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Lou Dobbs Tonight

Authorities Warn Against Possible Terrorists Making Way to Northeast; Bloody Day in Baghdad

Aired January 19, 2005 - 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, HOST (voice-over): Tonight, a bloody rampage in Iraq. Suicide bombers launch a wave of deadly attacks. This has been worst day of violence in Iraq in weeks.

COL. MIKE MURRAY, U.S. ARMY: They will do anything they can to prevent these very important elections from happening.

DOBBS: An astonishing administration about Condoleezza Rice about the Bush administration's policies in Iraq.

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: I would be the first, again, to say we've had to make a lot of decisions, some of them good, some of them bad.

DOBBS: On this broadcast, candor is always a good decision.

And tonight, a leading senator just back from Iraq says we face a huge challenge. I'll be talking with Senator Jeff Sessions about his visit, his plan to improve family benefits for our troops killed in combat.

Dangerous imports. We report here regularly, some would say relentlessly, how Chinese imports are hurting American workers. Tonight, we'll show you how some of those imports put your health and safety at risk.

And "Broken Borders." President Bush has a plan for so-called immigration reform. But will it do anything to improve border security or stop illegal aliens invading this country? In fact, some say, it may encourage it. That's the subject of our debate in "Face Off" tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, January 19. Here now for an hour of news, debate and opinion, is Lou Dobbs.

DOBBS: Good evening. We begin tonight with news that federal agents are now investigating a possible new terrorist threat in this country on the eve of President Bush's inauguration.

Authorities, federal, state and local, are looking for at least four people who they say illegally crossed our border with Mexico. Officials say they could be headed to the northeast carrying dangerous materials.

Homeland security correspondent Jeanne Meserve reports from Washington -- Jeanne.

JEANNE MESERVE, CNN CORRESPONDENT: Lou, sources tell CNN that the joint terrorism task force in Boston has put out a "be on the look out" for four individuals the FBI would like to find and question.

According to multiple law enforcement and homeland security sources, an unnamed informant of unknown reliability phoned authorities telling them four Chinese chemists and two Iraqis had been smuggled across the border from Mexico into the U.S.

The unnamed source told authorities these individuals were making their way to Boston via New York and either possessed or were going to take delivery of a dangerous substance. Officials say the information is not corroborated and its reliability has not been established.

The state of Massachusetts has partially activated the statewide emergency operations center and put law enforcement on alert to respond if more specific information is received. The Transportation Security Administration says the security level at Boston's Logan Airport has not changed.

Both the governor of Massachusetts and the mayor of Boston tried to quell public concern.

(BEGIN VIDEO CLIP)

GOV. MITT ROMNEY (R), MASSACHUSETTS: This is not a coded color alert. But instead a specific issue that's been raised by the FBI for us to pay attention to. And, therefore, we're taking action to assure that we're in a state of readiness and that we're making sure that if there's somebody that has untoward plans that we're interdicting them and looking for them.

THOMAS MENINO, BOSTON MAYOR: Public safety is our first priority. When it comes to public safety, we always err on the side of caution, whether the information is reliable or not.

(END VIDEO CLIP)

MESERVE: Officials say they receive reports on a weekly, if not daily basis, of terrorists coming across the border. Most do not pan out, but authorities try to check out each and every one. And that is exactly what they are trying to do in this instance -- Lou.

DOBBS: Jeanne do we know at what time federal authorities alerted state authorities, particularly, specifically, in Boston and Massachusetts?

MESERVE: Well, the mayor of Boston held a press conference within the last half hour. He said he was alerted this morning between 10:30 and 11.

DOBBS: Jeanne, thank you very much. Jeanne Meserve reporting from Washington. And of course, we will have here the very latest on this story as it develops through this hour and through the evening right here on CNN.

Homeland security officials have long acknowledge that terrorists could enter the United States from Mexico. They say terrorists could try to infiltrate the country by posing as drug smugglers or human traffickers.

Last July, law enforcement officers arrested a woman with a South African passport in McAllen, Texas, after she apparently waded across the Rio Grande. Officials originally said the woman was on a government watch list for potential terrorists. Those officials later retracted the statement.

We'll have much more on the immigration crisis in this country and the lack of border security later on this broadcast. In our "Face Off" tonight, a heated debate on whether the president's plan for so- called immigration reform will help prevent illegal immigration or actually encourage it.

Turning now to other news of import. Terrorists today in Iraq went on a bloody rampage. In Baghdad, they killed at least 25 Iraqis in just 90 minutes.

Suicide bombers exploded four bombs in coordinated attacks just 11 days before the Iraqi elections are scheduled to be held. Radical Islamists linked to the al Qaeda network claimed responsibility for the attacks.

Jeff Koinange reports from Baghdad.

(BEGIN VIDEOTAPE)

JEFF KOINANGE, CNN CORRESPONDENT (voice-over): Wave after wave of suicide attacks rocked Baghdad. Bombings that come amid heightened security leading up to the January 30 elections.

The first target, the Australian embassy in south central Baghdad. A suicide bomber detonated himself, killing a bystander and wounding several others. Among them, two Australian soldiers.

Less than half an hour later, an even more powerful car bomb exploded outside the Iraqi emergency police headquarters, leaving a trail of death in its wake.

