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LOU DOBBS TONIGHT

President Bush on the Attack; U.S. Marines Arrive in Haiti

Aired February 23, 2004 - 18:00   ET

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

(BEGIN VIDEOTAPE)
ANNOUNCER: Tonight, President Bush on the offensive, taking on his critics, attacking the Democrats.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's going to be the year of the sharp elbow and the quick tongue.

ANNOUNCER: Democratic candidate Senator John Edwards says he takes the loss of American jobs to cheap overseas labor markets personally, what we call exporting America.

UNIDENTIFIED MALE: Everybody is being outsourced. What is going to be the future for someone like me?

ANNOUNCER: Tonight, we'll talk with Catherine Mann, the economist outsourcing advocates love to quote.

U.S. Marines arrive in Haiti to protect our embassy. Rebels now control half the country.

And, tonight, "Failing Grades." We begin a series of special reports on the extraordinary challenges facing American public schools.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, February 23. Now live from Washington, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening.

President Bush is fighting back on the campaign trail. Tonight the president is expected to accuse his critics of supporting backward-looking ideas that have already failed this country. Earlier today, President Bush predicted, this campaign will be a year of the sharp elbow and quick tongue.

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

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: ... from the president about a year of sharp elbows came during a bipartisan meeting with the nation's governors here at the White House today.

About an hour from now, the president will be in a supportive crowd of Republican governors of the Republican Governors Association. And he will give what is by far his most aggressive and most partisan speech of this presidential campaign year on a February night, framing what he sees as the choice come November. The president will say, among other things, this -- quote -- "It is a choice between keeping the tax relief that is moving this economy forward or putting the burden of higher taxes back on the American trail. It's a choice between an America that leads the world with strength and confidence or an America that is uncertain in the face of danger."

The president also will cast the upcoming race as a traditional liberal-conservative contrast. Also in the president's speech, this remark: "On issue after issue, the American people have a clear choice. Our opponents are against personal retirement accounts, against putting patients in charge of Medicare, against tax relief. They seem to be against every idea that gives Americans more authority and more choices and more control over our lives."

Now, why is the president doing this now? Aides had said he would have preferred to wait until it was certain who his fall opponent would be. But the president's poll numbers have been in decline. He now runs behind in the polls behind John Kerry, the Democratic front-runner, but also behind Senator John Edwards, the other major Democratic candidate. Some Republicans around the country were getting a bit nervous, so the Republicans have decided this is the time for the president to, as one aide says, enter a new, more aggressive phase of the campaign.

In addition to this new stump speech tonight, the president will launch his new TV ads next Thursday on March 4, two days after the big Super Tuesday primaries that most Republicans believe will confirm Senator John Kerry as the Democratic nominee -- Lou.

DOBBS: John, it's fairly clear, then, that the president is moving on the attack because of those poll numbers?

KING: In part because of the poll numbers, in part, also, because of anxiety.

While the Bush-Cheney campaign and the president's top political advisers say they always expected the poll numbers to go down a little bit, as they reach out to Republicans around the country, more and more of them are saying, you have more than $100 million in the bank. Why aren't you fighting back more? So a bit of unease in the Republican grassroots that the White House is hoping to calm down a bit, Lou, with this very aggressive speech tonight.

And it won't just be tonight. The president will be traveling more. And what you hear tonight will become the centerpiece of his new campaign stump speech.

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

Independent presidential candidate Ralph Nader today blasted President Bush and the Democrats when he officially launched his election campaign in Washington. Nader rejected Democratic fears that his campaign will divide President Bush's opponents in this election. Instead, Nader said the Democrats should -- quote -- "relax and rejoice."

(BEGIN VIDEO CLIP)

RALPH NADER, PRESIDENTIAL CANDIDATE: Movements for change come from more voices and choices, more debates and proposals, more organizing and more respect for the voters in the electoral arena, so they have a broader opportunity to vote for whom they choose to vote for.

(END VIDEO CLIP)

DOBBS: Democratic Senators John Kerry and John Edwards both say they will attract voters who might be tempted to vote for Nader. The presidential candidates today campaigned in states that hold primaries on Super Tuesday. That's a week from tomorrow.

Senator Kerry told supporters in New York City, he will work to bring back the millions of jobs lost during the Bush administration. Senator Kerry also said, President Bush's new campaign offensive means -- quote -- "He's on the run."

Senator Edwards today stepped up his attacks against President Bush and his economic policies. The senator told garment workers who have lost their jobs to cheap overseas labor markets that he takes their loss personally.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In New York City today, John Edwards tacked to union workers. Omar Alexander (ph) lost his job as a garment cutter after 33 years with the same company, a victim of outsourcing.

UNIDENTIFIED MALE: Everything is being done overseas. What is going to happen in the future for people like me? I am 59 years old. I have seven more years to retire.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: Men and women just like you build America. It's no more complicated than that.

