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LOU DOBBS TONIGHT

Can President Bush Recover?; Former Enron CEO Indicted

Aired February 19, 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 tries to shift the political agenda from jobs to taxes.

"Exporting America," the unrelenting pressure to cut costs in the automobile industry, American jobs shipped to cheap labor markets overseas. And tonight, two congressmen join me to talk about America's future, Republican David Dreier, Democrat Adam Smith.

Former Enron CEO Jeffrey Skilling is free on bail tonight. He turned himself in to face charges of insider trading, fraud and conspiracy more than two years after Enron's collapse.

UNIDENTIFIED MALE: The taxpayers have gotten their money's worth and are going to continue to get their money's worth.

DOBBS: In "Broken Borders," illegal aliens continue pour across the Arizona-Mexico border. Phoenix is the center of a huge ring of human smugglers.

UNIDENTIFIED MALE: To me, it's not very much different than this and slavery.

DOBBS: Tonight, our special report from Phoenix.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, February 19. Here now, Lou Dobbs.

DOBBS: Good evening.

President Bush today tried to seize the initiative in the increasingly heated debate over jobs and the economy. The president appealed to Congress to make his tax cuts permanent, tax cuts that he says will help the economy grow and help unemployed Americans find work. But the president avoided any predictions about the number of new jobs that will be created in the economy this year and he did not talk about the exporting of American jobs to cheap overseas labor markets.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the Bush team had varied explanation and statements about that prediction that 2.6 million new jobs will be created in this coming year.

The Bush campaign chairman said that it is a stated goal and it is a theoretical discussion among economists. The president's spokesman, Scott McClellan, said that it is simply a snapshot in time made by the president's economic team.

As for the president, as you mentioned, he simply didn't call it anything. The White House is making a concerted effort to have the president get back on the offense and not play defense on this jobs issue. So Mr. Bush talked about the issue that he thinks is really the top issue for him. That is defending his tax cut against Democrats, who he says are trying to raise voters' taxes.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When you hear people say, oh, let's just let the tax cut expire, that's a tax increase. It's a code word for, I'm raising your taxes to increase the amount of money we have to spend here in Washington on new programs, on programs that meet a particular political desire of the appropriators. That's what they are telling you.

(END VIDEO CLIP)

BASH: Now, the White House understands that Democrats, who really have the spotlight right now still as the Democratic nomination process is going on, that they are going to continue to stoke the jobs issue.

And some Republicans, Lou, around Washington privately are saying that they are a little bit concerned in what they are seeing coming out of the White House really being on the defensive on the jobs issue, particularly since they think that there are good economic signs out there that aren't getting out.

As for the Bush political team, they say that one good sign in this is that people are talking about job creation, no matter what the number is -- Lou.

DOBBS: Dana, thank you -- Dana Bash.

As we've been reporting here on this broadcast for more than a year, one reason that Americans are finding it increasingly difficult to find work is because hundreds of thousands of jobs have been exported to cheap overseas labor markets. The automobile industry is a prime example of a business where ruthless pressure to cut costs has driven jobs abroad.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): For 500 workers at Tower Automotive in Milwaukee, a painful lesson. They make the frames for Dodge Ram pickup trucks, but that work and their jobs going to Mexico. LEON KRAUS, TOWER AUTOMOTIVE WORKER: These are jobs that put kids through college, that paid the mortgages, that allowed us to spend to keep the economy going. What are you going to do?

VILES: The decision to move the work made by a German company, DaimlerChrysler, which, like Ford and General Motors, is squeezing its American suppliers.

NEIL DE KOKER, OESA: They buy parts all over the world, so they know what the best price for parts is. And what they are asking their suppliers here in North America to do is match world prices in order for them to get costs down, in order to provide the highest value to the consumer to hopefully maintain market share. It's a mad vicious circle.

VILES: And that vicious circle one reason employment in the auto industry has fallen by 200,000 jobs over the past four years. And where are the new jobs? You guessed it, China. Imports of auto parts from China have doubled in four years, and not just cheap parts. General Motors has a new Chevy, the Equinox, that will be assembled in Canada with a Chinese-made engine.

JIM GILLETTE, CSM WORLDWIDE: The three most expensive parts of an automobile are the body, the engine and the transmission. So, as long as a country can hang on to those three, they are getting most of the value at it. But when General Motors says, gee, we're going to make engines in China, we're going to make the transmissions there, two-thirds of your major costs are coming out of China.

VILES: But what is doubly frustrating for American workers, while Detroit throttles back at home -- Ford, for example, closing its Edison, New Jersey, plant this month -- it is investing heavily in Asia. Ford has a new regional headquarters in Thailand.

(END VIDEOTAPE)

VILES: And one irony here is that, while Detroit invests in Asia, foreign automakers, Honda, Nissan, Toyota, are investing in this market. In fact, they are providing all of the production growth in the United States, while American automakers cut back.

DOBBS: That's a fascinating trend. And, obviously, Toyota is now the No. 2 carmaker in the world, having supplanted the American and German companies.

(CROSSTALK)

VILES: And sometimes No. 3 in this market. Some months, they beat Chrysler. So the big three, if you want to be honest about it, Toyota is the third sometimes.