A third car bomb went off outside an Iraqi military base, killing two Iraqi soldiers. While a fourth suicide bomber detonated himself at an Iraqi National Guard checkpoint.

The attacks marked one of the bloodiest days this month, and authorities say it could get worse before the elections.

MURRAY: I think it's a sign of what we said all along is that they will do anything they can to prevent these very important elections from happening as we get towards the end of the month. KOINANGE: That end of the month is coming at a high cost for Iraqis. Hundreds of Iraqi police and National Guardsmen have been bearing the brunt of an insurgency that seems intent to derail the elections.

But one thing the insurgents couldn't derail, the arrival of ballot boxes, bringing Iraqis one step closer to the polls.

(on camera) There are no plans for U.S. troops to leave here anytime soon. In fact, the U.S. presence is increasing for the elections, so it's expected those boots will be on the ground long after Iraqis go to the polls.

Jeff Koinange, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: American troops elsewhere in Iraq have been engaged in fierce fighting with insurgents.

In the northern city of Mosul, American soldiers fired on suspected enemy positions after gunmen ambushed the U.S. convoy. That attack occurred near an Iraqi polling place. There is no word on the number of casualties in the attack, if any.

And in the western city of Ramadi, American troops supported by heavy armor swept through that city after insurgents fired rockets at a U.S. patrol. The troops called in a helicopter gunship. Warplanes were called in as well as they hunted down the insurgents.

Tonight, there is a rising dispute about the number and effectiveness of Iraq's security forces that have been trained by the U.S. military. The Bush administration says the United States can only start to withdraw troops when Iraqis themselves can fight effectively the terrorists.

Secretary of State nominee Condoleezza Rice says Iraq has more than 120,000 soldiers and police. But a leading Democratic senator says Iraq has only 4,000 fully trained troops.

Our Pentagon Correspondent Barbara Starr has the report.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In Iraq, the election now just days away, and it is Iraqi security forces that are supposed to take the lead in making those elections safe and secure.

SEN. JOSEPH BIDEN (D), DELAWARE: You all don't do anything except parrot.

STARR: In Washington, senators drawing their own political battle lines, asking Condoleezza Rice when 150,000 troops will come home. SEN. CHARLES NAGEL (R), NEBRASKA: Would you explain to this committee what you and the president see as an exit strategy for America from Iraq?

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: As Iraqis become more capable, then I would assume, certainly, our help will be needed less.

STARR: But Rice always saying she can't say when there might be a drawdown.

RICE: I am really reluctant to try to put a timetable on that because I think the goal is to get the mission accomplished, and that means that the Iraqis have to be capable of some things before we lessen our own responsibility.

STARR: No one can even agree how many capable Iraqi forces are on hand. The Pentagon says there are 127,000 trained Iraqi forces, fewer than half of what is required.

Senator Biden, who visited Iraq last month to talk to military trainers, claims there are just 4,000 fully trained troops, but acknowledges he is speaking only about Iraqi army forces.

A critical problem: police forces. Officially, there are 53,000 police across Iraq, but they have little training and are heavily targeted by insurgents. They may now start working more as commando- type units.

(END VIDEOTAPE)

STARR: And, Lou, a Pentagon review of Iraqi security forces is now underway. The idea is to get past those numbers and statistics and try and figure out how many Iraqi forces are actually capable of fighting and defending their country.

And make no mistake, Lou, that hearing on Capitol Hill was also sending a message not just to Condoleezza Rice at the State Department, but to Donald Rumsfeld here at the Pentagon, that Congress wants to know about an exit strategy from Iraq -- Lou.

DOBBS: Indeed, Barbara, but the most damning aspect of all of this is that apparently the United States government, in the form of the Pentagon, does not have hard numbers about how many Iraqi police and troops have been trained to this point.

STARR: Lou, by all accounts, that is exactly right. I can tell you that even before Christmas, senior military leaders in the theater were growing increasingly concerned about this very question.

What they have seen over the last months is an uneven performance by those Iraqi security forces. They've put them in the field. Some of them fight. Some of them do not. And what they have come to understand is they better figure out, as they say, why some of them don't fight and what the problem is. The feeling at this point is the strategy of a possible drawdown of U.S. forces from Iraq simply is not going to be possible until they determine that Iraqi security forces can really take over -- Lou.

DOBBS: Thank you very much.

Barbara Starr.

Secretary of State nominee Condoleezza Rice today acknowledged the administration has made some bad decisions on Iraq. Her admission came during some blunt questioning on the second day of her confirmation hearing on Capitol Hill.

Congressional Correspondent Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): after a Senate committee approved Condoleezza Rice's nomination by a wide margin, Republicans thought the full Senate would confirm Rice within hours of President Bush's inauguration and get his second term off to a running start.

But Democrats, led by Barbara Boxer, are now planning to delay the nomination. They want to stick a political thumb in the president's eye amid Democratic grumbling that the party is not standing up enough.

SEN. ROBERT BYRD (D), WEST VIRGINIA: George Bush pledged to work with Democrats to unite the country, didn't he?

HENRY: Boxer and Senator Byrd are planning to drag out Thursday's Senate floor debate until 7:00 p.m. when the inaugural balls start. Democrats believe Republicans will shut down the Senate to party, pushing the Rice vote back until next week.