(APPLAUSE)

EDWARDS: There are a lot of things we ought to be doing that we're not doing to make sure that we protect you. And one of those things is, we do need a trade policy that works for American workers.

PILGRIM: Super Tuesday primary states New York, Minnesota and Ohio have been hard-hit by job losses. Ohio lost 162,000 manufacturing jobs in three years. New York lost 131,000 and Minnesota 48,000. Edwards wants to end tax breaks for companies that move jobs overseas, cut taxes by 10 percent for companies that produce goods like software in the United States.

EDWARDS: We need to get rid of these loopholes in the tax code that give tax base to American companies going overseas? What in the world is that about?

PILGRIM: Edwards also wants to establish universal broadband access within next four years, so rural U.S. companies can communicate as easily as companies in South Korea and India, create an office for corporate responsibility to help keep jobs in the United States.

(END VIDEOTAPE)

PILGRIM: Edwards also says he would require full disclosure and he would require U.S. companies to publicly disclose when they ship U.S. jobs overseas -- Lou.

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

Turning now to the worsening crisis in Haiti, 50 U.S. Marines tonight arrived in the capital, Port-au-Prince, to reinforce for the U.S. Embassy. Haitian rebels are threatening to attack the city after driving government forces from half the country. American officials say the United States has no plans to send troops to end the uprising.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): In Port-au-Prince, two planeloads of specially trained Marines arrived to reinforce the U.S. Embassy, shut down because of increasing violence and political instability in Haiti. The Marines make up a FAST team, short for fleet anti-terrorism security team, and their mission is to protect the U.S. diplomats, not evacuate them, at least not yet.

RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: A fleet security team going down is there to maintain security, not to pull people out, although, if it came to that, I suppose they would be part of that.

MCINTYRE: The U.S. hopes it will not come to that. But if the Haitian capital does fall, the big question is whether the U.S. would allow President Jean-Bertrand Aristide to be deposed, an outcome Secretary of State Colin Powell has called unacceptable.

But Powell has also said there is -- quote -- "no enthusiasm" for another U.S. military intervention like the one in 1994 that forced Haiti's military junta into exile and restored Aristide as the country's democratically elected president. Pentagon sources insist there has been no serious planning for the U.S. military to ride to Aristide's rescue, in part because of questions surrounding the legitimacy of his 2000 reelection and reports of corruption in his regime.

For now, the U.S. is putting its eggs in the diplomatic basket.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: This is a political situation that requires a political solution. We continue to deplore the ongoing violence and we regret the continuing loss of life in Haiti. MCINTYRE: Unlike last time, the U.S. is not under pressure to stem a flood of Haitian refugees. And with 120,000 troops tied down in Iraq and another 11,000 or so in Afghanistan, it's not anxious for another open-ended mission of nation-building.

(END VIDEOTAPE)

MCINTYRE: The bottom line, U.S. officials say, is that Aristide has squandered the goodwill he enjoyed a decade ago. The U.S. has already cut off humanitarian aid to Haiti. And with no legitimate government in waiting ready to take his place, the U.S. may be willing to take its chances with Aristide's successor -- Lou.

DOBBS: Any sense tonight of the degree of threat to the U.S. citizens who remain in Haiti?

MCINTYRE: Well, it appears that they are not under direct threat from the rebels or even the supporters of Aristide. But, as the situation becomes more unstable, of course, there is a possibility that something could -- they could be caught in the crossfire. They don't appear to be the target of either group. But Port-au-Prince is increasingly becoming a dangerous place to be.

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

Defense Secretary Donald Rumsfeld traveled to Baghdad to assess security before the planned handover of power to the Iraqis in June. Secretary Rumsfeld met with Iraqi police and members of the Iraqi Civil Defense Corps. Rumsfeld told Syria and Iran to stop terrorists crossing their borders into Iraq. And while Rumsfeld was in Baghdad, insurgents attacked a police station in the northern Iraqi city of Kirkuk. A car bomb killed eight police officers and wounded 35 other people.

Still ahead here, "Broken Borders." California Republicans are sharply divided over the president's immigration proposal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: President Bush's immigration proposal is wrong for this state and it's wrong for the country. It's mechanically flawed and it's morally wrong.

(END VIDEO CLIP)

DOBBS: Also tonight, I'll be talking with the economist outsourcers love to quote. Dr. Catherine Mann will be my guest.

And the battle to build the most prestigious aircraft in the world, the president's helicopter, Marine One. It's all about "Made in America." We'll have a special report.

Please stay with us.

(COMMERCIAL BREAK) DOBBS: While honest work of any kind is praiseworthy and to be respected, a disturbing report tonight shows most of the new jobs being created in this country now are extremely low-paying. Most of the work is in services and some in construction. And most of the people taking those jobs are new immigrants and many of those people illegal aliens.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): New clues in a mystery for millions of Americans. Where are the jobs in this economy? A new study concludes many of the new jobs are in the construction industry and they're being taken by Mexicans and other recently arrived Hispanic immigrants, many of whom are likely in this country illegally. And the wages they're receiving are flat to falling.

