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Kerry, Edwards Hit the Campaign Trail as Running Mates; Former Enron CEO Ken Lay Finally Indicted

Aired July 7, 2004 - 18:00   ET


LOU DOBBS, ANCHOR: Senator Kerry today reported Senator Edwards has enough experience to be vice president.

SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL CANDIDATE: This man is ready for this job, and he's ready to help lead America.


DOBBS: Prosecutors today indicted former Enron chairman Ken Lay for his role in one of the largest bankruptcies in corporate history.

In Baghdad today, Iraqi soldiers battled insurgents in the streets of the capital without the help of American troops.

A top U.S. general admits the wars in Iraq and Afghanistan are putting huge stress on the Army Reserve and National Guard.


GEN. RICHARD CODY, ARMY VICE CHIEF OF STAFF: Are we stretched thin with our active and reserve component forces right now? Absolutely.


DOBBS: And Mexico apologizes after Mexican troops at gunpoint stop the funeral of a U.S. Marine killed in Iraq. We'll have the report.

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, July 7. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening.

Senator John Kerry and Senator John Edwards today hit the campaign trail for the first time as running mates. The senators took part in a series of carefully staged events designed to project an upbeat message about their values and their policies. The two spent much of the day in Ohio, a key state in the November election.

Senior Political Correspondent Candy Crowley reports.

(BEGIN VIDEOTAPE) CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Ta-da! The first official photograph of the Kerry-Edwards ticket. Message: We like each other.

KERRY: We had a wonderful dinner last night. We sat around, we laughed, we chatted, we talked politics.

CROWLEY: And John Edwards first public words since being tapped as number two. Message: He's on Kerry's message.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: First of all, you know, I grew up in a small town in North Carolina. This is the kind of man we grew up looking up to, respecting, somebody who believed in faith and family and responsibility, and having everybody get a chance to do what they're capable of doing, not just a few.

CROWLEY: The newly formed Democratic ticket and families had little of substance to say, but that wasn't the point at this photo op. Picked in part to soften Kerry's remote edges, Edwards did just that by simply showing up, smiling, charming, bringing the kids.

KERRY: We want to announce today that we have a new campaign manager. Jack Edwards is taking over everything. He does a wild cannonball.

CROWLEY: It was a family-friendly kind of day, as Kerry-Edwards moved en masse from Theresa Heinz Kerry's $3.7 million farm in Pennsylvania to begin a four day courtship of middle-class votes in middle America.

KERRY: Cleveland rocks!

CROWLEY: And it was here that John Edwards assets' were fully on display.

EDWARDS: You know about it. You know some of the academics call it the middle-class squeeze. This is real. People who -- you can't save. You know what I'm saying. You can't save any money. It takes every dime you make just to pay your bills. If something goes wrong, if somebody gets laid off, if you have a child that gets sick, you go right off the cliff. John Kerry understands this.

KERRY: What do you think of my choice for vice president of the United States of America?

CROWLEY: John Edwards is already earning his keep.

Candy Crowley, CNN, Cleveland.


DOBBS: President Bush today campaigned in Senator Edwards' home state of North Carolina. White House officials said they planned that visit long before Senator Kerry chose Senator Edwards as his running mate. President Bush today questioned Senator Edwards' qualifications to be vice president. White House Correspondent Suzanne Malveaux is traveling with the president tonight and now reports from Waterford, Michigan -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, President Bush making several stops here in Michigan, raising more than $2 million for Republicans and also fighting for his judicial nominees.

But, of course, as you mentioned, the big story is what happened earlier today when the president was in Edwards' home state of North Carolina. It was yesterday President Bush congratulated Edwards. Today, the gloves came off.

It was very apparent when a reporter asked the president to size up Edwards and Cheney.


UNIDENTIFIED MALE: He's being described today as charming, engaging, a nimble campaigner, a populist and even sexy. How does he stack up against Dick Cheney?




MALVEAUX: The clear implication here is that the president echoing what many Republicans have been saying. They do not believe that Edwards has the experience or the gravitas to go against Cheney and particularly in the event that he were to become president.

It is notable to note -- it is notable that in North Carolina back in 2000, Bush won that state by 13 points. They are very confident they can have North Carolina, win North Carolina again.

The president trying to downplay Edwards' suggestions that he makes the ticket stronger by winning the South.


BUSH: I'm going to carry the South because the people understand that they share -- we share values that they understand. They know me well, and I am -- I believe that I did well in the South last time. I'll do well in the South this time because the senator from Massachusetts doesn't share their values.


MALVEAUX: Well, the Kerry camp wasted no time in responding to President Bush's remarks. The rather harsh rhetoric from earlier today we heard from several senior advisers.

The first one saying, "The president is hitting the panic button over the Kerry-Edwards ticket when he should be hitting it over his failed policies." It goes on to say that "George Bush is vulnerable in states like North Carolina, and it's because he has failed to address the job losses."

Lou, they're talking about job losses in the tune of 158,000, that in the textile industry alone -- Lou.

DOBBS: Suzanne, thank you very much.

Suzanne Malveaux traveling with the president.

Well, the case that gave a face to the corporate criminal scandals over the past almost three years has finally sent prosecutors to the top of Enron.

