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Lou Dobbs Tonight

Send More Troops or Withdraw?; Gas Prices Headed Higher

Aired May 12, 2004 - 18:00   ET

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

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, the radical Islamist terrorist killing of American hostage Nick Berg. President Bush says the gruesome murder will not shake American resolve.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will complete our mission. We will complete our task.

DOBBS: Arab states throughout the Middle East, many of them presumptive U.S. allies, are conspicuous in their silence. Arab leaders have declined to condemn Nick Berg's and those responsible.

American troops tonight are battling Iraqi insurgents. Should the United States send more troops or withdraw from Iraq? Two opposing views in our "Face-Off" tonight. And my guest says the United States must not abdicate its responsibilities in Iraq. Professor Fouad Ajami joins us.

And record high gasoline prices headed even higher. Where is all the money going? Much of it to foreign companies with an ever larger share of the U.S. market.

UNIDENTIFIED MALE: I get so mad, I just can't describe it. It gives me chest pains.

DOBBS: And nearly 100,000 jobless Americans run out of unemployment benefits every week. Legislation that would help stalled on Capitol Hill. Is it too much to ask our elected officials, even as they seek higher office, to vote?

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, May 12. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

President Bush today said radical Islamist terrorists who cut off the head of an American civilian held hostage in Iraq will not shake American will. President Bush declared the United States will complete its mission in Iraq. And coalition officials today said there will be a thorough investigation of the murder of Nick Berg.

Senior White House correspondent John King reports -- John.

KING: And, Lou, the president offering his condolences in public today to the Berg family. Mr. Bush speaking just outside the White House, he said there was no justification for what he called the brutal execution of a civilian Mr. Bush said was in Iraq trying to help it on its way to freedom and democracy. The president again said no justification for that execution and he also said no chance at all the United States would waver in the face of this horrific act.

(BEGIN VIDEO CLIP)

BUSH: Their intention is to shake our will. Their intention is to shake our confidence. Yet, by their actions, they remind us of how desperately parts of the world need free societies and peaceful societies. And we will complete our mission. We will complete our task.

(END VIDEO CLIP)

KING: Now, Berg's family has complained. They believe he was held by the United States in coalition custody in Iraq. The administration today trying to make clear that was not the case. Berg was in the custody of Iraqi police. Three times during that custody, he was interviewed by the FBI.

And what the United States government is saying, that he was told he was alone in a dangerous place without an employer and that he should go home. And after Berg's release, we are told the State Department offered him a flight home. Berg said no, that he would make his way home to the United States over land through Kuwait. He then disappeared, Lou, and then of course taken hostage and brutally executed.

DOBBS: John, is there any reaction at the White House to the lack of protest, statements of regret and revulsion, from Arab states? Only the United Arab Emirates have expressed their official condemnation of this.

KING: No specific criminal of any individual countries.

As you noted at the top of the show, many of these countries that have been silent on this, Saudi Arabia and others, are U.S. allies or considered by the White House to be U.S. allies in the war on terrorism. The administration saying that it believes everyone should condemn this horrific act and again also promising a very aggressive investigation as the president today sent out condolences to the Berg family.

And the White House voiced some concerns, whether you buy the argument or not, that the prison abuse pictures had anything to do with this execution, the administration voicing concern that any American in that area, especially Americans alone, like Mr. Berg was, are not safe, Lou.

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

Tonight, as John indicated, there is a growing dispute between Nick Berg's family and the Pentagon and the White House over whether Berg was in U.S. custody in Iraq. The coalition says Berg was held by Iraqi police, but his family says Berg was in U.S. custody for two weeks, which delayed his departure from Iraq.

Maria Hinojosa reports from Nick Berg's home town of West Chester, Pennsylvania -- Maria.

MARIA HINOJOSA, CNN CORRESPONDENT: Lou, I was just speaking with some of the neighbors who knew Nick Berg from the time that he was a child.

And I just have to tell you this, first. They said: Nick Berg was not a missionary, but that's certainly how we saw him, how we felt about him. He was a young man who wanted to find the good in every human being that he saw. Today, many people coming by dropping off flowers at the home behind me where Nick Berg was born and raised.

Now, today, there has been quite a bit of sadness, but also tinged with anger. The family reacting to the statements by a coalition spokesperson this morning that Nick Berg was not in U.S. custody. The family quite upset about that, breaking their silence, the brother of Nick Berg coming out and talking to one of our producers, saying that this is not true, that they have e-mails from Nick Berg once he was released where he said that he was being held in U.S. custody.

But why does it matter? There are many people who are trying to understand, well, why does this matter? This is a family that has very strong feelings about this war. Nick Berg supported the war, wanted to be part of the rebuilding effort. That's one of the reasons why he went there. But the father, Nick Berg's father, was very much against this war, suing Donald Rumsfeld, as well as the Department of Defense, once he found out that his son was being detained.

He went as far as to sue him. After that lawsuit, the son was released, but, of course, was never heard from again after April 9. And this is what the father had to say about his search for blame. This is before he knew that his son had been murdered.

(BEGIN VIDEO CLIP)

MICHAEL BERG, FATHER OF NICK BERG: That's really what cost my son his life was the fact that the United States government saw fit to keep him in custody for 13 days without any of his due process or civil rights and release him when they were good and ready.

(END VIDEO CLIP)

HINOJOSA: Now, one of the family members just stepped out of the home. This is a very extraordinary thing, because the family really has been in seclusion for the past 24 hours. Came out of the home quickly to say, essentially, that she remain devastated.

Lou, there is a block and a half of live trucks that are parked in front of this home. This has been a very difficult time for this family and, certainly, for the community as well -- Lou. DOBBS: They must be simply devastated, Maria, as we are all touched and hurt by this senseless, savage act. Maria, thank you very much -- Maria Hinojosa, reporting from Nick Berg's home town of West Chester, Pennsylvania.

And to add to what Maria just reported, this just in to CNN. The FBI has just said that it did offer to give Nick Berg what it calls safe passage out of Iraq, but that Berg declined the FBI offer. The FBI also says its agents interviewed Berg while he was in the custody of Iraqi police in Mosul in Northern Iraq. The FBI said Iraqi police released Berg after officials determined there was no reason to keep him in custody.

And as John King reported from the White House, the Bush administration is promising a thorough, full investigation.

British Prime Minister Tony Blair condemned the brutal murder of Nick Berg, saying there was no justification for this kind of act in a civilized world. And the same sentiment came from the head of the Iraqi Governing Council.

(BEGIN VIDEO CLIP)

ABDEL ZAHRA OSMAN MOHAMMAD, PRESIDENT, IRAQI GOVERNING COUNCIL (through translator): We condemn, the Iraqi people condemns this crime. Islam condemns this crime.

(END VIDEO CLIP)

DOBBS: But other world leaders did not directly condemn those who beheaded Nick Berg. U.N. Secretary-General Kofi Annan said through his spokesman that he was horrified, but at the same time weighed in on the abuse scandal.

(BEGIN VIDEO CLIP)

FRED ECKHARD, SPOKESMAN FOR KOFI ANNAN: The secretary-general condemns all killings of innocent civilians in Iraq, as he condemns all abuse of prisoners and other violations of international humanitarian law.

(END VIDEO CLIP)

DOBBS: The government of the United Arab Emirates issued a statement saying, This disgusting brutality can never be justified and has nothing to do with Islam or our Arab values."

But, as we've reported, conspicuously, silence from other Arab leaders in the region. Many Arabic newspapers published the story, but did so without editorial comment. And the coverage varied greatly. While the Vatican had nothing to say about the beheading, an archbishop did say the photos from the Abu Ghraib prison has dealt a greater blow to the United States than the September 11 attacks.

Archbishop Giovanni Lajolo said that: "Torture, a more serious blow to the United States than September 11, except that the blow was not inflicted by terrorists, but by Americans against themselves."

One of the soldiers at the center of the Iraqi prisoner abuse scandal says she posed for photographs because she was ordered to by persons of higher rank. Private Lynndie England did not say who those people were. On Capitol Hill today, Defense Secretary Rumsfeld defended the interrogation methods used by U.S. troops in Iraq.

Senior Pentagon correspondent Jamie McIntyre has the report.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): As the Pentagon delivered more photographs and videos of prisoner abuse to Congress and members described them as worse than those already leaked, some of the accused repeated their defense they were acting on orders of higher-ups. Private Lynndie England says she was told to pose with naked prisoners to create psychological operations photographs.

QUESTION: Who told you to do that?

PRIVATE 1ST CLASS LYNNDIE ENGLAND: Persons in my higher chain of command.

MCINTYRE: Defense Secretary Donald Rumsfeld again assured Congress the ongoing investigation will go as high as necessary.

DONALD RUMSFELD, SECRETARY OF DEFENSE: People will be punished at every legal, I can assure you.

MCINTYRE: The highest officer now under scrutiny is Brigadier General Janis Karpinski, who says she objected to military intelligence being part of her military police. The unit, the 322nd M.P. Company, was described by the military's top general as -- quote -- "having issues adhering to Army standards."

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: They didn't have standardized uniforms. They were allowed to carry guns in their civilian clothes when they're off duty. They had things written on their cap. They didn't particularly want to salute.

MCINTYRE: Also under fire, the Pentagon's approved rules for pressuring prisoners. A list of interrogation rules of engagement provided to Congress includes isolation for longer than 30 days, sleep adjustment, sensory deprivation, and stress positions for up to 45 minutes at a time.

UNIDENTIFIED MALE: And let me tell you, your interrogation rules of engagement, the ones that are published, go far beyond the Geneva Convention.

MYERS: Those are appropriate. And that's what we're told by legal authorities and by anybody that believes in humane behavior.