JARED BERNSTEIN, ECONOMIC POLICY INSTITUTE: The number of jobs among low-end Hispanic workers seems to be increasing more quickly than among non-Hispanic, but their wage is actually falling. That's not a picture of strong demand for labor. That's a picture of an excessive supply of labor.

VILES: The Pew Hispanic Center concludes that employment among foreign-born Hispanics grew by 682,000 last year. That's 64 percent of all new jobs counted under the Labor Department's household survey.

The vast majority of those Hispanic immigrants, 498,000, arrived in the year 2000 or later, and a majority, 387,000, found work in the construction industry. Other big categories for Hispanic workers, retail and agriculture. Because of immigration and relatively high birth rates, Hispanics contribute more than half of the growth in the U.S. labor market.

RAKESH KOCHHAR, PEW HISPANIC CENTER: They may make only one out of every eight worker, but they are more than one out of two new workers entering the labor force. So we would expect that they would get more than half of the emerging jobs in the economy.

VILES: But Hispanics continue to lag well behind the rest of the labor market in wages. Median weekly earnings for Hispanics are 33 percent lower than they are for white workers.

(END VIDEOTAPE)

VILES: Now, this study based on the government's household survey, which showed roughly a million new jobs in the period surveyed. It relies on government statistics that do not address a key question. That is whether these immigrants are in the country legally or illegally -- Lou.

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

California is home to one of the largest populations of illegal aliens in the country. And the issue of illegal immigration, of course, has proved to be very definitely controversial. It's even divided state Republicans in California, and that became clear over the weekend at the state's convention of the GOP.

Casey Wian has the report from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Hundreds of California Republicans rallied outside the state party convention over the weekend, protesting a new proposal to give driver's licenses to illegal aliens. Governor Arnold Schwarzenegger says he will consider the plan, as long as it includes security and insurance provisions. That's angered many California Republicans, as has President Bush's proposed guest worker program for illegal aliens.

HOWARD KALOOGIAN (R), SENATORIAL CANDIDATE: President Bush's immigration proposal is wrong for this state and it's wrong for the country. It's mechanically flawed and it's morally wrong.

WIAN: Some Republicans at the rally booed the positions of Schwarzenegger and the president. They were both in Washington at the time meeting with other governors.

MIKE SPENCE, CALIFORNIA REPUBLICAN ASSEMBLY: I think there's a disconnect between some leaders in the Republican Party and the grassroots of the Republican Party, which is, you know, just the regular people that vote Republican on the issue of immigration. Rank-and-file Republicans don't like illegal immigration.

WIAN: Even so, state leaders say California Republicans are more united than ever.

DUF SUNDHEIM, CHAIRMAN, CALIFORNIA REPUBLICAN: We allow people to have demonstrations. We encourage debate. But to take the actions of a few people and to blow it up as some major rift, frankly, I think is irresponsible.

WIAN: At the convention, Republicans agreed to oppose illegal alien driver's licenses, even though their governor refuses to do so; 10 years ago, another Republican governor, Pete Wilson, supported Proposition 187, which would have denied most public services to illegal aliens. The fallout from that seriously weakened the Republican Party in California.

(END VIDEOTAPE)

WIAN: The state party chairman says that's not going to happen again. He says California Republicans agree, the current state of illegal immigration is untenable, adding that party leaders are in a listening mode right now. And they're expecting a vigorous debate over the issues, but are not ready to propose solutions -- Lou.

DOBBS: Thank you very much, Casey Wian from Los Angeles.

Coming up next here, a very different view of sending jobs overseas. My next guest says outsourcing to cheap overseas labor markets is good for the economy. And those companies outsourcing American jobs like economists Catherine Mann a great deal. She'll be here with us next. You'll find out why she's so likable.

And then:

(BEGIN VIDEO CLIP)

REP. ROB SIMMONS (R), CONNECTICUT: This is a buy-America issue. Sikorsky and the helicopter for the president is 100 percent American.

(END VIDEO CLIP)

DOBBS: A $2 billion battle over a new fleet of helicopters for the president. It's also a battle over whether to keep jobs in this country or to export them -- that job and a great deal more still ahead here.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The Pentagon today canceled its multibillion-dollar Comanche helicopter, a problem that critics have long called an expensive mistake; $8 billion over two decades is already spent -- been spent developing the helicopter. It's a joint venture between Boeing and Sikorsky. The Army had planned to buy as many of 650 of those Comanches at a cost of $60 million apiece. That would be five times its original price. Military officials say the helicopter is simply unsuitable for the type of warfare that the Army must fight in the future.

One helicopter program that will not be canceled is Marine One. But the competition to build the next generation of the president's helicopter has sparked an intense political battle. Two major defense companies are battling for that contract, Sikorsky with an all- American design, and Lockheed Martin with a British-Italian design.