A source close to the case tells CNN tonight that former Enron chairman and CEO Ken Lay has been indicted by a federal grand jury. The source tells CNN the indictment will be unsealed tomorrow in Houston. Lay was chairman of the former energy trading giant as it rose to become the seventh largest company in the country.

Lay was also in charge when the company filed for bankruptcy in December of 2001, sparking the largest corporate scandal in American history.

Ed Lavendera reports from Houston.


ED LAVENDERA, CNN CORRESPONDENT (voice-over): Enron's former chairman Ken Lay has dodged questions about the company's collapse for more than two years. But it's not because reporters and investigators haven't been asking.

CNN caught up with Lay when he arrived at his office shortly after the Enron scandal erupted. No comment. A congressional committee had questions of its own.

KEN LAY, FORMER ENRON CHAIRMAN: I have, however, been instructed by my counsel not to testify.

LAVENDERA: Now Lay is so rarely seen in public, some reporters have tried catching him going to church.

LAY: I don't think I need to give an interview here on the sidewalk on Sunday morning. You all have a great Sunday. It's a beautiful day.

LAVENDERA: Ken Lay was once the toast of Houston's business establishment -- baseball games with presidents, charity functions, wining and dining with politicians and the affluent. "Houston Chronicle" society columnist Shelby Hodge says Ken Lay and his wife are hardly a part of the city's social scene.

SHELBY HODGE, "HOUSTON CHRONICLE": They're sort of like weapons of mass destruction. You can't find them. They're pretty much sort of -- they haven't totally disappeared, but they're very hard to find.

LAVENDERA: Hodge says Lay is often seen ordering takeout food from one of his favorite restaurants. He lives in this exclusive Houston high rise, but many of his other properties have been sold off. Fearing bankruptcy, Lay's wife also sold off many of their belongings at this consignment store.

But, as the most high-profile Enron executives have been handcuffed, Lay's attorney continues to insist the former top man at the company is innocent.

MIKE RAMSEY, KEN LAY'S ATTORNEY: So long as everyone tells the truth, it doesn't affect Mr. Lay one way or the other.

UNIDENTIFIED FEMALE: Is it hard to come out in public?

LAY: Not really, but thank you for being here tonight.

LAVENDERA: No matter where Ken Lay goes, the questions follow. But most former Enron employees, like Rod Jordan, have just one question.

RON JORDAN, FORMER ENRON EMPLOYEE: I'd really like to ask him why he could do this to so many past and present Enron employees. You know, How can he go to church every Sunday and live with his conscience?

LAVENDERA: Ken Lay's life in Houston is nowhere near as pleasant as it once was. No matter where he goes, there's always someone in the crowd who thinks he's the symbol of corporate scandal.

Ed Lavendera, CNN, Houston.


DOBBS: Ken Lay will become the 22nd employee of Enron to be charged in connection with the company's stunning collapse just two- and-a-half years ago. The Enron scandal spurred the most sweeping crackdown on corporate crime in this country's history. Since Enron's collapse in late 2001, 124 corporate executives have been charged with criminal activity.

Christine Romans reports.


CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): Ken Lay is the biggest indictment yet to come in the war on corporate crime. It's been 947 days since Enron filed for bankruptcy, and only 10 executives from all of corporate America are in jail. Only one from Enron.

ROBERT BRYCE, AUTHOR, "CRONIES": When you look at the failure of Enron, the failure of Enron is Ken Lay's fault period. Now the question is: What can prosecutors pin on him? ROMANS: Enron started it all. In the waning months of 2001, as its employees scrambled to sell their stock and 401(k) accounts, they were barred from their retirement plan from doing so. Enron employees alone lost an estimated $1.2 billion just in their retirement plans. And 4,500 people lost their jobs. From Enron to Qwest to WorldCom, Tyco and Adelphia, the scandals cost an estimated $170 billion.

RAMSEY: Good morning, everybody.


ROMANS: Lou, there have been 30 separate Enron prosecutions, some 20 criminal probes there, 11 guilty pleas or convictions and, of course, the destruction of Enron's former auditor Arthur Andersen.

DOBBS: Christine, thank you very much.

Christine Romans.

Still ahead here Senator Kerry and Senator Edwards launch their campaign for the White House in Ohio, a key battleground state. I'll be talking about the Kerry-Edwards ticket with one of Ohio's leading political journalists next.

And Senator Edwards made millions of dollars as a trial attorney. The U.S. Senate is now debating a major tort reform bill that would sharply limit payments to trial lawyers. We'll have a report.

And a leading congressman says the Pentagon is stretching our Reserves and National Guard nearly to the breaking point. Senior Pentagon Correspondent Jamie McIntyre reports next.


DOBBS: The first stop for the Kerry-Edwards ticket: the battleground state of Ohio. President Bush won Ohio four years ago, but, since then, Ohio has lost hundreds of thousands of jobs. Senators Kerry and Edwards promised to create new jobs in Ohio at a rally today in Cleveland.

My guest tonight is a political reporter for Cleveland's "Plain Dealer" newspaper. Mark Naymik joins us from Cleveland.