(END VIDEOTAPE) MCINTYRE: And as he wrapped up his testimony before Congress, Defense Secretary Rumsfeld called the revelations of abuse -- quote -- "a body blow to the country" and warned that there would be more revelations in the weeks to come, what, with six investigations under way. He also said that as he looks at Iraq, he said: "All I can say is, I hope it comes out well. I believe it will. And we're going to keep at it" -- the words of Secretary Rumsfeld as he closed his testimony today -- Lou.

DOBBS: Jamie, the fact is that this investigation is going to go on for some time. The suggestion in the hearing that those stated published rules of interrogation going beyond the Geneva Conventions, do they or do they not?

MCINTYRE: Well, I guess it is one of those things you can get lawyers to argue about.

The Pentagon has lawyers on its side saying that the carefully crafted guidelines that they've come up with fall within the spirit of the Geneva Conventions and they note that it includes a specific reference that no inhumane treatment of prisoners is allowed. But Senator Durbin, who you heard there briefly, also read from the Geneva Conventions regarding prisoner abuse. And he quoted a section that says, essentially, that people will not be exposed to any unpleasant or disadvantageous treatment of any kind. So he clearly believes that these interrogation guidelines do cross the line.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent.

U.S. troops in Iraq tonight are on the offensive against supporters of Muqtada al-Sadr. We'll have a report for you.

And after the gruesome murder of Nick Berg, a little Middle East expert says the United States must remain true to its principles and its mission in Iraq.

And the rising cost of gasoline bringing pain to American consumers and big profits for many foreign companies. We'll have a special report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq tonight, U.S. troops on patrol in Najaf were attacked by members of the Mehdi militia. The patrol came under fire from rockete-propelled grenades and small-arms of the militia of Muqtada al-Sadr.

U.S. soldiers returned fire. They killed three insurgents. Earlier in the day, there was talk of a possible deal between coalition forces and forces loyal to al-Sadr. One proposal is an Iraqi security force that would include some of Sadr's gunmen and lieutenants. The U.S. military has called for the disbanding of Sadr's militia and for Sadr to be brought to justice, in the words of General Mark Kimmitt, killed or captured.

But, in Karbala, there was no break in the fighting. American troops killed 22 of the al-Sadr's gunmen. The fighting took place near a mosque during operations to disarm the insurgents. U.S. troops working with Iraqi security forces seized weapons, ammunition following pipe bombs and rocket launchers used in attacks against them. And they blew up a weapons cache near the mosque. Separately, six insurgents were killed in Baghdad by U.S. forces.

As we reported, Britain is the only major Western country to strongly condemn the murder of Nick Berg. Many people in Muslim countries have also criticized the killing. Others have supported it. Other Muslims saying the murder in fact was justified. Only the United Arab Emirates, among the 22 states in the Middle East, have condemned the action.

Diana Muriel reports from London.

(BEGIN VIDEOTAPE)

DIANA MURIEL, CNN CORRESPONDENT (voice-over): From Britain to Brunei, condemnation.

ADEL KARIM, BAGHDAD CITIZEN (through translator): If they are Muslims, the messenger of Allah Muhammad says don't kill even sick dogs.

ATEF JASSEM, BAGHDAD CITIZEN (through translator): Musab is a terrorist and all of the resistance is coming from outside Iraq like Syria and other parts of the world.

MURIEL: Some in Afghanistan defended the murder, blaming the United States for starting a cycle of violence following the coalition invasion of Iraq.

JABAR KHAN, KABUL SPOKESPERSON (through translator): This beheading is a good act because the Iraqis have been oppressed and whoever is oppressed should defend themselves. As a Muslim, I support this act.

MURIEL: Some sympathy, too, in the most populous Muslim nation in the world, Indonesia.

BUDI, JAKARTA RESIDENT (through translator): Even hostages, under the teachings of Islam, must be treated humanely. If others did otherwise it doesn't mean we should do the same. But then under the current conditions, such chaos in Iraq, we cannot blame the Iraqis whose lives have been totally destroyed.

MURIEL: But in Japan, as well as other parts of the non-Muslim Asia, Berg's murder was widely condemned. Sympathy on streets in Tokyo for the United States' predicament in Iraq.

NORKI KATO, TOKYO RESIDENT (through translator): I think the situation will become more of a quagmire. If you think about world peace, it's necessary for the U.S. to be there. (END VIDEOTAPE)

DOBBS: My first guest tonight says American goals in Iraq are being diluted by the day. Fouad Ajami says the entire effort in Iraq will be wasted if the United States abdicates its responsibility. Fouad Ajami is a professor of Middle East studies at Johns Hopkins University, the author of "The Dream Palace of the Arabs."

Professor, it's good to have you with us.

FOUAD AJAMI, JOHNS HOPKINS UNIVERSITY: Thank you, Lou.

(CROSSTALK)

SCARBOROUGH: Let's begin, if we may, sir, with the reaction or lack of reaction, condemnation and outrage at the action of these radical Islamist terrorists in beheading the American hostage, Nick Berg. Why this deafening silence?

AJAMI: I think you've asked the right question and I think you've used the right word. It's about silence.

There are people would who say I condemn 9/11, but, and then they go silent on you. And the very same people who have been outraged, as they should be, as we all should be, by Abu Ghraib now have nothing to say about this brutal deed that was put on camera for us all to watch.

And I think it is about time in the Muslim world that people to under the rage to be genuine and to be believed. We cannot be selective. We can't wink at these kinds of things. This is really just basically a devastating display of a level of barbarism that tells you what this war in Iraq is all about. And it tells you what Abu Musab al-Zarqawi, who is suspected, this al Qaeda affiliate who came to Iraq, what he and his group are all about.

DOBBS: Yet, there is really very little reason, I suppose, for many of us to be surprised at that silence because the Arab League, Arab states were silent for almost three decades when Saddam Hussein was in power, brutalizing his own people and intimidating the countries in the region.

What will be required of the United States if the mission is to be accomplished as the president again reasserted today? What would be required to be successful?

AJAMI: Well, we have to press on with our own mission. We can't listen to the Arab world. The Arab world as a whole does not approve of our mission in Iraq. There are regimes that are worried that we may actually succeed, we may create a democracy, we may create a functioning public order in Iraq.

So I think our mission is really about Iraq and the repair of Iraq and making sure that Iraq is no longer a menace to its neighbors. We can't go seeking approval for our Iraqi mission from other Arabs. And what's interesting, if you look at Abu Ghraib as this classic case, the Iraqi themselves seem to be cool a bit about Abu Ghraib. They understand that something went wrong in Abu Ghraib.

But the Arabs who, as you said, Lou, who were silent for three decades under the Baath are the ones who are nailing us with Abu Ghraib. So I think we must press on in Iraq. We must focus on Iraq and we not spend an enormous amount of time trying to explain our Iraqi mission to the other Arabs, because, frankly, there are no Arab hearts and minds to be won for this Iraqi campaign.

DOBBS: This Iraqi campaign, the United States is suffering an enormous loss of life. Security protection for our forces in Iraq, would you -- do you believe that we should -- and I know that you strategically thinking might have a number of different views. But would you say the United States should commit even freighter forces to preserve the security of our forces there and, secondly, to provide greater security for the Iraqis?

(CROSSTALK)

AJAMI: Well, Lou, I know I've been watching your broadcast. And I know you, as the rest of us in the country, are wrestling with this issue, what to do about Iraq and how much casualties can we take, how much blood can we endure in Iraq.

We've been on a roller-coaster ride in Iraq. We had the euphoria of the quick and easy victory. Then we had the terrible month of April now behind us, where we lost something like 130 of our best young men and women. So, I think we really, in fact, the country now is really divided on Iraq. We have to be very honest. And I think there are people who are beginning to lose faith in this mission.

However, the only thing you can say -- and that's the best you can say. And you can say it with modesty and you can say it without self-righteousness, is that we really don't know what will happen in Iraq, that even someone like our defense secretary now says, well, maybe we hope to be successful.

We rolled history's dice, Lou, in Iraq. It's a big role. This is the big American engagement in the foreign world since Vietnam. And we did it because of September 11. We did it because of the malignancies of the Arab world. And we did it to repair the Arab world. So I think we want to believe that these sacrifices are worth it.

But I think we have anguish. And I think we all are in the middle of trying to decide what the stakes are and what the costs are and whether we can stay and endure these costs.

DOBBS: Fouad Ajami, we thank you, as always, for being here.

AJAMI: Thank you. Thank you.

DOBBS: Tonight's thought is on violence. "All violence, all that is dreary and repels, is not power, but the absence of power" -- those thoughts, without regard to the Middle East at the time, I assure you, Ralph Waldo Emerson. That brings us to the subject of tonight's poll. The question, do you think Congress and the national media have the correct sense of proportion of the Iraqi prisoner abuse scandal and the murder of American Nick Berg, yes or no? Cast your vote at CNN.com/Lou. We'll haven't results for you later in the broadcast.

Still ahead, our "Face-Off." Should the United States pull out of Iraq or send in more troops? Two opposing views are next.

And millions of Americans unemployed, looking for work, and out of work for extended periods of time. Yet, our lawmakers in Washington stalled over partisan politics, unwilling to move the legislation that would help millions. Ahead, we'll have that report coming up next.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The vicious, savage murder of Nick Berg is adding to the debate over whether it is time for American forces to withdraw from Iraq.

Retired General William Odom, former national security adviser, has been urging the administration to cut its losses. The once head of the National Security Agency in the Reagan administration says we should try to pull out of Iraq by the end of this year or early next year at the latest.

Odom says President Bush should -- quote -- "Eat a little humble pie. And if Iraq falls into civil war and if all these unhappy things occur, we're just going to have to accept them."

Many others in Washington say U.S. troops should remain in Iraq until the situation is stabilized. Senator John McCain is among those arguing more American troops are needed in Iraq. Senator McCain says -- quote -- "If we fail, if we cut and run, the results can be disastrous. We risk all-out civil war."