Louise Schiavone reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The familiar dark green exterior, the military salute, the president of the United States striding up the stairs heading for the best seat in the most exclusive air taxi in the world, Marine One. But a new helicopter is coming, and the bidding crackles with the hot political issues of the day, buy-America contracting and U.S. jobs.

Sikorsky has been doing the honors for nearly 50 years, but is facing a stiff challenge from Lockheed Martin.

JEFF PINO, SIKORSKY: Our helicopter was developed in the late '90s. The Agusta-Westland, the European helicopter that Lockheed will offer, was designed 25 years prior to that. So, attendant in our design are all the advancements that have been made in the rotorcraft industry in those 25 years.

STEVE RAMSEY, LOCKHEED MARTIN: What we're proposing here is a 21st century helicopter system for the president. Basically, in the post-9/11 environment that we're in, the president needs a new helicopter system.

SCHIAVONE: At stake, a defense contract of nearly $2 billion for the 26-helicopter fleet. Hundreds, if not thousands of jobs are involved. Sikorsky, with 5,000 employees based in Connecticut, would keep all the work inside the U.S., a big political selling point.

SIMMONS: This is a buy-America issue. Sikorsky and the helicopter for the president is 100 percent American, designed and built. I think that's a good tradition to continue.

SCHIAVONE: But contrast, Lockheed is working with a British- Italian consortium, Agusta-Westland. And 35 percent of the contract would go to Europe. Lockheed would hire up to 700 new workers in its Upstate New York plant. That's got this congressman working hard.

REP. SHERWOOD BOEHLERT (R), NEW YORK: It's my favorite four- letter word -- and you can use it in polite company -- is jobs. So we're all scrambling to do the best of our ability to do everything we can to assist our companies in our districts in our states get some new opportunities for employment.

SCHIAVONE: Bids are already in. And the advertising and lobbying have been feverish, with both competitors bound to do whatever it takes to nail down the contract.

(END VIDEOTAPE)

SCHIAVONE: Lou, we're told that British Prime Minister Tony Blair has personally called President Bush about the Lockheed Martin bid. For the record, the White House won't comment. But it could be tough for the administration to ignore its special relationship with Britain, key ally in the war against Iraq -- Lou.

DOBBS: Is there any sense, Louise, as to which has the advantage here?

SCHIAVONE: So far, it looks like it could be a real draw because of this very important foreign policy issue, Britain's standing with the United States in the war against Iraq.

But let's remember that Sikorsky has been designing this for 46 years.

DOBBS: Louise, thank you very much -- Louise Schiavone.

Coming up next, defending outsourcing. Economist Dr. Catherine Mann agrees with the president's chief economist, who said, you may, remember, globalization is good for America. She is our guest.

And, as the race for the White House heats up, three of this country's top political journalists will be here. And James Webb, highly decorated former secretary of the Navy, on who the veterans of this nation will likely support in the presidential election.

And "Failing Grades." Education in America, we take up tonight and all week long, the crisis facing this country's public school system, as we begin a new series of special reports.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: We've reported for more than a year now on the exportation of American jobs to cheap foreign labor markets. We call it the exporting of America.

It's become the focus of a growing national debate and a major issue, of course, in this presidential campaign. The latest editions of "BusinessWeek," "The Economist," "TIME" magazine, all carrying the subject of outsourcing as their cover stories.

And "Washington Post" columnist George Will and "New York Times" columnist William Safire both defending the status quo, the exporting of America, in their latest columns. "The Financial Times of London" has made no secret of its support for outsourcing. Its parents company, Pearson, which also owns part of "The Economist," has sponsored conferences on how to outsource jobs. "The Financial Times" of its division runs those conferences and receives management fees, substantial fees, for them, $185,000 for some of them, in fact.

My guest tonight is also a supporter of outsourcing. Catherine Mann is senior fellow at the Institute For International Economics.

And it is a pleasure, Dr. Mann, to have you with us.

CATHERINE MANN, INSTITUTE FOR INTERNATIONAL ECONOMICS: Pleasure to be here, too.

DOBBS: You are quoted roundly, extensively as -- one would almost think you were the architect of outsourcing American jobs to overseas labor markets.

I've talked with CEOs. I've talked with journalists, various people, all walks of life who say, Dr. Catherine Mann says it's a great idea. In point of fact, we're losing jobs. We have a huge trade deficit. We have major issues in this economy. How can we defend it?

MANN: Well, I think we want to divide it up into a couple much different pieces.

First, if we go back to the 1990s -- and I think it's important to go back to that same period, because it was a period of time when the U.S. economy expanded at a more than 4 percent rate for an extended period of time. Unemployment fell to below 4 percent, stayed there for a while. This was also a period of time where the external balance, the trade deficit, widened even more than it has to date.

