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LOU DOBBS TONIGHT

President Bush Acknowledges Outsourcing Threat; U.S. General Attacked in Iraq; Interview With James Glassman

Aired February 12, 2004 - 18:00   ET

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

(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): Tonight: President Bush acknowledges the threat to American workers from cheap overseas labor markets, the exporting of America.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And we need to act in this country.

DOBBS: Leading Democrats today propose a new law to protect American workers from outsourcing of their jobs overseas.

Democrats have the White House on the defensive. Tonight, the Republicans strike back, the RNC to accuse the Democrats of playing dirty politics. I'll be joined by former presidential adviser David Gergen.

In "Broken Borders," illegal aliens flooding into this country. Members of Congress today call for tough action.

SEN. JOHN CORNYN (R), TEXAS: And I don't think you could build a wall high enough or wide enough to keep people out of this country.

DOBBS: And in "Grange On Point" tonight, death and destruction in Iraq, a brazen attack on the commander of U.S. forces. General David Grange on the question of whether the military should change its strategy.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, February 12. Here now, Lou Dobbs.

DOBBS: Good evening.

President Bush today acknowledged that American jobs are being shipped to cheap labor markets overseas, what we call here the exporting of America. President Bush promised to take action -- quote -- "to make sure there are more jobs at home." But the president did not repudiate his top economic adviser's claim that outsourcing jobs is good for America.

Peter Viles has the report.

(BEGIN VIDEOTAPE) PETER VILES, CNN CORRESPONDENT (voice-over): In Pennsylvania, where 132,000 manufacturing jobs have disappeared, the president acknowledged, outsourcing is part of the problem.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There are people looking for work because jobs have gone overseas. And we need to act in this country. We need to act to make sure there are more jobs at home.

VILES: But the president did not challenge the conclusion of his own economic team that -- quote -- "When a good or a service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically." And that blanket endorsement of outsourcing has economic adviser Greg Mankiw in hot water, but Democrats try to keep the focus on the president.

SEN. HILLARY CLINTON (D), NEW YORK: This is the president's economic policy. And we cannot permit our Republican friends to try to shift the blame and the burden to Mr. Mankiw.

VILES: Senate Democrats pushing new legislation that would bring outsourcing under government scrutiny.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Companies that export U.S. jobs would be required to disclose how many jobs are being shipped overseas, where they are going, and why.

VILES: The larger issue here is not corporate behavior. It's American trade policy, which now officially encouraged outsourcing.

MIKE EMMONS, FORMER TECH WORKER: When you move these goods high- tech jobs out of the country, there goes the R&D right behind it. They say they only do the low-end grunt work. Well, that's not correct. They are going after each and every job they can get. And I don't fault them so much. I fault our government for not standing up and stopping it.

VILES: On that trade issue, the administration continues to maintain -- quote -- "Free trade is win-win."

(END VIDEOTAPE)

VILES: Offshoring a big issue in Harrisburg, where the president spoke today. EarthLink is closing a call center there, shipping the work to the Philippines and India, 400 jobs. And those workers got bad news this month. They have been denied special trade assistance by the Bush administration -- Lou.

DOBBS: Pete, thank you very much -- Peter Viles.

Well, Pennsylvania is a key battleground in President Bush's reelection hopes. The president narrowly lost that state to Al Gore in 2000.

White House correspondent Dana Bash reports from Pennsylvania.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Dale Kerns owns this coffee shop in suburban Philadelphia. Business is not exactly booming.

DALE KERNS, BUSINESS OWNER: My cash register has gone down over $200 a day.

BASH: Despite tough economic times, security is his top issue. He's a Republican planning to vote for President Bush. At the train station across the street, others aren't so sure.

ELLEN KRONFIELD, VOTER: There's, you know, some issues that he may not have made the best decisions.

BASH (on camera): Like what?

KRONFIELD: Maybe like the war in Iraq.

BASH (voice-over): The president lost electoral-rich Pennsylvania by 4 percent in 2000. He's been back to court voters now 25 times. It's a tough sell. More than 85,000 people here lost their jobs on the president's watch.

After this mill changed owners, Jeff Pilsitz was fired.

JEFF PILSITZ, FIRED WORKER: A lot of people are talking about this war, but I don't think this war is the big issue. The economy is the main issue.

BASH: And this is central Pennsylvania, known as Bush Country. He has even bigger challenges elsewhere.

(on camera): This Philadelphia suburb, Delaware County, is historically Republican, but went for Al Gore in 2000. Many believe it is here the president must win over voters in order to win the state.

UNIDENTIFIED MALE: I'm still weighing the issues.

BASH (voice-over): Moderate GOP voters like Franklin Fitzgerald (ph), a car salesman. He sees the president's appeal as a decisive leader with good values, but...

UNIDENTIFIED MALE: I'm not voting on character as much as issues.

BASH: For Joanne Lawson, a registered Republican, health care is the issue, and she's made up her mind.

JOANNE LAWSON, VOTER: I will definitely not vote for him.

BASH (on camera): Why?

LAWSON: There's no way. I'm just not happy with any of the job that he's done. BASH (voice-over): The president has proven he can make it to the White House without Pennsylvania. But political experts say for the Democratic nominee, it's a must-win.

PROF. TERRY MADONNA, MILLERSVILLE UNIVERSITY: You'll find John Kerry literally camping in the state if he wraps up the nomination in the next couple of weeks.