The debate over whether this country should withdraw from Iraq is at the center of our "Face-Off" tonight. Ted Galen Carpenter of the Cato Institute says U.S. forces should be out of Iraq within seven months. James Carafano says the United States has a moral obligation to stay in Iraq for at least one to three years. He is with the Heritage Foundation. Both join us tonight from Washington, D.C.

Good to have you here.

JAMES CARAFANO, HERITAGE FOUNDATION: Good evening.

TED GALEN CARPENTER, CATO INSTITUTE: Good to be with you.

DOBBS: Let me begin, Ted, with you. Squarely put, which is the most intelligent decision for us to take in the interest of the United States? What is in the best national interest, in your judgment?

CARPENTER: That's the key point.

And we need an exit strategy that has a withdrawal measured in months, not years. Lou, let's face it. The Iraq mission is the foreign policy equivalent of an investment in Enron or WorldCom. It has gone sour. And investors who stayed the course with those stocks lived to regret it deeply. If we stay the course in Iraq, we're going to regret it. We will stumble out of Iraq years from now having wasted hundreds of billions of dollars and having lost thousands, not just 700 and some American soldiers. That's not in our interest.

DOBBS: James, your thoughts?

CARAFANO: Well, first of all, Ted is absolutely right, Lou.

The first and most important question here is, what is in the U.S. national interest? And second I think, actually, we both agree that a long-term military presence of the United States in the Middle East is not in our interests in Iraq. So the real question is, why are we there?

Well, we have a legal and moral obligation to do certain things as an occupying power. This is, keep the people from dying from mass starvation and disease. We have done that. Set up a legitimate government and establish Iraqi domestic security forces. And then, as an occupying power, we'll have met our obligations and we can leave.

So, I think those goals are achievable. I think setting up a legitimate government is an achievable goal. I think establishing Iraqi domestic security forces is a legitimate goal and goals that can be reached in a fair amount of time. I think two things really trouble Americans, and the first is somehow people think, yes, it's a mess. But you know something, all of these things are messes. The notion that these things could be easy and bloodless and simple is just not true. Look back at Europe and Japan and the occupations as easy and effortless, they quite honestly weren't. There were fears about revolutions and everything else. So, the point is Iraq is not terribly different from where we're trying to reestablish the countries and turn them back to civilian leadership so they can be reconstructed. We're not far off from where we need to be, which is immediately, an amazingly and complex thing to do.

CARPENTER: Unfortunately it is not comparable to the situations in Germany and Japan after World War II. Those were cohesive modern societies. Iraq really is not. And the situation is deteriorating. Every cycle of violence in the past year has been a bit worse than the previous cycle. Every upsurge a bit worse. The security situation is getting worse, not better. And sentiment in Iraq is turning rapidly against the United States. A poll taken by Gallup, CNN, and "Usa Today," just a couple weeks ago showed 57 percent of Iraqis wanted us to leave immediately, 70 percent regard us as occupiers, not liberators. And positive views towards the United States were down to 23 percent, and that was before all the scandal involving the prison abuses. One can only imagine what the figures are now.

CARAFANO: I take Ted's point on the polls, and the date it is interesting but irrelevant. We did polling in Japan and Austria, which is technically a liberated and not occupied country and Germany as well, and people hated us and didn't want to be occupied. You wouldn't expect people to want to be occupied. We asked people, do you want to -- do you want a legitimate government, do you want Iraqi forces protecting you. I believe, a majority would say yes. To do those things, it will take some time. I think we could have done a better job and move faster on getting up Iraqi security forces. But the good news in Fallujah and Najaf, and here is where I disagree with Ted, all the violent acts and recent uprisings haven't led to civil war, haven't knocked us off the political track, they haven't pushed going forward with the security situation. I think we can move faster with the Iraqi security forces. I think that's the key to success. I think the goals are achievable.

DOBBS: Define success here, James. I think, the real question is national interest. You mentioned Najaf and Fallujah. In Fallujah the provisional authority has put Ba'athists in charge in Najaf, seeking to put lieutenants of Muqtada Al-Sadr in charge and bring in some of his henchmen and gunmen. This does not sound, be any definition in the most carefully worded political definition like victory or progress.

CARAFANO: This isn't about victory. We won the war. We deposed the regime of Saddam Hussein, which was our primary national interest and goal. We're doing what, you know, Colin Powell said you have to do. You break it, you buy it. Yes, there are people from the old regime that are going to be in positions. If you look at any one in the post-war occupation situations in Germany and Austria and Japan, when you build domestic security, part of that leadership has to come from the old order, because you can't grow generals overnight. You have to find people willing to cooperate, won't overthrow the government, aren't criminals, aren't tied to the old regime to badly.

DOBBS: First of all, we put in charge of the Iraqis in Fallujah turned out to have been highly suspect, lets put it that, in terms of his (UNINTELLIGIBLE) along those lines as you know, James. Let me ask you both this question. Because you talked about the treasure required, the pain and the sacrifice of American blood that we're enduring. The United States is proceeding with policies and strategy that is are often unclear. We can call it the Bush administration or the Rumsfeld approach, whatever you want. But right now in the world it's the American approach and strategy in question. We are spending hundreds of billions of dollars quite literally in this effort to Democratize Iraq and to forestall the forces of Muqtada Al-Sadr, some of the Ba'athist insurgents, foreign terrorists and they are spending cents. In terms of the economics and politics it is pretty clear to just about everyone to this point that for us to engage in the war on terror and the war against other despotic regimes in the future, we have to come up with a far more favorable calculus both in terms of man power and force and economic that is what we have tried to do in Iraq so far.

Would you gentlemen at least agree with that?

CARPENTER: I think we have to be far more selective about what we try to do. Iraq was not central to the war on terror, the war against al Qaeda. It was a distraction, and almost everything in Iraq has gone awry, has not according to plan. We were supposed to have Iraq oil revenues pay for the reconstruction. We were supposed to have our troop strength down to 30,000 by the end of summer 2003. This plan has gone off the tracks from the very beginning.

DOBBS: James, you have the final word.

CARAFANO: Here's something we can agree on. Wars are expensive, dangerous and unpredictable. You shouldn't enter into it unless you are serious and realize they require a amount of national treasury. So, no one should enter into war lightly.

DOBBS: Thanks very much, James Carafano and Ted Galen Carpenter. We thank you both for being here tonight.

In Gaza, new developments between Israeli troops and Palestinian gunmen. The Israeli troops and tanks have begun pulling back from Gaza City. In return, the Palestinian gunman are to hand over the remains of six Israeli soldiers killed yesterday, and there was more violence in Gaza today. The Israeli army says four soldiers and one officer were killed when Palestinians blew up a vehicle. It was the second Israeli armor armored vehicle to be destroyed in two days. Israeli soldiers killed five Palestinians today and wounded more than 40 others in those battles.

Taking a look at some of our thoughts.

Frank in Scearce, Pennsylvania, "The beheading of an American worker who was in Iraq to help them get back on their feet plainly demonstrates the brutality of these terrorist that we must stop and bring to justice."

Chris in San Rafael, California, "While the media is in a frenzy over the mistreatment of the Iraqi prisoners, our men and women serving in Iraq have targets on their heads."

Vince in Shreveport, Louisiana, "It seems that pictures of an American beheaded are not as serious as the abuse of prisoners. When is the Senate going to wake up and realize this is war and we better do something more than hold hearings."

Gail Rubio in California, "Lou, the silence of Europe and Asia in the aftermath of this senseless slaughter is telling. Never have nations looked so cowardly, so pitiful and so putrid."

Though they were quite vocal about our comparably modest behavior, demanding apologies, now the nothing being heard is deafening.

We love hearing from you, e-mail us at loudobbs@cnn.com. And a reminder vote in our poll. The question, do you think Congress and the national media have the correct sense of proportion of the Iraqi prisoner abuse scandal and the murder of American Nick Berg?

Vote yes or no on the Web site.

And just ahead, the trade deficit keeps growing. We'll tell you about one industry facing tough times.

And motorists may have a tough time. They will have a tough time at the gas pump during this summer's driving season. But that's not the only thing driving energy costs higher. Bill Tucker has the report.

Later, the politics of jobs Congress debates. The America's unemployed are the ones who suffer. We'll tell you why next.

(COMMERCIAL BREAK)

DOBBS: The already staggering trade deficit hit a new record high in March. $46 billion. Our massive trade deficit with China widened even further. Perhaps the biggest area of concern is the increasing imports of foreign made autos and auto parts. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT: The American appetite for cheap, Chinese goods, Japanese cars and OPEC oil set new records in March. The nation's trade deficit shooting up to $46 billion.

BILL DUDLEY, GOLDMAN SACHS: If you have a very large trade deficit, it, basically, suggests that you're living beyond your means. You're exchanging pieces of paper for foreign goods and services.

VILES: The Bush administration recently had argued that the trade picture with China was improving. There was no sign of it in this report. The trade deficit with China, 10.4 billion in March, that's up 26 percent from February. Other large deficits, 9.3 billion with the European Union. $6.7 billion with Japan. $5.6 billion with the OPEC nations. The deficit in autos and auto parts widened as foreign automakers continued to feast on the world's richest market, Toyota reported a stunning $10 billion profit this week. The Detroit- based American auto industry with an older work force and huge pension liabilities is at a disadvantage. Its cost structure is higher than even Japanese transplants operating in the United States.

RICHARD DAUCH, AMERICAN AXLE: They're coming in with incredible incentives paid by the American people and the American taxpayer. They're coming into areas where the predominant work forces are nonunion. They're coming in with brand-new everything, facility, plants, equipment, and new products.