And it was a time when there was a tremendous amount of outsourcing. So if we go back to the 1990s, we find that there is a very strong growth, strong productivity, lots of job creation at the same time as there is outsourcing. So the question is, what is different today?

DOBBS: Just to be clear, Dr. Mann, when you say outsourcing, during the '90s, there was not outsourcing to cheap foreign labor markets compared to anything that we've seen in the last few years in this country, based on our research.

MANN: Well, I think we have to be very careful. I mean, data are open to interpretation. But in terms of...

DOBBS: I think we should say, too, that data here is dismal.

MANN: Terrible. Yes, we will agree on that, no question.

DOBBS: You and I are agreeing too much already.

MANN: Well, I think what we need to go back to is, how much has outsourcing contributed to GDP growth, and to productivity growth and to job creation. We do have enough data to look at some of the numbers with respect to information technology. How important that was in the 1990s for generating the economic condition.

What's different today, and what I think is key to addressing this question today, is that it's services. Even the manufacturing jobs that we see outsourced today, the higher proportion of them are in the services. The blue collar workers got outsourced in the 1990s, increasingly it's the people who are in the corner office -- not the corner office, but in the other offices and the cubes with the computers who are also being outsourced.

DOBBS: That loud cheer you heard go up when you said corner office was from those who have been outsourced some distance from that office.

MANN: Right. Well, so the issue is, is that there are more jobs being outsourced in the services sector. Not just manufacturing, but also services sector. So it's white collar jobs that we're addressing here.

The change has been very rapid. The scope of the labor force that's being affected by outsourcing is much broader, because, of course, white collar jobs are a larger share. Plus, the skill level of the jobs that are currently vulnerable is higher than it used to be.

What that means is that there are many more people who are at risk, and that is a recipe for coming up with better public policy to address the issue of adjustment that has been ignored up to now.

DOBBS: That public policy to now has led us under the guise of what I refer to simply as the polar extremes of those who would like to distort the argument. As you well know, there is no such thing as free trade. We have people who say they're free trade proponents, meanwhile they're watching subsidized agriculture in this country in the tens of billions of dollars, manufacturing as well, through the export/import bank (ph), all of the others, or on the other polar extreme of that argument is protectionism. No one, to my knowledge, has advocated protectionism. But those who want to defend the status quo under the name, the rubric of free trade and the outsourcing of jobs, say, well, if you manage your policy, that's protectionism.

But does it not seem to you that what we really are talking about in both instances, whether it be protectionism or free trade, is sort of faith-based economics? And in point of fact, sort of absolves all of us from the responsibility for the fact that we have a $3 trillion trade debt. We have a $7 trillion public debt. And we have a program of outsourcing in corporate America right now that is devastating, potentially.

MANN: Well, again, trade is currently the lightning rod for everything that's wrong in the U.S. economy. And it's certainly the case that job creation...

DOBBS: I would suggest to you -- I would suggest to you, Dr. Mann, I could give you a list of a lot of things that are wrong. But this is the one we're focusing on.

MANN: But my point is, is that trade policy is being viewed as the only tool we have available to us to effect change. What I'm arguing is that what we ought to be focusing on is not trade policy per se, but look at the source of the issue, which is worker adjustment questions, how to get that person from one job to another, if they become -- you know, if they lose their job. And more importantly, as we're seeing more of the high skilled jobs being vulnerable, is how do we take the worker who is incumbent in the workplace and move them up the skill ladder. Those are really the essence of the issue, and we want to be able to have workers move from one job to another. That's part of the advantage of the U.S. economy.

DOBBS: Absolutely. The mobility of our workforce, our hard- working middle class, across the board, that's absolutely critical.

But what I hear you saying is that the only response outside of trade policy on a short-term basis is to simply -- to retrain, to train as a response. That's to deal with the result of what is, in my opinion, a trade policy that's been pure folly.

Why would it not be within the purview of trade policy to say, yes, we're going to make a determination about what kind of country we want this to be. We want to preserve a standard of living, a quality of life, and that it's not all about return on investment or short- term profits on Wall Street, that there is a responsibility to the stakeholder. And I know that goes well beyond the purview of your studies. But isn't it central to economics to consider those questions, the value question?

MANN: Well, the value question, for sure, means that we ought to be focusing on the worker. We ought to be focusing on training. And I'm glad to see you're going to be working on education for the next -- for this week, in terms of your special programs. But trade policy as a response to what is a longer term issue, is missing the point. I mean, trade policy is relevant. It certainly is. And there are a number of issues that we ought to address. For example, one of the big reasons for why we have a trade deficit as large as it is today, and I agree that that's a big issue, is that there has been a collapse in export growth.

DOBBS: That's right.

MANN: And part of that is the dollar. Part of that is slow growth abroad. Part of that is not having open markets for competitive U.S. service providers, who, as you know, the service sector is the one area that actually has a balance of trade surplus, and not a deficit.