The maneuver comes after Rice got an even more intense grilling on her second day of hearings, even though only two Democrats, Boxer and John Kerry, voted against her. Democrats zeroed in on Iraq charging Rice and her colleagues in the administration are not leveling with the American people.

SEN. BARBARA BOXER (D), CALIFORNIA: It's telling a half-truth to the American people. It's gaming the American people.

HENRY: The panel's top Democrat, Joe Biden, voted for Rice, but, first, he lashed out at her and Defense Secretary Donald Rumsfeld for both claiming 120,000 Iraqi officers have been trained. Biden insists it's only 4,000.

BIDEN: God love you. Please do me a favor. Start to tell the whole deal, and let's agree -- not agree. Let me cite a new definition of "trained." If you're able to take the place of a U.S. force. Let's call it that.

And I'd like you to think about it, and, in private, tell us later after you're secretary, which -- I'm about to vote for you in about five minutes. Tell us how many of those folks you think -- you think -- and for God's sake, don't listen to Rumsfeld. He doesn't know what in the hell he's talking about.

HENRY: Rice acknowledged there have been some bad decisions in Iraq, but she said progress is being made.

RICE: I know enough about history to stand back and to recognize that you judge decisions not at the moment, but in how it all adds up.

(END VIDEOTAPE)

HENRY: Republicans believe the Democratic delay on the Rice vote will look too partisan and backfire. Outgoing Secretary of State Colin Powell has agreed to stay on, though, until Rice is confirmed. So, even if there's a delay, there will be no power vacuum at the State Department -- Lou.

DOBBS: Ed, thank you very much.

Ed Henry.

Outgoing Secretary of State Colin Powell today declared Condoleezza Rice will bring what he called gifted leadership to the State Department. Powell's comments came during an emotional farewell ceremony at the State Department. Secretary Powell praised his staff, saying they are in the first line of offense of America's foreign policy.

Iran today accused the United States of trying to disrupt its nuclear negotiations with Europe by threatening a military strike. The Iranian government said it would respond to what it called unwise measures. The Iranian statement follows comments by President Bush Monday. President Bush said he could not rule out the use of military force, if Iran does not abandon its nuclear weapons program.

There is unprecedented security in Washington tonight in advance of the president's inauguration. Anti-aircraft missiles have been deployed around the city and airspace will be restricted over Washington and the City of Baltimore.

Six thousand law-enforcement officials will be on hand for the event. Hundreds of security officials will be watching the crowd through cameras from multiple command centers.

Despite all the security, officials say there have been no specific threats related to the inauguration.

President Bush begins his second term with a bold agenda of domestic reforms, but President Bush is also leading a nation that's been at war for more than three years.

Senior White House Correspondent John King reports.

(BEGIN VIDEOTAPE) JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): A glimpse at George Washington's inaugural address as he prepares for one of his own and tries to set a softer, more optimistic tone after a first term defined by war and terror.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: It is a liberty speech. The president will talk about the power of freedom. Peace is secured by advancing freedom.

KING: But war remains an overriding theme. The inaugural's first official event, a salute to the troops.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Through your service and sacrifice in the war on terror, you are making America safer.

KING: The unprecedented security is both a sign of the times and a source of debate. Mr. Bush well aware his critics believe he overplays his greatest political strength.

BUSH: The enemy's dangerous, and I say that, you know, fully understanding that some are saying, well, the administration keeps crying wolf, I mean, but it is -- our most solemn duty is to protect the American people.

KING: There's little evidence in the polls of a post-election honeymoon. Mr. Bush's plans to revamp Social Security are a tough sell in Congress and with the American people, and the violent insurgency has significantly eroded support for the war in Iraq. Fifty-two percent of Americans now say it was a mistake to send U.S. troops to Iraq, up from 44 percent three months ago.

But Mr. Bush continues to get higher marks when it comes to securing the home front. Sixty-two percent of Americans say the president improved the nation's security in his first term, and 68 percent believe he will keep the country safe from terrorism in a second.

The president shies away from any talk of legacy, but is well aware one test of his is whether America is attacked again.

BUSH: There's a desire by people to kind of slip into the comfort zone of normal life, which we want, but I don't think the president has that luxury. The president must be always mindful that an enemy lurks.

(END VIDEOTAPE)

KING: I asked the president this nation's greatest security shortcoming, and he immediately answers human intelligence, a weakness cited as a factor in the 9/11 attacks and in the now we know false claim that Iraq had weapons of mass destruction, and a weakness, still, Mr. Bush says, as he embarks now on a second term -- Lou.

DOBBS: One that looks to be beginning with a measure more of candor, John. Is that the case? KING: Well, certainly, the administration is acknowledging it still has much work to do on the Homeland Security front, as you noted earlier and Ed Henry did in his piece about Condoleezza Rice.

Still some contention between the Democrats and the administration and even some Republicans in the administration over the assessments of how it is going in Iraq.

So you ask the question, is the administration being more candid, you might get a different answer depending on who you ask here in Washington -- Lou.

DOBBS: Thank you very much. I said only a measure, John.

John King from the White House.

More on the president's inauguration later. We'll tell you why it is so difficult to find any inauguration souvenirs that are actually made in the country the president leads and any that are not imported from specifically China and other cheap overseas labor markets.