VILES: Even counting Germany-based Daimler Chrysler, the big three's share of the U.S. market is now below 60 percent. Japanese companies hold 30 percent, Europeans 6.5 and Korean automakers just under 4 percent.

(END VIDEOTAPE)

VILES: Just to illustrate the way investors view this industry right now, Toyota now has a higher market capitalization than Ford, General Motors and Daimler Chrysler combined -- Lou. DOBBS: That's extraordinary and even though your graphics suggested the big three, the fact is Toyota is the No. 2 car maker and Daimler Chrysler is the No. 3. car maker and the big three is one in four.

VILES: Sure thing. If you talk about cars as opposed to trucks, just cars, the foreign automakers sell more in the United States than Americans do.

DOBBS: Amazing. Got to love free trade at any cost. Thank you very much.

Oil prices rose again today, closing just 36 cents shy of the highest price ever in this country. Those high crude prices are translating into record-high gasoline prices across the country, directly hitting the wallets of all Americans. Bill Tucker reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: ...the president a letter. I just dropped it off in the post office right now, I swear.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: The president remains concerned about rising gas prices. I think most Americans are concerned about rising gas prices.

BILL TUCKER, CNN CORRESPONDENT (voice-over): Gasoline is one of the prices people take personally, for good reason. Any increase comes directly out of their pockets. The math is simple. Every penny increase in a gallon of gasoline equals $1.36 billion out of consumer pockets. Add all the petroleum products together and the penny means $3 billion. Consumers feel the pinch. Some are changing their ways.

UNIDENTIFIED MALE: I switched my gas from ultimate to regular now because I understood it is the same thing. Now I just use regular premium and save a few dollars.

UNIDENTIFIED FEMALE: I'm not driving as much, I'd say. I'm just not driving as much because I know I have to keep filling it up.

TUCKER: And there is another way to look at the numbers. For every penny increase in a gallon of petroleum products, $1.8 billion leaves the country and goes to foreign producers. In other words, it is not only bad for the personal economy, it hurts the American economy.

JOHN FELMY, AMERICAN PETROLEUM INSTITUTE: It means we have reduced purchasing power in the United States. We can't buy as much domestically as we otherwise could. It raises our cost of production because we have to spend more on energy to produce goods and services and it affects the trade deficit which can have negative implications on other parts of the economy.

TUCKER: How much does it add up to? Gasoline prices are now 45 cents a gallon more expensive than they were a year ago. That's $61 billion out of the economy and into gas tanks. (END VIDEOTAPE)

TUCKER: And it is not just gasoline that will be taking it out of your wallet. Expect to see higher prices on everything from food to clothing as trucking companies, railroads, and air transport companies pass on their increased cost of doing business -- Lou.

DOBBS: And that record trade deficit of ours, more than half of it coming in higher prices and greater imports of oil. Bill Tucker, thank you very much.

Still ahead, making the grade. Our special report on education. Enrollment and tuition at this country's community colleges rising. State funding is falling. Students looking for an education. Many are being turned away.

And a rising number of jobless Americans running out of unemployment benefits. Legislation to help stalled in Congress. Not enough people want to vote. We'll have a special report.

A UFO mystery in Mexico baffling aviation experts around the world. New comments tonight by Mexico's defense secretary. We'll have that story. Do you believe? Next.

(COMMERCIAL BREAK)

DOBBS: Tonight, making the grade. Community colleges all across the country are in financial trouble. Students piling into classes, state governments slashing budgets. Caught in the middle, students who, in many cases, are having trouble paying for their education. Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: Pierce College is a typical community college, students who either can't afford or don't have the grades to attend a four-year school, adults training for new careers or learning a new skill like English.

While demand for its services grows, the Los Angeles community college district cut 1,000 classes in the past year because of California's budget crunch.

PETER LANDSBERGER, CHANCELLOR, L.A. COMMUNITY COLLEGE DISTRICT: It is, frankly, very painful for faculty to tell students they cannot get admission to their classes. Sometimes I have seen situations where students were literally sitting on the floor hoping that one of the other students in the class would drop and make room for that student.

WIAN: California plans a 3-percent reduction in per pupil spending next year and a sharp tuition increase of nearly 240 percent of last year's rate.

SHANNON STOKES, PIERCE COLLEGE STUDENT: My family can't afford it. I work almost full time and I'm almost a full-time student. Even with that, I can't afford it.

WIAN: What are you going to do?

STOKES: I might have to drop out.

KUANA JACKSON, PIERCE COLLEGE STUDENT: Instead of being a full- time student I will probably take a couple classes.

WIAN: Now, California community colleges are being required to accept up to 8,000 additional students frozen out of state universities by budget cuts. California ranks 45th nationally in per pupil community college spending. It's an extreme example of a nationwide problem. While state spending on community colleges is down, enrollment is soaring, up 18 percent in 2002 alone.

GEORGE BOGGS, CEO, AMERICAN ASSOCIATION OF COMMUNITY COLLEGES: Whenever we see an economic downturn more people go back to school. The other reason is we're seeing the tip of this tidal wave of students headed toward higher education. Community colleges are taking a lot of these students especially with tuition costs going up in four-year schools.

WIAN: In Los Angeles, class reductions have created a new kind of student, those who commute from one community college to another for the classes they need.

(END VIDEOTAPE)

WIAN: Federal funding for community college students appears to be safe and President Bush has proposed a $250 million job retraining program that would involve community colleges. Both the president and Senator Kerry have made campaign speeches at community colleges in recent weeks to draw attention to their critical role in the U.S. economy -- Lou.

DOBBS: Of course, Casey, that additional money would be provided for what would be retaining, as you say, but those would be additional workers requiring it. So just more burden on the community colleges. Casey Wian, thank you very much.

Coming up next, lawmakers in Washington are busy battling it out with one another while the country's unemployed are left to suffer the uncertainty of whether help is on the way or not. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Senate has narrowly rejected an extension of unemployment benefits. That means no relief for a million and a half Americans whose benefits have expired, 100,000 people are losing the benefits each week. The reason for the failure of the legislation, a bitter fight over partisan politics in, of all places, Washington, D.C. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): More than 80,000 people a week are running out of unemployment benefits. Don't bother Congress about it. They're more concerned with politics, a proposal to extend extra temporary benefits to jobless Americans fell short by one vote in the Senate Tuesday.

UNIDENTIFIED MALE: The point of order is sustained. And the amendment falls.

PILGRIM: Democrats had been pushing for it. Yet John Kerry was campaigning and didn't vote. Republicans accuse the candidate of, quote, too busy playing politics, unquote, and Kerry accused the Republicans of, quote, playing games in scheduling the vote.

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: If they're willing to reconsider and keep everybody's votes where they are, we'll go back and do it. But that's not what they're doing, they're playing a game.

PILGRIM: Meanwhile, the average unemployed American is out of luck. A million and a half people have exhausted their unemployment benefits since the end of last year, when the last temporary employment benefit plan ran out.

The average unemployed worker is staying out of work longer, 12 weeks in September 2000 is now up to 20 weeks out of work. Federal Reserve chairman Alan Greenspan testified to Congress last month about the quote, exceptionally high number of unemployed people exhausting their benefits.

ISAAC SHAPIRO, CTR. ON BUDGET AND POLICY PRIORITY: You have people losing their homes, people reducing their food consumption, reducing their acquisition of health insurance. You're having hundreds of thousands of people are having their lives unravel because of the absence of this program.

PILGRIM: Greenspan also said the situation is causing a, quote, rise in insecurity among workers.

(END VIDEOTAPE)

PILGRIM: Now, labor economists argue that additional benefits are necessary. It will take time before most of the unemployed find jobs and records numbers of people are running out of benefits without finding another job -- Lou.

DOBBS: So Senator Kerry...

PILGRIM: Missed the vote.

DOBBS: Missed the vote. Got outsmarted, out maneuvered and the Republicans were playing politics with the issue.

PILGRIM: It was a political game.

DOBBS: Kitty Pilgrim, thank you very much.

A mystery over the skies of Mexico, tonight remains very much a mystery. Mexico's Defense Secretary today weighed in on the mystery saying his military has made no official conclusions about a serious of bright, rapidly moving objects in the sky.

Mexican -- and there they are -- Mexican Air Force pilots used an infrared camera to videotape these images. Whether they are objects or not is a matter to be resolved, of course. The bright lights spotted more than 11,000 feet in March.

The Mexican Defense Secretary says he released the video to a UFO investigator only because it was pointless to keep it a military secret.

No secrets on Wall Street today. Stocks reversed steep losses. The Dow recovered from a triple digit loss, closing up more than 25 points, almost 26. The Nasdaq down nearly 6. The S&P 500 up almost 2. Makes you wish those numbers would be even from time to time.

A partial settlement today for former Enron employees nearly three years after the company collapsed.

Christine Romans is here. And I'm sure the employees and all the class action holders were satisfied with equity and justice.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: I wouldn't say that, Lou. When you talk about Enron numbers, they're usually very, very big, except if you are a former employee trying to get retirement money back.

Let's do the Enron math, Lou: 20,700 employees sued to get some of their lost retirements. On average they lost 50 grand each, encouraged, they say, by company management to load up on Enron stock. Now, with this partial settlement they'll share $85 million. That works out to a little over $4,000 each, on average, Lou. And of course, that's before attorneys's fees. And overall they have topped a billion dollars since this all started.

DOBBS: That's more than the 401(k) holders lost.

ROMANS: Absolutely.

DOBBS: Great. You got to love justice. Thank you very much, Christine Romans.

Still ahead, we'll have the results of our poll. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll: 63 percent of you do not believe Congress and the national media have the correct sense of proportion on the Iraqi abuse scandal and the murder of American Nick Berg.

That's our broadcast for tonight. Thanks for being with us. For all us here, good night from New York. "ANDERSON COOPER 360" coming up 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


Aired May 12, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): Tonight, the radical Islamist terrorist killing of American hostage Nick Berg. President Bush says the gruesome murder will not shake American resolve.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will complete our mission. We will complete our task.