DOBBS: It is remarkable to watch these events unfold.

Pete Viles, thank you.

VILES: Sure. DOBBS: Well, some of the most damaging testimony yet came in the case against Martha Stewart today. Stewart's friend of 20 years testified, Martha Stewart knew ImClone CEO Sam Waksal was trying to dump his shares in the company. That testimony directly contradicts what Stewart has told government investigators.

Mary Snow at the federal courthouse with the story in Lower Manhattan -- Mary.

MARY SNOW, CNN CORRESPONDENT: Lou, this could be a case of Martha Stewart's own words coming back to haunt her.

Mariana Pasternak testified she traveled with Stewart on December 27 of 2001. That's the date Stewart sold her ImClone stock. Pasternak testified that, about three days after that, while traveling together, that Stewart told her that Sam Waksal was selling or trying to sell his stock, that his daughter was also trying to do the same, and that Merrill Lynch didn't sell. She said she also recalled Stewart saying: The stock is going down, or went down, and I sold mine.

Pasternak testified that, at one point during a conversation,she recalled Stewart talking about her broker, saying -- quote -- "Isn't it nice to have a broker to tell you those things?" Damaging testimony that directly contradicts Stewart's story that she had a preexisting agreement with Bacanovic to sell those shares once they fell below $60, that $60 agreement was on a worksheet belonging to her broker. That, too, took a hit in testimony today.

And ink experts testified that a different ink was used on that notation of $60 next to ImClone, different from other notations. The government is expected to rest its case tomorrow. Before the defense begins, Stewart's attorney is going to try to have the charges against her dropped -- Lou.

DOBBS: Mary, thank you -- Mary Snow from Lower Manhattan.

Later in the broadcast, I'll be talking with CNN senior legal analyst Jeffrey Toobin about these developments in the Martha Stewart trial, also about what we can expect in the charges against former Enron CEO Jeffrey Skilling.

Also ahead here, "Broken Borders" tonight, a massive human smuggling ring. We'll have a special report for you from Phoenix, Arizona.

Authorities have fired a sheriff's deputy who shot and killed an unarmed African-American man in Georgia more than two months ago. The community is desperate for answers.

And "Exporting America." I'll be joined by two congressmen to debate America's future, Republican David Dreier, Democrat Adam Smith.

Please stay with us.

(COMMERCIAL BREAK) DOBBS: Tonight, new developments in a story we first reported to you last week, a fatal shooting that has raised accusations of racial profiling in Georgia.

The Muscogee County Sheriff's Department today fired a deputy who, more than two months ago, shot and killed an unarmed black man. Authorities have still not released a videotape of that incident. And neither has the Georgia Bureau of Investigation, nor the FBI explained any part of it to a community desperate for answers.

Eric Philips reports from Columbus, Georgia.

(BEGIN VIDEOTAPE)

ERIC PHILIPS, CNN CORRESPONDENT (voice-over): The press conference, which took less than five minutes, yielded an announcement some had been waiting for more than two months.

SHERIFF RALPH JOHNSON, MUSCOGEE COUNTY: I have this day provided Deputy Glisson with a letter of termination from employment with the sheriff's office.

PHILIPS: Muscogee County Sheriff's Deputy David Glisson shot and killed Kenneth Walker during a traffic stop on December 10. Authorities thought Walker and three of his friends were armed drug dealers. But there were no drugs and none of the men was armed.

UNIDENTIFIED FEMALE: What do we want?

PROTESTERS: Justice.

UNIDENTIFIED FEMALE: What do we want?

PROTESTERS: Justice.

PHILIPS: Since then, some outraged members of the Columbus community have been calling for the Deputy Glisson's termination and indictment. They say today is the first step.

EDWARD DUBOSE, COLUMBUS NAACP: It's long overdo. But we are very satisfied now that justice has started.

PHILIPS: Sheriff Ralph Johnson says Glisson's termination follows the completion of an internal investigation, including an interview with the deputy. Glisson's attorney says the sheriff's decision to terminate the deputy is the result of pressure, not facts.

RICHARD HAGLER, ATTORNEY FOR GLISSON: I understand the tremendous pressure that he has been under with regard to the entire situation. Unfortunately, I think that the pressure had a great deal to do with the decision he's reached. And we're very disappointed in it.

(END VIDEOTAPE)

PHILIPS: More movement is expected in this case tomorrow, as the Georgia Bureau of Investigation hands over its finding to the Columbus district attorney's office. The DA's office will then determine whether or not criminal charges will be filed in this case -- Lou.

DOBBS: A difficult wait for a community very concerned about an unexplained fatal shooting of one of its citizens, and that wait over tomorrow. Eric, we thank you very much -- Eric Philips reporting tonight from Columbus, Georgia.

Dramatic new evidence tonight that Phoenix, Arizona, is the center of a huge smuggling operation for illegal aliens. Authorities there have discovered two more houses sheltering 100 illegal aliens. Officials say smugglers use Phoenix regularly as an major hub from which illegal aliens are transported to parts, all parts, of this country.

Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): This house is an upscale Phoenix suburb sits next to a golf course. You'd think it's a safe neighborhood. Think again. Police discovered more than 160 illegal aliens here last week living in filth, under armed guard by suspected alien smugglers. The homeowner who rented the property to two couples who said they were landscapers still struggles to understand what happened.

RUSSELL YOUNG, HOMEOWNER: People were locked in rooms. And they didn't have food. They didn't -- so, as far as I'm concerned, nobody is happier than I am that they got busted.

WIAN: It was the biggest bust in a week that saw four aliens smuggling drop houses raided by law enforcement. Phoenix has become a major transit center for illegal aliens on their way to cities throughout the United States.

As immigration officials have cracked down on smugglers, the price for their services has gone up to between $1,500 and $5,000 per alien. With so much money at stake, violence here is on the rise.

(on camera): Last year, Phoenix set a record with 257 murders, a 22 percent increase over the previous year. The police chief estimates that 60 to 80 percent of those were directly related to immigrant smuggling.

(voice-over): Phoenix seems to be returning to the days of the Wild West.

HAROLD HURTT, PHOENIX POLICE CHIEF: And I think the thing that really also bothered me, not only the fact that we're losing a great number of lives in the city of Phoenix, but the jeopardy that the everyday citizen is put in because of these operations and shoot-outs in the middle of intersections and shoot-outs on the freeways.

WIAN: With the help of local law enforcement, federal immigration officials say they have made progress targeting smugglers, with 148 arrests during their Operation Ice Storm crackdown since September.

THOMAS DEROUCHEY, ICE SPECIAL AGENT IN CHARGE: Well, I think that we're certainly getting a better handle on the criminal organizations that are utilizing Arizona as an entry point for smuggling aliens into the United States.

WIAN: But with so much money as stake, local police expect alien smuggling violence to get worse before it gets better.

Casey Wian, CNN, Phoenix.

(END VIDEOTAPE)

DOBBS: California regulators have rejected a request for the U.S. Border Patrol to seal off the western-most stretch of the U.S.- Mexico border, including an area known as Smugglers Gulch. The California Coastal Commission said damage to the natural habitat would outweigh any security benefits. The Border Patrol says it will fight that decision.

Coming up next, former McCain campaign manager Rick Davis says, 2004 is off to a terrible start to President Bush. Rick Davis will be my guest next.

Also, the growing debate over whether free trade creates or destroys jobs in this country. And just how significant is a half- trillion trade deficit? I'll be joined by Congressman David Dreier, later Congressman Adam Smith -- that and a great deal more still ahead here.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The nation's largest labor organization today endorsed John Kerry for president. The AFL-CIO said Senator Kerry is the best candidate for working people. Kerry also won the support of Georgia's longest-serving congressman, John Lewis. Kerry and his main rival for the Democratic presidential nomination, Senator John Edwards, both were in Georgia today campaigning.

Senator Edwards told voters, the exporting of America is more than just an economic issue.

(BEGIN VIDEO CLIP)

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: This is a moral issue. It's about what we believe in as a nation. The United States of America should never in the -- never, going forward, enter into a trade agreement that allows an American company to leave this country, take jobs with them, go to another country, and hire children to do their work.

(CHEERING AND APPLAUSE)

EDWARDS: That's not the America we believe in. (END VIDEO CLIP)

DOBBS: Senators Edwards and Kerry both have campaigned more against President Bush than one another. My guest now says, the Democratic attacks are just one reason why the last six weeks have been among the worst of the president's political career, in his opinion. Rick Davis managed Senator John McCain's presidential campaign four years ago and joins us tonight from Washington.

Good to have you with us, Rick.

RICK DAVIS, FORMER MCCAIN CAMPAIGN MANAGER: Thanks, Lou. Good to see you.

DOBBS: A bad six weeks seems mild when one looks at the impact on these polls of the past six weeks. What do you think is going on?

DAVIS: Well, I don't think you ought to really use the polls as a firm indicator of success or failure, because polls this far out really aren't that determinate.

But if you look at what has been going on in this campaign, 90 days ago, everybody was ready to inaugurate Howard Dean as the Democratic primary candidate to go against George Bush. And then the whole world changed.

And while that was changing, it was pretty clear that the Bush White House, the Bush campaign, was having a hard time dealing with that change. And the outcomes for them were that some of their own people were starting to trip them up. Their weapons inspector comes up and says no weapons of mass destruction. Their own economists come out and say, oh, we're going to get 2.6 million jobs. Well, we got to downtick that and we're exporting jobs, which is a good thing. And that handed that issue to John Edwards.

So I think that now's the time they have got to look inwardly and say, what's the plan?

DOBBS: Well, let's look at where we are, because, as you suggest, polls are hardly -- well, first of all, they are not determinative, nor firm, even.

But let's take a look at the poll results, because this is something I haven't seen before. And that is two candidates beating an incumbent president in a poll even at this early stage, both Senator Edwards and Senator Kerry sitting there enjoying a 10 or better percent lead over an incumbent president.

You don't think that the White House should be alarmed about that?

DAVIS: Oh, look, I think it's probably got bells ringing all the way from the White House to Arlington, where the campaign headquarters are going. But these are smart guys. They know better than to be tripped up by the latest poll that shows them in trouble. This has always -- has -- going to have been a close race. Karl Rove has been saying for a year, this is going to be a close race. They knew they had a hot race. They knew that the picture of the country is divided. It's the classic red states vs. the blue states. And not a lot has changed in four years.

