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Surprising March Jobs Numbers Excites White House; Mistrial For Tyco Executives Today; Spanish Authorities Find Bomb On High Speed Railway

Aired April 2, 2004 - 18:00   ET


JOHN KING, GUEST HOST: Tonight, the strongest jobs report in nearly four years, just when President Bush needs it.

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: This economy is strong. It is getting stronger.


KING: I will talk with treasury secretary John Snow about the political impact.

A new terror alert in this country tonight. Radical Islamists may be planning to bomb trains and buses in major cities this summer.


ASA HUTCHINSON, UNDERSECRETARY, DEPT. OF HOMELAND SECURITY: We're working with our transit authorities to enhance that security.


KING: A dramatic end to the Tyco trial. The judge declares a mistrial after a juror receives a coercive letter.

And in "Exporting America," a small town in Virginia struggles to stay alive after Travelocity decides to ship 250 call center jobs to India. We will have a special report from the town.

ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, April 2. Sitting in for Lou Dobbs for an hour of news, debate and opinion, John King.

KING: Good evening. Tonight, employment is growing at the fastest pace in nearly four years. There were 300,000 new jobs in march, Far more than economists forecast. The numbers could indicate that economic expansion is finally leading to major jobs growth. The data is, of course, welcome news for the White House after months of anemic job growth and sharp Democratic attacks on the president's economic record. Peter Viles reports.


PETER VILES, CNN CORRESPONDENT (voice-over): At last, good news on jobs. The government says there were 308,000 new jobs in March, a big surprise to investors, the best job numbers in almost four years.

PHIL FLYNN, BOND TRADER, ALARON TRADING: It's almost like this is the missing piece of the puzzle. The ship has come in, and everything has changed. And so we're living in a new world. So happy Easter, I guess.

VILES: Seventy-one thousand new construction jobs last month, forty-seven thousand new jobs in retail boosted by workers returning after the California grocery strike. The jobless rate did tick up to 5.7 percent, but most economists agreed the labor market is improving.

CHARLES LIEBERMAN, ADVISORS FINANCIAL: There's no question in my mind that the job market is getting substantially better, and it's not just this month alone taken out of context. You got to put it into context. All of the other data on the economy has been strong for quite a while now.

VILES: Over the first three months of the year, half a million new jobs. That's a pace of 2.1 million new jobs per year. But many caution not to read too much into a single report that still shows plenty of slack in the labor market.

WILLIAM DUDLEY, GOLDMAN SACHS: While the headline payroll number was very gratifying, especially to the White House, underneath the report, things were less robust. For example, total hours worked actually slipped a tenth of a percent this month, and there wasn't much in the way of wage growth, up only a tenth of a percent. So average hourly earnings are not growing very fast.

VILES: And for nearly 15 million Americans, the job market isn't working at all: 8.3 million are unemployed, 1.6 million want a job but don't qualify for unemployment, 4.7 million work part time but want a full-time job. That's 14.7 million.


VILES: One other headline today, that brutal slump in manufacturing employment came to an end in March. After 43 months in a row of lost factory jobs, factory employment was flat in March. All in all, John, that's good news -- John.

KING: Good news in the economic numbers, Pete. One of the major political numbers is what is the total number of jobs lost during the Bush presidency? It's a moving target, of course. Where are we now?

VILES: Moving target and shrinking. It's 1.8 million now. Now, you may hear higher numbers than that. If it's higher than 1.8 million, they're either talking about an old number or they're talking about some other number, lost manufacturing jobs or lost private sector jobs. All in all, counting the growth in government jobs, we're down 1.8 million since January of '01 -- John.

KING: Peter Viles in New York, thank you very much.

And as Pete just reported, the jobs rebound is encouraging to President Bush as he fights Democratic charges he has failed the American people on employment and overseas outsourcing. Today the president said the economy is strong and getting stronger. Suzanne Malveaux is traveling with the president. She joins us now from Augusta, Georgia, with more on how the administration quickly sought to gain politically from the jobs report -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, John, this is certainly good news for the White House. We saw early today President Bush giving the thumbs-up after he heard those good numbers. Earlier today, he was in Huntington, West Virginia, at Marshall University. That is where he was highlighting his economic policy, talking about $250 million for community college partnerships, $500 million for job training and education programs. And the president really using these new numbers today to make the case to the American people that it's his economic policy that is working.


BUSH: The economy is growing, and people are finding work. Today the statistics show that we added 308,000 jobs for the month of March. We've added 759,000 jobs since August. This economy is strong. It is getting stronger.


MALVEAUX: And the president delivering that message in the key battleground state of West Virginia. That is where 20,000 West Virginians have lost their jobs under President Bush's watch, 10,000 of that from the manufacturing sector. And John, as you know, Democrats were quick to point out that millions of dollars -- millions of jobs, rather, have been lost under President Bush's term, and that only one month really does not make a trend -- John.

KING: And Suzanne, what is the latest tonight on this dispute over the Bush White House turning over to the 9/11 commission documents dating back from the Clinton administration?