DOBBS: Dr. Mann, as you -- we're going to have to leave it here. I hope you'll come back as we discuss this and try to illuminate it. And as you suggest, free trade has hardly been reciprocal in most instances, and we've paid the price for it.

MANN: Right, yes.

DOBBS: Dr. Catherine Mann, great to have you here. Please come back soon.

MANN: Thank you.

DOBBS: Thank you.

That brings us to the subject of tonight's poll. The question, do you believe the outsourcing of U.S. jobs is a threat to the American way of life? No big deal? The price of doing business today? Please cast your vote at cnn.com/lou. We'll have the results for you later in the broadcast.

And while we're here in Washington, we wanted to share with you a souvenir from right here in the nation's capital, while we're talking about international trade and outsourcing. Anthony Tiona (ph) of Boca Raton, Florida, and his wife were nice enough to send us this visor. I'm going to set it right here -- I'm going to hold it right here, my director tells me. They purchased it at one of the national monuments here. Take a good look at it. If you'll notice, perhaps something missing, namely, the letter G. A souvenir sold right here in our nation's capital. It is, by the way, made in Vietnam.

And tonight's thought is on business. "The selfish spirit of commerce knows no country and feels no passion or principle but that of gain." Those are the words of Thomas Jefferson.

Coming up next, the Democratic presidential candidates face a new counteroffensive from President Bush. We'll be talking with our panel of top political journalists about what it all means and what we can expect.

And more and more Americans are entering college and the workforce without the skills they need to succeed. That special report coming up. And shocking words today from Education Secretary Rod Paige, who called the nation's largest teacher's group a, quote, "terrorist organization." That and a great deal more still ahead here. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, President Bush tonight will launch a campaign offensive against the Democrats who hope to replace him. Joining me now our panel of top political journalists, Karen Tumulty, the national political correspondent for "TIME" magazine, Ron Brownstein, the national political correspondent for the "Los Angeles Times," and Roger Simon, political editor of "U.S. News and World Report." Good to have you with us.

Let's deal briefly with the Nader announcement which seemed to surprise no one, but which is creating some consternation. Karen, is this going to have a significant impact?

KAREN TUMULTY, "TIME" MAGAZINE: Well, no one knows precisely what kind of impact it's going to be. But it's really hard to see him getting the kind of support he did four years ago. The fact is, that the Nader voter was -- however he protests -- it was drawn a lot from Al Gore's base. And there's been a lot of remorse over that for the last four years. His idea that somehow he's going to draw in Republicans and Independents, I still don't get.

DOBBS: He used a word I hadn't heard from a candidate or an incumbent president so far in this campaign, Roger. He used the word relax, rejoice. Now, rejoice is a word I can get behind.

ROGER SIMON, "U.S. NEWS AND WORLD REPORT": I think he'd like people to forget, too. He got 2.7 percent of the vote last time. I doubt he'll do that well this time. But I don't understand why people blame him. Why Democrats blame him for Gore's loss. Blame the doofuses (ph) who voted for him. Why should we discourage people -- he didn't lose Florida for Al Gore. The people who voted for Ralph Nader did. Ralph Nader does not have a silver tongue. He did not have multi-million-dollar campaign commercials. He didn't have huge high-powered brilliant staff to get him through. He'd just go out and made little speeches and he still did that well.

DOBBS: When you said the doofuses who voted for Ralph Nader, all of us doofuses had to vote for somebody. I thought where you might be going is the suggestion that seems to me to defuse the Ralph Nader effect is all Al Gore had to do was win his home state of Tennessee and the election was his.

RON BROWNSTEIN, "LOST ANGELES TIMES": And for that matter, New Hampshire. Look, there are a lot of reasons Al Gore lost. No one really, I think, in American history has lost an election in the incumbent party when the cards were all tilted so far in their direction. But I think Ralph Nader will have one big problem this time, the core of his argument in 2000 and the core of his argument again is there's no meaningful difference between the two parties. I don't care where you stand on the political spectrum from left to right, it's hard to argue that there's not going to be any difference between George Bush and John Kerry or John Edwards. It's just simply not a plausible argument and I think that's going to cut into his vote.

TUMULTY: Howard Dean made that argument and look where it got him.

DOBBS: But you were both nodding as he was saying that.

SIMON: Even if you confront Nader with a whole series of issues that he agrees with the Democrats on, and doesn't agree with the Republicans on, he still sticks to that same position that Ron was talking about. There's no difference between the two parties, let's get rid of them both and elect an Independent.

DOBBS: Is there a real difference between Senator John Edwards and Senator John Kerry?

SIMON: There's not much on the issues. On the issue of trade, if you can get people to care about the issue of trade.

DOBBS: We dare to decide...

SIMON: You know, trade. But otherwise, what you get is a press captivated by a guy who can give a good stump speech, John Edwards, and a guy who some people think is basically a taller Al Gore. When you get into real substance of the differences between them...