DOBBS: The red states vs. the blue states. A Zogby poll showing that, in traditional Republican states, the president remains well ahead of the Democratic challengers, whoever he may -- or they -- may be, and doing just slightly -- just slightly worse than the Democrats in their states.

Do you really believe that, if this economy does not deliver a significant amount of job growth, that if there isn't a righting of what seems to be an administration off-kilter, that the president can prevail?

DAVIS: Well, I think that it's all how they start talking about jobs. Clearly, they are trying to find the right message to talk about jobs. They have got a good economy. There are clearly good indications that the economy is expanding at a significant rate, that it is creating new wealth and it's putting people back to work.

It is only putting them back to work at a smaller pace than they probably think is necessary for good political reward. I think the Democrats have to worry about looking too protectionist, looking to roll up the carpets and put up the walls around this country. And that could shock industries that are dependent upon trade. So I think both of the entities on either side of the political spectrum need to find their footing on how they are going to talk about the economy and what expectations do they want to create between now and November.

DOBBS: Right.

Laura Bush, the first lady, considered to be -- and the White House has been putting this message out -- one of their secret weapons. I would like to roll, if I may, a piece of tape talking to the first lady about the issue of immigration, if we could see that.

(BEGIN VIDEO CLIP)

LAURA BUSH, FIRST LADY: I think it's a human rights issue and a way to address what is a huge inequity in the United States. And that is illegal workers who are here who don't really have any rights.

(END VIDEO CLIP)

DOBBS: What is your reaction to that?

DAVIS: Well, look, there's a big debate going on, especially in the border states of our country, as to what is the right approach on immigration. George Bush has spelled out a plan on immigration that tries to take the reality that exists, which is, there are a lot of undocumented workers in this country, try to capture them, build them into our economy in some way that will account for them. There are also a lot of people who worry that, if we aren't able to capture these undocumented workers, that that's a lot of trouble waiting to happen someplace.

(CROSSTALK)

DAVIS: And so I think she touches on some of the sentiment that exists, especially in these border states.

DOBBS: And do you think she's an appropriate advocate for reform of the immigration policies and do you think that's a pretty good political answer?

DAVIS: Well, I'm sure she was just answering whatever questions were thrown at her. And, as you know, Lou, in situations like that, you try to get out the best approach you can.

I think that Laura Bush has been a tremendous first lady who has added a great deal to the president's stature, in being able to show that he's a man of faith and he's a man of a family and what that family means to him. So I think she does have great value in talking about who George Bush is as an individual. And that's something that I think is one of the things voters really like about George Bush.

DOBBS: Eric Davis, we thank you for being with us. Appreciate it.

DAVIS: Thank you, Lou.

DOBBS: I'm sorry. Rick Davis.

That brings us to the topic of tonight's poll: Do you believe elected officials who change their mind on a major issue or admit making a mistake should lose credibility and support, yes or no? Cast your vote at CNN.com/Lou. We'll have the results for you later in the broadcast.

And coming up next, "Exporting America." Congressman David Dreier will be here. He says open trade policies help American families. Congressman Adam Smith has a plan to help American families who have already lost their livelihood in the wake of open trade.

And indictments in the Enron scandal finally reach all the way to the top. We'll be joined by our senior legal analyst, Jeffrey Toobin.

And another deadly day in Iraq, two more American soldiers killed. General David Grange on point tonight.

(COMMERCIAL BREAK)

DOBBS: My guest now supports President Bush in every respect. Congressman David Dreier of California is a member of the House Republican leadership, instrumental in the passage of NAFTA, permanent normal trade relations with China, fast track trade authority for the president, also one of the co-founders of the U.S.-Mexico Congressional Caucus. Congressman Dreier joins us from Los Angeles tonight.

Good to have you with us.

REP. DAVID DREIER (R), CALIFORNIA: Nice to be back, Lou.

All those things that you seem to love -- I love your question for the audience just before you went to the break. And I will tell you that you're allowed to change your position if you move to the right position. And my concern about you is, is that I have sense you might have been a free trader in the past, Lou, but you are dead wrong in moving to the wrong position.

I've been reading the transcripts of your programs over the last few weeks. And it's almost as if you're sort of a 21st century Pat Buchanan. Pat Buchanan used to be a free trader when he was working for Ronald Reagan. And now here you are, having moved to this position, which, to me, is counter to the whole cause of freedom and the free flow of goods and services and ideas.

DOBBS: You know what I like about you, Congressman? I didn't even have to ask a question.

(LAUGHTER)

DREIER: Yes, well...

DOBBS: Let's start out with a couple things.

In the question of free trade, in point of fact, I have never been a free trader. I did support NAFTA, under the theory that it would be better to enrich our neighbors than those in distant lands.

(CROSSTALK)

DREIER: That made you a free trader. By virtue of that, you were a free trader, Lou.

DOBBS: Oh, did it? OK. In that case, I plead guilty on that basis, but certainly no supporter of WTO, certainly no supporter of free trade in other areas.