MALVEAUX: Well, there seems to be a compromise tonight, John. You have the counsel from the White House, as well as the counsel from the 9/11 commission have both agreed that on Monday, they'll go to the National Archives. That is where they're going to sit with boxes and boxes of these Clinton documents, go over what are duplicates, what's relevant, what's classified and what's appropriate to send to the 9/11 commission -- John.

KING: Suzanne Malveaux with the president in Augusta, Georgia. Thank you very much, Suzanne.

Senator John Kerry and his top economic advisers today held a strategy meeting at the senator's home in Boston. After that meeting, the Democratic presidential candidate told reporters, in his view, Mr. Bush has little reason to celebrate.


SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: Obviously, all of us are pleased with the job numbers for this month. But there's almost no way this administration will avoid having lost two million jobs. And the fact is that the deficits, which go out as far as the eye can see, the lack of any one single manufacturing job in those jobs, and the huge numbers of jobs that are leaving for overseas tells the real story of the economy of our country.


KING: Later in the broadcast, I will talk with treasury secretary John Snow about the economy and the political impact of this new employment report. I will also talk with presidential adviser Karen Hughes.

Turning now to the new warnings about the threat of terrorism in this country. There was a government alert today about possible terrorist attacks this summer against buses and trains in major U.S. cities. The FBI and Homeland Security Department called on local law enforcement agencies to step up security in transportation centers. Justice correspondent Kelli Arena has that story -- Kelli.

KELLI ARENA, CNN CORRESPONDENT: John, the intelligence is uncorroborated and very general in nature. Still, no one is taking any chances, the Department of Homeland Security and the FBI alerting state and local partners and industry officials about a possible plot to attack buses and trains here in the United States.


ASA HUTCHINSON, UNDERSECRETARY, DEPT. OF HOMELAND SECURITY: The information that we receive, intelligence-wise, with the reality of the bombings overseas in transit -- this is an area of concern. We're working with our transit authorities to enhance that security, put the appropriate protective measures in place, public awareness, as well, alerting law enforcement.


ARENA: In an advisory, officials say the intelligence points to a plan to attack commercial transportation systems in major U.S. cities, but it doesn't name the cities, and the only timeframe that's offered is the summer.

But officials do get a little more specific when they're writing about explosives that could possibly be used. They say the plot calls for use of improvised explosive devices, possibly made of ammonium nitrate and diesel fuel. The intelligence, of course, coming on the heels of last month's train bombings in Madrid and the discovery today of another bomb under Spain's high-speed rail system. Plus, there was a seizure this week in London of 1,000 pounds of ammonium nitrate. Now, there's nothing to suggest, according to officials, that there's any relation to this latest intelligence, but pieced together, John, it all explains how concerned they are.

KING: Concerned -- help our viewers understand whether they should be afraid, in the sense that this is called an inlet (ph), the document you obtained.

ARENA: Right.

KING: It goes out only to law enforcement. It's not meant for public consumption.

ARENA: It is not meant for public consumption, but it is definitely targeted at the industries involved, the local and state law enforcement officials involved. But it is good for people to know, so that they are aware, if they see suspicious packages, if they see suspicious behavior, they can report it and it will be taken care of.

KING: Kelli Arena, thank you very much.

ARENA: You're welcome.

KING: And as Kelli just reported, hours before that warning here in the United States, authorities in Spain found a bomb under a high- speed rail line. The bomb was discovered three weeks after radical Islamists killed nearly 200 train commuters in Madrid. Kitty Pilgrim reports.


KITTY PILGRIM, CNN CORRESPONDENT: Spanish authorities say they believe the bomb is the same type that was used in the deadly attacks Spanish rail lines last month.

CRISPIN BLACK, DIR., RISK ADVISORY GROUP: The Spanish did not have much intelligence warning about what went on in Madrid, which is perhaps temporarily making people rely less on the intelligence they can receive and more on what they can actually see going on on the ground.

PILGRIM: In France in recent weeks, a search after the Madrid bombing also turned up bombs along French rail lines. Disaster averted. In Britain, a massive plot foiled. The ninth suspect this week was arrested. Authorities say a half ton of bomb-making materials recovered earlier this week was going to be used to blow up rail lines and shopping malls. In Canada, Mohammed Momen Kuadja (ph), a Canadian of Pakistani descent, was arrested just before the raids in Britain. He's charged with terrorist activities on Ottawa and London, but police won't say if his arrest is linked to the London bomb plot. Attacks also stopped in the Philippines this week. The Philippine president said they stopped what could have been a, quote, "Madrid- like" attack, a plan to blow up trains and shopping malls.

Terrorism experts say the change in tactics reflect certain successes on the war on terror. Simpler operations are planned, like rail and car bombings, rather than the highly coordinated operations of 9/11.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: It took a year or more to plan 9/11, and al Qaeda doesn't have the kind of apparatus and kind of sanctuary needed to do that sort of planning right now. So you're seeing the al Qaeda affiliates are behaving more like organizations in the past that simply did simple things that were at their disposal. PILGRIM: For example, the bomb material in England was fertilizer ammonium nitrate.


Now, there are a couple of big events coming up that have authorities concerned about security. This is the beginning of Easter week. It's a big holiday in Europe, where large crowds gather in public places to celebrate -- John.

