when we look at the fact we have a president who graduated from Yale, the frontrunner right now is from Yale. Who's mother was quoted as saying that, in trying to explain how much Howard Dean is a man of the people, that in their family they didn't treat the servants like servants.

Is there any possibility that a middle class American who is not an attorney can run for president?

I realize it's a little late in the process to bring it up, but these are hardly representative candidates of the population of the United States.

BROWNSTEIN: It depend how you look at it. Certainly people from diverse backgrounds. Dick Gephardt more modest background. Wesley Clark a more modest background and a different pedigree for running. One thing we've seen in the last several years, and Arnold Schwarzenegger in his own way demonstrates despite his wealth, which is what the public's definition of what is acceptable credentials for high office is somewhat different from the political establishment and the media. Whether it's been business executives or Schwarzenegger from outside the system voters have been willing to sort of expand the definition of what they will accept. You do, I think, have the opportunity, in the presidential race, as Wes Clark is showing. He has never been elected to anything and he is probably in many ways the number two candidates. SIMON: But only two times in American history, has a major party nominated someone who is not white Anglo-Saxon Protestant. We have only had two Catholics in the whole history of this country. Only two Catholics have ever been nominate bid a major party. We elect white Anglo-Saxon Protestant males in this country. That's who we nominate, that's who elect. So I think your point is well taken, Lou. It's from a very narrow range.

TUMULTY: Although this year it does seem to be incredibly (UNINTELLIGIBLE). Because if it does come down to dean and bush, we're looking at one guy who is grandmother was a bridesmaid in the other guy's grandmothers wedding. So we are talking about a very small strata of society here.

DOBBS: Well, strata of society may not change appreciable soon but if President Bush has his way and it appears that he is going to advance tomorrow, a major change in immigration policy, how significant a political risk is the president taking?

Let's turn to you, Ron.

BROWNSTEIN: I think it is a risk. Both ends of the equation that he's dealing with are controversial at this point. The general assumption has been the only way to do either some kind of earned legalization for illegal immigrants who are here now or a guest worker program that business wants is to do them both together or do a coalition that will bring together Republicans and Democrats, business and labor. The problem is each end of the that equation is very controversial right now. At a time when we have a net loss of job under President Bush a lot of people are going to ask why do we need a guest worker program to bring in more foreign workers. At a time when we have all the security concerns there are going to be a lot of people especially conservatives, asking why do we want to legalize people who enter the country illegally. So, he's going to have to thread the needle. But I'm told from the White House it is going to be an ambitious proposal and there may be some unhappy conservatives tomorrow.

DOBBS: Unhappy conservatives and that middle class we're talking about who are struggling to find representation. Economically, this is pressuring wages at the lower end of the income scale in this country. The middle class facing another squeeze.

Is there a possibility in your judgment, Karen, that this could become more than simply an issue of between conservatives and liberals but rather go straight to the heart of the middle class?

TUMULTY: Well, of course, what the big demographics of it, the Bush administration is looking at here, Hispanics which are, you know, very much a part of the growing population, not just in the southwest but in a lot of Midwestern cities throughout the south. These are voters that the White House thinks they really need to make inroads with if they are going to win. And there is just no other issue where the rubber really hits the road with Hispanics than this one. So...

DOBBS: Is that really true. Because what we have heard here, is we have been reporting on this issue, Karen, is the idea of making a connection between quote "Hispanics and Latinos" in this country and illegal immigrants or illegal aliens doesn't hold up. Hispanic and Latino legal immigrants are as offended by illegal immigration as any other part of our society.

TUMULTY: Well, all you have to do is look at what happened in California with prop 187 and you see how much of a visceral reaction this issue, however, does bring out with Hispanic voters.

BROWNSTEIN: There is, but I think, Lou, there is some ambivalence even in the Hispanic community because of the economic competition that is created. As I say, one of the things that's going to be difficult for President Bush here is that what is going to take to attract labor, Democrats and organized Latino groups is a very generous program of moving people here illegal toward legal status. But if he goes in that direction obviously there are going to be a lot of conservative and maybe even many mid Americans -- middle class Americans who don't like it. So it's one of these things where it simply may not be possible to square the circle and get this done. We'll see tomorrow exactly where he comes out at his opening bid.

DOBBS: And Roger, the final question, John Kerry, he is calling companies exporting jobs overseas to cheap foreign labor markets Benedict Arnold companies.