So let's go to the issue here. And that is, with the president now under attack on so many areas, both in terms of the outsourcing of jobs, the WMD intelligence before the war -- we can talk about the 2.6 million job forecasts on the part of his Council of Economic Advisers, Chairman Greg Mankiw.

What in the world is the president going to do here?

REP. DAVID DREIER (R-CA), CO-CHAIR, U.S. MEXICO CAUCUS: Well, the fact of the matter is we are on the right track. You were just talking to Rick Davis a few minutes ago about the struggle, and you mentioned that Kerry and Edwards are really going against the president. They are fighting to become protectionist. To me that is a policy that is dead wrong. All you need to do, Lou, is to go back 20 years to the 1984 presidential campaign when Walter Mondale was running against Ronald Reagan and at that time he said, all of our jobs are going overseas, they are going to Japan and Germany and at that point Japan and Germany were our great models for the future. Since that period of time, he was obviously wrong, he wanted to increase taxes and all, but since that time, Lou, what we have seen is the creation of 40 million new jobs and many good jobs in this country. And so that's why I think we need to recognize that I don't know how many jobs are going to be created in the next 11 months.

DOBBS: Sure you do.

DREIER: 2.6 million. Yes.

DOBBS: Sure you do. Wait a minute. The Council of Economic Advisers and your president with a signature on it has said 2.6 million. So you know how many.

DREIER: I hope that that is right. But no one knows with certainty. I know this, 112,000 were created last month. We saw a drop of 24,000 of the jobless claims last week. It's clear that whatever that number is it's going to be better in 11 months than it is today. And I believe that we clearly are on a path, if we proceed towards greater trade and these -- the idea of these guys...

DOBBS: Congressman, I appreciate your faith. Let's review the facts.

DREIER: It's more than faith.

DOBBS: Well, your statement require some support then empirically because what we do know for a fact is we have a half trillion dollar current account deficit. What we do know since the implementation of NAFTA, that we have moved to almost $100 billion in negative trade. We have seen a half million jobs lost in this country as a result. We have seen GDP growth in Mexico, and I'm only focusing right now on Mexico, out of consideration to your proximity, to your district. The fact is those are not happy numbers by any definition. And that has to concern even a quote unquote "free trader" such as yourself.

DREIER: OK, now clarify this.

DOBBS: Sure.

DREIER: You said that we have seen GDP growth in Mexico you just said, right?

DOBBS: GDP growth has -- is averaging about 50 percent of its historical level, yes.

DREIER: So what was the reason you just said, Lou, that you supported NAFTA? Because you wanted to see us increase the growth in Mexico because that was a very positive thing. There's no benefit to us so you have just now said and in your statement we are seeing the benefits of NAFTA. The other premise...

DOBBS: Wait a minute. How in the world are you saying that, we're talking about the benefits of NAFTA if over the past two years it's GDP growth rate has dropped by 50 percent from its historical levels.

DREIER: My point is this, if you look at what NAFTA...

DOBBS: Wait a minute, Congressman. You said something and now I'm asking you to clarify.

DREIER: What I'm saying is that we are seeing increased growth in Mexico and I believe that NAFTA is helping the economy of Mexico. There are lots of problems there...

DOBBS: I'm going back to the empirical evidence. We have also seen this country move to a strong deficit with Mexico. We have seen...

DREIER: And you know what? And that's not bad, Lou. That is not bad. Many people -- you call it negative. I happen to believe we need to recognize the importance of imports. What they do to this economy. You know, the single mother who is trying to make ends meet by going to Kmart or Wal-Mart to buy toys, clothes for her kids, is able to do it, why? Because the world has access to the U.S. consumer market. We need to realize that is a benefit.

John Kerry is out there talking about Benedict Arnold CEOs when in fact Heinz has 79 operations and 22 of them are in the United States. 57 interestingly enough are outside of the United States. So we need to realize that this is a global economy. If we don't shape the global economy we'll be shaped by it.

DOBBS: Let's talk about what is happening because we surely -- we just surely are not shaping the global economy. We are, if anything, placing our destiny in the hands of others. We are right now running a half trillion dollar trade deficit.

DREIER: And you see that as a huge negative. I see that as a...

DOBBS: Yes, sir. That's why it's called a deficit. It's a negative to have a half trillion dollar budget deficit.

DREIER: One of the things we found is traditionally full employment in this country was considered to be 6 percent, today it's 5.6 percent. I saw you the other day be dismissive with Steve Forbes on the issue of the household survey. For the first time and whatever you say, whether you accept the household survey or the payroll survey you have to recognize we have the largest disconnect. That's one of the points Greg Mankiw was making ever because it showed that 1.9 million new jobs have been created since November of 2001 and that's the independent contractor, the self-employed, those in the biotech industry.

DOBBS: And, Congressman I am delighted to talk about the household survey with you or my good friend Steve Forbes, but why or suddenly -- when was the last time you were talking about the household survey on employment?

DREIER: We've talked about it regularly. And I will tell you. The point is there's a disconnect and you've got to acknowledge that between the payroll and the household survey.