BASH: The Democrats will be battling Mr. Bush for people like Marianne Degregorio.

MARIANNE DEGREGORIO, VOTER: The economy's got me a little worried. And we are wanting some family.

BASH: Concern for her family's finances and terrorism and undecided. Like so many living along these tree-lined streets, whose votes are up for grabs this fall.

Dana Bash, CNN, Pennsylvania.

(END VIDEOTAPE)

DOBBS: The Democrat who is expected to challenge President Bush for the White House will soon have the endorsement of another former rival. General Wesley Clark is expected to endorse Senator John Kerry tomorrow at a campaign event in Wisconsin. General Clark dropped out of the race yesterday. Just last week, former candidate Congressman Richard Gephardt endorsed Kerry as well.

The Democrats have had the Republicans on the defensive of late. But tonight, the Republicans are to launch a counter attack. RNC Chairman Ed Gillespie is expected to accuse the Democrats of planning -- quote -- "the dirtiest campaign in modern presidential politics."

Bob Franken reports.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Both sides can expect to take a lot of fire. And it goes without saying that it's far better to be the shooter than the target, which may explain the event speeches from Republican National Committee Chairman Ed Gillespie, the latest tonight in Nevada, as Democrats lob their own heavy artillery.

TERRY MCAULIFFE, DNC CHAIRMAN: I would call it AWOL. You call it whatever you want, but the issue is, the president did not show up for the year he was in Alabama, when he was supposed to show up for the National Guard.

FRANKEN: Gillespie is shooting back, as he had for months, charging that opponents have made clear they intend to run the dirtiest campaign in modern presidential Palestinians.

Gillespie will go on to charge, he expects Democrats to use the Internet to spread a scurrilous story that President Bush drove a former girlfriend to an abortion clinic and paid for her abortion. He's quoting a rock musician Kerry supporter in a "New York Daily News" article.

The Democrats' press secretary had a response. "Ed is hyperventilating." Gillespie isn't through. He quotes a newspaper article. "Teresa Heinz Kerry gave over $50,000 to the League of Conservation Voters, which has endorsed her husband's candidacy." The League says she made a contribution in may of May 2000 of $2,500.

(END VIDEOTAPE)

FRANKEN: Well, there's a method to all this madness, No. 1, neutralize the other side's maneuvers by denying them before they even happen, and, two, make sure that that other side knows that everyone loses in a war, particularly those whose hearts and minds they are trying to win -- Lou.

DOBBS: Bob, thank you -- Bob Franken reporting from Washington.

That brings us to the subject of tonight's poll. The question: Do you believe that personal and private matters should be left entirely out of presidential politics, yes or no? Cast your vote at CNN.com/Lou. We'll have the results for you later in the broadcast.

Coming right up, the president under fire, the Republicans striking back. The election campaign turned serious. I'll be joined by former presidential adviser David Gergen.

In "Broken Borders" tonight, lawmakers calling for action to stop the influx of illegal aliens into the United States.

And "Exporting America," commentator James Glassman says I'm outrageous. James Glassman says I'm wrong. He'll be here to explain why.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush's proposal to give millions of illegal aliens in the country a temporary legal status has sparked widespread criticism. Opponents say it would threaten the country's economic and national security. Congress today began to look at that very question.

Louise Schiavone reports.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The government says 40 percent of the illegal aliens in the United States have overstayed their visas.

SEN. JOHN CORNYN (R), TEXAS: And I don't think you could build a wall high enough or wide enough to keep people out of this country who have no hope and no opportunity.

SCHIAVONE: Congress is beginning to digest a temporary worker program offered by President Bush in the pressure of an election year.

SEN. JOHN MCCAIN (R), ARIZONA: You know what the conventional wisdom is? We're going to talk about it, we're going to debate it, we're going to discuss it, and nothing is going to happen this year, because the issue is too hot politically.

SCHIAVONE: The Bush plan would enable employed, but illegal workers to stay in the U.S. legally for perhaps three years at a time, with permission to travel in and out of the country. Employers would have to demonstrate that U.S. citizens don't want the jobs these workers take.

Denounced by some as a reelection bid for Latino votes, by some conservative as condoning illegal behavior, and by liberal Democrats as not going far enough, the proposal touches a nerve. A January CNN/"USA Today"/Gallup asked, should the USA make it easier for illegal immigrants to become citizens? Only 23 percent said yes. Three-quarters of respondents said no.

Administration officials insist, the guest worker program is not designed to grant amnesty.

ASA HUTCHINSON, UNDERSECRETARY FOR HOMELAND SECURITY: The president's plan provides a disincentive to immigrate illegally to the United States when this type of program is the beginning of a path to return home and not a path to permanent residency or citizenship.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: But that result will never happen, when the vast majority realize that they will be deported after their temporary status expires.

SCHIAVONE: And this question remains unanswered: Is it safe to assume that millions of foreign workers, permitted to establish roots, marry and have children in the U.S., will ever choose to leave the country?

(END VIDEOTAPE)

SCHIAVONE: Lou, in the 2000 election year George Bush carried about a third of the Hispanic vote. This move could give Mr. Bush an even larger block of Latino support in November -- Lou.

DOBBS: Louise, thank you very much -- Louise Schiavone reporting from Washington.

Today's hearing came only hours after police in Arizona discovered dozens of illegal aliens hiding in a home in an exclusive suburb of Phoenix. Several people believed to be illegal alien smugglers were also arrested also in the raid.