DOBBS: Arab states throughout the Middle East, many of them presumptive U.S. allies, are conspicuous in their silence. Arab leaders have declined to condemn Nick Berg's and those responsible.

American troops tonight are battling Iraqi insurgents. Should the United States send more troops or withdraw from Iraq? Two opposing views in our "Face-Off" tonight. And my guest says the United States must not abdicate its responsibilities in Iraq. Professor Fouad Ajami joins us.

And record high gasoline prices headed even higher. Where is all the money going? Much of it to foreign companies with an ever larger share of the U.S. market.

UNIDENTIFIED MALE: I get so mad, I just can't describe it. It gives me chest pains.

DOBBS: And nearly 100,000 jobless Americans run out of unemployment benefits every week. Legislation that would help stalled on Capitol Hill. Is it too much to ask our elected officials, even as they seek higher office, to vote?

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, May 12. Here now for an hour of news, debate and opinion, Lou Dobbs.

DOBBS: Good evening.

President Bush today said radical Islamist terrorists who cut off the head of an American civilian held hostage in Iraq will not shake American will. President Bush declared the United States will complete its mission in Iraq. And coalition officials today said there will be a thorough investigation of the murder of Nick Berg.

Senior White House correspondent John King reports -- John.

KING: And, Lou, the president offering his condolences in public today to the Berg family. Mr. Bush speaking just outside the White House, he said there was no justification for what he called the brutal execution of a civilian Mr. Bush said was in Iraq trying to help it on its way to freedom and democracy. The president again said no justification for that execution and he also said no chance at all the United States would waver in the face of this horrific act.

(BEGIN VIDEO CLIP)

BUSH: Their intention is to shake our will. Their intention is to shake our confidence. Yet, by their actions, they remind us of how desperately parts of the world need free societies and peaceful societies. And we will complete our mission. We will complete our task.

(END VIDEO CLIP)

KING: Now, Berg's family has complained. They believe he was held by the United States in coalition custody in Iraq. The administration today trying to make clear that was not the case. Berg was in the custody of Iraqi police. Three times during that custody, he was interviewed by the FBI.

And what the United States government is saying, that he was told he was alone in a dangerous place without an employer and that he should go home. And after Berg's release, we are told the State Department offered him a flight home. Berg said no, that he would make his way home to the United States over land through Kuwait. He then disappeared, Lou, and then of course taken hostage and brutally executed.

DOBBS: John, is there any reaction at the White House to the lack of protest, statements of regret and revulsion, from Arab states? Only the United Arab Emirates have expressed their official condemnation of this.

KING: No specific criminal of any individual countries.

As you noted at the top of the show, many of these countries that have been silent on this, Saudi Arabia and others, are U.S. allies or considered by the White House to be U.S. allies in the war on terrorism. The administration saying that it believes everyone should condemn this horrific act and again also promising a very aggressive investigation as the president today sent out condolences to the Berg family.

And the White House voiced some concerns, whether you buy the argument or not, that the prison abuse pictures had anything to do with this execution, the administration voicing concern that any American in that area, especially Americans alone, like Mr. Berg was, are not safe, Lou.

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

Tonight, as John indicated, there is a growing dispute between Nick Berg's family and the Pentagon and the White House over whether Berg was in U.S. custody in Iraq. The coalition says Berg was held by Iraqi police, but his family says Berg was in U.S. custody for two weeks, which delayed his departure from Iraq.

Maria Hinojosa reports from Nick Berg's home town of West Chester, Pennsylvania -- Maria.

MARIA HINOJOSA, CNN CORRESPONDENT: Lou, I was just speaking with some of the neighbors who knew Nick Berg from the time that he was a child.

And I just have to tell you this, first. They said: Nick Berg was not a missionary, but that's certainly how we saw him, how we felt about him. He was a young man who wanted to find the good in every human being that he saw. Today, many people coming by dropping off flowers at the home behind me where Nick Berg was born and raised.

Now, today, there has been quite a bit of sadness, but also tinged with anger. The family reacting to the statements by a coalition spokesperson this morning that Nick Berg was not in U.S. custody. The family quite upset about that, breaking their silence, the brother of Nick Berg coming out and talking to one of our producers, saying that this is not true, that they have e-mails from Nick Berg once he was released where he said that he was being held in U.S. custody.

But why does it matter? There are many people who are trying to understand, well, why does this matter? This is a family that has very strong feelings about this war. Nick Berg supported the war, wanted to be part of the rebuilding effort. That's one of the reasons why he went there. But the father, Nick Berg's father, was very much against this war, suing Donald Rumsfeld, as well as the Department of Defense, once he found out that his son was being detained.

He went as far as to sue him. After that lawsuit, the son was released, but, of course, was never heard from again after April 9. And this is what the father had to say about his search for blame. This is before he knew that his son had been murdered.

(BEGIN VIDEO CLIP)

MICHAEL BERG, FATHER OF NICK BERG: That's really what cost my son his life was the fact that the United States government saw fit to keep him in custody for 13 days without any of his due process or civil rights and release him when they were good and ready.

(END VIDEO CLIP)

HINOJOSA: Now, one of the family members just stepped out of the home. This is a very extraordinary thing, because the family really has been in seclusion for the past 24 hours. Came out of the home quickly to say, essentially, that she remain devastated.

Lou, there is a block and a half of live trucks that are parked in front of this home. This has been a very difficult time for this family and, certainly, for the community as well -- Lou. DOBBS: They must be simply devastated, Maria, as we are all touched and hurt by this senseless, savage act. Maria, thank you very much -- Maria Hinojosa, reporting from Nick Berg's home town of West Chester, Pennsylvania.

And to add to what Maria just reported, this just in to CNN. The FBI has just said that it did offer to give Nick Berg what it calls safe passage out of Iraq, but that Berg declined the FBI offer. The FBI also says its agents interviewed Berg while he was in the custody of Iraqi police in Mosul in Northern Iraq. The FBI said Iraqi police released Berg after officials determined there was no reason to keep him in custody.

And as John King reported from the White House, the Bush administration is promising a thorough, full investigation.

British Prime Minister Tony Blair condemned the brutal murder of Nick Berg, saying there was no justification for this kind of act in a civilized world. And the same sentiment came from the head of the Iraqi Governing Council.

(BEGIN VIDEO CLIP)

ABDEL ZAHRA OSMAN MOHAMMAD, PRESIDENT, IRAQI GOVERNING COUNCIL (through translator): We condemn, the Iraqi people condemns this crime. Islam condemns this crime.

(END VIDEO CLIP)

DOBBS: But other world leaders did not directly condemn those who beheaded Nick Berg. U.N. Secretary-General Kofi Annan said through his spokesman that he was horrified, but at the same time weighed in on the abuse scandal.

(BEGIN VIDEO CLIP)

FRED ECKHARD, SPOKESMAN FOR KOFI ANNAN: The secretary-general condemns all killings of innocent civilians in Iraq, as he condemns all abuse of prisoners and other violations of international humanitarian law.

(END VIDEO CLIP)

DOBBS: The government of the United Arab Emirates issued a statement saying, This disgusting brutality can never be justified and has nothing to do with Islam or our Arab values."

But, as we've reported, conspicuously, silence from other Arab leaders in the region. Many Arabic newspapers published the story, but did so without editorial comment. And the coverage varied greatly. While the Vatican had nothing to say about the beheading, an archbishop did say the photos from the Abu Ghraib prison has dealt a greater blow to the United States than the September 11 attacks.

Archbishop Giovanni Lajolo said that: "Torture, a more serious blow to the United States than September 11, except that the blow was not inflicted by terrorists, but by Americans against themselves."

One of the soldiers at the center of the Iraqi prisoner abuse scandal says she posed for photographs because she was ordered to by persons of higher rank. Private Lynndie England did not say who those people were. On Capitol Hill today, Defense Secretary Rumsfeld defended the interrogation methods used by U.S. troops in Iraq.

Senior Pentagon correspondent Jamie McIntyre has the report.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): As the Pentagon delivered more photographs and videos of prisoner abuse to Congress and members described them as worse than those already leaked, some of the accused repeated their defense they were acting on orders of higher-ups. Private Lynndie England says she was told to pose with naked prisoners to create psychological operations photographs.

QUESTION: Who told you to do that?

PRIVATE 1ST CLASS LYNNDIE ENGLAND: Persons in my higher chain of command.

MCINTYRE: Defense Secretary Donald Rumsfeld again assured Congress the ongoing investigation will go as high as necessary.

DONALD RUMSFELD, SECRETARY OF DEFENSE: People will be punished at every legal, I can assure you.

MCINTYRE: The highest officer now under scrutiny is Brigadier General Janis Karpinski, who says she objected to military intelligence being part of her military police. The unit, the 322nd M.P. Company, was described by the military's top general as -- quote -- "having issues adhering to Army standards."

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: They didn't have standardized uniforms. They were allowed to carry guns in their civilian clothes when they're off duty. They had things written on their cap. They didn't particularly want to salute.

MCINTYRE: Also under fire, the Pentagon's approved rules for pressuring prisoners. A list of interrogation rules of engagement provided to Congress includes isolation for longer than 30 days, sleep adjustment, sensory deprivation, and stress positions for up to 45 minutes at a time.

UNIDENTIFIED MALE: And let me tell you, your interrogation rules of engagement, the ones that are published, go far beyond the Geneva Convention.

MYERS: Those are appropriate. And that's what we're told by legal authorities and by anybody that believes in humane behavior.