DOBBS: There has always been a disconnect. Every economist you talk with will tell you that going to the household survey and changing the base, the standard for analyzing job growth or job creation in this country makes no sense at all. That's beside the point. Let's forget the methodology. Let's talk about what you said. Shaping international trade. We sit here and I listen to you say protectionist is the only obvious countervailing reaction to free trader. If you are such a free trader why don't you get rid of $20 billion in agricultural support.

DREIER: I totally agree with you. I voted against the farm bill. I was opposed to the steel subsidies, I'm opposed to the tariffs on softwood lumber...

DOBBS: Why in the world then would you say we're shaping international trade when you're watching the wealth of this country being exported every day? Jobs exported every day?

DREIER: You know, it's so interesting. The semiconductor industry. 70 percent of the engineers for the semiconductor industry are right here in this country. I believe that it is pro American, it is pro American to find the best quality product at the lowest possible price whether it's a raw material or a finished product for our consumer. That's the American thing to do.

DOBBS: Congressman, you get the last word. I hope you'll come back.

DREIER: You are a great guy.

DOBBS: Give you an opportunity for some more words.

DREIER: OK. Have fun.

DOBBS: Thank you, you too.

Congressman Adam Smith of Washington also voted for permanent normal trade relations with China and fast track trade authority for the president. He wasn't in Congress when it voted on and passed NAFTA. Congressman Smith now is working to help Americans who have lost their jobs to cheap or foreign labor markets. He has written legislation to give federal help to Americans who have lost their jobs in the service sector. Congressman Smith joining us from Seattle.

Good to have you with us.

REP. ADAM SMITH (D), WASHINGTON: Good to be here, Lou. I promise not to be as tough on you as my colleague.

DOBBS: No, I want you to be tough. SMITH: I'm kidding.

DOBBS: It's called America because we have the opportunity to express ourselves and sometimes passionately and I respect that. Let me ask you, the trade adjustment authority that you seek, has been denied to service workers and specifically software workers, because of the determination that software is not a quote unquote "product." Do you think that you can change this? It's been defeated before.

SMITH: Absolutely I think we can. I think there's a growing awareness, due in no small part to some of the programs that you've run, that service sector jobs are also vulnerable to this sort of competition and people who lose those jobs need the benefits that come with trade adjustment assistance every little bit as much. It's become a huge issue in this country with a lot of attention. So I'm confident that we can do that and I'm going to push really hard in Congress to get the change through.

DOBBS: The fact that we need trade adjustment authority. The fact that we are losing jobs as a result of trade, it boggles my mind, Congressman, to hear people, frankly, like Congressman Dreier who is a very smart, accomplished legislator and very knowledgeable, say things like we are going to shape international trade when we are watching American wealth being sent out the door every day in our search to buy, as he put it, low cost products. Those low cost products are amounting to something like half a trillion dollars in deficit every year. When are we going to see some rationalization of trade and its impact on working men and women in this country?

SMITH: And that's my concern, really, about the Bush administration's overall approach. They seem fairly cavalier about it, like there's not really a problem, it's going to work itself out. I mean, I agree with many of the points that Congressman Dreier made. I mean trade is important. Raising tariffs has a negative effect, but there are also negative impacts. We need to be smart about how we change our policies to address those negative impacts and improve the situation and not just assume they are going to take care of themselves. The administration saying that outsourcing is just fine, it doesn't create any problems, we'll be OK, is not a smart approach.

I mean, I don't think you should go shutting off the borders but let's make some changes to our policy so we can help those people who need the help. And one big point that I think we ought to do. If we are going to bring China into the WTO, as you mentioned, I voted for that, we ought to make sure that they live up to the responsibilities of being there. Right now, they are enjoying the rights but we're not enforcing the rules against them. I certainly would not have supported WTO if China -- China and the WTO if they had said we're not going to enforce the rules against them. We need to aggressively enforce the rules. There's things we need to do to improve this situation.

DOBBS: At the same time you're seeking, in the contradictions and the complexities in this debate and dialogue are immense on trade and its impact here, but at the same time you're talking about trade adjustment authority, you are also one of the leading proponents of expanding the work visa program, the H-1b, H-1a, the L-1, and the other work visas.

SMITH: Actually that's not true. I'm not a proponent of expanding the L-1 visas. I think the L-1 visas are a major problem. H-1B's have many requirements attached to them. They're smaller for one thing. There's a fixed number of H-1B's. There's an unlimited of L-1s and there's no requirements attached to them. So I'm very concerned about the L-1 visa.

I think the H-1B visa program has been fairly positive. I am concerned about some of the enforcement on H-1B to make sure that the rules that we have put in place, the legislation, is actually enforced. But it's the L-1 I think are the big problems.

DOBBS: To put a cap on this, just so we're not rationalizing anything, you are still a free trader. Is it -- just out of curiosity for our audience, as we discuss the jobs that are being lost, the huge trade deficit and we hear time and time from so-called free traders.

SMITH: I reject that label, by the way, but I'll try to answer your question.

DOBBS: That's what I'm asking you, if you are a free trader, because at some point we've got to, it seems to me, if I may be so simpleminded, reach some sort of balance in trade in order to preserve the wealth of this country. Would you agree with that?