Mike Watkiss of our affiliate KTVK reports.

(BEGIN VIDEOTAPE)

MIKE WATKISS, KTVK REPORTER (voice-over): Just off the scenic second tee of North Phoenix's Orange Tree Golf Course, a small army of local and federal cops making quite a find.

UNIDENTIFIED MALE: What is going on next door?

UNIDENTIFIED FEMALE: A coyote hotel.

UNIDENTIFIED MALE: He's running.

UNIDENTIFIED MALE: You wouldn't expect it out of this neighborhood, I don't think.

UNIDENTIFIED MALE: It looks like it's probably a stash house for smuggling, human smuggling.

WATKISS: Indeed, inside this Spanish-style home, in this decidedly upscale corner of the valley, well over 125 men, women and children discovered, packed shoulder to shoulder inside the rented home, a place with no food, no furniture, and where all of the toilets and showers were overflowing with human waste.

SGT. DAVE LUNDBERG, PHOENIX POLICE DEPARTMENT: Oh, it's deplorable. It's disgusting. The people that smuggle these people they have no caring for human life. They treat them like cargo. That's all they are to them.

UNIDENTIFIED MALE: By spot count that there's probably 125 people in the house, we have got women. We've got minors. We have a little boy, it looks like he's about 4 years old. In interviews with some of our agents, some of the people said they had not eaten in three days.

UNIDENTIFIED MALE: It scares me. It scares me very much.

WATKISS: Nick and Antoinette Zendelbock (ph) live next door. And they say, for the last several weeks, they have known something was wrong, with the constant coming and going of large vans in the middle of the night.

UNIDENTIFIED MALE: So I called the police. They have been on stakeout. They have been watching the house.

WATKISS: And while watching the home, officers saw two vans leaving the property loaded with people. Those vans then stopped on nearby streets, and officers entering the Shea (ph) address to make this extraordinary discovery.

LUNDBERG: What we're trying to do is develop information to get the people that are really responsible for this, the people that are making the money off of those people. And that's who we are going to target and we're going to try to put an end to them.

WATKISS (on camera): People who are so desperate to get over our borders, to put up with this and pay this kind of money, my goodness, how do you combat that?

LUNDBERG: Yes, I know it's difficult. It's extremely difficult, because they are coming up here. They want to come up here. They want to work. They want to come to the United States for something better. But to go through this, this isn't better.

(END VIDEOTAPE)

DOBBS: Mike Watkiss reporting from our affiliate KTVK in Phoenix.

Still ahead here, "Exporting America," two very different reactions to our extensive reporting to the shipment of American jobs to cheap labor markets. Congressman Sherrod Brown and James Glassman join us, James Glassman of the American Enterprise Institute.

Also, "Made in America," tonight, one American company managing to give its customers the latest in technology while keeping its production and jobs in this country.

Those stories, a great deal more, still ahead here. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My guest tonight says the White House's claim that outsourcing is good for the economy is outrageous. Congressman Sherrod Brown says outsourcing is to blame for hundreds of thousands of job losses in his home state of Ohio. He joins us tonight from Cleveland.

Congressman, good to have you with us.

REP. SHERROD BROWN (D), OHIO: Thank you, Lou. Good to be back.

DOBBS: The issue today, at least in the Senate, providing proposal to at least constrain outsourcing overseas, is that something you can support and will support?

BROWN: We have seen -- in the first part of the last decade, we saw continued job loss in manufacturing jobs.

And I remember during NAFTA in 1993 the debate that we were told over and over that, if you get more education to prepare for this, then we'll just ship out the low-skilled jobs, but there will be plenty of jobs for people as they get educated more. But we're seeing more and more that we're losing computer engineers. We're losing radiologists. We're losing all kinds of white-collar jobs, all kinds of jobs in addition to manufacturing jobs, which we're losing by the droves in my state.

We're losing all kinds of higher-tech jobs and all over the place.

DOBBS: And what in your state -- and I'm referring to your colleagues in the Democratic Party -- what are you, the governor, what are all of you doing there to try to help business hold those jobs for Americans in Ohio?

BROWN: Well, there's all kinds of things we need to do in terms of the education system, in terms of better job training, you know, all of that.

But it's what we do nationally that, instead of the president's answer that the answer to every bad statistic and every bad report about the economy, about job loss, is more tax cuts for the most privileged and trickle-down economics, hoping that some jobs will be created among -- for the rest of us, and continued trade agreements, CAFTA, the Central American Free Trade Agreement, Free Trade Act for -- Area of the Americas, which will quadruple the number of low-income workers in NAFTA, we need to stop those and move in a different direction.

(CROSSTALK)

DOBBS: The president, in the interest of fairness here, Congressman, I think, as you know, today acknowledged, for the first time, the threat to American jobs from outsourcing. He did not repudiate the statements of his chairman of the Council of Economic Advisers, but he did acknowledge it for the first time.

Now, you, as a Democrat, what would you like to see done in terms of trade, in terms of the balance of capital flows, as well as services and goods? What would you like to see done to bring some sort of redress?

BROWN: Well, first of all, as we have a capitalist system with great dynamism to it, a capital system that works very well, a market system, we have rules. We have rules about the environment and rules about worker safety and rules about consumer protection.

If we're going to pass international trade agreements, as we should, they should have similar kind of rules, not as high a wage as obviously as a steelworker in the U.S. or in Lorain, Ohio, but certainly rules on the environment and worker safety. You go to Mexico, you don't see those kinds of worker protections or environmental safeguards.

