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LOU DOBBS TONIGHT

Interview With Senator Carl Levin; U.S. Civilian Beheaded in Iraq

Aired May 11, 2004 - 18:00   ET

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


(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): Tonight: an American civilian beheaded in Iraq by radical Islamists associated with al Qaeda. An Army general blames the Iraqi prisoner abuse scandal on a failure of leadership.

MAJ. GEN. ANTONIO TAGUBA, U.S. ARMY: A few soldiers and civilians conspired to abuse and conduct egregious acts of violence.

DOBBS: Tonight, my guest is Senator Carl Levin, ranking Democrat on the Senate Armed Services Committee. I'll be talking with Congressman John Murtha, a decorated Vietnam hero who says the Iraq war may now be unwinnable.

Also tonight, another American industry targeted by Europe. Airbus, a consortium backed by huge European government subsidies, is trying to take over the global aerospace market. Senator Patty Murray says U.S. aerospace companies are the victims of subsidized slaughter. She's our guest tonight.

Tonight, education in America, middle-class college students burdened by massive debt. Two-thirds of graduates have unpaid loans.

UNIDENTIFIED MALE: Debt levels of this scale are unmanageable.

DOBBS: Tonight, our special report, "Making the Grade."

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, May 11. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

Radical Islamists terrorists have beheaded an American civilian taken prisoner in Iraq. The terrorists released a video of the beheading on an Islamic Web site, that Web site associated with al Qaeda. Before he was killed, the American identified himself as Nick Berg, a 26-year-old contractor from Westchester, Pennsylvania.

National security correspondent David Ensor reports -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, on the Web site you mentioned, a group claiming to be Abu Musab al-Zarqawi's gang shows a man who identifies himself as American Nick Berg of Westchester, near Philadelphia.

A hooded terrorist then reads a statement in which he says that -- quote -- "The dignity of the Muslim men and women in Abu Ghraib Prison and others is not redeemed except by blood and souls." He says that the U.S. refused to exchange Berg for prisoners in the Abu Ghraib prison. However, a senior U.S. official tells CNN he does not believe that is true.

The tape then shows Berg being executed, his head being cut off with a large knife. Berg's family say he disappeared April 9 while in Iraq seeking work as a civilian contractor. They were informed Monday that his body was found, the head severed from the body. The Web site where the tape was shown appears to suggest that Berg was killed by Abu Musab Zarqawi himself.

Zarqawi heads a terrorist group which is tied to al Qaeda, as you mentioned, and which U.S. intelligence believes responsible for a number of the attacks against Westerns in Iraq, as well as the murder of an American diplomat in Amman, Jordan. U.S. officials say they do believe it is plausible the Zarqawi group could have kidnapped and killed Berg. They are looking into the case.

There is a statement out from the White House spokesman saying that the killers will be brought to justice -- Lou.

DOBBS: Any statements from any of the Arab capitals expressing regret or revulsion at this act?

ENSOR: None that I have seen thus far, Lou, no, although there have been expressions of that sort from a number of Iraqis that our reporters have talked to in Baghdad.

Clearly, this is not something that's appealing to many people. There will be some that are sympathetic to it, though -- Lou.

DOBBS: David Ensor, national security correspondent, thank you.

The White House today expressed revulsion at the beheading of the American contractor. White House spokesman Scott McClellan said his murder showed the true nature of the enemies of freedom.

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

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And, Lou, as the White House condemned those heinous tactics in the killing, the beheading of Nicholas Berg, it also said that the United States would not be swayed from continuing its prosecution of the war on terrorism, including inside Iraq.

The White House also say that its thoughts and prayers, of course, are with the Berg family. The White House saying it needs to get more information, as David just noted, about this Web site, about the chain of events, whether in fact there was any offer to swap Mr. Berg for prisoners at the Abu Ghraib prison. U.S. officials say they do not believe any such offer was made. So, as they seek more information, Lou, the primary focus right now from the White House is promising not to be deterred by this in the war on terrorism, offering its thoughts and prayers to the families. But I must say, on this issue, the president and his Democratic opponent showing unanimity. Senator John Kerry also issuing a statement tonight, saying his thoughts and prayers are with the Berg family. And in the words of Senator Kerry -- quote -- "The terrorists who committed this atrocity will not prevail and America stands together against them" -- Lou.

DOBBS: The bald facts are, John, that Zarqawi, the other terrorists have been operating now since September 11 without punishment, without capture and certainly without being killed. What is there in any of the statements by the White House or any part of officialdom in Washington that would suggest, as they said, justice will be done here?