And "Power Play." How an old-fashioned Latin American strongman -- some would call him a dictator -- believes he can threaten the United States, our oil supplies and get away with it.

(COMMERCIAL BREAK)

DOBBS: The second inaugural of President Bush has inspired the manufacture of thousands of collectibles -- buttons, T-shirts, magnets and more -- all marking the occasion, but good luck finding one that was actually made in the U.S. of A.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): An inaugural souvenir? There's lots to choose from. How about a baseball cap? This one is so patriotic, even the label is an American flag. But flip it over. Made in China!

This shirt carries an inaugural seal. Perfect if you are looking to buy a commemorative shirt made in Pakistan. Many of the popular, but unofficial collectibles being sold to mark the country's 55th inauguration are made overseas.

Political Americana sells inaugural merchandise just one block from the White House.

JIM WARLICK, POLITICAL AMERICANA: A lot of things that are made that we use these days, there's not a supplier in the United States. I know we try and a lot of people try to get items made in the United States, but sometimes you just can't -- you can't find a manufacturer for it. And it's going to get worse and worse, too. SYLVESTER: The AFL-CIO union label group says it's a self- fulfilling prophecy. Big-box retailers like Wal-Mart no longer wants American goods, so the U.S. factories are run out of business. Then when it comes time to U.S. inauguration T-shirts and toys made in the USA, there are few U.S. manufacturers still around.

MATT BATES, AFL-CIO: It is obscene, and it's extraordinarily damaging to the economy, but it's very, very profitable for them. And, of course, they're celebrating. They're very happy about it.

SYLVESTER: So, if you can't actually make it to this year's inauguration celebration, you can always buy a George W. Bush doll crafted in the People's Republic of China or settle for a 2005 inauguration mug made in -- Where else? -- China.

(END VIDEOTAPE)

SYLVESTER: There is one place where you can buy inaugural items that are still made in the USA. The official inauguration committee Web site, inauguralgiftshop.com, sells a handful of items, including accessories, apparel and buttons, and all are made in America -- Lou.

DOBBS: Well, at least we have that.

Thank you very much.

Lisa Sylvester.

Well, another product made in China was recalled today. The Consumer Product Safety Commission says Martha Stewart paper lanterns are prone to overheating, melting and catching fire. For the last three years, more goods made in China are recalled from American store shelves than goods made in any other country.

Christine Romans has the story.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): The Batmobile, this Nerf football and even this Rock 'N Roller baby stroller -- all recalled from store shelves last year, all deemed unsafe for American consumers, all made in China.

KIM KLEMAN, CONSUMER REPORTS: What we're getting are toys that don't meet federal safety standards. They're -- the parts are too small. They don't have adequate warning labels. So young kids could choke. You have a real problem with counterfeit products, counterfeit electrical products.

ROMANS: As American companies search the globe for the absolute cheapest products to sell to Americans, the consumer goods on our shelves are often now from countries with weak product safety oversight, made by manufacturers who bypass safety for a few extra cents of profit.

RACHEL WEINTRAUB, CONSUMER FEDERATION OF AMERICA: If you look solely at price point, consumers are going to get hurt and injured and exposed to potentially dangerous things, and that should not be happening in our country or anywhere else.

ROMANS: The chairman of the Consumer Product Safety Commission has traveled to China to educate manufacturers and politicians about higher U.S. standards for safety. He says they're listening.

HAL STRATTON, CONSUMER PRODUCT SAFETY COMMISSION: It's natural that as we have more consumer products imported from a country like China that we're probably naturally going to have more recalls.

ROMANS: Recalls like this remote-control toy, another dangerous product made in China that was recalled last year. China is the biggest source for dangerous consumer goods, but India is the source of the largest toy recall ever in the history of the Consumer Products Safety Commission: 150 million necklaces for children sold in vending machines.

(END VIDEOTAPE)

ROMANS: Now those vending machine necklaces were full of lead. They sold for a quarter, 50 cents. They potentially harmed thousands of kids. They are thankfully off the market now but many harmful imported products are not, exploding electrical cords, dangerous toys and games that have not yet been recalled, Lou.

And I brought one to show you. This is an exacto knife, a cutter, for children.

DOBBS: For children?

ROMANS: Age 3 and up. And the package is on the market now. The package from China says "choking hazard." I would say the hazard is cutting hazard.

DOBBS: That is remarkable.

ROMANS: It's on the market right now.

DOBBS: Baby's first exacto knife?

ROMANS: I guess so.

DOBBS: That's a remarkable, remarkable situation. And what really the Consumer Product Safety Commission is saying is the United States has not only lost control of its borders and much of its economy, but also the standards that our society will meet, and, of course, people need to exercise a little individual responsibility to be very careful.

ROMANS: Indeed.

DOBBS: Christine, thank you. Excellent report.

The same White House adviser who famously told us that outsourcing American jobs to cheap foreign labor markets is a good thing and who has no problem with $7 trillion in national debt, who also has no problem adding another $2 trillion on to that debt, top White House economic adviser Gregory Mankiw called those who opposed the president's plan to privatize a portion of Social Security the ostrich caucus.