You see wages that people can't live on. You go to China, it's even worse. If we're going to do trade agreements, as we should, we need trade agreements with rules that will lift up all boats, rather than continuing to pull down U.S. food safety standards, U.S. worker wages, environment, all that these job losses and all that this has done to pull down our standards.

DOBBS: Well, Congressman, as you well know, NAFTA was signed by a Democratic president.

BROWN: Correct.

DOBBS: The World Trade Organization was signed by and ratified by Democrats. The Democratic Party, the Republican Party, it seems to me, at least, bear equal responsibility for the half-trillion dollars in trade deficit, current account deficit, that we now have, the imbalance in trade.

Is there, in your judgment, any single straightforward way in which to begin to redress the imbalances? BROWN: Sure, there is.

First of all, I agree that it was President Clinton. Now it's President Bush. The issue is today. And today, an overwhelming number of Democrats say no Central American Free Trade Agreement without strong labor and environmental standards to lift them up so, that, ultimately, they buy our products. And that's the goal, to begin to right the rules so that their living standards go up south of the border and they begin to buy American products, and then trade works for both countries.

The way it is now, trade only works for the investors. It doesn't work for a steelworker in Lorain or a rubber worker in Akron. It doesn't work for a computer engineer in Palo Alto. It works for wealthy investors in the U.S. It doesn't work for Mexican workers. It works for wealthy investors in Mexico.

But until we have real standards, it is simply not going to work for most of the world's people. Until the workers in Mexican can buy American products, trade really doesn't work.

DOBBS: Congressman Sherrod Brown, thanks for being with us.

BROWN: Thank you, Lou.

DOBBS: Well, my next guest takes a decidedly different view. James Glassman wrote an article this week that begins by asking, "What Has Gotten Into Lou Dobbs?" In it, he takes issue with our extensive reporting here on "Exporting America," our conclusions and positions.

Glassman says our list of companies sending American jobs overseas, which we update here every night and post on our Web site, include some of America's most innovative companies. James Glassman is a resident fellow with the American Enterprise Institute and joins me here in New York.

Jim, that was quite a little article.

JAMES GLASSMAN, RESIDENT FELLOW, AMERICAN ENTERPRISE INSTITUTE: Well, I think it was quite accurate.

DOBBS: OK, let's start with the accuracy.

The fact is that we are seeing hundreds of thousands of jobs being outsourced on the basis purely of a corporation's interest in achieving the lowest possible price for labor. Does that make sense to you?

GLASSMAN: Lou, that is called trade.

And we have been doing it for hundreds of years.

(CROSSTALK)

GLASSMAN: You majored in economics at Harvard. You understand that Adam Smith, David Ricardo showed that trade is good for both parties.

DOBBS: Absolutely.

GLASSMAN: So outsourcing, offshoring, whatever you call it, it is always called by something different during different generations -- those are the words right now. But it's trade. And it's good for the Indians and it's good for Americans.

DOBBS: OK. Let's assume that trade is good, because here no one has argued otherwise.

But what we have argued is that trade that is not mutual, mutually beneficial, doesn't make a lot of sense. We're looking here -- since you brought up trade, we'll go back to outsourcing those American jobs. We are looking at a half-trillion a year current account deficit.

GLASSMAN: Right.

DOBBS: How good is that?

GLASSMAN: It's not good. It's not bad.

We have, for the last 20 years, run a trade deficit. And by coincidence, for the past 20 years, we have had by far the greatest economy in the world. We've got an $11 trillion economy. We're bigger than the next five countries combined. We've got a 5.6 percent unemployment rate, compared to 10 percent in Germany. I think we're doing fairly well.

The reason we have such a large trade deficit is, we're doing a lot of importing, while the rest of the world, which has a worse economy, is not able to buy. That's the problem.

(CROSSTALK)

GLASSMAN: If you want to have a trade surplus, Lou, the best way to do it is to plunge the United States into a recession. If we don't buy anything, hey, we don't have a trade deficit anymore.

DOBBS: What is it with you people?

GLASSMAN: You people? What do you mean?

DOBBS: You people who seem to think there's only way for trade to work. Why in the world are you so opposed to the idea

(CROSSTALK)

DOBBS: Please, Jim, I let you finish.

GLASSMAN: Yes. Well, go ahead.

DOBBS: Thank you.

You could not conceive of the idea of restoring a manufacturing base to this country to actually manufacture products and export them?

GLASSMAN: Lou, over the last 10 years, we have manufactured 40 percent more than we did 10 years ago. Manufacturing is doing well. Jobs change. This is a dynamic society.

Now, the thing I'd like to -- the thing I would like to say is, free trade is much better than the alternative, which is no trade or obstructed trade.

(CROSSTALK)

DOBBS: Wait, Jim, you are far too smart to do something like that. There is not simply a Hobson's choice between free trade and no trade. I just offered you one, a mutuality of interest, mutual trade.

GLASSMAN: That's the idea of the World Trade Organization.

DOBBS: It may be the idea of some in the World Trade Organization. It is not the practice.

We have got 11 years experience with NAFTA. We have 10 years experience under WTO. It isn't working, Jim? What part of that don't you get?

GLASSMAN: It's not working?

DOBBS: It's not working.

GLASSMAN: Then why is the American economy as robust as it is?

DOBBS: Tell people it's robust.