Is this issue starting to take on some traction?

SIMON: Well, he certainly wants it to. The solution he has for the outsourcing of American jobs, especially in telecommunications though, is not a very strong one. He wants a law that says when a company switches your phone I inquiry to a foreign country you're notified of it. Well, I don't think most people are going to care. It doesn't stop people that are going to do it. If have you a computer question and are told your call is being switched to New Delhi, you only care if your computer question is being answered.

DOBBS: Roger Simon, Karen Tumulty, Ron Brownstein we thank you always. Good to talk with you.

TUMULTY: Thank you, Lou.

DOBBS: Senate Majority Leader Bill Frist is in Mexico. He's meeting with members of the legislature there and Mexican law enforcement officials. Frist and Mexican officials talked about, of course, immigration, trade, the drug war and the war on terror. The Senate Republican leader will meet with President Vincente Fox tomorrow in advance of the president's trip to Mexico next week and as we reported earlier, tomorrow is also the day President Bush will unveil his immigration proposals. Mr. Bush meets with President Fox at the summit of the Americans which will be held in Monterey, Mexico next week.

That brings us to the topic of "Tonight's Poll." Ahead of that immigration initiative tomorrow to come from the White House. The question should Mexico reform its own political and economic policies as a condition of any liberalized U.S. immigration policy, yes or no? Cast your vote as cnn.com/lou. We'll the results later in the show.

Coming up next, a controversial proposal. Our next guess says it amounts to amnesty for illegal aliens. Michael Cutler is a former special agent for the Immigration and Naturalization Service. He joins us. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush is about to present his plan to fix immigration laws in this country. But my guest says, we still haven't learned the lessons of the last immigration reform, so called.

Michael Cutler is former senior special agent for Immigration and Naturalization Service. And he joins us. 1986 immigration reform, about three and a half million illegal aliens...

MICHAEL CUTLER, FORMER SENIOR SPECIAL AGENT FOR INS: There abouts.

DOBBS: ... were granted amnesty.

CUTLER: Yes.

DOBBS: Now we have an estimated somewhere around 10 to 12 million in this country.

CUTLER: That's right.

DOBBS: How is that working out?

CUTLER: I think we're creating another nightmare for ourselves. Somebody wants to find insanity is doing the same thing and same way and expecting a different outcome. Certainly that situation now from where I see it.

DOBBS: Our distinguished panel of political journal is addressed the political motivations or at least some of them involved. The idea of matching so-called willing workers with willing employers.

We know there are plenty of willing employers in this country who will hire low wage illegal aliens irrespected of their status.

What does that expression mean to you?

CUTLER: It's hard to comprehend it. Because the policy of immigration enforcement was based on the idea of employer sanctions. The magnet that draws the alien across the border was the prospect of finding employment. So, now we seem to be sending the very confused message.

Well, if you have a job, come on over and that's what's been drawing them in the first place. So I don't understand how this is going to discourage a human tidal wave if this becomes the way we do business. DOBBS: What will be the impact, do you think, on the spirit, if you will, of those who protect our borders. The border patrol, immigration control, customs, what in the world -- would they just throw their hands up?

CUTLER: I've been talking to some of the folks and they are ready to jump out the window. Nobody could believe this is happening. You know, you would think we would learn from our mistakes and especially at a time when we have great concern over who we're letting into the country and other issues that revolve around this whole immigration problem.

To send this very mixed message that on the one hand we don't want you to run the border, but on the other hand, if you do, we'll let you work here and we'll do everything we can to make it convenient for you. How does that discourage people from coming here?

DOBBS: The other part of this is that the administration seems, if I can use the expression, hellbent on providing amnesty. Providing a matching willing workers and employers which is, to me, just simply a code for we're going to let business, whether they be agribusiness or corporations or small business, hire whom they want at whatever wage they basically want. And saying they want to protect their social benefits of illegal aliens while the middle class is getting hammered in this country.

CUTLER: The thing that's amazing to me is when I worked on narcotics investigations, that was part of the drug task force for a number of years, we would seize the assets of people that gained these assets by breaking the law.

Now we were dealing with drug dealers, but we would take their houses, their bank books, their jewelry, their airplanes because these were ill gotten goods. So now we're talking about protecting money that's earned by people who got the money by breaking the law. It just seems to fly in the face of the way we do business as law enforcement officers.