Mark, what were your reactions, the crowd, the presence of the candidates?

MARK NAYMIK, "PLAIN DEALER": There was some new enthusiasm for the Kerry campaign, and I base that on talking to a lot of people there who had come out to see Edwards. While they had been supporting Kerry, they were there to see, you know, the primary candidate that many of them supported in the primary. Edwards finished second in Ohio with about 34 percent of the vote to Kerry's 52 percent. So there was a lot of Edwards people out there.

DOBBS: And this crowd as large as you were led to believe it would be, as enthusiastic? NAYMIK: It was. According to the Secret Service estimate given to us by the Kerry campaign, 12,000 people. I thought that seemed a bit large, but it was a large park downtown. They were waiting in line since 8:00, 8:30 this morning to get in. The Kerry folks pulled up, parked their media buses actually about midway through the crowd, actually blocking the view of a couple thousand people, but they stood around and stayed with it.

DOBBS: I suspect they'll learn better than to do that.

NAYMIK: Yes, they will.

DOBBS: The message that Senator Kerry and Edwards brought today? Your thoughts?

NAYMIK: I think it underlines the issue of we're connected to real families, real America. It was a very visual message from the minute they stepped off the plane with the families hugging and mingling around and Heinz-Kerry's children carrying Edwards' children. The same thing up on stage.

Very, very powerful message. And they all harped on that same idea that John Kerry understands the background of people like John Edwards and the people of North Carolina, and Edwards praised Kerry and back and forth. It was all about theme.

No economic message today. There was a little bit of numbers about Ohio's economy, which had been the hallmark of Kerry's campaign stops thus far. Today, it was very much about vision, optimism and family values.

DOBBS: And Vice President Dick Cheney was in Ohio, what, just over the weekend?

NAYMIK: He came in on Saturday to an area just outside of the City of Cleveland known for the Reagan Democrats, a swing area of the Cleveland area, and he spoke at a Ukrainian Catholic Church to a crowd of about 1,500 people, very enthusiastic. There was some organized opposition out front, about 200, 300 protesters.

Cheney seemed to do well. It was a very -- a lighter side of him, you know, no cussing, no confrontation, brought out his wife and his granddaughter, Kate, and shared news of his new grandson. This was a very light side of Cheney, maybe Cheney Light.

DOBBS: The enthusiasm for the vice president?

NAYMIK: It was strong by the supporters. They -- the campaign in Ohio for Bush-Cheney is very well organized. They're able to draw as many people as they need. They'll bus them in, get them there.

DOBBS: What are the latest polls showing us about this race?

NAYMIK: They flip flop. The "Plain Dealer" did a poll about six weeks ago that had Bush up by about 6 points, which had contradicted earlier polls by the University of Cincinnati that had it essentially a dead heat. It's probably somewhere in the middle at this point.

DOBBS: And going into the conventions, I'm sure we're going to see more of those erratic poll numbers.

Mark, we thank you very much for being with us here.

NAYMIK: Thank you. Glad to be here.

DOBBS: That brings us to the subject of our poll tonight. what will be your primary motivation in voting in this presidential election -- the candidate's political message, the party's principles, or the lesser of two evils? Cast your vote at We'll have the results for you later in the broadcast.

Senator Kerry's choice of a former trial attorney as his running mate comes as the Senate begins debate on a major tort reform bill. That bill would limit the amount of money attorneys can make in large class-action lawsuits. In many cases, lawyers walk away with millions -- tens of millions of dollars in some cases -- more than the plaintiffs they represent.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): When a group of Blockbuster customers settled a class-action lawsuit over late fees, they received two coupons for movie rentals. Their lawyers walked away with more than $9 million.

The Senate is considering legislation that would limit such class-action cases by moving the lawsuits out of state court to federal court where the legal bar is higher. Corporations say everyone except the lawyers lose with frivolous lawsuits.

STAN ANDERSON, U.S CHAMBER OF COMMERCE: The cost of frivolous litigation is more than $2,000 per family of four per year, and so it's passed on to all of us as consumers in the prices we pay for products and services.

SYLVESTER: But critics say these lawsuits hold companies like Ford and Firestone accountable when they make a defective product. It also allows consumers to seek remedy from negligent doctors and corporate polluters.

SALLY GREENBURG, CONSUMERS UNION: There's a cry-baby element to this. They're losing cases in these courts because, in many cases, they're wrong. What they do then is they run to Congress, protect us, help us, don't let us be sued.

SYLVESTER: Throwing a wild card in the debate is John Kerry's choice for running mate. Senator John Edwards is a former trial lawyer. The National Association of Manufacturers says of the 60 most important issues to them, Edwards voted with them only once. The group claims if class-action reform does not pass now, it may never. MICHAEL BAROODY, NATIONAL ASSOCIATION OF MANUFACTURERS: An administration that has Senator Edwards as vice president might stifle that momentum. Indeed, it might stall it altogether. That would be a major concern, I think, of a nationwide business community.

SYLVESTER: With much at stake for both sides, lawyers are opening up their checkbooks to support the Kerry-Edwards ticket, while corporate groups are lining up to give to the Bush-Cheney camp.