(CROSSTALK)

DOBBS: Tell those 15 million people out there who can't

(CROSSTALK)

DOBBS: No, look in the camera, tell those 15 people out there who can't find a job right now...

GLASSMAN: I prefer to look at you. And let me say this.

This is a huge economy. I have tremendous sympathy for people who lose their job and are in pain. And for those people, we need to concentrate on helping them. How do we do it? We do it through job retraining. We do it through...

DOBBS: What are you going to retrain them for, Jim? You're a smart guy.

GLASSMAN: What do you mean what I am going to retrain them

(CROSSTALK)

DOBBS: What are you going to retrain them for? We're exporting many, many jobs.

(CROSSTALK)

DOBBS: We're exporting radiologists.

GLASSMAN: How did we retrain blacksmiths when the automobile came in?

(CROSSTALK)

GLASSMAN: Forty percent of Americans worked on the farm. Today, it's 2 percent. We produce far more agricultural goods than we ever did. We export agriculture.

(CROSSTALK)

DOBBS: Do you want to go back to policies of the 1850s in this country?

GLASSMAN: No.

(CROSSTALK)

DOBBS: Well, then why are you quoting these metaphors?

GLASSMAN: Because I'm trying to tell you, this is a dynamic economy.

DOBBS: Well, I think we understand that.

GLASSMAN: Every week, Alan Greenspan, in his testimony...

DOBBS: There's no fool here again, OK, no fool watching, no fool here listening.

Let me say this to you. David Ricardo, as you well know, never considered a world in which you were exporting American jobs to produce services and goods for reexport to the United States. It was never considered.

GLASSMAN: I really object to this term exporting American jobs.

DOBBS: Well, wait a minute.

(CROSSTALK)

GLASSMAN: It's not as though we start with 100 jobs. They have 100 jobs. We send a few. Our jobs have been on the rise for the last 20 years, enormously. We have 130 million people working in the United States.

DOBBS: Well, it's actually

(CROSSTALK)

DOBBS: ... million, but that's all right. GLASSMAN: Every week, as Alan Greenspan said in his testimony, a very interesting statistic for your readers.

(CROSSTALK)

DOBBS: They're viewers.

GLASSMAN: For your viewers and readers, right, in "U.S. News."

Every week, one million Americans leave their job, but one million Americans take a new job. It is that dynamism....

DOBBS: Jim, Jim...

GLASSMAN: It is that dynamism that drives the American economy.

DOBBS: American corporations are shipping jobs overseas for one reason.

GLASSMAN: They are not shipping jobs. And I really object to this rogue...

DOBBS: They are not shipping jobs?

GLASSMAN: I really object to this rogue's gallery of America's greatest companies: Intel, Pfizer, Amazon.com

DOBBS: Shipping jobs.

GLASSMAN: You were once a journalist. You know the accuracy.

DOBBS: Is IBM shipping any jobs overseas? Is IBM?

GLASSMAN: It's creating jobs at home and it's employing people overseas. Just as Honda, you have Congressman Brown here.

DOBBS: I've got to tell you something, if you continue to this...

GLASSMAN: there are 13,000 Honda jobs in Central Ohio. Honda is the largest private employer in Central Ohio.

DOBBS: What's that got to do with...

GLASSMAN: I was wondering whether you would like to stop, that, too.

DOBBS: If I wanted to stop that, Jim, I would say I wanted to stop it. There's no difficulty getting my opinion on something. That is a transplant in a market in which it is brought, it's factories of production. It is not analogous in any way to IBM shipping 10,000 jobs to India solely for the purpose of achieving lower wages.

GLASSMAN: No, no, no. Solely for the purpose of achieving lower costs.

DOBBS: All lower costs are I achieved by what means?

GLASSMAN: All businesses strive to cut costs. And why do they do that? In order to increase their profit so they can reinvest their profits into growth.

DOBBS: Let me review the bidding war, Jim, very quickly. What you are refusing to acknowledge, a half trillion dollar current trade deficit. We are importing capital. We are squandering our wealth on a short-term basis, corporate America and U.S. multinationals are shipping jobs for only one reason, not for greater productivity, not for efficiencies, those are purely code words for cheaper labor costs and you know it and you won't admit it.

GLASSMAN: Absolutely -- no, of course I'll admit it. Obviously any business...

DOBBS: Then, how can you support it?

GLASSMAN: ...every business is trying to lower its cost. But by finding laborers in other countries and lowering those costs, they are able to reinvest in their own business.

DOBBS: OK, I want to show you something, Jim.

GLASSMAN: And increase business at home. They have done this consistently.

DOBBS: Let me show you what Jim Glassman wrote, if we could have that, which piqued my interest when I read it. "Once a sensible, if self-important and sycophantic, CNN anchor, he has suddenly become a table thumping protectionist."

Do you think I'm a protectionist?

GLASSMAN: I do. I really do. And I think the worst thing about it. I think the worst thing about it is, that you know economics. You do know economics. And you understand comparative advantage.

DOBBS: And what is it that...

GLASSMAN: You understand Adam Smith. You understand the trade benefit both sides. You know that. I wish you would concentrate your tremendous intelligence...

DOBBS: That statement is wrong. It's flat wrong.

GLASSMAN: Lou, I wish you would concentrate your intelligence...

DOBBS: When you are carrying a half trillion dollar trade deficit, it's not benefiting both sides. That's precisely the point. If it were I would...