In a prepared remark for the Council of Foreign Relations, Mankiw said, "Reasonable people can debate what kinds of reforms are best, but don't let the ostrich caucus convince you to put your head in the sand."

Thank you, Gregory Mankiw.

That brings us to the subject of our poll tonight. Do you believe privatizing Social Security is a good idea? That is yes or, if you're a member of the ostrich caucus, you may vote no. Cast your vote at loudobbs.com. We'll have the results for you later in the show. I assure you that was a facetious comment about the ostrich caucus.

Also tonight, "Tough Talk" against one of this country's largest suppliers of oil. How Secretary of State nominee Condoleezza Rice is answering years of antagonism from Venezuelan President Hugo Chavez.

And then our "Face Off" tonight. A debate on our immigration crisis. How the White House is defending the president's plan to give millions of illegal aliens legal status. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Updating you now on our top story tonight, a possible terrorist threat in this country. Federal agents are looking for at least four people, four Chinese nationals and two who are believed to be Iraqis, who illegally crossed our border with Mexico. Federal, state and local authorities are looking for those people. Sources say they may be carrying dangerous materials, heading to Boston by way of New York. These reports are based on one source, a source whose information, obviously, has not been corroborated, but authorities very much on the lookout.

The governor of the state of Massachusetts, Mitt Romney, just updated reporters on this ongoing investigation.

(BEGIN VIDEO CLIP)

GOV. MITT ROMNEY (R), MASSACHUSETTS: None of the individuals that we're looking for is believed to be in Massachusetts, at this point. They're believed to be out of state. And yet we do have names and identification of people who we want to speak with, and law enforcement is looking for those individuals. And we, obviously, hope to be able to speak with them and to get the information that we're seeking.

(END VIDEO CLIP)

DOBBS: Governor Romney urged the public not to panic and to go about their business at usual. We will, of course, here be bringing you the very latest on the developments in this story and throughout the evening right here on CNN.

Well, President Bush has said immigration reform will be a top priority of his second term. During hearings on the confirmation of Condoleezza Rice as secretary of state, members of the Senate Foreign Relations Committee asked Rice about the president's plan to legalize millions of illegal aliens in this country.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: He has a proposal on the table for temporary worker program that would serve the purposes -- purposes in a humanitarian sense, in that it would help to alleviate what is really a humanitarian crisis for us. It would help us economically because matching willing workers and willing employers is an extremely important thing for our economy, when Americans -- when there are jobs that Americans will not take. It's not an amnesty, and the president's been very clear about that.

(END VIDEO CLIP)

DOBBS: Immigration reform, if that's what you can call it, is the subject of our "Face-Off" tonight. Joining me now from Washington, D.C., is Frank Sharry. He is the executive director of the National Immigration Forum. He supports the president's guest worker program. And from Fresno, California, Victor Davis Hanson, author, senior fellow at the Hoover Institution, who says the president's plan will only encourage illegal immigration.

Gentlemen, good to have you both here. Frank Sharry, Condoleezza Rice's statement that illegal immigration is a matter of a humanitarian crisis -- your reaction to that?

FRANK SHARRY, EXEC. DIR., NATIONAL IMMIGRATION FORUM: Well, it is a humanitarian crisis. We have thousands of people dying at our borders who are trying to get in to do jobs that Americans don't want.

But more fundamentally is that we have a broken immigration system that has obvious vulnerabilities. And if we're going to get control of our system and control of our borders, we have to have both carrots and sticks. We can't just enforce bad laws and maintain these bad laws which don't allow legal channels. We have to both allow people to come in legally who want to work, and at the same time, have much -- have those laws be more strictly enforced. It's a combination of both liberalized migration channels and tougher enforcement, not just one or the other.

DOBBS: And Victor, your thoughts?

VICTOR DAVIS HANSON, SR. FELLOW, HOOVER INSTITUTION: [OFF-MIKE] -- had the level of illegal aliens residing and had highest unemployment because employers would prefer to hire people without education who are in the shadows and can't collectively bargain, and pay them in cash. It's a moral issue.

Think of 14,000 people here illegally from Mexico who are in the California prison system. It costs us $400 million in our state, and yet the start-up cost of one UC campus is $20 million. We could fund 20 new UC campuses for their first year, at a time when Mexican- American citizens who are here legally or second generation can't find access to the University of California.

These are all different issues -- environmental, national security, and yes, humane -- that we don't even talk about because of the demagoguery on the laissez-faire right and the therapeutic ethnic left.

DOBBS: Where are you in that spectrum, Frank?

(LAUGHTER)

DOBBS: I haven't heard that expression before.

SHARRY: Well, we find ourselves in the middle that want laws that work. We have laws that don't work. We have a regulatory regime that's out of step with economic reality. We have a declining number of U.S.-born workers who are interested in the service and agricultural jobs that immigrants are filling. So when it comes time for a professional couple to find a nanny or a hotel to find a housekeeper or a landscaper to find a worker, the Americans want to go work in the office and go to college. It's the immigrants that are filling those jobs. So to say that they're all criminals and it causes unemployment...

DOBBS: Whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa! Frank, I'm not going to let you get away with that, and you know it. No one has accused everyone of being a criminal. Have they?

SHARRY: No. Well, look...