KING: Well, Lou, that is one of the lingering frustrations of this administration and one of the lingering complaints of this administration's critics. Every time there is an Osama bin Laden videotape, every time there is from Zarqawi or terrorists operating within Iraq threatening actions or in this case a threatening act, a murderous act, administration critics say, where is the intelligence? Why have you not scored more success?

And the administration says, this is the reason it continues to prosecute the war and continues to try to pour more resources into intelligence. That, of course, is one of the lingering questions. If you know these terrorists are out there, why can't you find them? But the White House says it is a lot harder to find them when you have situations like all the political and security chaos in Iraq.

DOBBS: John, the United States today took the action of imposing economic sanctions against Syria as part of the global war on radical Islamist terrorism. Why today? Why Syria?

KING: Why today? The president has been mulling this for some time, Lou. This was expected. Congress passed the Syria Accountability Act. The president had some choices, a menu from which to pick from. The president did decide today to ban most U.S. exports to Syria. Food and medicine are exempted from that.

And the president also decided to allow no more direct flights from Syria to the United States and from the United States to Syria. The president had some tougher options he could have imposed, including forbidding any U.S. companies from doing business at all in Syria. The administration did not quite go that far. Now, as to why, the administration says Syria continues to support terrorists like Hamas and Hezbollah in Lebanon and elsewhere in the Middle East.

And, most importantly, the administration says Syria has continued to allow guerrillas to go in and out of Iraq. That is the chief complaint of the United States in the past year or so, that Syria has resisted repeated requests that it seal the border with Iraq, not let terrorists go in and out. So the president imposing those sanctions today -- Lou. DOBBS: John, thank you very much -- John King, senior White House correspondent.

On Capitol Hill today, a new hearing on the way American soldiers treated Iraqi prisoners. The general who investigated prisoner abuse in Iraq blamed the scandal on a failure of leadership in the Army. But General Antoine Taguba said the abuse did not result from a specific military policy or direct order.

Senior Pentagon correspondent Jamie McIntyre with that report -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, it was a command performance for General Taguba, whose report into the investigation of abuse of Iraqi prisoners by U.S. soldiers has become required reading on Capitol Hill.

The question most senators had today was, who gave the orders? Whose idea was it to have this abuse? And the answer from General Taguba was, essentially, no one did, that this was the result of low- level cooperation.

(BEGIN VIDEO CLIP)

SEN. ROBERT BYRD (D), WEST VIRGINIA: General Taguba, based on your investigation, who gave the order to soften up these prisoners, to give them the treatment? Was this a policy? Who approved it?

MAJ. GEN. ANTONIO TAGUBA, U.S. ARMY: Sir, we did not find any evidence of a policy or a direct order given to these soldiers to conduct what they did. I believe that they did it on their own volition.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: People that we're charging are going to say, this system that we see photographic evidence of was at least encouraged, if not directed by others. Do you think that's an accurate statement?

TAGUBA: Sir, I would say that they were probably influenced by others, but not necessarily directed specifically by others.

GRAHAM: OK.

(END VIDEO CLIP)

MCINTYRE: General Taguba said that he found a failure of leadership, from the brigade commander down. Now, that included Brigadier General Janis Karpinski, who was the military police brigade commander, and also Colonel Pappas, who was the military intelligence brigade commander.

He also found tension and friction between those two over who was actually in control of the prison. And he said that he also found that it was the case that in some cases some of the prisoners had been moved around in order to avoid inspection from the International Committee of the Red Cross, which seemed to smack of a cover-up -- Lou.

DOBBS: Smacking of a cover-up at whose order?

MCINTYRE: Not clear. In fact, when you want to find out who exactly -- how far up the chain this goes, two things are apparent. One is, the investigation is still continuing into that.

And General Taguba himself stopped he said at the one-star general level. He did not look at the effect that General Sanchez, the three-star commander, of his orders and what they had on the prison and how far above Sanchez that might have had as well. So those are the areas of investigation that Congress is pressing for answers on.

DOBBS: Jamie, thank you very much.

And it is worth noting that General Taguba, the author of the report on the problems in the Iraqi prisons at the direction of the U.S. Army, his report forming the basis of all the investigation that are going forward.

Thank you very much, Jamie McIntyre, senior Pentagon correspondent.

Iraqi insurgents today launched new attacks against U.S. forces and coalition forces across Iraq. U.S. soldiers killed 13 of Muqtada al-Sadr's fighters in Najaf. In what they consider a holy city, 1,000 Shiite Iraqis marched through the streets. They called for al-Sadr and his fighters to leave Najaf. The city's new governor spent the day meeting with tribal and religious leaders. And he told CNN that militias like al-Sadr's have no place in the new Iraq.