SMITH: Absolutely. And I think throwing out the term like free trade is not very definitive. Let me tell you for example --

DOBBS: Congressman, I appreciate it.

I just wanted to get to that point. We're way out of time on this. I appreciate you being here. Good luck.

SMITH: Thanks for the opportunity.

DOBBS: You bet you. Thank you.

Coming up next, the government has charged former Enron CEO Jeffrey Skilling with 35 counts of conspiracy and fraud, Skilling in -- in handcuffs as he is moving toward the courthouse there. We'll have a special report for you. "Grange On Point," this has already become the bloodiest month in Iraq since the end of major combat. General David Grange "On Point." He's next and a great deal more, as well. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Federal authorities indicted Enron's former CEO, Jeff Skilling. Skilling is the highest ranking executive being charged in Enron's collapse. A collapse that defrauded investors out of nearly $80 billion and led to more than two years of corporate scandals. Skilling turned himself into the FBI early this morning.

(BEGIN VIDEOTAPE) DOBBS (voice-over): A handcuffed Jeffrey Skilling walked into Houston's federal courthouse and entered a not guilty plea to all 35 charges against him. New charges were filed against former Enron chief accountant Richard Kozzi.

JAMES COMEY, DEPUTY ATTORNEY GENERAL: The indictment charges that Mr. Skilling, Mr. Kozzi and other Enron executives oversaw a massive conspiracy to cook the books of that company and create the illusion, the illusion that it was a robust growing company with limitless potential when, in truth, and in fact, Enron was an increasingly troubled business, kept afloat only by a life line of gimmicks and maneuvers.

DOBBS: Skilling is also charged with security's fraud and insider trading. Skilling's attorney said his client is a scapegoat.

DANIEL PETROCELLI, ATTORNEY FOR SKILLING: Jeff Skilling has nothing to hide. He did not steal. He did not lie. He did not take anyone's money. In the 60 pages of charges filed by the United States government, they don't even accuse him of these things. It's not for lack of trying.

DOBBS: Skilling has been under investigation for two years since he testified before the SEC and Congress and claimed to know nothing about fraud at Enron.

JEFFREY SKILLING, FRM. ENRON CEO: I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability.

DOBBS: Skilling was CEO for Enron for only six months. He abruptly resigned in August of 2001 for personal reasons.

LARRY KING, HOST LARRY KING LIVE: You left with a clear conscious. Didn't see anything...

SKILLING: Not only that, Larry, I could even farther than that. I think we made some tremendous progress in the six months before I left.

KING: Then why did you leave?

SKILLING: I was tired.

DOBBS: If Skilling is still tired and found guilty, he will have plenty of time for rest. He faces 325 years in prison, hundreds of millions of dollars in fines.

(END VIDEOTAPE)

DOBBS: Today he posted a $5 million bond and is freed.

To update our criminal scoreboard tonight, 113 executives in all of corporate America have now been charged. 20 of them from Enron. Only three people have been sent to prison. It has been 808 days since Enron filed for bankruptcy. Joining me now for more on the Skilling case and the developments today in the Martha Stewart trial, our senior legal analyst, Jeffrey Toobin. Jeff good to have you here.

First, a long time to get to Jeffrey Skilling.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: A long time, but a tremendous achievement when you think of where they started. They have done, the Enron task force, they have done the classic white collar criminal investigation. They have worked their way up through the bottom.

Obviously the key turning point was when Andrew Fastow, the chief financial officer, pled guilty, agreed to cooperate just a couple of months ago, that led directly to this indictment and now they have reached the chief executive officer.

DOBBS: The charges of insider trading, not brought in other cases. In this -- was that a surprise to you?

TOOBIN: That is somewhat surprising. What is different about the Skilling case as opposed to the Fastow, everybody probably remembers the off the book partnerships which are really the key factor in Enron's collapse. Fastow made money on those partnerships, off the books, in addition to his salary. Skilling did not. He only made money through his salary and through his stock. He made plenty of money it's going to be tougher to charge him with personal enrichment than it was for Fastow.

DOBBS: He was well compensated for a relatively uninformed and forgetful CEO.

TOOBIN: He certainly was. And the jury will certainly hear a great deal about that.

DOBBS: Highly alert CEO and talent in modern living, Martha Stewart, contradicted today in her testimony. How important?

TOOBIN: Very important. Her best friend, Marianna Pasterneck (ph) testified that she went to Mexico with Martha Stewart on December 27, 2001, the day of her fateful trade of Enron stock. Three days later they were overlooking the ocean. And Martha said, that Sam Waksal had sold his stock. That Sam Waksal's daughter had tried to sell all her stock and that's why she told her stock, directly contradicting what Martha Stewart said to investigators.

Then even worse, a little while later Martha Stewart said to her friend, Marianna Pasterneck (ph), isn't it nice to have a broker who tells you these things? Boy, it was a silent and devastated courtroom today.

DOBBS: Prosecution wraps up tomorrow.

TOOBIN: Probably tomorrow. Cross-examination of Pasterneck (ph) begins tomorrow. Be interesting to see what, if anything, they can do to shake her story. DOBBS: We look forward to talking to you about that as well. Jeffrey Toobin, thank you.