SYLVESTER: The class-action legislation has enough votes to pass in the Senate, but Democrats want to attach amendments to the bill, including one to raise the minimum wage, and that's making it more difficult to get through -- Lou.

DOBBS: Lisa, thank you.

Lisa Sylvester reporting from Washington.

Damages of a different kind may be an issue for several thousand people who turned out today in Pamplona, Spain, for the annual running of the bulls. Today's bull run kicked off a week-long celebration. It's known as the San Fermin Festival.

Several people were taken to the hospital after their 900-yard sprint from the charging bulls, but no one, we are told reliably, was seriously injured. The festival dates back to the 16th Century but gained worldwide notoriety from Ernest Hemingway's novel "The Sun Also Rises."

Just ahead here, a massive gun battle erupts in central Baghdad, but, this time, Iraqi security forces manage to go it alone.

And a mystery tonight surrounding the whereabouts of an American Marine missing in Iraq. His family says he's now safe in Lebanon. We'll have the latest for you.

And stretched too thin. Are this country's reservists being pushed to their limit? Senior Pentagon Correspondent Jamie McIntyre with that story for us next


DOBBS: Iraqi security forces today fought a four-hour gun battle with insurgents in the center of Baghdad without the assistance of American troops. The battle broke out as Iraq's new government announced a national security law. Officials said about four people were killed in that battle. Up to 20 others were injured.

American troops arrived to support the Iraqi security forces, U.S. helicopters flew overhead, but the American troops pulled back without using their weapons, and the Iraqi national guardsmen handled the situation.

In Yemen today, authorities charged six people with planning the bomb attack on the "USS Cole" in October of 2000. That attack killed 17 American sailors. Five of the six accused Yemenis were put in court today. The alleged leader of the terror cell in U.S. custody. Prosecutors charging all six with belonging to al Qaeda terrorist network.

Two suicide bombers rammed the "USS Cole" as it refueled in the southern port of Aden. Authorities in Yemen said the terrorists spent three years planning and training for that attack.

There is a mystery tonight about the whereabouts of a U.S. Marine reported missing in Iraq and now believed to be in Lebanon. A source close to the Marine's family said Corporal Wassef Hassoun called home to say that he has, indeed, been released by his kidnappers and that he is now safe in Lebanon. Tonight, a State Department official said there are some indications Corporate Hassoun is in Lebanon.

Miguel Marques reports from near the family's home in West Jordan, Utah -- Miguel.

MIGUEL MARQUES, CNN CORRESPONDENT: Yes, Lou, that mystery seems to be getting closer to being solved, if that information you talked about is correct.

The latest of that information coming from a State Department official -- a senior State Department official saying that 24-year-old Marine Corporal Wassef Hassoun -- they believe he is in Lebanon, they believe he is safe, and they are, in fact, looking for him right now.

A second U.S. source saying that they have talked to his family and that they are looking for the 24-year-old Marine corporal right now.

And, as that search is going on in Lebanon, here in West Jordan, Utah, some FBI agents showed up a short time ago for the first time that they have shown up to this home.

An official with the FBI here in Salt Lake City saying that they were seeking information useful to their investigation, hoping to glean any bit of information to find out where exactly he is. And they are treating this as an American citizen captured overseas.

All of this follows that information CNN got earlier from a source close to the family who says that he called the family both here in Utah and also in Tripoli and called the embassy -- telling them he had called the embassy -- the U.S. embassy in Beirut asking them to come pick him up at some point.

An enormous family, apparently, in Tripoli, according to our reporter there on the ground, and U.S. officials hoping that they will bring this mystery to a conclusion -- a successful conclusion fairly soon -- Lou.

DOBBS: Miguel Marques, we thank you very much. Reporting from West Jordan, Utah.

In Iraq tonight, a radical Islamist group says it has kidnapped a Filipino man working for a Saudi Arabian company. An Arab television network showing a videotape of the hostage. The network says the terrorists are threatening to kill the man unless the Philippines withdraw troops from Iraq within 72 hours. The Philippines have about 50 troops in Iraq.

A senior lawmaker today said the Pentagon is pushing its reserve soldiers nearly to the breaking point. That charge coming as 5,600 former soldiers are being called back to active duty. Jamie McIntyre will have that story for us coming right up.


JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): The decision by the Army to recall to active duty some 5,600 ready reservists to go to Iraq or Afghanistan, many of whom thought they were done with military service, is clear evidence to some in Congress the U.S. armed forces are stretched too thin.

REP. IKE SKELTON (D), ARMED SERVICES COMMITTEE: I think we're taxing our part-time soldiers in the Guard and Reserve nearly to the breaking point.

CODY: We are building back our surge capability right now, Mr. Congressman, and you and I have had some of these discussions. Are we stretched thin with our active and reserve component forces right now? Absolutely.

MCINTYRE: The Pentagon insists the problem is not size, but how the U.S. military was organized for the Cold War. It insists its transformation plan now under way with solve the problem by making a much higher percentage of the U.S. Army deployable on short notice. But, as for the burden on reservists now, Pentagon officials make no apologies for expecting them to fulfill their obligation.