GLASSMAN: Of course it benefits both sides. The United States is the most...

DOBBS: Do you realize there are 3 trillion dollars in IOUs held by foreigners against U.S. assets? Does that trouble you.

GLASSMAN: The United States is the most robust economy in the world.

DOBBS: You can keep doing it.

GLASSMAN: Obviously, we have problems.

DOBBS: You talk like a cult member. There's a mantra, you say market, you say largest and dynamic.

GLASSMAN: I don't think I've said market yet.

DOBBS: And it simply removes the need for rationality.

GLASSMAN: I just wish you would devote your considerable intelligence what I think is the biggest problem with trade, which is alleviating the pain of the people who get caught. Trade definitely has more benefits...

DOBBS: I am trying to stop the pain before it continues and that's what has got to be addressed. And you are too smart to buy in as a sycophantic response to your corporate bosses and say, you know whatever you want to do, whatever the American enterprise needs to do.

GLASSMAN: To have real economists on the show to discuss these things. People like Katherine Mann who has done a study which shows that computer jobs are rising in the United States.

You talked to Katherine Mann?

DOBBS: We have talk to...

GLASSMAN: Michael Beldon at NC State...

DOBBS: Don't waste our time running through a litany of...

GLASSMAN: I'm talking about facts.

DOBBS: Here are the facts. Half a trillion dollars in a current account deficit. Hundreds of thousands of jobs being shipped overseas, as you acknowledge, by cheap labor costs.

GLASSMAN: I don't consider it shipped overseas. That's not what's happening.

DOBBS: You may not, that's my word. And the fact is, it is exactly what is happening and why you won't acknowledge that is beyond me. Where do you want the United States economy to be in ten years? You can't talk about jobs to retrain.

GLASSMAN: I want it to grow 3 to 4 percent a year as it has done in the past 20 years. Partly because...

DOBBS: And how much of the GDP do you want to be imports? How much of that GDP do you want to be imports? GLASSMAN: I really don't know. I think that's up to individual Americans to determine how much do they want in imports.

DOBBS: Mr. Market...

GLASSMAN: If they don't want to buy goods from overseas, they have that choice. If they don't want to buy Japanese cars they have that choice.

DOBBS: You don't think there should be a balanced trade approach? Balance trade, protecting American jobs.

GLASSMAN: I don't know what that mean.

DOBBS: You don't know what it means?

GLASSMAN: I really don't know what balanced trade means.

DOBBS: Watch the show some more, Jim, we're going to make it clear.

GLASSMAN: Thanks for having me on.

DOBBS: Good to have you here, Jim.

Tonight's thought is on opinion. You just heard a couple. "Few people are capable of expressing, with equanimity, opinions which differ from the prejudices of their social environment, most people are incapable of forming such opinions." We have demonstrated the truth again of Albert Einstein's words.

In our series of special report, "Made in America" tonight, a company that struck a cord with consumers around the world for the past 60 years. Allen Organ Company, world's leading manufacturer of church organs and each and every organ crafted using cutting edge technology right here in the United States. Kitty Pilgrim has the story.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In this church in Bethlehem, Pennsylvania, the music is German, the organ is American, made just 20 miles away in Macungie, Pennsylvania.

The Allen Organ Company is the largest manufacturer of organs in the world. Started up just after World War II and it's still thriving, employing 450 people turning out about a thousand organs a year, selling them all over the world.

STEVEN MARKOWITZ, PRES. ALLEN ORGAN: This is a product that grew up in this country and the fact that we can dominate a market like we do is gratifying.

PILGRIM: Digital technology now makes up a portion of an organ, some parts of the factory look like a high tech lab.

MARKOWITZ: The computer in our larger organs really have super computer power with a number of processors that are working together.

PILGRIM: In this case, "Made in America" means constant retraining.

JANICE ROMIG, ALLEN ORGAN EMPLOYEE: So, I learn component locator which is that machine there. And then I learn the dip machine which is inserting IC in the boards. And then they asked me to learn the Axial (ph) machine, also.

PILGRIM: Behind the computer operations, the woodworking rooms are more what you would expect an organ company to look like. Cabinets and keyboards are hand assembled.

Many of the workers are of Pennsylvania Dutch heritage, a traditional sign says don't forget, good work comes first. Carl Bechtel has been with Allen Organ Company for 15 years. Before he did this, he made caskets.

CARL BECHTEL, ALLEN ORGAN EMPLOYEE: This walnut wood, and it will be an oak interior.

PILGRIM: After the cabinet work, detail carving.

(on camera): The organs cost anywhere from $10,000 to half a million dollars and can take up to a year to assemble.

(voice-over): When they are complete, Bill Robiski, who is also a church organist, shows us how he tests them before shipping. Of course the real test comes on Sunday. Kitty Pilgrim, CNN, Macungie, Pennsylvania.

(END VIDEOTAPE)

DOBBS: Coming up next, President Bush has been on the defensive tonight. The Republican National Committee going on the offensive. We'll talk with the former adviser to four presidents, David Gergen.

Also, "Grange On Point." Insurgents attacks are becoming more frequent, including one today against the U.S. commander. David Grange, General David Grange joins us.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The Repulicans, President Bush, on the defensive for days on the economy, the president's military record, weapons of mass destruction. Tonight, the Republican National Committee Chairman, Ed Gillespie, will launch a counterattack. The election campaign is officially in full swing.