DOBBS: I mean, come on. Let's not indulge in that sort of nonsense.

SHARRY: Oh, well, look...

DOBBS: The fact of the matter is there's a real issue here.

SHARRY: But -- but...

DOBBS: It is economic. It's societal.

SHARRY: Of course.

DOBBS: And does it not appall you that the United States government -- because you agree with Condoleezza Rice that there is a humanitarian issue here, why in the world has the United States government not demanded of Mexico that it begin to take care of its own people?

SHARRY: Well, I think it has, and it will continue to do so. Look...

DOBBS: Oh, come on, Frank! Name one time.

SHARRY: Well...

DOBBS: We just heard the interior minister of Mexico say that he would demand rights for Mexican citizens in this country...

SHARRY: Lou...

DOBBS: ... who come here illegally.

SHARRY: ... let's not demagogue Mexico. Let's come up with a solution.

DOBBS: That's not demagoguing! You're simply evading...

SHARRY: Let...

DOBBS: ... and I don't think you should be doing that, do you?

SHARRY: No, I'm interested in U.S. immigration policies that serve American interests. And right now, our system is broken. And the president has made a good start on a set of principles that need to be added to by the likes of John McCain and Ted Kennedy and others, so that we have a bipartisan reform package that...

DOBBS: Oh, who needs a bipartisan reform package! I don't care whether it's Republican or Democrat...

SHARRY: Well, you like...

DOBBS: ... so long as it's effective.

SHARRY: You like the status quo?

DOBBS: So long as it's -- absolutely not, Frank.

SHARRY: Well, then what's the solution, Lou? That's the question.

DOBBS: Here's the -- would you like me to offer it or -- well, let's...

SHARRY: Please!

DOBBS: I'm suddenly in the middle of your debate, Victor. You respond first, and then I'll post a footnote, if I may.

HANSON: We're always going to have a 10 to 12 percent unemployment in counties such as my own when an employer has the option of hiring somebody off the books who is not able -- either doesn't have English or is here illegally and does not see this as an entry-level job but as a job that will exist in perpetuity until he's 50 or 60, and needs the entitlement industry to subsidize the employer who never paid into health insurance. In 1970, we -- believe me, we had lawns that were mowed...

DOBBS: Right. Victor, let me go -- let me go to the...

HANSON: ... people were able to go to a restaurant...

DOBBS: I think Frank really -- you know, this is -- we've reached a point where we need to be talking about real solutions. And we don't need any more border games.

SHARRY: Yes.

DOBBS: What is the solution, Victor?

HANSON: I think it's very simple. We need to have tough employer sanctions. We need a verifiable ID. We need to have a one- time amnesty, not rolling amnesty, for people who are here 10 years, 15 years. And especially, we need to tell Mexico that we're not going to allow them to subsidize their own economy with $12 billion of remittances by exporting potential people they can't feed or house.

And we got to -- one last thing that's not necessarily extraneous. We need to change the attitude toward the melting pot and not the salad bowl, so people realize that we're here to integrate, intermarry, assimilate, and bilingualism, separatism, ethnic solvenism (ph) -- it's not going to create a climate where you can live in a perpetual apartheid society. So we need to do a multi-faceted task that sends the message to Mexico that if you come across to the United States, you're going to come legally and you're going to assimilate into the mainstream of American culture, as we did so wonderfully in the past.

DOBBS: You got a problem with that, Frank?

SHARRY: Well, actually, I think our proposal issue is very much along the same direction. We have to make sure that people come out of the shadows who are here, who have been working and plan to stay here and assimilate into American society. We have to have legal channels for workers and family members, so that they can come legally, with rights and without smugglers.

And we need to enforce realistic limits effectively, but we have to have limits that are expanded and realistic if we're going to be able to enforce them and reverse the incentives. There's too many Americans who wink and nod at illegal immigration now because they know our steps are so out of step with reality. Let's bring in law...

DOBBS: You mean like corporate America and some of the companies who support your organization?

SHARRY: Corporate America and professional couples and county governments. Everybody, Lou. We're all complicit in this because...

DOBBS: No, we're not all complicit! There you go again, as the saying goes. We're not all complicit. Some people are very, very adamant about...

SHARRY: Lou, I beg to differ. I beg to differ. I'm guessing that in New York, in your studios, that who cleans that building when the lights go out are people, some of whom are here legally and some of whom are not. I mean, it's just the reality of the labor force in America that the low-wage service sector and agriculture jobs are primarily being done now by immigrants because the number of...

DOBBS: Well, why are you willing to support a system that is exploitive of people...

SHARRY: I'm not. I'm...

DOBBS: ... who we all respect, who have a terrific work ethics...

SHARRY: Right.

DOBBS: ... who are outstanding human beings?

SHARRY: Oh, exactly.

DOBBS: Why would you support a system that does that?

SHARRY: We want a reformed system that does away with the incentives for abuse and exploitation. Right now, you have undocumented workers who are easy to be taken advantage of, and they under -- and the bottom-feeder employers...

DOBBS: Frank -- Frank...

SHARRY: ... undercut the decent employers.

DOBBS: All right, as a condition precedent (ph), you asked me, I said I'd put a footnote in this. Here's the response to your question on what I personally would do, since you were kind enough to ask.

SHARRY: Please.