DAVID CHU, UNDERSECRETARY OF DEFENSE: I disagree with the conclusion we're overusing the Reserves. Vigorous use of Reserves is part of the answer.

MCINTYRE: Despite the grumbling, the Pentagon insists it's not seeing any significant drop-off in either recruiting or re- enlistments. Officials emphatically reject persistent rumors circulating on the Internet that a return to the draft may be coming.

CHU: Let me reiterate for the record: The administration does not support resumption of the draft. There is no secret plan on this front. I do not know where these people in the e-mails are getting this idea from.


MCINTYRE: And, as for proposals to add between 30,000 and 40,000 more troops to the U.S. military, the Pentagon says it already has 30,000 extra troops in uniform, and it's asking Congress not to make that increase permanent because it insists it will not need the extra troops forever and keeping them on permanently would be very expensive -- Lou. DOBBS: Jamie, thank you very much.

Jamie McIntyre.

The Pentagon's decision to call back more than 5,000 former soldiers is rekindling the debate about whether the military is simply overstretched. Reserve troops currently make up 40 percent of American forces in Iraq. Forty percent.

In all, 156,000 men and women from the National Guard and Reserves are on active duty now around the world, the majority of those from the U.S. Army. The Air Force and Marines with about 10,000 each, followed by the Navy and Coast Guard.

Some say the number of reservists currently serving is simply too large and our National Guard and Reserves must be restructured. That is the focus of our Face Off tonight.

James Carafano from the Heritage Foundation supports the restructuring, adding that we need a higher state of readiness than now exists.

Vance Renfroe, on the other hand, says a reorganization is not the answer. He's the president and CEO of the Minute Man Institute for National Defense Studies joining us from Washington, D.C.

Thank you both for being here.

At this point, James, let me ask you first off, with this number of reserves, people being called back from the so-called ready reserve, IRR, there's only one reason. We have too few people.

JAMES CARAFANO, HERITAGE FOUNDATION: What this is, is the system works. This is exactly the way we designed the force. We designed it with a very large Reserve component. We have about three million uniform; as you said, 40 percent of that is in the Reserve component.

And the reason for that is so we can expand the military during moments of crisis like we now have. So, we're using our military exactly as it's supposed to be used.

DOBBS: This moment, however, has stretched to a year-and-a-half now.

CARAFANO: Right. And do the math. We have about three million people in uniform. We have trouble keeping 200,000 in the field. It's not numbers that's not the problem, it's the structure of the military that's the problem. We should be able to sustain this if we had our Reserve components restructured properly for the missions of the 21st century and not still structured for the Cold War.

DOBBS: Vance, do you agree with James that there are an adequate number of men and women in uniform; they're simply not being used properly and allocated properly?

VANCE RENFROE, MINUTEMAN INSTITUTE FOR NATL. DEFENSE: Lou, I do agree with him to a certain extent; however, I support the idea that we need more soldiers in the United States Army and, if you have to have more in the United States Army, the most effective way to expand the army is to expand the Reserve force.

As you are well aware, the cost of, for instance, combat wing of air power, you can get three to one if you put that into the Guard and Reserves. So, if we have a tension with soldiers, it may not be the structure, but it might be resourcing -- adequate full-time manning, adequate people out there that are going to serve our country well.

CARAFANO: But that's not the point. The point is we have tons of Reserve soldiers already. The problem is, is they're not structured for the right mission. We don't have them in the right specialties, like engineers and military police. We don't have them structured for the right missions.

We have them structured basically to help us fight World War III, with armor divisions on the planes uphold (ph) to Germany. And that's just not what we need in the future. So, it's not just a question of more; it's a question of right.

DOBBS: Yes, Vance?

RENFROE: Jim, I think that that's essentially correct. What I believe is the transformation, however, that is Secretary of Defense and his staff have began pushing and that Steve Blum -- General Steve Blum from the National Guard has instituted as a lead the force endeavor on the National Guard side, is well on the way to right- sizing and right-focusing the forces out there.

What we are not on the way to do is provide the adequate resources out there to fund the units that we have on hand to the full 100% and to get everyone to C-1, C-2 status. And that's what we should be focusing on and not restructuring the form of the forces.

DOBBS: Well, let me ask you both, because James, actually, I have heard the problem described inversely to the way in which you described it with our National Guard and Reserve forces bringing forward specialties that are not available to our active duty troops, which seems to me to be about as wrong headed as it can get.

The fact is we've got men and women who are stretched across the world, literally, engaged in active engagements in nearly 30 countries right now. We have the same number of men and women in uniform today that we did 10 years ago. We're drawn down from the Cold War by almost 10 divisions.

How in the world can we pursue these policies, if these policies are to be pursued, with this level of force? It seems like that is the first question that needs to be answered in any suggestion that there be reconstructing, they're reconfiguring. Once you say right- sizing, I get very nervous.

CARAFANO: Right. Sure. Well, I mean, if you look, there's an enormous part of this force that we're simply just not using. You know, the Pentagon, in their own analysis, said, you know, if we rationalize the structure of the forces we had in Europe and just got rid of the commands we didn't need because we don't have as many troops over there anymore, just consolidate some bases like we -- we could free up 20,000 places. That's a division -- more than a division.