KING: Kitty Pilgrim, thank you very much.

New anti-terrorist measures here in this country. The federal government plans to extend tough border controls to travelers from close allies, such as Britain, Australia and Japan. Immigration agents at airports and seaports will fingerprint and photograph citizens from 27 countries who do not require visas under the existing rules. Agents already take photographs and fingerprints of citizens from other countries.

And still to come: a stunning end to the Tyco corporate corruption trial. We will have a live report from the courthouse, and I will be joined by CNN's senior legal analyst, Jeffrey Toobin.

In "Exporting America," a small town in Virginia faces economic collapse after its biggest private employer says it will ship 250 jobs to India. And in "Heroes," the extraordinary story of a U.S. military policeman who went to Baghdad to train Iraqi police officers. Stay with us.


KING: A stunning end to one of the biggest corporate corruption trials. On what would have been day 12 of deliberations, outside pressure on the jury prompted the judge in the Tyco case to declare a mistrial. Mary Snow has the story from Manhattan State Supreme Court in Lower Manhattan.


MARY SNOW, CNN CORRESPONDENT (voice-over): The former titans of Tyco walked out of court with a big question mark hanging over charges they looted $600 million, using Tyco as a piggy bank to live a life that pegged them the poster boys for corporate greed. After six months, the judge declared a mistrial after what happened following a single supposed "OK" hand gesture juror No. 4 supposedly made to the defense.

CHARLES STILLMAN, SWARTZ'S ATTORNEY: Look, I've been doing this 40 years. I will tell you, if I piled up all the experiences top to bottom, I ain't seen nothing like this yet.

SNOW: An audible gasp was heard in the courtroom when Judge Michael Ovis (ph) said he had no other choice but to end the case because of efforts to pressure the jury from the outside. A source close to the Tyco case tells CNN that a coercive letter was sent to juror No. 4. In the end, the judge said there's no proof she did anything wrong, but in a departure from the norm, her name was published in two newspapers and she became the subject of what was described as venomous attacks on the Internet.

STEPHEN KAUFMAN, KOZLOWSKI'S ATTORNEY: We're disappointed because of events that occurred outside of the courtroom that this case did not reach verdict.

BRUCE SCHAEFFER, ATTORNEY/TRIAL OBSERVER: It had a circus atmosphere by the end. It was a case that probably could have been concluded in six weeks instead of six months.

SNOW: A $2 million birthday bash in Sardinia, complete with gladiators, was part of the prosecution's proof that former CEO Dennis Kozlowski and former CFO Mark Swartz misused company money to live extravagantly. Tyco footed half the tab for the party for Kozlowski's wife, and it also paid for a $6,000 shower curtain in a maid's bathroom at Kozlowski's home. The defendants say they never hid anything, that the company's board knew about all of it. But one juror says the prosecution appeared to make its case on some counts.

PETER MCENTEGART, TYCO JUROR: It's just so frustrating because we virtually had a verdict yesterday afternoon. We were that close. And then to come in this morning, and we're not allowed to deliberate today at all.

SNOW: The juror said it appeared there would be a mixed verdict.


Now, the juror we spoke with said that the panel appeared to convict or be ready to convict on several counts. And unlike some high-profile corporate trials we've seen recently handled by the federal court system, this one was handled by the Manhattan DA's office, which calls this trial a disappointment and says it will retry the case -- John.

KING: Now, Mary, not to be flippant, but in a retrial, does the defense have an edge, essentially having had a practice run here?

SNOW: Some legal experts say, yes, they do, especially after hearing from some of the jurors about what would have led them to a conviction. But also, some legal experts say that the prosecution may really have an advantage, as well, because critics have said that this case went on too long, so this will give them a chance to fine-tune their case for the next time.

KING: Mary Snow, thank you very much.

And joining me now with more on this amazing case is CNN's senior legal analyst, Jeffrey Toobin. Jeff, let's follow up on that point. Who has the edge after a disaster like this?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I think the defense, by and large. Any time a defendant leaves the courtroom through the front door instead of through the back door into jail, the defense wins. And cases tend not to get better with age. Defense lawyers are always looking to delay. Evidence gets lost. Memories fade. The opportunity to cross-examine witnesses for a second time, based on what they said in a first trial -- it does help the defense, by and large. That isn't to say that they won't ultimately be convicted, but certainly, today is a victory for the defense.

KING: And is it a logical extension, then, to say, in your view, that the prosecution made mistakes here?

TOOBIN: I think they can't be blamed for the crazy way this ended, in terms of a juror getting a letter that had to result in a mistrial. But certainly, taking a case that took this long, six months, and a case that was so difficult for the jurors that it took them 12 days and still couldn't resolve it, I do think it calls into question whether this was a successful prosecution effort. But they will have the opportunity to learn from those mistakes, and they'll get to do it again, in all likelihood.

KING: There are occasions when, after a mistrial, there is a plea deal. Do you see any likelihood of that in this case?