In Kirkuk, three Iraqis were killed, at least 22 others wounded when a car bomb exploded in a market area of a Kurdish neighborhood. And to the west of Baghdad, a KBR subsidiary's convoy was attacked on its way from Jordan to Baghdad, a Halliburton subsidiary. Several of the 21 vehicles in the convoy were destroyed in the attack. KBR says all of the drivers are accounted for. No word on the status of other personnel in that convoy.

Also, to the west of Baghdad, an American soldier was killed in a clash with insurgents.

Still ahead here, Senator Carl Levin says the entire military chain of command must be held accountable for Iraqi prisoner abuse. Senator Levin is my guest next.

And Congressman John Murtha says the Pentagon has been arrogant and irresponsible in Iraq. Congressman Murtha says the war may now in fact be unwinnable. I will be talking with Congressman Murtha later in the broadcast.

And another American industry under threat from overseas competition. Airbus fighting to dominate the global aerospace market with the help of massive European government subsidies. We'll have a special report for you. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The ranking Democrat on the Senate Armed Services Committee, Senator Carl Levin, says everyone in the military chain of command must be held accountable for the prisoner abuse in Iraq.

Senator Carl Levin joins us now from Washington, D.C.

Senator, first of all, General Antonio Taguba today testified there was no policy, there was no direct order given that would lead to the abuse and to the scandal that has erupted in the prison systems of Iraq, principally Abu Ghraib. Are you satisfied with that response?

SEN. CARL LEVIN (D), MICHIGAN: I think that he has not found the direct order so far. And he was very forthright about that. But he also stated that, indeed, the military intelligence people that were not his direct focus in terms of his investigation were in collaboration with these military police. And it was that collaboration that produced the results that we have all seen now in these horrific pictures.

DOBBS: General Taguba referred to a few soldiers and civilians. Are we to deduce from that that the civilians were intelligence? Or precisely what was the role of the civilians? Were they the interrogators? How broad is the statement?

LEVIN: I think that includes probably people in the intelligence community, perhaps the CIA, as well as the contractors. But how far up the military chain this goes is not going to be known for some time here, because, clearly, there was a dispute here between Taguba and Undersecretary Cambone, the civilian at the Defense Department, on the issue of who was in control of this prison. Was it our military investigators, the M.I.s, or was it the military police, the M.P.s?

And it's very clear from the order that was cut on November 19 that the military intelligence people were put in charge of this prison, a very unusual act, that that put them in control of the operations at this prison.

DOBBS: And from his testimony as well, the undersecretary asserts that there was perhaps a collaboration. But he asserted definitely that Karpinski, Colonel Karpinski, and Colonel Pappas were in conflict as to who would be responsible, who had the greater authority at Abu Ghraib.

LEVIN: There is a conflict there, but the conflict is resolved very clearly by this order, which was issued on November 19, which put our military intelligence commander, Colonel Pappas, in charge of that prison.

And that meant that the M.P.s were reporting to Colonel Pappas, the intelligence guy, after November 19 in that particular chain of command. That's very unusual, very critical information, but what that means is you've got to look at the intelligence side of this and not just at these enlisted personnel who are the M.P.s.

DOBBS: What is your assessment, Senator Levin, as to the responsibility, the accountability that proper belongs to Secretary of Defense Rumsfeld?

LEVIN: Well, I think that everybody has got to look at their own actions and look at what messages they sent. Secretary Rumsfeld just recently, for instance, has said that the Geneva Convention is not exactly applicable to the events in Iraq.

Well, according to everybody else, the Geneva Conventions do directly apply to our activities in Iraq, and I think there's been some real ambiguity and vagueness along that line, which has been, basically, a message right from the beginning. The president has talked about this as legalisms, whether or not the Geneva Convention applies.

These are not legal legalisms. These are critically important for the protection of our troops, as well as for the prisoners who are under our supervision.

DOBBS: And it goes to, at least in my opinion, the standard of conduct the Army expects of all of its soldiers.

Let me turn to what many might see as counterpoint. And I want to ask you if you do see it that way. And that was the awful act taken by the al Qaeda associated terrorists today in beheading the young American, 26-year-old Nick Berg. This stands in stark contrast, does it not, to a discussion of abuse in prisons?

LEVIN: It does, indeed. And that's, hopefully, what the world will see, is that we take action to go after the problems that exist, that we clean house, and that we're willing to do that and we're willing to hold people responsible and to hold people accountable for their actions.