(END VIDEOTAPE) MCINTYRE: And as he wrapped up his testimony before Congress, Defense Secretary Rumsfeld called the revelations of abuse -- quote -- "a body blow to the country" and warned that there would be more revelations in the weeks to come, what, with six investigations under way. He also said that as he looks at Iraq, he said: "All I can say is, I hope it comes out well. I believe it will. And we're going to keep at it" -- the words of Secretary Rumsfeld as he closed his testimony today -- Lou.

DOBBS: Jamie, the fact is that this investigation is going to go on for some time. The suggestion in the hearing that those stated published rules of interrogation going beyond the Geneva Conventions, do they or do they not?

MCINTYRE: Well, I guess it is one of those things you can get lawyers to argue about.

The Pentagon has lawyers on its side saying that the carefully crafted guidelines that they've come up with fall within the spirit of the Geneva Conventions and they note that it includes a specific reference that no inhumane treatment of prisoners is allowed. But Senator Durbin, who you heard there briefly, also read from the Geneva Conventions regarding prisoner abuse. And he quoted a section that says, essentially, that people will not be exposed to any unpleasant or disadvantageous treatment of any kind. So he clearly believes that these interrogation guidelines do cross the line.

DOBBS: Jamie, thank you very much -- Jamie McIntyre, our senior Pentagon correspondent.

U.S. troops in Iraq tonight are on the offensive against supporters of Muqtada al-Sadr. We'll have a report for you.

And after the gruesome murder of Nick Berg, a little Middle East expert says the United States must remain true to its principles and its mission in Iraq.

And the rising cost of gasoline bringing pain to American consumers and big profits for many foreign companies. We'll have a special report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: In Iraq tonight, U.S. troops on patrol in Najaf were attacked by members of the Mehdi militia. The patrol came under fire from rockete-propelled grenades and small-arms of the militia of Muqtada al-Sadr.

U.S. soldiers returned fire. They killed three insurgents. Earlier in the day, there was talk of a possible deal between coalition forces and forces loyal to al-Sadr. One proposal is an Iraqi security force that would include some of Sadr's gunmen and lieutenants. The U.S. military has called for the disbanding of Sadr's militia and for Sadr to be brought to justice, in the words of General Mark Kimmitt, killed or captured.

But, in Karbala, there was no break in the fighting. American troops killed 22 of the al-Sadr's gunmen. The fighting took place near a mosque during operations to disarm the insurgents. U.S. troops working with Iraqi security forces seized weapons, ammunition following pipe bombs and rocket launchers used in attacks against them. And they blew up a weapons cache near the mosque. Separately, six insurgents were killed in Baghdad by U.S. forces.

As we reported, Britain is the only major Western country to strongly condemn the murder of Nick Berg. Many people in Muslim countries have also criticized the killing. Others have supported it. Other Muslims saying the murder in fact was justified. Only the United Arab Emirates, among the 22 states in the Middle East, have condemned the action.

Diana Muriel reports from London.

(BEGIN VIDEOTAPE)

DIANA MURIEL, CNN CORRESPONDENT (voice-over): From Britain to Brunei, condemnation.

ADEL KARIM, BAGHDAD CITIZEN (through translator): If they are Muslims, the messenger of Allah Muhammad says don't kill even sick dogs.

ATEF JASSEM, BAGHDAD CITIZEN (through translator): Musab is a terrorist and all of the resistance is coming from outside Iraq like Syria and other parts of the world.

MURIEL: Some in Afghanistan defended the murder, blaming the United States for starting a cycle of violence following the coalition invasion of Iraq.

JABAR KHAN, KABUL SPOKESPERSON (through translator): This beheading is a good act because the Iraqis have been oppressed and whoever is oppressed should defend themselves. As a Muslim, I support this act.

MURIEL: Some sympathy, too, in the most populous Muslim nation in the world, Indonesia.

BUDI, JAKARTA RESIDENT (through translator): Even hostages, under the teachings of Islam, must be treated humanely. If others did otherwise it doesn't mean we should do the same. But then under the current conditions, such chaos in Iraq, we cannot blame the Iraqis whose lives have been totally destroyed.

MURIEL: But in Japan, as well as other parts of the non-Muslim Asia, Berg's murder was widely condemned. Sympathy on streets in Tokyo for the United States' predicament in Iraq.

NORKI KATO, TOKYO RESIDENT (through translator): I think the situation will become more of a quagmire. If you think about world peace, it's necessary for the U.S. to be there. (END VIDEOTAPE)

DOBBS: My first guest tonight says American goals in Iraq are being diluted by the day. Fouad Ajami says the entire effort in Iraq will be wasted if the United States abdicates its responsibility. Fouad Ajami is a professor of Middle East studies at Johns Hopkins University, the author of "The Dream Palace of the Arabs."

Professor, it's good to have you with us.

FOUAD AJAMI, JOHNS HOPKINS UNIVERSITY: Thank you, Lou.

(CROSSTALK)

SCARBOROUGH: Let's begin, if we may, sir, with the reaction or lack of reaction, condemnation and outrage at the action of these radical Islamist terrorists in beheading the American hostage, Nick Berg. Why this deafening silence?

AJAMI: I think you've asked the right question and I think you've used the right word. It's about silence.

There are people would who say I condemn 9/11, but, and then they go silent on you. And the very same people who have been outraged, as they should be, as we all should be, by Abu Ghraib now have nothing to say about this brutal deed that was put on camera for us all to watch.

And I think it is about time in the Muslim world that people to under the rage to be genuine and to be believed. We cannot be selective. We can't wink at these kinds of things. This is really just basically a devastating display of a level of barbarism that tells you what this war in Iraq is all about. And it tells you what Abu Musab al-Zarqawi, who is suspected, this al Qaeda affiliate who came to Iraq, what he and his group are all about.

DOBBS: Yet, there is really very little reason, I suppose, for many of us to be surprised at that silence because the Arab League, Arab states were silent for almost three decades when Saddam Hussein was in power, brutalizing his own people and intimidating the countries in the region.

What will be required of the United States if the mission is to be accomplished as the president again reasserted today? What would be required to be successful?

AJAMI: Well, we have to press on with our own mission. We can't listen to the Arab world. The Arab world as a whole does not approve of our mission in Iraq. There are regimes that are worried that we may actually succeed, we may create a democracy, we may create a functioning public order in Iraq.

So I think our mission is really about Iraq and the repair of Iraq and making sure that Iraq is no longer a menace to its neighbors. We can't go seeking approval for our Iraqi mission from other Arabs. And what's interesting, if you look at Abu Ghraib as this classic case, the Iraqi themselves seem to be cool a bit about Abu Ghraib. They understand that something went wrong in Abu Ghraib.

But the Arabs who, as you said, Lou, who were silent for three decades under the Baath are the ones who are nailing us with Abu Ghraib. So I think we must press on in Iraq. We must focus on Iraq and we not spend an enormous amount of time trying to explain our Iraqi mission to the other Arabs, because, frankly, there are no Arab hearts and minds to be won for this Iraqi campaign.

DOBBS: This Iraqi campaign, the United States is suffering an enormous loss of life. Security protection for our forces in Iraq, would you -- do you believe that we should -- and I know that you strategically thinking might have a number of different views. But would you say the United States should commit even freighter forces to preserve the security of our forces there and, secondly, to provide greater security for the Iraqis?

(CROSSTALK)

AJAMI: Well, Lou, I know I've been watching your broadcast. And I know you, as the rest of us in the country, are wrestling with this issue, what to do about Iraq and how much casualties can we take, how much blood can we endure in Iraq.

We've been on a roller-coaster ride in Iraq. We had the euphoria of the quick and easy victory. Then we had the terrible month of April now behind us, where we lost something like 130 of our best young men and women. So, I think we really, in fact, the country now is really divided on Iraq. We have to be very honest. And I think there are people who are beginning to lose faith in this mission.

However, the only thing you can say -- and that's the best you can say. And you can say it with modesty and you can say it without self-righteousness, is that we really don't know what will happen in Iraq, that even someone like our defense secretary now says, well, maybe we hope to be successful.

We rolled history's dice, Lou, in Iraq. It's a big role. This is the big American engagement in the foreign world since Vietnam. And we did it because of September 11. We did it because of the malignancies of the Arab world. And we did it to repair the Arab world. So I think we want to believe that these sacrifices are worth it.

But I think we have anguish. And I think we all are in the middle of trying to decide what the stakes are and what the costs are and whether we can stay and endure these costs.

DOBBS: Fouad Ajami, we thank you, as always, for being here.

AJAMI: Thank you. Thank you.

DOBBS: Tonight's thought is on violence. "All violence, all that is dreary and repels, is not power, but the absence of power" -- those thoughts, without regard to the Middle East at the time, I assure you, Ralph Waldo Emerson. That brings us to the subject of tonight's poll. The question, do you think Congress and the national media have the correct sense of proportion of the Iraqi prisoner abuse scandal and the murder of American Nick Berg, yes or no? Cast your vote at CNN.com/Lou. We'll haven't results for you later in the broadcast.

Still ahead, our "Face-Off." Should the United States pull out of Iraq or send in more troops? Two opposing views are next.

And millions of Americans unemployed, looking for work, and out of work for extended periods of time. Yet, our lawmakers in Washington stalled over partisan politics, unwilling to move the legislation that would help millions. Ahead, we'll have that report coming up next.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The vicious, savage murder of Nick Berg is adding to the debate over whether it is time for American forces to withdraw from Iraq.

Retired General William Odom, former national security adviser, has been urging the administration to cut its losses. The once head of the National Security Agency in the Reagan administration says we should try to pull out of Iraq by the end of this year or early next year at the latest.

Odom says President Bush should -- quote -- "Eat a little humble pie. And if Iraq falls into civil war and if all these unhappy things occur, we're just going to have to accept them."

Many others in Washington say U.S. troops should remain in Iraq until the situation is stabilized. Senator John McCain is among those arguing more American troops are needed in Iraq. Senator McCain says -- quote -- "If we fail, if we cut and run, the results can be disastrous. We risk all-out civil war."