DOBBS: The consequences of crossing a border illegally in this country is almost nothing. In other countries in Europe, for example, it is a very serious matter, as you well know. But the idea, again, that we can't come up with an intelligent and honest response to border security, to me, is absolutely baffling.

Because we're effectively, it seems to me, saying citizenship -- American citizenship -- doesn't mean much. Cross our borders illegally, do whatever is necessary, for the Yankee dollar we'll forget and forgive.

CUTLER: It seems that way. It seems that we are willing to sell citizenship, in effect, by doing this. We have cheapened what it means.

DOBBS: What would make sense, in your judgment?

CUTLER: We need to have meaningful strategy for interior enforcement. We keep talking about the border but half the illegal aliens don't run the border. They come through ports of entry. The terrorists came through ports of entry.

There's a fraud problem where people are filing applications for citizenship, for residency, and according to the general accounting office, the level of fraud is astronomical because there's nobody out there to do investigations, to determine that there's any kind of legitimacy to the applications that are being filed.

So you need to look at it from an enforcement tripod perspective. The inspectors have to enforce the laws at ports of entry, the border patrol agents between ports of entry, and you need enough special agents to go out there and enforce the laws from within the interior and then you would have a possibility of success. But you know, a tripod on two legs falls over.

DOBBS: You work on these issues all the time and you have a sense of what is happening in Washington.

CUTLER: Yes.

DOBBS: If the president's proposals are as dramatic as we are hearing they may well be, is it your judgment that Congress is prepared to accept them and put them into law?

CUTLER: I think that there's a lot of people on both sides of the aisle that have some real concerns where this is going to go. This one is a rough call. I don't know.

DOBBS: Are you astounded that more people aren't just picking up the phones, calling their congressmen or senators and saying what in the world are you people thinking about?

CUTLER: This is supposed to be a government by the people and 70 percent of Americans when polled said they want tighter immigration enforcement yet neither side of the aisle wants to deliver it.

I think the public does need to be heard. They need to -- in that movie network where the guy got up and said I'm angry as hell and I won't take it anymore. The public needs to make their elected representatives do what they are supposed to do and that is represent them.

DOBBS: That would be an interesting approach. Michael Cutler, thank you very much for being here.

CUTLER: Thank you for having me again. Good to see you.

DOBBS: Coming up next, the broken promises of free trade. I'll be joined by Nobel Prize winning economist Josef. He says the very peace and prosperity of the western hemisphere are now at risk. He joins us next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The NASDAQ is now at its highest level in two years. The dollar is at another record low against the Euro. Christine Romans is here with the market and more -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: And that falling dollar has been a boom for the metals market. Blue gold at the highest since 1988. Platinum at a 24-month high and silver, copper and other industrial metals booming as the U.S. recovery moves overseas.

Corporate corruption also moving overseas. The accounting hold for Parmalat, that's the Italian dairy company. It could be on par with WorldCom. Banks and creditors nervous to say the least. The SEC is investigating and the lawsuits are already flying and prosecutors want to know, what role, if any, U.S. banks played in this fraud.

And an alleged bribery ring between IBM executives and South Korean officials in a case involving state contracts for service of computers. IBM Korea, Lou, says it does not condone such behavior and has fired some staff involved in that case.

Meanwhile in New York, jury selection began today in the Martha Stewart insider trading case. Her trial begins January 12 and opens a busy season of executives on trial.

Former WorldCom and Adelphi executives head to court next month. CreditSuisse FirstBoston's Frank Quattrone will be retried in March. Enron's former CFO faces the music next year. Tyco's former general counsel will be tried in March and the trial with old chief Dennis Kozlowski is expected to wrap up later this month.

A witness testified that Kozlowski used $5 million of Tyco money to buy a very big diamond ring for Kozlowski's wife.

DOBBS: So he used all of the company's five million to buy that one ring?

ROMANS: Well I'm not sure, but I'm telling you something, it's been interesting twist and turns. That should wrap up later are this month.

DOBBS: Three people in jail, it's over two years since Enron. Big investigation, prosecution, you have a lot of interesting things. Christine Romans, thanks.

Taking a look now at the news in brief tonight. A woman's winter coat triggered a terror scare on a Delta flight from Paris to Cincinnati. The woman was taken off the plane before it left France because of suspicious wires sticking out of her coat.