And what a contrast it is to what the terrorists do. But that's something which we, it seems to me, have got to be very strong about, which is -- and this is for the protection of our own troops, because, when they are captured, we have to expect that the Geneva Convention, for instance, will apply. We have got to live up to these standards ourselves. And that's what these investigations are truly all about.

DOBBS: Senator, I wonder if there is some proportionality due here. Is there do you think any room to examine on the part of the Senate, for example, the lack of response, the lack of statements of outrage, of condemnation on the part of 22 Arab states of actions like those taken today, the beheading of a young American, the mutilation of American civilians outside Fallujah a month ago?

Is there a proportionality issue? Is there a value imperative here that suggests that we examine carefully why that occurs?

LEVIN: Oh, sure. And I think we should be critical of any country or any group or any individual that does not condemn the kind of actions that we saw today. That's something that we've got to point out everywhere. That's what the human rights is all about, which this country stands for. And when we fall short ourselves, when we act against those who hold us up to scorn and ridicule and abuse other people, we are upholding the banner of decency and human rights. And when other countries fall short by not condemning the kind of horrific action we saw today in the beheading or the other actions which are taken against people by terrorists, we should be very strong in our condemnation of the failure of other countries to condemn those kinds of actions.

DOBBS: Senator Levin, as always, good to have you with us.

LEVIN: Thank you very much, Lou.

DOBBS: That brings us to the subject of tonight's poll. The question, are you offended by the lack of Arab outrage over the killing and mutilation of Americans in Iraq, yes or no? Cast your vote at CNN.com/Lou. We'll have the results later in the broadcast.

In Gaza City, Israeli soldiers today destroyed a series of workshops it claims were manufacturing rockets. Six Israeli soldiers and seven Palestinians were killed in the fighting. The Israeli troops were killed when their armored personnel carrier ran over an explosive device. Hamas claimed responsibility for the attack and its members displayed the remains of the Israeli soldiers. Israel demanded that the bodies be returned.

In a speech to the Israeli Parliament, Prime Minister Ariel Sharon said Israel is fighting a cruel enemy and it will not stop fighting in every place the enemy operates. Chief Palestinian negotiator Saeb Erekat condemned the Israeli invasion.

Coming up next, Congressman John Murtha says the current Pentagon strategy in Iraq could make this an unwinnable war. Congressman Murtha is my guest.

And fighting back against the exporting of American jobs. Senator Joseph Lieberman has a plan.

We'll have that story and a great deal more still ahead. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest strongly in favor of the war against Saddam Hussein. Now Congressman Murtha says it could be unwinnable. Democratic Congressman John Murtha says we cannot prevail in this war under the current Pentagon strategy. The congressman says the United States simply has two choices, mobilize more troops and put them into action in Iraq or get out.

Congressman John Murtha of Pennsylvania joins me tonight from our studios in Washington.

Congressman, good to have you with us.

REP. JOHN MURTHA (D), PENNSYLVANIA: Nice to be here, Lou.

DOBBS: I know this had to be a difficult decision for you to reach, such a stark choice. What prompted it?

MURTHA: Well, I've been struggling with this for the last six weeks. And I'd written to President Bush in November. I got an interim reply in January and then got a reply from an assistant secretary of defense in April or May and he said, everything is going all right.

About 100 of us wrote a letter to the president in November, in addition to this letter, and said, look, you miscalculated. You have much more opposition than you thought. You need to reconsider and send more troops, and, of course, no reply at all. So there's an arrogance there in the White House that's disturbing. And I usually don't speak openly about these things.

I usually do it behind the scenes.

DOBBS: Right.

MURTHA: Well, we were getting nowhere. So I believe I needed to speak out and talk about the military security, which is obvious. They keep telling us how good it is. I keep telling them -- and I've met with them a number of times, Secretary Rumsfeld, Ambassador Bremer -- I've been over to Iraq three or four times. And I keep saying, you are not being realistic about this thing. You are not telling us the truth, the facts.

And I have found over the years, if you don't ask exactly the right question, you don't get the right answer. And if you don't have military security, you don't have any reconstruction. As we've seen, it's almost come to a standstill. You don't have allies that are willing to come in. You don't have anybody willing to donate money.

So you're really talking about a situation where we have 170,000 on the ground. And in Bosnia, we had 60,000, a country that was about a tenth the size. Just, we're trying to do it on the cheap. We're trying to do it with inadequate forces. And, of course, the planning was for 30,000 people at the end of the year. And we have got 170,000 people out there. So we're really talking about a disastrous plan which didn't work.

If you listen to Senator...

(CROSSTALK)

MURTHA: And I know you want to ask some questions, Lou.

DOBBS: I do.