The debate over whether this country should withdraw from Iraq is at the center of our "Face-Off" tonight. Ted Galen Carpenter of the Cato Institute says U.S. forces should be out of Iraq within seven months. James Carafano says the United States has a moral obligation to stay in Iraq for at least one to three years. He is with the Heritage Foundation. Both join us tonight from Washington, D.C.

Good to have you here.

JAMES CARAFANO, HERITAGE FOUNDATION: Good evening.

TED GALEN CARPENTER, CATO INSTITUTE: Good to be with you.

DOBBS: Let me begin, Ted, with you. Squarely put, which is the most intelligent decision for us to take in the interest of the United States? What is in the best national interest, in your judgment?

CARPENTER: That's the key point.

And we need an exit strategy that has a withdrawal measured in months, not years. Lou, let's face it. The Iraq mission is the foreign policy equivalent of an investment in Enron or WorldCom. It has gone sour. And investors who stayed the course with those stocks lived to regret it deeply. If we stay the course in Iraq, we're going to regret it. We will stumble out of Iraq years from now having wasted hundreds of billions of dollars and having lost thousands, not just 700 and some American soldiers. That's not in our interest.

DOBBS: James, your thoughts?

CARAFANO: Well, first of all, Ted is absolutely right, Lou.

The first and most important question here is, what is in the U.S. national interest? And second I think, actually, we both agree that a long-term military presence of the United States in the Middle East is not in our interests in Iraq. So the real question is, why are we there?

Well, we have a legal and moral obligation to do certain things as an occupying power. This is, keep the people from dying from mass starvation and disease. We have done that. Set up a legitimate government and establish Iraqi domestic security forces. And then, as an occupying power, we'll have met our obligations and we can leave.

So, I think those goals are achievable. I think setting up a legitimate government is an achievable goal. I think establishing Iraqi domestic security forces is a legitimate goal and goals that can be reached in a fair amount of time. I think two things really trouble Americans, and the first is somehow people think, yes, it's a mess. But you know something, all of these things are messes. The notion that these things could be easy and bloodless and simple is just not true. Look back at Europe and Japan and the occupations as easy and effortless, they quite honestly weren't. There were fears about revolutions and everything else. So, the point is Iraq is not terribly different from where we're trying to reestablish the countries and turn them back to civilian leadership so they can be reconstructed. We're not far off from where we need to be, which is immediately, an amazingly and complex thing to do.

CARPENTER: Unfortunately it is not comparable to the situations in Germany and Japan after World War II. Those were cohesive modern societies. Iraq really is not. And the situation is deteriorating. Every cycle of violence in the past year has been a bit worse than the previous cycle. Every upsurge a bit worse. The security situation is getting worse, not better. And sentiment in Iraq is turning rapidly against the United States. A poll taken by Gallup, CNN, and "Usa Today," just a couple weeks ago showed 57 percent of Iraqis wanted us to leave immediately, 70 percent regard us as occupiers, not liberators. And positive views towards the United States were down to 23 percent, and that was before all the scandal involving the prison abuses. One can only imagine what the figures are now.

CARAFANO: I take Ted's point on the polls, and the date it is interesting but irrelevant. We did polling in Japan and Austria, which is technically a liberated and not occupied country and Germany as well, and people hated us and didn't want to be occupied. You wouldn't expect people to want to be occupied. We asked people, do you want to -- do you want a legitimate government, do you want Iraqi forces protecting you. I believe, a majority would say yes. To do those things, it will take some time. I think we could have done a better job and move faster on getting up Iraqi security forces. But the good news in Fallujah and Najaf, and here is where I disagree with Ted, all the violent acts and recent uprisings haven't led to civil war, haven't knocked us off the political track, they haven't pushed going forward with the security situation. I think we can move faster with the Iraqi security forces. I think that's the key to success. I think the goals are achievable.

DOBBS: Define success here, James. I think, the real question is national interest. You mentioned Najaf and Fallujah. In Fallujah the provisional authority has put Ba'athists in charge in Najaf, seeking to put lieutenants of Muqtada Al-Sadr in charge and bring in some of his henchmen and gunmen. This does not sound, be any definition in the most carefully worded political definition like victory or progress.

CARAFANO: This isn't about victory. We won the war. We deposed the regime of Saddam Hussein, which was our primary national interest and goal. We're doing what, you know, Colin Powell said you have to do. You break it, you buy it. Yes, there are people from the old regime that are going to be in positions. If you look at any one in the post-war occupation situations in Germany and Austria and Japan, when you build domestic security, part of that leadership has to come from the old order, because you can't grow generals overnight. You have to find people willing to cooperate, won't overthrow the government, aren't criminals, aren't tied to the old regime to badly.

DOBBS: First of all, we put in charge of the Iraqis in Fallujah turned out to have been highly suspect, lets put it that, in terms of his (UNINTELLIGIBLE) along those lines as you know, James. Let me ask you both this question. Because you talked about the treasure required, the pain and the sacrifice of American blood that we're enduring. The United States is proceeding with policies and strategy that is are often unclear. We can call it the Bush administration or the Rumsfeld approach, whatever you want. But right now in the world it's the American approach and strategy in question. We are spending hundreds of billions of dollars quite literally in this effort to Democratize Iraq and to forestall the forces of Muqtada Al-Sadr, some of the Ba'athist insurgents, foreign terrorists and they are spending cents. In terms of the economics and politics it is pretty clear to just about everyone to this point that for us to engage in the war on terror and the war against other despotic regimes in the future, we have to come up with a far more favorable calculus both in terms of man power and force and economic that is what we have tried to do in Iraq so far.

Would you gentlemen at least agree with that?

CARPENTER: I think we have to be far more selective about what we try to do. Iraq was not central to the war on terror, the war against al Qaeda. It was a distraction, and almost everything in Iraq has gone awry, has not according to plan. We were supposed to have Iraq oil revenues pay for the reconstruction. We were supposed to have our troop strength down to 30,000 by the end of summer 2003. This plan has gone off the tracks from the very beginning.

DOBBS: James, you have the final word.

CARAFANO: Here's something we can agree on. Wars are expensive, dangerous and unpredictable. You shouldn't enter into it unless you are serious and realize they require a amount of national treasury. So, no one should enter into war lightly.

DOBBS: Thanks very much, James Carafano and Ted Galen Carpenter. We thank you both for being here tonight.

In Gaza, new developments between Israeli troops and Palestinian gunmen. The Israeli troops and tanks have begun pulling back from Gaza City. In return, the Palestinian gunman are to hand over the remains of six Israeli soldiers killed yesterday, and there was more violence in Gaza today. The Israeli army says four soldiers and one officer were killed when Palestinians blew up a vehicle. It was the second Israeli armor armored vehicle to be destroyed in two days. Israeli soldiers killed five Palestinians today and wounded more than 40 others in those battles.

Taking a look at some of our thoughts.

Frank in Scearce, Pennsylvania, "The beheading of an American worker who was in Iraq to help them get back on their feet plainly demonstrates the brutality of these terrorist that we must stop and bring to justice."

Chris in San Rafael, California, "While the media is in a frenzy over the mistreatment of the Iraqi prisoners, our men and women serving in Iraq have targets on their heads."

Vince in Shreveport, Louisiana, "It seems that pictures of an American beheaded are not as serious as the abuse of prisoners. When is the Senate going to wake up and realize this is war and we better do something more than hold hearings."

Gail Rubio in California, "Lou, the silence of Europe and Asia in the aftermath of this senseless slaughter is telling. Never have nations looked so cowardly, so pitiful and so putrid."

Though they were quite vocal about our comparably modest behavior, demanding apologies, now the nothing being heard is deafening.

We love hearing from you, e-mail us at loudobbs@cnn.com. And a reminder vote in our poll. The question, do you think Congress and the national media have the correct sense of proportion of the Iraqi prisoner abuse scandal and the murder of American Nick Berg?

Vote yes or no on the Web site.

And just ahead, the trade deficit keeps growing. We'll tell you about one industry facing tough times.

And motorists may have a tough time. They will have a tough time at the gas pump during this summer's driving season. But that's not the only thing driving energy costs higher. Bill Tucker has the report.

Later, the politics of jobs Congress debates. The America's unemployed are the ones who suffer. We'll tell you why next.

(COMMERCIAL BREAK)

DOBBS: The already staggering trade deficit hit a new record high in March. $46 billion. Our massive trade deficit with China widened even further. Perhaps the biggest area of concern is the increasing imports of foreign made autos and auto parts. Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT: The American appetite for cheap, Chinese goods, Japanese cars and OPEC oil set new records in March. The nation's trade deficit shooting up to $46 billion.

BILL DUDLEY, GOLDMAN SACHS: If you have a very large trade deficit, it, basically, suggests that you're living beyond your means. You're exchanging pieces of paper for foreign goods and services.

VILES: The Bush administration recently had argued that the trade picture with China was improving. There was no sign of it in this report. The trade deficit with China, 10.4 billion in March, that's up 26 percent from February. Other large deficits, 9.3 billion with the European Union. $6.7 billion with Japan. $5.6 billion with the OPEC nations. The deficit in autos and auto parts widened as foreign automakers continued to feast on the world's richest market, Toyota reported a stunning $10 billion profit this week. The Detroit- based American auto industry with an older work force and huge pension liabilities is at a disadvantage. Its cost structure is higher than even Japanese transplants operating in the United States.

RICHARD DAUCH, AMERICAN AXLE: They're coming in with incredible incentives paid by the American people and the American taxpayer. They're coming into areas where the predominant work forces are nonunion. They're coming in with brand-new everything, facility, plants, equipment, and new products.