I'm joined now by a man who has been in those campaigns over the years, a former adviser to four presidents, in fact, during 30 years of distinguished public service, David Gergen. David, good to have you here. DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: Thank you, Lou. And thank you, Lou, for also for pushing this question about the export of American jobs. It is one of the most important issues the country faces today and you're one of the only people out there talking about it. Thank you.

DOBBS: David, thank you. We work hard here to try to keep that straight on the record.

To go to the issue of the president, has he waited too long here to move off the defensive and go on the offense?

GERGEN: Well, I don't think they waited too long to go after Senator Kerry.

DOBBS: You know, they had to wait for a Democratic nominee or nominee apparent to emerge before they launched their assaults. And those are coming. I think we have just seen the beginning. The mud is going to start flying as we both know in a pretty hot and heavy way here pretty soon. But the president himself about his own record, has seemed to me to be sluggish, unusually so. I'm sure the White House wanted to continue to have him above the fray, to be the commander-in- chief and to start the campaign as late as possible. But he's been caught in a downdraft here in the last few weeks. And his fortunes have suffered some. He hasn't been himself in responding even on Tim Russert on Sunday when he first came out of the box. He seemed to be rusty. His State of the Union was tepid and not well received. Surprising for George W. Bush. He usually is very aggressive and makes a cleaner, tougher argument.

DOBBS: The fact he has been the president for some three years now, perhaps he's just now returning to game form, if you will, or at least being charged with moving to game form. The issues that he is being attacked on, whether it be the Iraqi intelligence, the U.S. intelligence, on Iraq leading up to the war against Saddam Hussein, whether it be job creation, so many of these problems seem to be of the creation of this administration. In some cases, one could argue, definitely, the president and administration went farther than intelligence should have led them, irrespective of the way you want to argue that. Saying 2.6 million jobs will be created this year, no need to create a definitive number on it. People don't understand economics isn't an exact science.

What are they doing?

This group of people seem to be so politically savvy previously.

GERGEN: Well, I think it's going to be one of the mysteries of this campaign, probably, especially if it's a very close election. Why do they somehow -- why did some of the wheels start coming off the wagon at this stage because they had been so disciplined in the past. And there has been this quality on national security of every man and woman for himself in some of the public comments of late. If may, Lou, on two things, one on the economic numbers, I was extremely surprised when the president came up with a hard number about how many jobs he was going to create this year. Because that is -- it's one thing for the economic advisers to put it in a report, and predict it. It's another thing for the president to be out there on television and in a taped piece that can come back to haunt him in September, October, November, as he's going to the electorate. I mean, the likelihood as you know of that many jobs being created from our prospective sitting here today seems very low. And last year they came up with this big job prediction, of course, we came nowhere close to the prediction. So, I was surprised about that. Just seemed to me that's weird politics. That's -- risky politics.

DOBBS: Let's give both President Bush and the presumptive nominee of the Democrats at this point Senator Kerry the benefit of your counsel.

What would you first advise President Bush to do here?

GERGEN: Well, it strikes me as Peggy Noonan has said in her own response and of course a good friend of the White House, she said in her response to the president's conversation with Tim Russert, he is much better in a speech format than he is in a Q&A format. And it does seem to me what is needed here on the weapons of mass destruction in Iraq is they need essentially a white paper from the White House, from the administration laying out their full case, rebutting the critics argument point by point with a presidential speech to accompany that giving the highlights. That way we have something that's complete to deal with.

DOBBS: And for Senator Kerry?

GERGEN: Senator Kerry, you know, he needs to get his flack jacket on. The assaults are coming. The rumors are spreading. The issues are going to be out there. You know, I think one of the reasons the Democrats turn to him they see him as tough. He knows how to return fire. But this is going to get very rough in the near future. I think the other thing he needs to do, Lou, is he needs to be much clearer about his priorities for the future. It's not enough to run as anti-Bush or not Bush.

You have to layout a positive vision for the future. That vision has not come forward in these early primaries. He needs now to express himself on what his top three priorities for his first term.

DOBBS: David, thank you very much. David Gergen.

Coming up next here, national guard soldier is in custody tonight charged with allegedly trying to pass information to the al Qaeda.

Also, "Grange on Point," the commander of U.S. Forces in the Mideast escapes an attack in Fallujah as two more American soldiers are killed in nearby Baghdad. General David Grange coming up. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: This in to CNN. The army tonight said an enlisted national guard brigade in Fort Louis, Washington is in custody after trying to communicate with al Qaeda. The soldier is being held on criminal charges of aiding an enemy, by giving intelligence to the al Qaeda network. Sources say that the soldier tried to communicate with al Qaeda through Internet chat rooms, but as far as we know did not make contact.

Turning to the continuing violence in Iraq, insurgents killed two more American soldiers in Baghdad with a roadside bomb, a third soldier was wounded. Also today, gunmen in Fallujah launched a brazen attack against General John Abizaid, the commander of U.S. forces. Insurgents attacked the general and other Americans as they visited the Fallujah headquarters of the Iraqi Civil Defense Corps. U.S. troops responded with machine gunfire. There were no injuries to American troops.

In "Grange on Point" tonight, U.S. Military strategy against those insurgent, today's attacks followed two massive car bomb attacks that killed hundreds of Iraqis and wounded hundreds more. The insurgents seem to be stepping up attacks on Iraqis working with the coalition as the United States cuts the number of American troops in Iraq. General David Grange joins me now.