I mean, so, the troops -- in part, the troops are there. And the reason why we haven't done it is because these things are all politically difficult. They were hard to do, and so we avoided these questions, particularly the Reserve components. Why? Because the Reserves were cheap, we never used them, and they were very politically strong because they're all connected -- every National Guard unit's connected to a governor's state.

So, it was difficult to really do fundamental reforms. So, the easy answer, as my grandmother would say, is don't worry about the odds, you know? Don't worry about the heartburn. Just leave it alone and forget it. Well, we can't do that anymore, because we do have to use these guys now. And so, that means we have to resource them properly, structure them properly, and we have to face the hard political decisions to do things that people didn't want to do.

DOBBS: Vance, in terms of a restructuring, dealing with the National Guard in particular and the reservists, the force wasn't designed for long engagements. We got National Guards and Reserves that have been in the field now two years. That's unthought of in any planning that I'd ever heard to do with these men and women.

Why don't we get really honest? It's about money. We're not providing the kind of leadership that we should and the issue of our U.S. Military and relating what we're going to do with the military to our policy , our geopolitical goals. Don't we have to really start there?

RENFROE: Lou, I think that you're right. And I would agree that we need to start there.

What I think is really important to remember is that when you send the citizen soldier to war, you send America to war. The National Guard and Reserve represent a bridge to America for our international community, and they represent the link between the State House and the White House here in this country.

If you try to restructure the Guard too much, you can damage the fundamental structure of American democracy. This is a real risk.

Now, I don't mean to be alarming to the man in the street, but I know that the people in Poughkeepsie understand what the National Guard is and they may never have seen an active duty soldier except on CNN, because the people in the National Guard are in the communities of America.

So, I think that what we're doing when we look at the way the Guard is being used now is that it's being used, the Reserves are being used exactly the way that it was designed to be used by our founding fathers and by those wise men since then. What we find, however, is that you're never ready for the war you have to fight. So, as we look at Jim's very brilliant -- and he's got some excellent ideas that I support. Restructuring is a wise thing, but helter-skelter restructuring based upon the trouble we're having in Iraq right now is not the way to go about it.

I think that if you look at the values that Congress puts on the Guard and Reserve, you're on the right track and that we should talk to them about what size the force should be in the future and not necessarily any administration.

DOBBS: James, you get the last word.

CARAFANO: Well, I mean, Vance is right. We do need a large Reserve component, because what that allows us to do is expand and contract the force to meet the missions. Because it's not always going to be Iraq. I mean, that'll draw down.

But you have to have a large Guard force. And the answer may be a larger Guard force, because then we can rotate Guard units through, and so, you're not putting the burden on the same guys all the time. But it's really the key, because we're not going to be able to find -- buy all the equipment we need in the future, do operations, and maintain a large active duty force. And the only way you can do that...

DOBBS: Why aren't we? I mean, this is supposed to be a superpower. And we talk like we're doing everything on the cheap here when we've got men and women in uniform carrying out two-year missions when they were signing up for something quite different.

CARAFANO: Well, they signed up to serve their country, which is exactly what they're doing. And they'll serve...

DOBBS: Yes, but I don't think that we should take that -- take advantage of their commitment. In fact, we should honor that commitment by providing them the best leadership possible.

CARAFANO: Right. But you have to remember, too, you know, we took about a decade off of buying new equipment and modernizing the military after the Cold War ended. We've got to pay for that.

DOBBS: What we did after the Cold War ended is we got rid of divisions. And we did actually the opposite. We gave them less equipment, and we've made less of a commitment to our armed forces.

CARAFANO: So, you need a large, well-trained force and you need modernized equipment. And the only way you're going to be able to afford both those things is with a large, robust, properly organized Reserve component.

DOBBS: Well, I love the Reserves and the National...

RENFROE: I agree with that.

DOBBS: And I agree, too, Vance Renfroe -- and James Carafano, we thank you both for being here. Come back, we're going to discuss this more, but...

CARAFANO: Thanks, Lou.

DOBBS: ... this is critically important to our nation and also to the men and women who serve in both the Guard and the Reserves.

CARAFANO: That's right.

DOBBS: Thank you.


DOBBS: That brings us to tonight's thought. "If our country is worth dying for in time of war, let us resolve that it is truly worth living for in time of peace." Those are the words of Former Secretary of State, Hamilton Fish.

Just ahead, the Democratic ticket is official, and the game is underway. We'll have some early indications about what Americans think about the Kerry/Edwards ticket. We'll also be talking with three of the country's top political journalists.

Mexico today apologized to the family of a U.S. Marine killed in Iraq. We'll tell you why Mexican soldiers disrupted at gunpoint the funeral of Lance Corporal Juan Lopez.

And "Made in America" tonight: the story of one textile mill that is not only thriving, it's managing to keep jobs right here in the USA.


DOBBS: Senator Kerry's choice of Senator Edwards as running mate appears to be popular with American voters, at least the ones we polled.