(LAUGHTER)

MURTHA: But if you listen to what Shinseki said, we needed several hundred thousand. And then Wolfowitz said, Secretary Wolfowitz said, we only need 30,000 and the oil is going to pay for it. Now, these young people over there fighting deserve better than that. They deserve a plan not based on what we have available, but based on the need in the war. And that's not what we're planning to.

DOBBS: Some may not be entirely aware that you are one of the strongest, stalwart supporters of our troops, of our military in Congress, in either house of Congress.

But can we realistically -- and this is a huge issue I know that you've also struggled with -- in the war against terror, against the impact it would have not only in Iraq, but throughout the Middle East, is withdrawal of U.S. force from Iraq a truly viable choice?

MURTHA: Well, let me put it this way. We can struggle along with the number of people we have.

And they keep saying, well, it's just a handful of people. Well, just a handful of people in this prison caused this international disaster. These handful of so-called opponents or so-called handful of people are causing us terrible problems. When you look at Fallujah, when you look at the areas where there are IEDs, they're spending thousands of dollars and we're spending billions of dollars in this fight.

We've spent $200 billion in this fight in Iraq and it wasn't supposed to cost us anything. So when you say, it is realistic to pull out? It would be an international disaster I think if we pulled out. But the alternative is, we're going to struggle along, get more and more young people killed. And I go out to visit the hospitals every week or so.

I go to Bethesda one week. I go to Walter Reed the next week. And I see these young men and women who have been maimed and hurt so badly. And I'm saying to myself, you have got to have better security. You have got to give these forces what they need in order to fight this war.

DOBBS: All right, now, let me ask you the question, because you are a veteran in every respect of the word, a distinguished veteran. You are a veteran in Congress, have worked with this White House and others.

Why, in your judgment, is this White House and this Pentagon not being receptive to criticism, to adapting its strategy and focusing on the issues that you are raising and, in fairness, others have raised?

MURTHA: Well, I'm not sure that the Pentagon -- the Pentagon doesn't set the policy. The policy is set by the White House. I dealt with the Bush One White House where every two, three weeks we had President Bush meet with us and all kinds of suggestions he had to listen to. I dealt with President Reagan, who was completely open and made available to us all the information we need. I don't know where the policy should be set in the White House. I don't know if it's being set. What worries me is, when President Bush said, in his State of the Union speech, he said, "I'm going to give you a budget where the war is going to be paid for." Now, he had no money for the war he had no money for the 30,000 additional troops, he had no money for reconstitution of the weapons. Now, again, we're trying to do -- we're working to what we have rather than what we need over there. That's my biggest complaint. The fact that the planning has been so bad. Now, let's take this prison situation. We had half the people in this prison, according to the Taguba report, that we needed. These people had been in Bosnia for ten months. They came home. They were sent back for a year and then extended. Some half of them were extended and then they were sent to be convoy duty.

So these troops are overextended. We're breaking the National Guard. We're breaking the army. We're going to send the 10th Mountain Division back prematurely, we're going to send the 1st armored division. We've extended their time. Getting back to the answer. The answer is that normally we have 17 brigades deployed. We have 17 brigades not deployed. You need three to one, not two to one. So we don't have the troops even to sustain 170,000. There's not 135,000. There's 170,000.

DOBBS: Congressman, as you talked about this and you used the expression, we're fighting this war on the cheap. $200 billion, estimated $60 billion just for current military operations in Iraq alone per year. It's hardly on the cheap. You're also talking, as General Shinseki advised, really tripling the number of U.S. troops as the first choice that you would make, tripling it which one would assume would triple the cost. At some point doesn't someone in Congress or this White House or this Pentagon, somewhere in Washington have to understand that we are embarked upon an absolutely mindless ratio of expenses to a result, and that we have to come up with new strategies? Is there anyone in the Pentagon, is there anyone in the White House, to your knowledge, and Congress trying to bring costs and effective results into line?

MURTHA: Well, I keep telling them, you have to be more realistic about our goals. Now, there's two or three things that have happened lately that I feel a little more comfortable about. This Fallujah thing, as terrible as it was, these contractors being killed and as good a job as the ordinary troops are doing over there and all of us praise the troops and know their families are suffering, and so are they. But the problem is that when you look at the overall picture and when you tell them over and over again, be realistic. The military is just always optimistic when their spokesperson gets on and says how well things are going. We've built this many stores. I would say at this point they're beginning to see the light. Fallujah is the perfect example. Can they take over and run that place and we get out of there? If we have a few other places like that, we may be able to turn over -- but we don't even know who the intermediary is going to be, the new president of Iraq is going to be. And you can't turn it over...