DOBBS: The first thing I'd do is I would end the PR border games, and I would make certain that our borders and our ports are absolutely secure, no matter what it costs, because you cannot control immigration, legal or illegal, if you do not have control of our borders. And you cannot even discuss homeland security unless we are in control of our borders and our ports. Anything else is a fiction and a shameful lie that's being perpetrated, frankly, in many quarters right now on the part of both parties. And it's time for us all to wake up.

And thirdly, I'd come to an understanding about how we're going to deal with the illegal aliens we have here. And I would do it not on the basis of what corporate America or those who want to hire and exploit workers want to do, and call that economics and a free market system. I would do so based on a policy that says we're going to bring the skilled -- the skills, the people who are necessary to keep this society growing.

We are the most diverse racial, ethnic society on the face of the earth. We have everything to be proud of. There's nothing racist here. There's nothing xenophobic. It's simply about preserving the national interest, don't you think, Frank?

SHARRY: Well, I like your plan. I think that... DOBBS: We have a deal, and we get to conclude it. I will send the papers down for your signature right away.

(LAUGHTER)

DOBBS: Frank, thank you very much. Victor Davis Hanson, we thank you both.

Never ask a question, Frank, unless you want an answer. I try to remember that myself from time to time.

Coming up next, a bold new proposal to substantially raise the benefit for the military families who lose a loved one in combat. I'll be talking with one of the senators supporting that proposal and advancing it through the U.S. Congress. And our special report, "Assault on the Middle Class," why nearly 100,000 Americans may no longer be able to afford a college education. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My guest tonight will introduce legislation next week to raise the family benefits for American troops killed in combat to $100,000. The families of troops killed now receive $12,000. Senator Jeff Sessions of Alabama will sponsor the bill, along with Senator Joseph Lieberman. Senator Sessions has just returned from Iraq and joins us tonight from Capitol Hill.

Senator, I think we all would be quick to say thank you for putting forward this legislation that's overdue, and we're grateful for you doing so. Just coming back from Iraq today -- the worst wave of violence in weeks in Iraq -- what is it going to take, in your assessment, based on your experience to bring the situation under control and bring stability to Iraq?

SEN. JEFF SESSIONS (R), ALABAMA: First, I want to thank you for those kind words. It is important that we say to our soldiers, If something happens to you in combat, your family will be well taken care of.

We did have a good review of the situation in Iraq. In many ways, the violence has been down from what it was in November, but it's still very high. These terrorists are very determined. They are targeting the weakest links in the system. They're very hard to deal with.

I think several things have to occur. We need to raise up the training of the local forces, police and military. We need to continue our military efforts to identify and destroy these bad guys. And we need this election to go well, and we need -- the Iraqi people need to rise up and take control of their country and defend their country from these nihilist attackers.

DOBBS: And Senator, as you point out, that was the crux of a -- really, a contest between Condoleezza Rice and Senator Joseph Biden today.

SESSIONS: Yes.

DOBBS: And remarkably, our reporting from the Pentagon -- Barbara Starr reporting that there is, indeed, wide, wide differences between the Pentagon, what they are saying, the Bush administration, and what other people who have visited Iraq recently, who have been there, are seeing as the number of trained troops and police, Iraqi troops and police.

The fact that the United States military doesn't even know how many Iraqis have been trained to this point, I personally, I just -- can you explain that to the American people, how it could even be? It's one thing to have a dispute over the level of training and the number trained, but not to even know the number of Iraqis in the military and in law enforcement in that country is astounding, is it not?

SESSIONS: Well, General Petraeus, who's in charge of that, met with us and talked with us about that situation. He has decided that it's not helpful to give out exact numbers. What did occur, when he was sent there to enhance this training, he made a determination to reduce the numbers that were being stated as fact because he didn't think they were sufficiently trained. And he was determined to have a lower number and build from that. He is turning out large numbers of soldiers and policemen now.

I believe they're going to be better trained, they're going to be much better equipped, much better armed. They're going to have an infrastructure that will support them. If their precinct is under attack, they will know somebody will come to help them. And he's doing the slow, hard things, and he's identifying leaders. He told us that a unit will not function well unless it has a good leader.

DOBBS: Absolutely.

SESSIONS: So there are some good leaders there. But we've got -- we can't -- some are not. And that's been harmful, too.

DOBBS: Well, Senator Sessions, we thank you for sharing your thoughts with us here tonight. And again, we look forward to the introduction of your bill next week, raising the family benefits for Americans killed in combat. Thank you, Senator Sessions.

SESSIONS: Thank you.

DOBBS: Coming up next, "Assault on the Middle Class," our special report, the rising cost of education in this country, why nearly 100,000 of our students could see their financial aid slashed. Our special report is next.

(COMMERCIAL BREAK)

DOBBS: "Assault on the Middle Class, our special reports this week. Tonight: More students than ever before in this country will graduate from high school, and one of the biggest questions they and their families will face is how and whether they can afford a college education. And it doesn't help that the amount of financial aid and grants available to those students are not keeping pace with the rise in inflation and tuition. Bill Tucker has the story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): For students like Kehli Faulkner, a college campus is a hard-one place to be.