The government and aviation security sources say U.S. fighter jets escorted the flight part of the way to Cincinnati. U.S. officials determined the woman was not a threat at all. The wires were part of a heater built into the jacket. Now that's some jacket.

DNA tests have confirmed with a high degree of certainty that the first case of mad cow disease in this country originated in Canada. Agricultural officials say the infected cow in Washington state came from a dairy farm in Alberta. And a winter storm has hit the pacific northwest with record cold temperature. Falling snow, treacherous driving conditions. Parts of Oregon and Washington have been brought to a standstill tonight. The storm is being blamed for one death in Seattle.

And NASA today released the clearest image yet of Mars taken by the Spirit rover. The stunning image shows (UNINTELLIGIBLE) rocks dotting the Martian landscape. NASA says the red, orange, pink colors in the picture appear as they would to the naked eye. Spirit is expected to send back more color pictures of Mars over the coming days before it begins roving around the Gusev crater where it landed flawlessly, perfectly three days ago.

Well, turning now from the scientific wonders of Mars to trade tension in this hemisphere. My guest tonight says free trade agreements that this is country is pursuing in Central and South America could, in fact, be doing more harm than good. I'm joined by a Nobel laureate, professor of economics at Columbia University, Joseph Stiglitz, and a former chairman of the Council Economic Advisers under President Clinton, chief economist for the World Bank, always a busy man. And today, in your op-ed piece in "The New York Times," you suggest that NAFTA has hurt Mexico more than helped it. Why?

JOSEPH STIGLITZ, FORMER CHIEF ECONOMIST, WORLD BANK: Well, it didn't live up to its promise. A lot of people thought that it was going to be the magic bullet that would lead Mexico to prosperity. In fact, the gap between the United States and Mexico has actually grown in the decade. Real wages in Mexico have actually fallen, and the growth in Mexico in the last decade is much poorer than it was in the decades after, say, 1948.

DOBBS: Yet we have a huge trade deficit with Mexico. They have been the beneficiary in the trade balance with this country. Why?

STIGLITZ: Well, one of the concerns about these trade agreements is that they focus only on two countries. The trading regime that we have is a global trading regime. You can't look at the balance between any two countries. If you look at really the relationship between Mexico and the United States, what you see is that Mexico is being hurt by our huge subsidies for agriculture.

DOBBS: Well, let's be honest. Mexico is being hurt, because it doesn't have the developed infrastructure, it does not have the investment that is necessary to drive a modern country. It is not organized for transparency and terrific market conditions. That NAFTA can't solve or anything else.

STIGLITZ: Exactly. So the point exactly the point I was making. It's not a magic bullet. Mexico can't compete...

DOBBS: Yet it was sold on the basis that this is going to drive jobs in the United States. It's going to create wealth in Mexico. When did we figure it all out?

STIGLITZ: Well, a lot of us knew that it was not going to be the magic bullet, and that it was being oversold. We were worried. On the other hand, there was a debate on the other side that was underselling it. They said that jobs -- the sucking sound of jobs that we were going to lose, Ross Perot talked about that. There wasn't -- remember, after NAFTA was signed, unemployment in the United States fell. It fell to 3.8 percent.

DOBBS: You don't really think that was because...

STIGLITZ: No, no. No, no. The point I'm making is that when you have the economy managed well, it can create jobs even though we're reshifting our economy, losing some low quality jobs and gaining high quality jobs.

DOBBS: Well, you have been a proponent of free trade, and a vigorous one. Wouldn't you have...

STIGLITZ: But fair trade.

DOBBS: Fair trade. You have been a vigorous advocate, also, of concern for illegal immigration into this country. You want humane treatment. Most of us do. The fact is, we're looking at a situation that we have not considered before. We are seeing labor being transported all over the world, along with capital and technology. And we've got people saying, well, you can't be protectionist, you would simply disrupt the world economy. They are looking at it as if we have to have free trade, monolithically, blindly in one direction. What do you think is going to happen?

STIGLITZ: Well, I think one of the things that those of us who were advocates -- are advocates of free trade was that we need assistance for people who are going to be losing jobs. There's no way of hiding that.

But the other thing we have to do at a global level is make sure that we have fair trade agreements, and the problem is United States has been advocating unfair trade agreements.

DOBBS: When you say unfair, I get the feeling you are talking about it's unfair to the countries we are dealing with, rather than the United States.

STIGLITZ: That's absolutely true.