Well on Wall Street today the Dow up to a 33-month high and then losing all of its gains. The Dow closed down 7 points, the Nasdaq down 30, the S&P dropped almost 5 points.

CEOS in this country are, many of them, depending themselves for shipping American jobs to cheaper foreign labor markets, Christine Romans is here and has some very interesting statistics on this controversial practice.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: Lou, 54 percent of Americans CEOs say they shipped U.S. jobs overseas last year.

DOBBS: Wait, say that again.

ROMANS: 54 percent of American CEOs admit they shipped U.S. jobs overseas last year. And while they are upbeat on the economy in the U.S. this year, less than a third expect a pickup in hiring. This from CEOs attending the business counsel meeting in Florida. Businessman Wayne Huizenga acknowledged that jobs going overseas is a problem, but he said CEOs must go where the costs are lowest.

(BEGIN VIDEO CLIP)

WAYNE HUIZENGA, CHMN. & PRES., HUIZENGA HOLDINGS: I think if you are the CEO of a large company your responsibility is to your shareholders and your responsibility is to have your company have the lowest cost possible otherwise you can't be competitive here in the U.S. So, if your competition is sending jobs overseas you are almost forced to do the same thing, because you have to keep your costs down.

(END VIDEO CLIP)

ROMANS: For the record, Huizenga is not a chronic outsourcer of U.S. jobs. Many of his business -- Lou, the business council president Dupont CEO Chad Holiday, says the solution science and technology education in this country so American workers can have the brain jobs, the business council surveyed CEO Harris Interactive regular Americans is and their trust in American companies very low. Seventy-four percent of those surveyed called corporate America's reputation not good or terrible.

DOBBS: Christine, thank you.

Coming up next, "Grange on Point. " Insurgents kill two more Americans in Iraq, more than 200 Iraqis killed this month.

General David "Grange on Point" next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq today two more American soldiers killed by a roadside bomb. That bomb went off as soldiers and Iraqi police were investigating an earlier attack against a U.S. convoy some 50 miles west of Baghdad. One Iraqi also killed in that attack. Insurgents have killed 250 Iraqis so far this month. More than any already since the end of major hostilities first of may.

Joining me now "Grange on Points," General David Grange.

David, this was supposed to be a winding down of violence. The capture of Saddam Hussein, and continued repetition that we have enough troops and enough security in Iraq. What, in your judgment, is going on, and what is going wrong?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Lou, I think you see here like any combat operation, any operation, whether it be combat or stability and support operations is that you have peeks and valleys. The rhythm of combat is irregular. And right now there's a peak. There's a peek because of election, there is a peek because there are successes with the coalition force which is threatening the insurgents, the terrorists, that are fighting the coalition because it may just work. And it's making -- they are concerned about it. And they are increasing their operations because of that.

DOBBS: One of the things, general moving on to another aspect of this, that is the question of intelligence in Iraq current day. It's very troubling. To many people, as they listen to the Pentagon explain who is attacking American forces. Who is attacking Iraqi Police recruits. Who is attacking Iraqi civilians. And there doesn't seem to be a definitive answer. We hear about insurgents. Those that would like to restore some semblance of Saddam Hussein's regime. But there is no clear statement of who it is that's attacking these superior forces of the United States.

GRANGE: Very uncertain environment. You have some Shi'ites on Sunnies, Sunnies on Shi'ites, all of them on U.S. and other coalition forces. There's some mutual agreement between some of these groups, they benefit either through money or power or just the common enemy being us. And so there is a loose alliance. It is a loose alliance. But they all have their own agendas. Very difficult to sort out with the right intelligence for the coalition to do something about it. Very difficult.

DOBBS: The pentagon announced today that Green Berets are going to be used as spies. That strikes me as peculiar.

Why would you tell the world that you are going to use special forces as spies?

GRANGE: Well, they are not going to be used as spies. There not allowed to be used as spies by law. Maybe it's a great psychological factor that they are using to intimidate terrorists but they cannot be used for spies, it's against the law.

DOBBS: It's an interesting thought. Defense Secretary Rumsfeld trying to scare terrorists with that statement.

GRANGE: Well, I e that's the case.

DOBBS: I took it that way, general.

Thank you very much General David Grange.

Coming up next, the results of our poll tonight. But first an update on the list of companies we confirmed to be "Exporting America." The companies sending American jobs overseas or choosing to employ cheap foreign labor. Tonight additions to our list of more than 300 companies now include and we should say, we have an estimated thousand companies waiting to be confirmed. Allen Systems Group, Delco Remy, Kraft Foods, Rawling Sporting Goods, Teleflex, Textron. Log on to cnn.com/lou for the entire list. We'll be right back, please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight. Thirty-two percent of you said elected officials who change their minds on a major issue or admit making a mistake should lose credibility and support, 68 percent say no.

And that is our show for tonight. We thank you for being with us.

Tomorrow here, Richard Trumka the AFL-CIO on the "Exporting of American" and his efforts to protect American jobs. Tomorrow we'll also be joined by Jim Oberweis who wants to be the next senator from Illinois. He says the presidents guest worker program amounts to Amnesty for illegal aliens. Please joins, for all 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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