BROWNSTEIN: There are some differences. I think Edwards would be more centrist on social issues. You know, Kerry is more conventionally liberal on the whole range of social concerns. Edwards really hasn't done a good job, I think, of delineating those differences or broadening his case against John Kerry. He's relied almost solely as Roger suggested on the trade issue. It's hard to make that the central point of distinction in the campaign, a, when Kerry, looking forward, is not talking about big differences and, b, when he's got the AFL-CIO, James Hoffa and Richard Gephardt out there as character witnesses. It's hard for Edwards to sort of sell the argument that he's fundamentally different on that front.

TUMULTY: It's not in his interest to sell the argument that he's fundamentally different. The argument that he needs to sell is essentially the voters are going to look at me and are going to look at this other guy and they're going to decide on personality, on a lot of other intangibles that I am somebody they would rather have in their living rooms for four to eight years.

BROWNSTEIN: Ultimately, I think he has to challenge the fundamental engine of Kerry's success which is the electability argument. He has not done that. I mean, there was an argument to be made about primarily on social issues that John Edwards said, look, I like John Kerry, I respect him, but his views are not going to be able to carry my part of the country. He didn't do that. The opportunity may have passed. We'll see next week.

SIMON: Defeating the electability argument, he's only gotten one victory in his native state.

DOBBS: Tomorrow, Idaho, Hawaii, Utah go to the polls. Any surprises for us there? Any impetus to be gained from the results?

TUMULTY: Well, neither of the two top candidates are really investing a lot in any of those states. So I think that, you know, at this point, everybody is looking forward to next week.

SIMON: My only surprise is that we're not in Honolulu tonight. We dropped the ball on that one.

DOBBS: Let me assure you, Roger, we discussed that at some length as a possible venue for tonight's broadcast. It's good to have you with us. It's good to be with you in person. Appreciate it very much. Roger, Karen, Ron, thank you very much.

A reminder to vote in our poll tonight. The question, "do you believe the outsourcing of jobs is a threat to the American way of life?" No big deal. Simply the price of doing business today. Cast your vote at CNN.com/lou. We'll have the results coming up later in the broadcast.

Next, the distinguished former secretary of the Navy, James Webb, on the race for the White House. The critical role veterans will pay in this election.

And Mr. Webb's judgment about where veterans will likely cast their support. Senator Kerry or President Bush.

And failing grades, education in America, we take up the tremendous challenges that face this country's public school system.

And shocking words today from the secretary of the department of education, who called members of the nation's largest teacher's union terrorists.

That story and a great deal more still ahead here. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The Democratic party, of course, has yet to nominate a presidential candidate. Yet the military records of its front-runner Senator John Kerry and the military records of President Bush are already a major issue in the campaign. My guest tonight says the veterans' vote will play a key role in this presidential election. James Webb is one of the most highly decorated combat marines from the Vietnam war. He also served as secretary of the Navy during the Reagan administration. Good to have you with us.

In your judgment, how important a role will veterans actually play in determining who's president this year?

JAMES WEBB, FMR. SECRETARY OF THE NAVY: Well, I think you have the veterans' vote, and it -- it's sort of like by (UNINTELLIGIBLE) here. Very divided among itself. But in strong blocks. But also through the veterans issues, I think people are going to sort of see illuminated the character issues of the two candidates.

DOBBS: I think that as soon as I said that former secretary Webb was in the Reagan administration, a Republican, that they would have automatically assumed that you would say that the vote would go to President George Bush. Yet you have said rather strongly that Senator Kerry has some questions answered himself and President Bush has some serious questions to answer. You've been rather even-handed, I suppose, in offending the campaign committees of both gentlemen. At this point, do you think that one or the other has an advantage among the...

WEBB: You know, I think that under almost any other historical circumstances, the veterans, particularly the veterans of the Vietnam War would have aligned themselves strongly against John Kerry. But with what has happened with the evolution of the war against international terrorism, you know, off into the war against Iraq, and a number of the leadership questions that came off of that, you're seeing surprising number of veterans for me. I worked in the veterans community starting back in the '70s, surprising number of veterans to me have held their fire or decided they're actually going to work with Kerry. There's a strong, strong element that's going to go after John Kerry based on what he did after the war, no doubt about that.

DOBBS: We're not articulating his role in the protest against the Vietnam War. The president, his service in the national guard, flying jet fighters, serving all but about six months of his commitment.

Does it surprise you that that's become as large an issue as it has?

WEBB: I think what's happened here is, both of these gentlemen have advanced at one point or another themselves or through their surrogates, their military credentials. That's why it's a hot issue this year as compared to others. George W. Bush says he's a wartime president. He's loved his image as a fighter pilot in many different forms as we know. At the same time he's got strong negatives. The comparison of national guard service as opposed to what a lot of other people did during that era. And also from the perspective of veterans early on, after this thing against Iraq started to heat up. A lot of veterans termed the phrase chicken hawks for those around the president who did not serve, and yet were articulating his policy.