TOOBIN: Boy, it certainly seems unlikely in these circumstances because what you have here is a prosecution team that virtually is certain to insist on serious jail time. And here you have two-white collar defendants who are not at all interested in going to jail. It doesn't seem like there's the kind of possibility of common ground that would exist. And also, both sides seem to think they had a shot with this jury. Every reason to think they will think they will have a shot at the next jury.

KING: And finally, Jeff, our business, the news media, does not come out of this trial unblemished, do we.

TOOBIN: A big, big question mark here. "The New York Post" and "The Wall Street Journal" identified this juror. This juror was then approached. This is why there is a custom observed by CNN here, and most other news outlets, of not identifying jurors during a trial, because they might be approached. I think there are going so be some really hard questions about "The Wall Street Journal" and "New York Post." They didn't do anything illegal. There's no question there. but on the question of journalistic ethics, that's -- that's there are going to be some hard questions for them to answer.

KING: Jeff Toobin, thanks for your time tonight.

And still to come, we'll talk with treasury secretary John Snow about today's jobs report. And in "Heroes," a military policeman is wounded in Iraq while on his way to take care of a fellow soldier. But Stephen Rice says he's confident his wounds won't slow him down. In "Exporting America," the choice between saving money or saving American jobs. We'll tell you what one on-line travel company chose when we return.


KING: Two more American troops have been killed in Iraq. A roadside bomb killed one soldier and wounded another in Baghdad today. The military also announced a Marine died yesterday in hostile action in the Anbar province, where Fallujah is located. Separately, in Najaf, insurgents shot and killed the police chief of the southern Iraqi city of Kufa (ph). His deputy was also killed.

In "Heroes" tonight, Second Lieutenant Stephen Rice dreams of a career in law enforcement. But after being injured by a roadside bomb during his service in Iraq, his sights are now set on just walking again. Casey Wian has his remarkable story.


2ND LT. STEPHEN RICE, ILLINOIS NATIONAL GUARD: I've always been an active person, and the prospect of not walking again or being able to run again -- it's rough. It's definitely rough.

CASEY WIAN, CNN CORRESPONDENT (voice-over): Military policeman Stephen Rice is struggling to stay in shape. Six months ago, he was in Baghdad leading a platoon of 33 soldiers teaching Iraqis how to be cops. Three months ago, a roadside bomb shattered everything.

RICE: We were going on shift about 7:00 o'clock in the morning, and I received a call on the radio saying that a soldier was injured in a roadside bombing and they needed help securing the scene. And I was running to that soldier's location, and a secondary device detonated on my left side.

WIAN: The blast knocked Rice to the ground.

RICE: And I knew there was quite a bit of damage there.

WIAN: Since then, he's had numerous surgeries.

RICE: They pulled shrapnel out of my knee and also had to remove a piece of my quad. There's also a scar right here from an operation they did, and there's an entrance and entry wound here on the left side of my ankle, and an exit wound right here. And also, my big toe is missing a middle bone.

WIAN: Rice will be back in surgery again in a couple of weeks, but he's confident he'll not only walk again but run and be able to do the martial arts he loves.

RICE: I'm still the same person, and there's just one more thing to overcome. Life's full of little obstacles, and we just have to get by all that.

WIAN: The bomb may have shredded Rice's leg but not his mind or his determination to stay in the National Guard and become a cop. Casey Wian, CNN, reporting.


KING: All of us wish Lieutenant Rice the best of luck.

Still ahead tonight, "Exporting America." Hundreds of jobs lost in one small American town to cheap overseas labor markets. We'll have a special report. Plus, elsewhere in America, the best monthly job growth in four years. The White House says it's just the beginning. We'll talk with treasury secretary John Snow. And one of the president's former aides returns to help him win reelection. White House adviser Karen Hughes will join us. That and much more still ahead. Stay with us.


ANNOUNCER: LOU DOBBS TONIGHT continues. Here again from Washington with more news, debate and opinion, John King.

KING: The exporting of America tonight is devastating one small Virginia town. One of its largest employers is laying off hundreds of workers and shipping their jobs to a cheaper labor market overseas. Louise Schiavone has the report.


LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Two hundred and fifty of Clintwood, Virginia's best jobs are being outsourced to India, and the town only has a population of 1,800.

DONALD BAKER, CLINTWOOD, VA, MAYOR: In my opinion, if something doesn't happen, it's not going to be too long until we'll be a third world country instead of some of these other countries being third world.

SCHIAVONE: Online travel service Travelocity is pulling the plug on its call center here, where workers had been pleased to start at $8 plus training and benefits.

ANGIE ELLIOTT, TRAVELOCITY EMPLOYEE: Well, me and my husband, we just bought a new home in August, so that's putting it, you know, really rough on us right now.

VERONICA PORTER, TRAVELOCITY EMPLOYEE: For anyone to understand it, I think you honestly need to live it. They'd have to live the week that I lose my job and see, you know, what the week before, what I feed my kids, compared to the week after, what I feed my kids.

SCHIAVONE: Having lost $55 million last year, the company expects to save $10 million with the change. Travelocity has told CNN, quote, "We made a difficult decision to outsource following significant losses last year. Our costs were significantly higher than our major competitors, who had chosen long ago to outsource to the Philippines, India and elsewhere."