VILES: Even counting Germany-based Daimler Chrysler, the big three's share of the U.S. market is now below 60 percent. Japanese companies hold 30 percent, Europeans 6.5 and Korean automakers just under 4 percent.

(END VIDEOTAPE)

VILES: Just to illustrate the way investors view this industry right now, Toyota now has a higher market capitalization than Ford, General Motors and Daimler Chrysler combined -- Lou. DOBBS: That's extraordinary and even though your graphics suggested the big three, the fact is Toyota is the No. 2 car maker and Daimler Chrysler is the No. 3. car maker and the big three is one in four.

VILES: Sure thing. If you talk about cars as opposed to trucks, just cars, the foreign automakers sell more in the United States than Americans do.

DOBBS: Amazing. Got to love free trade at any cost. Thank you very much.

Oil prices rose again today, closing just 36 cents shy of the highest price ever in this country. Those high crude prices are translating into record-high gasoline prices across the country, directly hitting the wallets of all Americans. Bill Tucker reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: ...the president a letter. I just dropped it off in the post office right now, I swear.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: The president remains concerned about rising gas prices. I think most Americans are concerned about rising gas prices.

BILL TUCKER, CNN CORRESPONDENT (voice-over): Gasoline is one of the prices people take personally, for good reason. Any increase comes directly out of their pockets. The math is simple. Every penny increase in a gallon of gasoline equals $1.36 billion out of consumer pockets. Add all the petroleum products together and the penny means $3 billion. Consumers feel the pinch. Some are changing their ways.

UNIDENTIFIED MALE: I switched my gas from ultimate to regular now because I understood it is the same thing. Now I just use regular premium and save a few dollars.

UNIDENTIFIED FEMALE: I'm not driving as much, I'd say. I'm just not driving as much because I know I have to keep filling it up.

TUCKER: And there is another way to look at the numbers. For every penny increase in a gallon of petroleum products, $1.8 billion leaves the country and goes to foreign producers. In other words, it is not only bad for the personal economy, it hurts the American economy.

JOHN FELMY, AMERICAN PETROLEUM INSTITUTE: It means we have reduced purchasing power in the United States. We can't buy as much domestically as we otherwise could. It raises our cost of production because we have to spend more on energy to produce goods and services and it affects the trade deficit which can have negative implications on other parts of the economy.

TUCKER: How much does it add up to? Gasoline prices are now 45 cents a gallon more expensive than they were a year ago. That's $61 billion out of the economy and into gas tanks. (END VIDEOTAPE)

TUCKER: And it is not just gasoline that will be taking it out of your wallet. Expect to see higher prices on everything from food to clothing as trucking companies, railroads, and air transport companies pass on their increased cost of doing business -- Lou.

DOBBS: And that record trade deficit of ours, more than half of it coming in higher prices and greater imports of oil. Bill Tucker, thank you very much.

Still ahead, making the grade. Our special report on education. Enrollment and tuition at this country's community colleges rising. State funding is falling. Students looking for an education. Many are being turned away.

And a rising number of jobless Americans running out of unemployment benefits. Legislation to help stalled in Congress. Not enough people want to vote. We'll have a special report.

A UFO mystery in Mexico baffling aviation experts around the world. New comments tonight by Mexico's defense secretary. We'll have that story. Do you believe? Next.

(COMMERCIAL BREAK)

DOBBS: Tonight, making the grade. Community colleges all across the country are in financial trouble. Students piling into classes, state governments slashing budgets. Caught in the middle, students who, in many cases, are having trouble paying for their education. Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: Pierce College is a typical community college, students who either can't afford or don't have the grades to attend a four-year school, adults training for new careers or learning a new skill like English.

While demand for its services grows, the Los Angeles community college district cut 1,000 classes in the past year because of California's budget crunch.

PETER LANDSBERGER, CHANCELLOR, L.A. COMMUNITY COLLEGE DISTRICT: It is, frankly, very painful for faculty to tell students they cannot get admission to their classes. Sometimes I have seen situations where students were literally sitting on the floor hoping that one of the other students in the class would drop and make room for that student.

WIAN: California plans a 3-percent reduction in per pupil spending next year and a sharp tuition increase of nearly 240 percent of last year's rate.

SHANNON STOKES, PIERCE COLLEGE STUDENT: My family can't afford it. I work almost full time and I'm almost a full-time student. Even with that, I can't afford it.

WIAN: What are you going to do?

STOKES: I might have to drop out.

KUANA JACKSON, PIERCE COLLEGE STUDENT: Instead of being a full- time student I will probably take a couple classes.

WIAN: Now, California community colleges are being required to accept up to 8,000 additional students frozen out of state universities by budget cuts. California ranks 45th nationally in per pupil community college spending. It's an extreme example of a nationwide problem. While state spending on community colleges is down, enrollment is soaring, up 18 percent in 2002 alone.

GEORGE BOGGS, CEO, AMERICAN ASSOCIATION OF COMMUNITY COLLEGES: Whenever we see an economic downturn more people go back to school. The other reason is we're seeing the tip of this tidal wave of students headed toward higher education. Community colleges are taking a lot of these students especially with tuition costs going up in four-year schools.

WIAN: In Los Angeles, class reductions have created a new kind of student, those who commute from one community college to another for the classes they need.

(END VIDEOTAPE)

WIAN: Federal funding for community college students appears to be safe and President Bush has proposed a $250 million job retraining program that would involve community colleges. Both the president and Senator Kerry have made campaign speeches at community colleges in recent weeks to draw attention to their critical role in the U.S. economy -- Lou.

DOBBS: Of course, Casey, that additional money would be provided for what would be retaining, as you say, but those would be additional workers requiring it. So just more burden on the community colleges. Casey Wian, thank you very much.

Coming up next, lawmakers in Washington are busy battling it out with one another while the country's unemployed are left to suffer the uncertainty of whether help is on the way or not. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Senate has narrowly rejected an extension of unemployment benefits. That means no relief for a million and a half Americans whose benefits have expired, 100,000 people are losing the benefits each week. The reason for the failure of the legislation, a bitter fight over partisan politics in, of all places, Washington, D.C. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): More than 80,000 people a week are running out of unemployment benefits. Don't bother Congress about it. They're more concerned with politics, a proposal to extend extra temporary benefits to jobless Americans fell short by one vote in the Senate Tuesday.

UNIDENTIFIED MALE: The point of order is sustained. And the amendment falls.

PILGRIM: Democrats had been pushing for it. Yet John Kerry was campaigning and didn't vote. Republicans accuse the candidate of, quote, too busy playing politics, unquote, and Kerry accused the Republicans of, quote, playing games in scheduling the vote.

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: If they're willing to reconsider and keep everybody's votes where they are, we'll go back and do it. But that's not what they're doing, they're playing a game.

PILGRIM: Meanwhile, the average unemployed American is out of luck. A million and a half people have exhausted their unemployment benefits since the end of last year, when the last temporary employment benefit plan ran out.

The average unemployed worker is staying out of work longer, 12 weeks in September 2000 is now up to 20 weeks out of work. Federal Reserve chairman Alan Greenspan testified to Congress last month about the quote, exceptionally high number of unemployed people exhausting their benefits.

ISAAC SHAPIRO, CTR. ON BUDGET AND POLICY PRIORITY: You have people losing their homes, people reducing their food consumption, reducing their acquisition of health insurance. You're having hundreds of thousands of people are having their lives unravel because of the absence of this program.

PILGRIM: Greenspan also said the situation is causing a, quote, rise in insecurity among workers.

(END VIDEOTAPE)

PILGRIM: Now, labor economists argue that additional benefits are necessary. It will take time before most of the unemployed find jobs and records numbers of people are running out of benefits without finding another job -- Lou.

DOBBS: So Senator Kerry...

PILGRIM: Missed the vote.

DOBBS: Missed the vote. Got outsmarted, out maneuvered and the Republicans were playing politics with the issue.

PILGRIM: It was a political game.

DOBBS: Kitty Pilgrim, thank you very much.

A mystery over the skies of Mexico, tonight remains very much a mystery. Mexico's Defense Secretary today weighed in on the mystery saying his military has made no official conclusions about a serious of bright, rapidly moving objects in the sky.

Mexican -- and there they are -- Mexican Air Force pilots used an infrared camera to videotape these images. Whether they are objects or not is a matter to be resolved, of course. The bright lights spotted more than 11,000 feet in March.

The Mexican Defense Secretary says he released the video to a UFO investigator only because it was pointless to keep it a military secret.

No secrets on Wall Street today. Stocks reversed steep losses. The Dow recovered from a triple digit loss, closing up more than 25 points, almost 26. The Nasdaq down nearly 6. The S&P 500 up almost 2. Makes you wish those numbers would be even from time to time.

A partial settlement today for former Enron employees nearly three years after the company collapsed.

Christine Romans is here. And I'm sure the employees and all the class action holders were satisfied with equity and justice.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: I wouldn't say that, Lou. When you talk about Enron numbers, they're usually very, very big, except if you are a former employee trying to get retirement money back.

Let's do the Enron math, Lou: 20,700 employees sued to get some of their lost retirements. On average they lost 50 grand each, encouraged, they say, by company management to load up on Enron stock. Now, with this partial settlement they'll share $85 million. That works out to a little over $4,000 each, on average, Lou. And of course, that's before attorneys's fees. And overall they have topped a billion dollars since this all started.

DOBBS: That's more than the 401(k) holders lost.

ROMANS: Absolutely.

DOBBS: Great. You got to love justice. Thank you very much, Christine Romans.

Still ahead, we'll have the results of our poll. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll: 63 percent of you do not believe Congress and the national media have the correct sense of proportion on the Iraqi abuse scandal and the murder of American Nick Berg.

That's our broadcast for tonight. Thanks for being with us. For all us here, good night from New York. "ANDERSON COOPER 360" coming up next.

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