DOBBS: Congressman, let me ask you this. Directly as you possibly can. Is it time, in your judgment, for the United States to leave Iraq?

MURTHA: Well, it would be disastrous if we were to leave under those circumstances without making every effort...

DOBBS: Having reached that conclusion, and this being a presidential election year, the Democrats are building immense thunder over this issue in a partisan election year. Is there a Democratic senator or congressman, and I would ask you to throw your voice into this, who has specific strategies or tactics or approaches that should be followed in Iraq that would take all of the difficult choices that face the United States and the consequences of those choices and offer a better result?

MURTHA: Lou, you have to go back to the original planning. You have to look at there should have been a couple hundred thousand people. They said you only need 30,000 people. You have to look at not having enough people. That's the first plan. The first plan is you have to have enough people to provide security. Without security, you won't have any allies there. You won't have the U.N. there. You won't have any reconstruction. None of the things you need to do. Now, you can say, well, it's only a small portion of Iraq that that's happening. That's not the point. The perception is that we're not able to control a situation, and then, on top of that, we have this incident, which was so disparaging to all of us, a terrible incident, which discredits us even -- weapons of mass destruction. I talked to...

(CROSSTALK)

DOBBS: Excuse me, Congressman. I hate to interrupt. We're really out of time. Let me ask you for a short, straightforward statement. You've offered two choices, in your judgment. Either increase troops or get out. Which is your preferred policy choice?

MURTHA: My preferred case is to increase the number of troops and provide the military security, which will give us a chance that Iraq could become an independent country and move on from the war that we've been involved in.

DOBBS: Congressman Jack Murtha, we thank you very much for being here, sir.

MURTHA: Nice to talk to you, Lou.

DOBBS: Still ahead, a leading Democratic senator says the exporting of American jobs to cheap foreign labor markets is only the tip of what he calls an economic iceberg for the United States.

And a critical American industry could be crushed by unfair European competition. Senator Patty Murray says our national security, in fact, is at risk. She joins me.

Making the grade, our special report on higher education. Tonight middle-class college students buried under a growing mountain of debt. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: On Capitol Hill today, leading Democratic senator, Joseph Lieberman, called for a bipartisan commission on the exporting of American jobs to cheaper foreign labor markets. Senator Lieberman proposed a series of tax breaks and education incentives he says will protect American jobs and encourage innovation. Louise Schiavone reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Former presidential candidate Joe Lieberman says he rejects the strategies of both free traders and protectionists but says this country needs to deal with reality.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: If a software programmer in India earns $7,000 a year and can do the same work as a software programmer in the U.S. making $64,000 a year, it's, obviously, only a matter of time before more of those jobs relocate overseas.

SCHIAVONE: Lieberman recommends giving companies tax breaks to keep research jobs in the United States. He says the government should get serious about fighting for U.S. industries and protest foreign currency manipulation and industrial subsidies in the World Trade Organization, if necessary. He's also proposing a study commission. (UNINTELLIGIBLE) industries says the proposal lacks a sense of urgency.

JIM SCHOLLAERT, AMERICAN MANUFACTURING TRADE ACTION COALITION: I like Senator Lieberman's description of the problem, but I think we're beyond needing a commission. We need tough action, and we need it fast. I don't think we have time for another commission.

SCHIAVONE: Lieberman's proposals come at the same time the Senate nears passage of a bill to use tax incentives to discourage the exodus of American business.

SEN. ERNEST HOLLINGS (D), SOUTH CAROLINA: That crowd is not interested in main stream America. They are interested in main stream Beijing. That's where you make the money, and the country can go to hell.

SCHIAVONE: The House has passed a similar bill, but final action could be weeks away.

(END VIDEOTAPE)

SCHIAVONE: Lou, with polls showing a continued lack of confidence in the economy, the question remains. Can workers and voters be patient with just a bait and ideas even as job security continues to grow.

DOBBS: At least ideas are being advanced. That is an important change. Louise, thank you. Louise Schiavone.

Lawmakers in Kansas voted overwhelmingly to ban the call center for their state's food center program. Kansas contracted that work to a company using call centers in India. Under this new legislation, the jobs would be returned to the United States. The legislation passed as part of the state's budget. It is now before the governor.

Still ahead, a fierce rivalry in aerospace between Boeing and Airbus. Airbus has an unfair advantage, some say. I'm joined next by Senator Patty Murray, who calls it subsides slaughter.

And a remarkable act of nature caught on video. We'll have the story in just a moment. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We have, of course, been focusing extensively on this broadcast on industries exporting jobs in the United States to cheap labor markets. A big exception to the trend has been the aerospace industry, which, until the last few years, the United States dominated. But now, the government-backed European Airbus continues to take market share from Boeing. And that threatens the aerospace industry in this country itself.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Is it a fair fight, or is it rigged?