With 11 months' notice, possible interviews at their two remaining U.S. call centers, Travelocity wants these workers to have a soft landing.

STEVE HORNE, TRAVELOCITY SITE MANAGER: We'll be working with local Virginia employment commission and resume writing, things of that nature, as time progresses. SCHIAVONE: Clintwood, meanwhile, is going back to its roots, marketing what you can't outsource: tourism, local crafts and a mountain music museum dedicated to a local artist, Grammy Award-winner Ralph Stanley, who sees a bit of Clintwood in his song, "Oh, Death."

RALPH STANLEY, GRAMMY WINNER AND CLINTWOOD, VA, NATIVE: (SINGING) Well, what is this that I can't see, with ice-cold hands taking hold of me?


SCHIAVONE: John, things change fast these days when it comes to information technology jobs. Just before Travelocity came to town, Nexus (ph) Communications shut down their operation in Clintwood. That leaves the residents there wondering what might come next and how long it might last -- John.

KING: And Louise, when we go out and cover these stories like this, the companies get a little up tight, don't they.

SCHIAVONE: They get very nervous about us looking into this, especially a big-name company like Travelocity. Got a lot of calls from them. How did we get in? How did we get those pictures? They're just very concerned that they're going to get a black eye for this because the focus so much, especially in this political climate, is on outsourcing American jobs.

KING: Well, we're glad you did get in. Louise Schiavone, thank you very much.

The White House says the new employment report is proof that more jobs are on the way. The economy created 308,000 jobs last month. The best showing in four years. Earlier I discussed the economy with Treasury Secretary John Snow and I began by asking him if this new job growth is sustainable.


JOHN SNOW, TREASURY SECRETARY: Well, I think it will be sustainable and I'm encouraged by that number. And I am encouraged by the fact that January and February were both revised upward. So suggesting that the first quarter is stronger than had been indicated by prior numbers.

KING: As you know, in the political debate in this campaign much has been made of the administration's prediction at the beginning of the year that the economy would create 2.6 million new jobs this year. Do you feel vindicated and is reaching that number possible?

SNOW: I'm not focused on any one number, John, but rather seeing the economy generate as many jobs as possible. When the economy is growing, like it is now, last half of last year, at 6 percent, this year at well over 4 percent. We should create a lot of jobs. A growing and expanding economy historically creates jobs. And I'm confident we'll see a lot of jobs created in the months ahead. KING: You say a lot of jobs. Let me try it one more time this way. Senator Kerry, the president's Democratic opponent says his economic program would create 10 million jobs over the next four years if he's elected president. Do you believe that if Mr. Bush is re-elected that the economy would create that many or more jobs.

SNOW: I can't give you a precise number. But I would say this, that there will be a lot more jobs created under a Bush administration than otherwise. Because the job creation process is directly tied to the president's tax cuts. And as I understand it, Senator Kerry would raise taxes and raising taxes would be the last thing you should do in a recovering economy.

KING: In this new report, for the first time in, I believe, 44 months, the manufacturing sector in the United States did not lose jobs. It is flat, it did not gain jobs but it did not lose jobs. There's a new survey for first time in 20 years, a survey of the manufacturing sector indicates some mood to perhaps expand a little bit. What are your thoughts on the state of the manufacturing sector right now. Do you foresee job growth there?

SNOW: Yes, I do. I think we finally turned the corner in the long beleaguered manufacturing sector. It turned down in the summer of 2000. And has been through a rough ride. I think we finally turned the corner which is a very hopeful note. And in the months ahead, the expectation would be to see manufacturing pick up on the jobs front. It's already picked up on the output front. Manufacturing output is showing some nice upward numbers now.

KING: Let me ask you then to follow up on that. Some comments you have made recently about trade and outsourcing have been seized by the president's critics on the issue. You said, I believe, in this past week that outsourcing, the shipping of American jobs overseas is, quote, part of trade and there can't be any doubt about the fact that trade makes the economy stronger. Explain for us, sir, what you mean by that in your views on outsourcing. Is it not damaging to the American worker?

SNOW: What I was talking about, of course, was the importance of the United States staying engaged in the global economy. We're only 5 percent of the world's population which means that 95 percent of the potential customers, for products and services produced in the United States lie outside our borders. We need to continue to engage the world economy. It seems to me pretty clear that trade, opening -- taking down trade barriers is good for America, good for American workers and I'd be strongly opposed to anything that would have us turn our back on what has made us a success.

KING: As you also know, we are in the middle of a political campaign and there are some Democrats questioning why your department did an analysis of Senator Kerry's proposal or analysis of a proposal very similar to Senator Kerry's anyway but if you took away the Bush tax cut for the upper bracket what effect that would have. Then the Republican National Committee began using those figures. Some questioning whether the government is involved in politics, political campaigns here? SNOW: John, nothing could be further from the truth on that score. The Treasury Department conducts analysis of tax proposals. We got a request for analysis of a proposal. We conducted the request. And everything was done in accordance with standard procedures.

KING: The Secretary of the Treasury John Snow. Sir, we thank you very much for your time today.

SNOW: Thank you, good to be with you.