A new CNN/USA Today/Gallup poll finds 64 percent of Americans surveyed say the choice of Senator Edwards is excellent or good. Fifty-five percent felt the same way about then Governor George Bush when he chose Dick Cheney as his running mate in 2000. Fifty-three said Senator Joe Lieberman was an excellent or good choice, 44 percent said the same of former vice president Dan Quayle back in 1988.

Joining me now some of the country's top political journalists. Ron Brownstein, national political correspondent for the "L.A. Times."

Michael Duffy, Washington Bureau chief for "Time" magazine.

And Dan Klaidman, Washington bureau chief for "Newsweek" magazine.

All from Washington, D.C. tonight. Let me begin, if I may, with you Ron. The choice of Edwards it looks like this was obvious four months ago.

RON BROWNSTEIN, "L.A. TIMES": Well, you know, they went through an exhaustive progress. Jim Johnson was on your show last night. Many of us talked and said they started with 25 people and ended up with the candidate that many Democrats expected the morning after John Kerry clinched the nomination. In many ways this is an obvious and safe choice. It is not going to have any second guessing within the party. It leaves John Kerry with a running mate who is tested on the national stage, who has proven that he can deliver a message.

On the other hand, there are risks. He is picking someone whose primary expertise is domestic policy, in a year when foreign policy looms large. And as the president very personally and pointedly suggested today, Republicans want to make an issue about picking a fresh face and a newcomer at a time when experience is looming large for many Americans as well.

DOBBS: Dan, do you think it's a good choice?

DAN KLAIDMAN, "NEWSWEEK" MAGAZINE: Oh, I do think it's a good choice, time will tell. And I think it is a good choice on a number of levels. For one thing, Edwards definitely compliments Kerry in fundamental ways. He's a terrific campaigner. He's got this sort of sunny, optimistic demeanor which contrasts a little bit with Kerry's somewhat more dour and somber sometimes. And he's going to be important in battleground states. He's going to be important in rural America, where John Kerry, some people think, will have a harder time getting votes. Partly because he's got this up from the bootstraps story. He comes from a working class background, and he has a way of connecting with voters that Kerry doesn't in quite the same way.

DOBBS: Michael Duffy, the Republicans were quick to respond to suggestions that Edwards didn't have the experience to be vice president. The implication of course a heartbeat away from being president. What do you think of the Republican response to the Kerry/Edwards ticket?

MICHAEL DUFFY, "TIME" MAGAZINE: I think it's been predictable. We would have been surprised if there hadn't been a response like that today. But it's also there's some thin ice they're getting toward here. The more often they say that -- Republicans say that he hasn't been an elected official in Washington long enough, the more it is worth asking the question, or pointing out, that George W. Bush had only been governor for the same amount of time that John Edwards had been a senator before he was elected president. So, the matter of relative experience is common and some would say Edwards might have more in some ways. So, they're kind of pushing a rock up a hill there, and I don't think they're going to stick to it for very long.

DOBBS: Isn't there implicit in this, Ron, the idea that we voters are sort of stupid, that we don't recall that George Bush didn't have much experience either in 2000, that we didn't recall that his father accused Ronald Reagan's supply-side economic theories of being voodoo economics?

I mean, at what point should somebody be embarrassed here?

BROWNSTEIN: In politics once you turn the page, you turn the page, boy. And you know, in fact, one of the reasons why this was able to happen, Lou, is because there were not that many policy differences between Edwards and Kerry. You pointed out Ronald Reagan and George Bush in 1980, that was the last time a nominee chose someone who ran against them, and usually a big obstacle is the fact there are a lot of quotes looming out there like the voodoo economic quote from 24 years ago. There really isn't that much this time. There's the one comment from John Kerry, questioning whether John Edwards had enough experience in rather graphic, colorful language, about whether he was in diapers when Kerry came home from Vietnam. But overall there isn't going to be much daylight between these two.

I do think the experience issue may seem more important than it was in 2000 with President Bush, but on the other hand, this is the number two on the ticket. They are not asking people to elect him as president today. They're asking to elect him as an understudy. And that may be a much easier sell and opportunity to focus on some of his other strengths.

DOBBS: Michael, is there anything in all of this that suggests to you that we're going to see a further closing of this race or a great boon to the Democratic ticket, or advantage to the Republicans?

Is there any break point in all of this?

DUFFY: Well, with a country so deeply divided, it's hard to imagine there's going to be a big shift because of this decision or anything perhaps in the next couple of months until the very end. The thing that struck me today I guess most of all watching the two together was that for the first time John Kerry looked happy. You know, he looked generally pleased. You could see it on his face. You know, he doesn't always look that happy. I talked to Bill Clinton when his book was coming out a few weeks ago, he goes, the most important thing is not whether he brings a state or changes the numbers, it's whether the guy who's running for president the next morning wakes up and feels good about it. Because if he does, you'll notice, and if he doesn't, you'll notice that, too. And it looks like he does.

DOBBS: Dan, optimism. The president says he's an optimist. Senator Kerry and Senator Edwards today made much of their of their optimism.

Which is the party of optimism here, and is it truly persuasive or relevant?