In one corner from Toulouse, France backed by European governments Airbus betting on the super jumbo A-380 seats up to 550 passengers. Available in 2006, Airbus has sold 129 to customers, including, Air France, Virgin Atlantic and Federal Express. In the other corner, from Chicago, Boeing betting on the fuel efficient, mid size 7E7 dreamliner. Won't be ready until 2008, Boeing has sold 50, all of them to Japan's ANA.

MICHAEL MILLER, THE VELOCITY GROUP: Boeing is the historic leader and Boeing has more airplanes are more airlines today, as well as yesterday. But Airbus more recently has been able to garner more of the current aircraft orders. So they currently have a lead in orders.

VILES: A hot issue in Washington. Senator Patty Murray says Airbus has so much government support it is not even close to a fair fight.

SEN. PATTY MURRAY, (D), WASHINGTON: That's not competition. That is subsidized slaughter, and we have to wake up before it's too late for America's aerospace companies and workers.

VILES: The chairman of Airbus North America tells CNN, quote, the subsidy claim is a bogeyman, saying Airbus receives no government subsidies in Europe, only loans at market rate that it repays. Airbus plays the Washington game to, it likes to support 100,000 American job, but uses a multiplier formula to get to the numbers because the direct U.S. employment is less than 1,000 jobs. And its French, Spanish, German parent also plays the influence game. Its American subsidiary, EADS North America recently hired the Washington lobbying firm, Quinn Gillespie, the firm founded by national committee chairman Ed Gillespie.

(END VIDEOTAPE)

VILES: For the record, he is not lobbying during the campaign which means he personally is not going to pat for this French, German, Spanish company. He does, however, remain a partner in the firm that does go to bat for that company -- Lou.

DOBBS: So Gillespie, while on leave to drive the Republican National Committee, would be participating in the profits through the partnership in representing the Airbus?

VILES: He's still a partner, and the value of the firm would be increasing during this time. He's not taking a salary and not picking up the phone. But when the campaign is over, they do have this new client.

DOBBS: And speaking of that new client, Pete thanks. Peter Viles.

The battle between Airbus and Boeing, my next guest says it is subsidized slaughter. My guest is Senator Patty Murray, Democrat of Washington state and joins us tonight from Washington, D.C.

Senator, good to have you with us.

MURRAY: Thank you, Lou.

DOBBS: When you say subsidized slaughter, Airbus was quick to tell us they receive no direct moneys but only market rate loans from European governments.

How do you respond to that?

MURRAY: We know Airbus receives tremendous subsidies. They receive launch, development subsidies, facility subsides, supplier subsidies. Unparallel here for a private company that produces airplanes, Boeing, we just simply can't compete. You know, we have lost 700,000 jobs in aerospace industry in this country. If we just close our eyes, pretend it's not happening, we're going to lose the entire aerospace industry in this country.

DOBBS: Why in the world are we putting up with it if it is unfair trade competition, senator?

MURRAY: That's a question I've been asking a long time. It is absolutely clear to me that we have to take this on directly. We need to call the Europeans on it. We need to make a trade case, and we need to develop a plan in this country in how we're going to keep the aerospace industry. You know, Airbus has done that.

DOBBS: Did you say a plan, senator?

We should just leave it to...

MURRAY: A plan. DOBBS: ... free market vicissitudes?

MURRAY: I think, if we sit back and watch our company that plays by the rules and goes for profit competing against a European Union and their subsidies, we are at risk of losing of not only the jobs in aerospace industry, but our economic security and our real security that depends on that in this country.

DOBBS: Our national security.

And let me ask you, point blank, have you talked to the U.S. trade representative?

Have you said why don't we bring a case against the European Union and the WTO, and particularly, ironically as we're sitting here under imposition from the World Trade Organization by the European Union?

MURRAY: I have. I'm going to continue to raise the alarm because I really believe our future in the aerospace industry is at stake. And we can't afford to sit back quietly and watch it go.

DOBBS: What are we going to do about it?

Is there legislation?

Is there any approach here that would be helpful?

MURRAY: There's a number of things. All of us need to start calling on this administration to take a trade action against the European subsidies Airbus has. I think we also need to take some of the Aerospace Commission recommendations and put together a joint Senate/House Committee to look at what we need to be doing here in this country to assure that we have an aerospace industry for the future.

DOBBS: Senator, just quickly, why in the world don't you folks take the fast track authority from the executive branch and take responsibility in the Senate and Congress and start going after the issue?