KING: And we want to hear your opinion about the strong jobs report. Do you believe the economy has turned the corner on job creation? Yes, no, or too soon to tell. Cast your vote at We'll bring you the results later in the show.

Still ahead here tonight, I'll talk with presidential adviser Karen Hughes about her decision to return from Texas to help President Bush win re-election.

And then Israeli forces clash with Muslim worshipers at one of the holiest sites in Jerusalem. Those stories and much more still ahead. Stay with us.


KING: A tense standoff today at a disputed holy site in Jerusalem between Israeli police and Muslim worshipers. Israeli police stormed the al-Aqsa mosque using stun grenades and bullets to break up a group of Palestinian protesters that were throwing rocks at them. Police say there were at least 14 arrests and Palestinians report dozens of injuries.

Police in Wisconsin have ended their search for a suspect in the case of a student who said she was kidnapped. Police site inconsistencies and say there was lack of evidence to support the claims of 20-year-old Audrey Seiler.

And the House today passed a record $275 billion transportation bill despite a veto threat from the White House. The legislation boosts funding for federal highway, transit and safety programs for over six years.

One of President Bush's most trusted advisers is assuming a more prominent role as the re-election campaign intensifies. Karen Hughes left Washington to return to Texas with her family but is making more frequent appearances at the White House these days and will assume a full-time campaign role this summer after touring the country to promote her new book "Ten Minutes From Normal." I spoke with Karen Hughes earlier today at the White House and began by noting her book is in more ways than one competing against the new book by former White House counterterrorism czar and now Bush critic Richard Clarke.

(BEGIN VIDEOTAPE) KAREN HUGHES, WHITE HOUSE ADVISER: Well that is an irony. And I have to tell you, it's not what I would have chosen, because my book is very different really. It's not a typical Washington political book. It's really a book -- I mean, obviously, my life has been lived largely in the political context in the last 20 years of so, but it's really a personal story. It's about the struggle we all face to balance career and family. In may case, the highest level of our government.

It's a story of how we set priorities in life and how we choose to use our time. In my case, my faith helps me make those kinds of decisions. So, it's really personal look at what it feels like to be a normal person whose boss suddenly runs for president and becomes the president. And you find yourself having lunch with the Queen of England. Thrilling things like that. I hope it's a book that Americans who ever think about what it is like to be inside the White House will enjoy.

KING: In a sense it's also a competition over the credibility of this president. Richard Clarke says he ignores the terrorist threat. You paint the picture of a very different president.

HUGHES: Well, and I think my picture was much more accurate, because I was there, I was in the room. It's ironic in hindsight. Of course, I didn't know about Mr. Clarke's book when I wrote mine. And I mentioned him once in my book. It was because he came -- he was sent to my office the week after September 11 by Condi Rice to brief me on Afghanistan.

Now interestingly, that's the time when he says when we were focused on Iraq, but he came to my office to brief me on Afghanistan because the president had told me on Sunday night, September 16 that he had determined al Qaeda was responsible and he was going after al Qaeda in Afghanistan and I needed to know more about al Qaeda and Afghanistan.

KING: What is your sense -- you mentioned Mr. Clarke in the competition of the bookstore will have a dramatic rebuttal from Condi Rice next week when she testifies to the commission. A lot of people say why. It's not just the Bush administration, this executive privilege or the right of a president to with hold information to protect his staff and in the end almost always somebody has to go public or the documents have to be released. From a communication standpoint, do you sit and you just think, just get the lawyers out of this?

HUGHES: From a purely communication standpoint, my goal is always to get as much out as quickly as possible. I think someone in the former administration Lenny Davis who I think highly of, tell the truth and tell it fast and quick.

I really think in this case, though, in the White House, what I experienced is you have to balance a lot of competing interests. When we came into the White House we were told that the steadily, the executive power of the presidency had been eroded by Congress over the course of the last 20 or 25 years. All of us stood in the east room and raised our hand to protect the constitution, which clearly talks about the separation of powers between the 3 branches of government. So we felt that was an important principle. The president felt that was an opinion principle.

But I'm very glad, again, as a communicator and as an American that he was able to resolve it in a way that protects the constitutional principle by stating clearly in writing that this is exceptional, that this is an extraordinary set of circumstances, but also allows Dr. Rice to do what I know she wants to do and that is publicly share the facts with the American people. I think that's particularly important now they have seen the facts in somewhat a distorted perspective.

KING: The president says 9/11 is the day that changed everything. Why not from a communication standpoint find a way for the president to make a public statement to the 9/11 commission. Meet with them in private, deal with the classified information, but at a time when your critics say the administration is trying to hide something or stonewall the commission, wouldn't that be a way for the president to go out and say, yes, we're going to waive the rules for this 1 day because this was the 1 day that changed everything.

HUGHES: Well, I think -- I don't really know all the concerns about that. But I understand that would just be totally unprecedented. The most -- the most famous commission I can remember in my lifetime, the Warren commission, President Johnson did not even appear before it because he said presidents don't do that. I think the president clearly has other ways of communicating with the American people.