KLAIDMAN: Oh, I don't think it's irrelevant. I think it's important. I think you want to project that sense of optimism and hope. Traditionally, it's a little bit harder for the challenging party to project optimism when they're trying to unseed the incumbent, because they've got to say, look what's wrong with the country. The other side of this, is Dick Cheney has been saying that -- has been criticizing Kerry for being pessimistic. And Kerry has a pretty good retort. He says well Cheney and Bush have been saying the economy is as good as it's ever been, and Kerry says to that, well, if it's as good as it's ever been, then they don't think it can get any better, and so they're not particularly optimistic. I think this will go back and forth. But ultimately it's the people who can project optimism. And certainly John Edwards does that better than any other candidate. He's just got that winning smile and personality.

And I guess one question is, can you be that optimistic if you're also supposed to be the attack dog and go after the opposing team?

DOBBS: Well, we're going find out shortly. Dan, thank you very much. Michael Duffy, thank you. And Ron Brownstein, as always good to see you.

A reminder to vote in our poll tonight. The question, what will be your prime motivation for voting in this presidential election? The candidate's political message, the party's principles, or the lesser of two evils. Cast your vote at We'll have the results here in just a few moments.

Still ahead here tonight, "Made in America." A Pennsylvania textile company managing to stay in business and keep its jobs here as well. We'll have that special report and a great deal more, still ahead. Stay with us.


DOBBS: Mexico today apologized after Mexican troops stopped a funeral for a U.S. Marine in Mexico, and stopped it at gunpoint. The U.S. Marine migrated to the United States as a teenager. He was killed in combat in Iraq last month. Mexican troops stopped the funeral of Lance Corporal Juan Lopez because they said they believed U.S. Marines at the ceremony were carrying real weapons. In fact, the Marines were carrying rifles that could not fire any shots. Eventually a trumpet player began playing "Taps" and the funeral continued despite the objections of the armed Mexican troops.

Now "Made in America." A look at companies that chose to keep jobs right here in the United States. Tonight the textile industry has been devastated by cheap foreign imports but Sunbury Textile Mills in Pennsylvania have managed to stay in business at home, keep it thriving, despite pressures from global competition and keep those jobs right here at home. Kitty Pilgrim reports.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Sunbury Textile Mills beats the competition by custom designing its fabrics. The company admits it would be cheaper to produce the upholstery fabric overseas.

HANK TRUSLOW, JR., PRES., SUNBURY TEXTILE MILLS: Our average price is around $12 a yard. If we move offshore it's still going to be, what, $11? $10.50, something like that? With the added complications of the transportation infrastructure, having people offshore measuring quality performance.

So our goal or stance is is that we want to continue to fight to exist in this country.

PILGRIM: The company expanded from residential business to buyers for hotels and outdoor furniture companies. The average worker in the mill is just short of 20 years on the job and makes $12.50 an hour. Tom Drego has been here 32 years.

TOM DREGO, EMPLOYEE: My father and also grandparents. My paternal grandfather actually helped build the old part and then after it was built, got a job weaving and he was here all his life.

So I guess it's in my blood.

PILGRIM: Sunbury is a town of 11,000. The mill gives a lot back to the community in terms of charity and civic involvement. But the part-time mayor, who works for a manufacturing company himself says retaining the manufacturing base of the town has been a struggle in this rural area right in the middle of the state.

MAYOR DAVID PERSING, SUNBURY, PENNSYLVANIA: We want people to be here. We want to maintain the jobs we have. It seems to be a battle more than ever just to maintain what you have not even to think about increasing them.

PILGRIM: This small-town product has big-city appeal in the Manhattan showroom. With more than 40,000 different patterns in the company archives, Sunbury Textile Mills has the diversity to compete. Kitty Pilgrim, CNN, New York.


DOBBS: Coming up next, we'll share some of your thoughts about exporting America.

Also ahead. Firefighters in Arizona trying to stop spreading wildfires. We'll have the very latest for you. Coming up next.


DOBBS: Firefighters in Arizona are optimistic now that they can save a $200 million observatory from spreading wildfires. Two fires threaten the Mount Graham International Observatory and about 90 summer cabins in the area. Those two fires have burned more than 22,000 acres. A third fire in Arizona known as the Willow Fire has burned 94,000 acres.

Taking a look now at some of your thoughts about exporting America.

P.A.B. from Los Angeles. "Innovation is what made the U.S. great. Innovation starts in the manufacturing process. If we move manufacturing out of the U.S., we lose more than jobs. We lose the ability to innovate."

Peter Tarowski of Brooklyn, New York. "Corporate America has resorted to business practices of the 1930s. Instead of busting unions and bringing in scabs, now jobs are exported, corporate America is fixated on short-term wealth instead of growth. The lessons of what made America a superpower by building a manufacturing base, a stable middle class have been exchanged for a profit margin."

Send us your thoughts at Still ahead, the results of our poll tonight. Please stay with us.


DOBBS: The results of our poll tonight. 38 percent of you say the candidates' political message will be your primary motivation for voting in the upcoming presidential elections. 33 percent say the party's principles and 30 percent, the lesser of two evils, brought an even distribution.

Thanks for being with us. Don't forget to vote and join us tomorrow. Former CIA director James Woolsey will be our guest. For all of us here, good night from New York. "ANDERSON COOPER 360" is next.


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