MURRAY: I am going after the issue.

DOBBS: I'm sorry. I meant broadly.

MURRAY: Broadly why doesn't Congress?

Well, I think it is up to the administration to make the trade case, and that's what needs to happen.

DOBBS: Thanks for being here tonight to make your case. We appreciate it. Senator Patty Murray.

MURRAY: You bet. Thank you.

DOBBS: Still ahead, making the grade. Our special report, how colleges are trying to help some low-income students with rising costs, tuition is sky-rocketing and middle-income students are being squeezed to pay for higher education. We'll have that story.

Federal employees, some of them, have no problem buying their degrees without even the bother or the benefit of an education. We'll have more on that next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, making the grade. The cost of a college education in this country is soaring up 14 percent just in the past year while inflation has been running less than 3 percent. The average federal grant only covers a third of the price of education and many colleges are trying to help low-income students but middle- income students are feeling the squeeze on the college campuses around the country. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT: Rachel Kay is packing up for the summer after her first year at Occidental College in Los Angeles, a private college that costs more than $37,000 a year. She gets about a quarter of the money from achievement scholarships, takes out another quarter of the tuition in loans and works in the summer. But she says her family still feels the financial burden. Her sister is going to a state school next year because it's cheaper.

RACHEL KAY, STUDENT, OCCIDENTAL COLLEGE: I think my sister kind of felt like she almost couldn't apply to a private school or a most expensive school because she knew it would be too much of a burden and so that kind of influenced her choice on where she was going to apply to.

PILGRIM: The college says the middle-class kids bear a new burden.

MAUREEN MCRAE LEVY, DIRECTOR, FINANCIAL AID, OCCIDENTAL COLLEGE: If you have a $20,000 income you're going to get a lot of financial aid to come to college but the people in the middle are getting squeezed out.

PILGRIM: Private college tuition has shot up 14 percent in the last year and state schools have seen tuition hikes of 6 percent. The average federal grant used to cover 98 percent tuition at a state college, but even the maximum Pell grant now covers only 41 percent of tuition, fees, room and board. Students make up the difference by borrowing and the amounts of debt are staggering, averaging $18,000 but it can go higher.

DAN MOTE, PRESIDENT, UNIVERSITY OF MARYLAND: It's very easy to find students graduating from the University of Maryland, for example, with $30,000 and $40,000 worth of debt at the bachelor level. Debt levels of this scale aren't manageable.

PILGRIM: 64 percent of students now graduate with debt, double the number from eight years ago. (END VIDEOTAPE)

PILGRIM: Now increases in costs at both public and private colleges are at historic highs. The College Board says the average tuition and room and board at a four-year state school is costing nearly 20 percent of the annual income for middle-class families -- Lou.

DOBBS: Already tough enough and getting tougher. Kitty, thank you very much.

In Colorado today, Governor Bill Owens took a historic step to alleviate some of the financial burden on American college students at least in his state. Governor Owens signed into law the first college voucher program in the country. The Colorado plan would grant qualifying students up to $2,400. That program goes into effect in the fall of 2005.

Congressional investigators say dozens of senior federal employees have bogus college degrees. Now these employees, some of them, are rather high-ranking. They include three managers at the office that oversees nuclear weapons safety. The GAO says the government has no standard way to check employees' academic records.

Tonight's thought is on education. "Upon the education of the people of this country, the fate of this country depends." Benjamin Disraeli, former British prime minister.

A tornado watch in effect tonight in six counties in eastern Colorado after at least seven tornadoes touched down in the state. One of the tornadoes destroyed a farmhouse and a barn southeast of Denver. Look at these extraordinary pictures. The family was not home fortunately when that tornado hit. Power was, however, knocked out in much of the area. No injuries of any kind were reported.

On Wall Street today, a few injuries to report. Stocks slightly higher after yesterday's steep selloff. The Dow Jones Industrials up 29 points, the NASDAQ added more than 35 points while the S&P 500 rose more than 8. Crude oil prices closing above $40 a barrel for the first time since October of 1990. That after Iraq had invaded Kuwait. Prices have risen 20 percent so far this year.

Still ahead here, the results of our poll. First, a reminder to check our website for a complete list of now more than 600 companies we've confirmed to be exporting America. 600 and counting, we should say. CNN.com/lou. We continue in a moment. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results of our poll tonight. 73 percent of you responded, saying you are offended by the lack of Arab outrage over the killing and mutilation of Americans in Iraq. 27 percent are not.

Thanks for being with us tonight. For all of us here, good night from New York. "ANDERSON COOPER 360" 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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