KING: One of the big fights of course is about the economy. Some good news for the administration today, the unemployment report says 308,000 jobs created last month.

HUGHES: About three times as many as were expected, and more than any time in the last four years. I think what that says, we're finally back. We've been through a lot, the economy has been through a lot. I think we underestimate sometimes the impact September 11 had on the economy.

I patronize a travel related business in Austin that about two months ago finally closed and the woman owner told me that she never could get it back after September 11. You know the tourism industry is such a huge part of our economy.

And then we had after that first of all we were in a recession, President Bush inherited a recession, then we had the terror attacks then we had the stock market declines, then we had the corporate scandals. That's a lot to go through. But I think today's job numbers are proof positive the president's economic plan is working and that the economy is on it's way, roaring back.

(END VIDEOTAPE) KING: Karen Hughes earlier today at the White House. She says if the president wins reelection she will say congratulations sir and head back to Austin.

And now a look at some of your thoughts. Many of you wrote about securing our nation's border and my interview last night with Robert Bonner the head of the U.S. Customs and Border Protection.

Janice Moore of Waverly, Virginia, "what has happened to our immigration system? I believe that it is not fair that so many have had to study so hard to become citizens of our great country, now all they have to do is cross a border illegally and our president seems to be giving them the green light."

David Rieger of Mundelheim, Illinois, "If Bonner is so concerned about our broken borders, why has he not started arresting and prosecuting the CEO's of the corporations that are hiring illegal aliens?"

And Rick of Pheonix, Arizona, "while Bush says he's fighting terror, our borders are wide open. The only people that are getting screened are American citizens at the airport."

We love hearing from you. As always, e-mail us at

A reminder now to vote on tonight's poll question. "Do you believe the economy has turned the corner on job creation? Yes, no, or too soon to tell?" Cast your vote at We'll bring you the results a little later in the show.

Still ahead, I'll talk with Jim Ellis of "Businessweek" and Ron Brownstein of the "Los Angeles Times" about the fiercely debated issue of jobs, trade and the economy. Please stay with us.


KING: Word that the economy created 308,000 jobs last month helped stocks close the week with a gain. The Dow rose 97 points, the Nasdaq surged 42, the S&P added 9. Christine Romans is here with the market now -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: John, stocks rallied and bonds fell sharply. One sideshow today, some wild swings just before the jobs number was released got the attention of market regulators and the labor department. They are probing any possible leak of the jobs data early, but a Labor Department spokesman said it's not unusual for big last minute bets before important economic reports.

John in true Wall Street form, as stocks rallied because the economy added jobs, two big tech names rose as their cutting jobs. Sun Microsystems will layoff 3,500 workers, that's 9 percent of its work force. And Gateway shares rallied 11 percent today. As we told you last night, 2,500 get pink slips there.

Overall John, a good week for stocks. For the S&P 500, it was the best weekly gain in more than a year -- John.

KING: And so, Christine, this has been the question on Wall Street all year. Is the market now convinced, the street now convinced that the economy has turned the corner when it comes to job growth?

ROMANS: Basically they are saying it's a start, but they are not convinced. They want to see several months in a row of strong jobs gains. And John, Wall Street has a pretty short attention span, now that this jobs report is behind it, the focus becomes quarterly earnings and if companies are starting to earn more money, there's the hope that they will be able to hire more workers.

KING: Christine Romans in New York. Thank you very much. Have a great weekend.

We're joined now by Jim Ellis chief of correspondents at "Businessweek" and Ron Brownstein national political correspondent for "The Los Angeles Times."

Jim Ellis, let me start with you, and let's pick up where we just left off with Christine. If you look at this unemployment report today and the employment data, pretty strong across the economy, even manufacturing breaking even. What is your sense of what it tells about looking forward? Have we turned the corner?

JIM ELLIS, "BUSINESSWEEK": Well, it tells us we have definitely passed the lows. We had already seen that with the strength in the economy in the last couple of months. We'd known that corporate profits are extremely high. Sooner or later companies were going to have to start taking some of that out of profits and throwing it back into employment. It is happening now.

The big issue as we go forward, though, is just how sustainable is it. I think the market was quite excited about this today. But the big thing to keep in mind is that the recovery has been one that sort of fits and starts. And it hasn't responded as in the past -- as we had in the past recoveries. So, we have to be very careful to take this one month's report and extrapolate too much from it. Instead, it's a good start, but it's just that.

KING: Jim talking very cautious man. Politicians aren't that way, Ron. Karen Hughes saying, finally back, turned the corner. Does the Bush White House need to be a little careful until they see more of this?

RON BROWNSTEIN, "LOS ANGELES TIMES": Absolutely. Look, and I think the political people around the president understand that what they need here is both length and breadth. They need both to sustain and go on for a while. And they also need it to be widely shared.

The state by state job numbers come out about a full month later. And on Wednesday, only two days ago they came out for February of this year and they showed a real divergence, John, beginning to pick up in a number of battleground states like Florida, Wisconsin and Oregon, but still dropping in places like Missouri and Ohio that are going to be very hotly contested.

So, the White House wants to see, I think, both this go on for a while, but also to see that it is shared across the country.