The same thing with John Kerry, he has positives. He wanted to advance himself as a warrior, and yet when he came back, he really did, as a leader of the Vietnam Veterans Against the War not simply the fact that he was opposed to the war, but a leader who articulated so many of the negatives of the experience. He inflamed the passions of a lot of veterans for a long time. So both of them advanced their credentials in a positive way and both of them are going to get serious negatives.

DOBBS: Are we consigned to fighting the Vietnam War over in this country again, in this campaign?

WEBB: I think that what happened during the Vietnam War does illuminate the credibility of a gentleman who wants to be -- both of whom want to be commander in chief. Yes, there's a question of moral authority, when you're telling people to go off to war. So it's not simply refighting the Vietnam War. Although we're still refighting the civil war in many ways. As we assimilate these experiences as we move along. But the most important question to me, and a lot of veterans, really is who is going to articulate a strategy to the American people that will demonstrate when the United States military will leave Iraq. The Bush administration has deliberately left that vague from the beginning when it started justifying the war. And we've had yet to hear from Senator Kerry on it.

DOBBS: I think tonight James Webb's people are saying, for Republican, pretty even-handed. And I think that would be the same thing if you were a democrat. Either way, it's a pleasure to have you with us.

WEBB: Thank you very much. Thank you for having me.

DOBBS: James Webb.

Here in Washington today, shocking comments from Education Secretary Rod Paige. Secretary Paige called the nation's largest teacher's association a terrorist organization. Secretary Paige was referring to the almost 3 million member National Education Association. Paige later released a statement saying it was an inappropriate choice of words. However, the secretary again blasted the NEA for what he called obstructionist scare tactics to block support for the program No Child Left Behind.

Tonight, we begin a new series of special reports on the extraordinary difficult challenges that face our public school system. It's called "Failing Grades." A recent study by the American diploma project found a staggering 60 percent of our high school graduates rate either fair or poor in grammar and basic math.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT: It's tough when even your B students are still not able to cut it when they go to college. That's what happened in 2001 at Georgia's Coosa High School. Eleven out of 33 students who attended a Georgia public college, nearly half needed remedial work.

KELLY HANSON, SUPERINTENDENT, FLOYD COUNTY, GEORGIA SCHOOL DIST.: If a student doesn't go through a college prep program, or just does the minimal amount of work, they're truly not going to be prepared.

SYLVESTER: Students not doing much, and schools not expecting much, may be the reason why private employers complain American high school graduates lack basic reading, writing and math skills. And why high school students in the United States trail students in other countries. A 2000 report found American 15-year-olds ranked 14th in science out of 31 industrialized nations, and 19th in math, well behind students in Korea and Japan. ANDREAS SCHLEICHER, ORG. FOR ECONOMIC CO-OPERATION & DEV.: What is striking is the variation in performance in the U.S. like the gap between the best and poorest performing students is quite significant. So is the gap between the best and poorest performing schools.

SYLVESTER: President Bush's no child left behind initiative aims to close those gaps. It requires states to establish standards, and holds failing school districts accountable. But cash-strapped states say they are being asked to do the near impossible.

CHESTER FINN, FORDHAM FOUNDATION: The No Child Left Behind seems to assume that something can happen that probably can't happen. Like a broken school district fixing a broken school. Or a -- an inadequately staffed state fixing a broken school district.

SYLVESTER: The Department of Education disagrees that it's a resource problem.

NINA REES, DEPARTMENT OF EDUCATION: Our student outcomes are worse than most of the countries that are spending half as much money as we are spending. It's not a question of spending, it's a question of where the money is going and how it's being spent.

SYLVESTER: A lot of schools systems including Georgia put students on certain tracks. Vocational or college preparatory. Those taking college prep classes are challenged more, and generally have the best teachers and the most resources.

(END VIDEOTAPE)

SYLVESTER: It's always been assumed that the vocational students will find work in manufacturing or in the trades. But Lou, as you well know, it's getting a lot harder to find those jobs.

DOBBS: Unfortunately. A collision of issues. One hard to find jobs, and inadequate skills.

Lisa, thank you. Lisa Sylvester.

Coming up next, the results of "Tonight's Poll" coming up. But a list on the companies that we believe to be "Exporting America."

Tonight's additions include AFS Technologies, Bissel, Candle Corp., Fellowes, Ingersoll-Rand, Lionel, Peoplesoft, Rockwell Automations, Square D and Xerox. For the complete list, log onto cnn.com/lou. We continue in one moment. We hope your with us.

(COMMERCIAL BREAK)

DOBBS: Ninety-three percent of you say, exporting jobs is a threat to the American way of life. That's the conclusion of "Tonight's Poll."

That's our show for tonight. We thank you for being with us. Tomorrow night, Congress man -- well, we'll be joined by a number of folks in Washington. For all us here good night. "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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