General, first, good to see you. This is getting tougher, not easier in Iraq.

What do you think should be happening?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, we are getting close to the transfer time, if, in fact, conditions are met, I don't think they are met yet, to do a proper transfer to some type of Iraqi people's own government. But the bad guys know that. The al Qaeda tied to the insurgents in Iraq and others don't want this to happen. And they are not doing too well as dissuading the American G.I.s the coalition forces so they are going after their own people and to try to induce fear to keep this from happening. You can tell from the targets, it was police headquarters or army recruiting stations in order to dissuade the citizens from going through this transition. So this will pick up in the next few weeks.

What can be done, continue the pressure on the capabilities of the insurgents. Continue to round up the leaders and then cut off the influence the best you can from outside sources like terrorist and other states.

DOBBS: And general, I know this is a an all but impossible thing to assess. But the ability of the insurgents to attack a convoy with the U.S. commander of force is there, does that to you suggest pretty good intelligence on their part and also some ability to bring force to bear on the part of the insurgents?

GRANGE: You know, Lou, I don't think that the insurgents knew that General Abizaid was in a convoy. I think they identified the convoy as a high-profile target. Either from moving from a distance by vehicle or helicopter to vehicles and then moving to the area. And it was a target of opportunity for the insurgents. They have good intel, they have the best kind of intel for city fighting, human intelligence, and they know when things move around. They also know that there's only a few ways to move in these areas and I think that's what you see right here.

DOBBS: Let's turn back to this country. Three of the four service chiefs say they need a supplemental to operate their forces. The Pentagon looks to me in point of fact as if they are not being particularly well managed right now. What's your assessment and how would you interpret this?

GRANGE: Well, I kind of remember this situation from the old days. It seems to be continuing. What happens if you do not do supplementals, provide for the operating costs of the current conflict then you go ahead and use moneys from modernization or readiness to pay the near term bill. What you do is you sacrifice future operations. Future readiness. So the key thing here is political influence because an election year cannot take the place of properly resourcing an ongoing fight in the future. Hopefully that won't happen.

DOBBS: General David Grange. As always, good to see you.

GRANGE: You, too.

DOBBS: Coming up next, a very special Valentine that wasn't sent by mail. The story of one woman's Valentine surprise that literally stopped traffic. Stay with us.

(COMMERCIAL BREAK)

DOBBS: This development just in to CNN. Bush aide clarifying statements on the issue of exporting jobs. Under pressure from Republicans, according to Reuters in Washington, one of the president's top economic advisers is trying to defuse an election year controversy but he now says that he did not intend to voice support for shifting U.S. jobs overseas. Those the words of Gregory Mankiw who is the president's chairman of the Council of Economic Advisers. He said, quote, "my lack of clarity left the wrong impression that I praised the loss of U.S. jobs."

His letter in response to a straightforward and severe criticism by Speaker of the House Dennis Hastert yesterday again with political concern about unemployment heating up. The president's top economic adviser at the Council of Economic Advisers, the chairman, Gregory Mankiw saying that he did not mean in any way to imply that he thought the loss of jobs was a good idea.

On Wall Street today, stocks fell, the Dow lost almost 44 points. The Nasdaq dropped 16 points. And the S&P 500 down almost 6. Christine Romans is here now.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a surprising jump in jobless claims hurt the stock market today. We did find one company adding jobs. Perot Systems adding jobs in India. Adding thousand of call centers and bill processing jobs in India and moving two new facilities there this year. A spokesman for Perot Systems said the company bought a couple of Indian firms that do this work. It will add another 3,500 jobs there.

Perot Systems will invest tens of millions of dollars into those facilities. At the end of last year the company told us it had sent fewer than 50 jobs overseas but clearly, Lou, it is expanding into the lucrative outsourcing business.

Ross Perot owns 30 percent of the company. He is its chairman. Of course, he claims the giant sucking sound phrase, American jobs to Mexico, big movement into India.

DOBBS: Well that's a large movement, remarkable because it is Ross Perot's company. When he talked about that sucking sound he thought it was all about Mexico. Hardly anyone could have imagined India, The Philippines, Ireland, Poland and various other quarters. Thank you very much, Christine Romans.

Coming up here next his grammar may be off but his heart is definitely in the right place. The story of an American soldier fighting in Iraq sending his love.

But first an update on the list of companies that we have confirmed to be exporting America. These companies sending American jobs overseas. Shipping jobs overseas no matter whether anyone likes to use that expression or not or likes it.

Tonight's additions. Delphi, Honeywell, Invacare, Sabre (ph), Tower Automotive, Travelocity, and Vishay Inter Technology. Log on to CNN.com/lou for the entire list. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight. 35 percent of you say personal and private matters should be left entirely out of presidential politics. 65 percent say you believe personal and private matters should be a matter of presidential politics.

Finally, tonight, a long-distance Valentine from an army captain in Iraq to his wife in Connecticut stopping drivers in their tracks. This is not your ordinary box of candy. Captain Michael Engliss had something a little bigger in mind. Commissioning a 48-foot wide, 14- foot high billboard along Interstate 95 in Connecticut, it's a mural of Captain Engliss and his special message to his wife simply stated, "Evelyn Engliss, I love you the mostest (sic)."

That's our show for tonight and we thank you the mostest for being with us. For all of us here, good night from New York. "ANDERSON COOPER" is next.

END

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General Attacked in Iraq; Interview With James Glassman>


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