KING: And Jim Ellis, as this political debate goes on, what is the sense of the confidence in the business community and across corporate America? If they believe the economy has turned the corner and they are more confident they be inclined to hire people. Do you believe the confidence is out there?

ELLIS: I think that they are very confidence that there has been a real turn around in the economy, that there is a recovery there and that we have seen the worst.

I am not so certain they are ready to go out and start hiring willy nilly. I think that one of the real reasons so many companies have been blessed with strong profit growth is that they have really kept the lid on expenses, particularly hiring expenses.

And so one of the things that sort of helped them is not hiring. They found ways to outsource. They found ways to basically wring more work out of the present employee base, sort of increasing productivity there. And they are not about to give that up until they have to.

So I think for the administration to seem to think people are going to start running out now and putting up sort of help wanted signs everywhere, that's not going to happen. People are going to be extremely cautious because they don't want to give up the earning gains unless they have to.

BROWNSTEIN: I have to say, one thing this is going to test in the next few months and this election is going to test the assumption among most political scientists, and indeed most political strategists, that trend matters more than the absolute level of an economic indicator.

I mean the odds are still high, John, that George W. Bush will get to the end of this term with a net loss or a break even on jobs. He is still down 1.8 million jobs since he took office, which puts him as risk of being the first president since the depression to do that. But they believe in the campaign if they are showing sustained growth, month to month to month leading into the summer, leading into the election season, that will matter more to voters than the absolute level from the beginning of the term.

One said to me, voters assess the president more on the last year than the last four years. They may be right.

KING: And Jim Ellis, how does this complicate things then for Senator Kerry. He met with his economic team today. He is planning a series of major economic speeches. Just yesterday, began an advertisement slamming the president on outsourcing. When the newspaper tomorrow and programs like this, have 300,000 new jobs and good news, how does that complicate Senator Kerry's task?

ELLIS: I think what it has done with Kerry now, is it's forcing him to change his message into one that's not so much where are the jobs, but he's going to have to shift to whether the number of jobs that are being created are really the number that we need. And then more importantly, whether the jobs that are being created are the jobs that are really going to sort of give people the kind of lifestyles that they would like in the future.

I mean, there's a real sort of split in the numbers now that certain types of jobs, you know, people are doing quite well in, but for a lot of people, you know, they are underemployed. A lot of people are finding now, as we saw in the latest report, the number of hours worked actually dropped slightly, also wages are not going up any faster than inflation. So, you are actually not getting wealthier than you were, even know the job numbers are going up.

So, I think that for the Democrats now they most likely will have to shift and start saying, jobs are coming back but they are not the quality jobs you want. And that, we have to -- they have to talk a lot more about underemployment and also the fact that the long-term unemployed, people who have been out of work for at least 6 months, is not at a, I guess, at a 24 year high.

There are still a lot of problems on the job front that are sort of going to be debated in Washington. I mean this is not a slam dunk for the administration.

KING: Let me ask you as you jump in. We had a senior Kerry economic adviser booked on the program and they canceled that booking. Do they need to recalibrate?

BROWNSTEIN: Well, they may need to recalibrate. And I agree with Jim, if the job growth is sustained they are going to have to find other arguments. But that is going to be a very big hole right in the middle of your presidential campaign.

I think most analysts would argue the biggest obstacle President Bush faces to a second term has been the anxiety over the inability of the economy to create jobs. If that turns around on a sustained basis, you would probably see his approval rating rise a few points. And if it does of course, it puts him in a much stronger position for reelection.

So sure, they will find other arguments, but there is no good substitute from the Kerry campaign from an argument about job growth under Bush.

KING; Well change the subject in closing, one final question, horrific pictures out of Fallujah this week of the killings, the mutilations of the American contractors. Three months from now, the United States is supposed to hand over sovereignty. Jim Ellis, do those pictures do anything in terms of public support in this country?

ELLIS: I think that the pictures are very damming for public support here. I think a lot of people are going to say -- how in the world did we get to this? They are going to start asking a lot more questions about the intelligence we had going in and maybe whether the administration was being completely forthcoming in the immediate nature of the weapons of mass destruction danger, especially now that we know that there were no weapons of mass destruction.

BROWNSTEIN: Iraq has become a real wild card in this election. Bush gets consistently negative ratings on the economy, consistently positive on terrorism. Iraq itself is a 50/50 proposition for this country. There isn't an ideological majority against the war, there is not, but there can be an operational majority at various points and people may be cool toward it if things seem to be going badly.

KING: Ron Brownstein of the "Los Angeles Times," Jim Ellis in New York from "Businessweek" thank you both very much.

And when we return we'll have the results of tonight's poll question. But first, a reminder to check our Web site for the complete list of companies we've confirmed to be exporting America: We'll continue in just a moment. Please stay with us.


KING: Now the results of tonight's poll question: 81 percent of you believe the economy has not turned the corner on job creation. Skeptical bunch.

That's our show tonight. Thanks for being with us. Lou will be back Monday. And he'll be talking with John McArthur, publisher of "Harpers" magazine and author of "The Selling of Free Trade." Good night from Washington. Have a great weekend.


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