(CROSSTALK)

DOBBS: And I'm sitting here arguing with a Nobel laureate economist, professor. And I have to say to you, we're watching hundreds of thousands of high valued jobs being transferred, along with capital and production facilities, overseas. No one ever anticipated that situation, did they?

STIGLITZ: We did. We anticipated...

DOBBS: You forgot to tell me.

STIGLITZ: Well, what we anticipated is that at the same time we would also be creating new jobs, and we did when the economy was well managed. We did create new jobs in the '90s.

DOBBS: Wait a minute. Well managed economies? Wait a minute. You're going too far for me now.

STIGLITZ: What we were talking about is we had macro policies.

DOBBS: You mean like under the Clinton administration?

STIGLITZ: Exactly.

DOBBS: Exactly. I wondered where we were going with that.

STIGLITZ: That's where we're going.

DOBBS: Isn't that the president who signed NAFTA, though?

STIGLITZ: That's right. That's right. But so the point I'm making is that right now we're confusing two separate issues. We have unemployment, because the president, President Bush, decided to push a tax cut for upper income Americans rather than the kind of stimulus that the country needed and would have gotten us out of the economic downturn far quicker than it did. We've lost three million jobs in the last three years. We should have been creating...

DOBBS: And $1.5 trillion in stimulus isn't enough to drive it, you think?

STIGLITZ: We're finally getting it up. But...

DOBBS: Joseph Stiglitz, I am going to ask you to please come back. Can we ask you to come back soon?

STIGLITZ: Sure.

DOBBS: In the next few days?

STIGLITZ: Sure.

DOBBS: Because we really -- our audience is terribly interested, we're all interested in the future of this economy and the pressures that are on our hardworking middle class.

STIGLITZ: I understand that. I understand that impact.

DOBBS: So if you will, please come back soon. It's great to see you.

STIGLITZ: Nice to be here.

DOBBS: Professor Joseph Stiglitz.

A reminder now to vote on our poll. The question tonight, should Mexico reform its political and economic policies as a condition of any liberalized U.S. immigration policy? Give us your thoughts, as to yes or no. Cast your vote at cnn.com/lou. We will have the results in just a few moments. And next, a lotto controversy draws to a dramatic conclusion. We'll have that story and much more to come. But first, "Exporting America." Each night here, we build on the list of American countries that our staff has confirmed to be exporting jobs to cheap overseas labor markets. Tonight's addiction to that list include department store chain Marshall Fields, Storage Technology Corporation, Sykes Enterprises, a direct marketing firm, Target, Tecumseh, a machine manufacturer, and VA Software. Those are the additions tonight.

One company our staff confirmed last month, EarthLink, today announced a plan to restructure its call center operations; 1,300 jobs will be cut at the Internet service provider in this country. EarthLink, of course, will outsource most of those jobs to companies based in, well, some places here, but India and the Philippines. We will, of course, update the list each evening. Please continue to send us the names of those companies you don't see on our list. If you can see this moving by so quickly. We're going to try to slow that down. Please, our e-mail address, loudobbs@cnn.com. We'll be right back. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results of our poll. Eighty-four percent of you say Mexico should reform its political and economic policies as a condition of any liberalized U.S. immigration policy. Sixteen percent said it should not.

Finally tonight, after days of controversy, there is a winner in that $162 million Mega Millions lotto jackpot. Rebecca Jemison of South Euclid, Ohio came forward today to claim her prize as the sole winner. This just days after a Cleveland woman filed a police report claiming to have lost the winning ticket. Jemison was quick to respond to skeptics.

(BEGIN VIDEO CLIP)

REBECCA JEMISON, MEGA MILLIONS WINNER: Wow. First of all, I want to clear up a few things that have came out in the press. One of the them is that -- for one, I've been playing these numbers for approximately about two years. One thing I wanted to make clear when I hear people say, luck, luck, luck. Luck had nothing to do with this. This is truly a blessing, truly a blessing.

(END VIDEO CLIP)

DOBBS: A blessing indeed. Jemison opted, by the way, for the lump sum. After taxes, that single payout amounts to just about $67 million.

That's our show for tonight. We thank you for being with us. Tomorrow on "Exporting America," we focus on how some Americans are fighting to stop companies from shipping their jobs to cheap foreign labor markets. Congressman James Kolbe and (UNINTELLIGIBLE) face off over the president's proposed immigration policy. Please join us. For all of us here, good night from New York. Anderson Cooper 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





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