KEHLI FAULKNER, COLLEGE STUDENT: Personally, for me, I would say that trying to hold down two jobs, go to school, live off campus, pay my rent, pay my bills, pay my insurance, eat, you know, and then pay for the outstanding cost of my educational books, after I already paid for tuition, it's kind of like, I would say, a slap in the face.

TUCKER: Kehli is not alone. The total price of a four-year public college as a share of family income has risen to 70 percent. That is up from 42 percent in the mid-1970s. Kehli's mom has already put two children through college.

BRENDA FAULKNER, KEHLI'S MOTHER: You know, there's not enough. We can get student -- we can get loans, we can get federal grants, we can get financial aid. But there's still not enough support for the kids.

TUCKER: College costs typically rise faster than the rate of inflation, but in the past two years, the cost of public colleges has exploded, up 20 percent.

TRAVIS REINDL, AMER. ASSN. OF STATE COLLEGES AND UNIV.: You start losing your eligibility for the Pell grant in about the middle $40,000 range. It varies because every student is a little bit different in the formula, but your average student starts to fall out of eligibility around about $45,000 or so.

TUCKER: Adding insult to injury, some 90,000 students who were once eligible for Pell grants will lose them because of changes in the way eligibility is calculated. President Bush announced a plan to increase the maximum size of a Pell grant, but that plan would not increase the number of students eligible for the grants.

BRIAN FITZGERALD, BUSINESS HIGHER EDUCATION FORUM: We will make a serious mistake and have a really long-term impact on our economic growth if we fail to give the next generation of Americans the same opportunity to attend four-year college and get a college degree that the Baby Boom generation had.

(END VIDEOTAPE)

TUCKER: The Business Higher Education Forum says that unless adequate financial aid is made available, some 4.5 million college- qualified high school seniors will not be able to afford to go to a four-year college, Lou.

DOBBS: That's astounding, and a disgrace for a country that is a superpower and the world's wealthiest. Thanks very much, Bill Tucker.

Still ahead here, the results of our poll and a preview of what's ahead tomorrow. (COMMERCIAL BREAK)

DOBBS: Now the results of our poll tonight: 7 percent of you say privatizing Social Security is a good idea, 93 percent of you are in what presidential economic adviser Gregory Mankiew calls the "ostrich caucus" and do not think it is a good idea.

Thanks for being with us here tonight. Please join us tomorrow. It's inauguration day for President Bush. Former adviser to four American presidents David Gergen will be among our guests. Condoleezza Rice faced tough questions on trade and our exploding deficits. We'll be talking with the senator who pressed Rice on what the State Department should be doing all about that. Please be with us.

For all of us here, good night from New York. "CNN SPECIAL REPORT: Defending America" is next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Aired January 19, 2005 - 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, HOST (voice-over): Tonight, a bloody rampage in Iraq. Suicide bombers launch a wave of deadly attacks. This has been worst day of violence in Iraq in weeks.

COL. MIKE MURRAY, U.S. ARMY: They will do anything they can to prevent these very important elections from happening.

DOBBS: An astonishing administration about Condoleezza Rice about the Bush administration's policies in Iraq.

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: I would be the first, again, to say we've had to make a lot of decisions, some of them good, some of them bad.

DOBBS: On this broadcast, candor is always a good decision.

And tonight, a leading senator just back from Iraq says we face a huge challenge. I'll be talking with Senator Jeff Sessions about his visit, his plan to improve family benefits for our troops killed in combat.

Dangerous imports. We report here regularly, some would say relentlessly, how Chinese imports are hurting American workers. Tonight, we'll show you how some of those imports put your health and safety at risk.

And "Broken Borders." President Bush has a plan for so-called immigration reform. But will it do anything to improve border security or stop illegal aliens invading this country? In fact, some say, it may encourage it. That's the subject of our debate in "Face Off" tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, January 19. Here now for an hour of news, debate and opinion, is Lou Dobbs.

DOBBS: Good evening. We begin tonight with news that federal agents are now investigating a possible new terrorist threat in this country on the eve of President Bush's inauguration.

Authorities, federal, state and local, are looking for at least four people who they say illegally crossed our border with Mexico. Officials say they could be headed to the northeast carrying dangerous materials.

Homeland security correspondent Jeanne Meserve reports from Washington -- Jeanne.

JEANNE MESERVE, CNN CORRESPONDENT: Lou, sources tell CNN that the joint terrorism task force in Boston has put out a "be on the look out" for four individuals the FBI would like to find and question.

According to multiple law enforcement and homeland security sources, an unnamed informant of unknown reliability phoned authorities telling them four Chinese chemists and two Iraqis had been smuggled across the border from Mexico into the U.S.

The unnamed source told authorities these individuals were making their way to Boston via New York and either possessed or were going to take delivery of a dangerous substance. Officials say the information is not corroborated and its reliability has not been established.

The state of Massachusetts has partially activated the statewide emergency operations center and put law enforcement on alert to respond if more specific information is received. The Transportation Security Administration says the security level at Boston's Logan Airport has not changed.

Both the governor of Massachusetts and the mayor of Boston tried to quell public concern.

(BEGIN VIDEO CLIP)

GOV. MITT ROMNEY (R), MASSACHUSETTS: This is not a coded color alert. But instead a specific issue that's been raised by the FBI for us to pay attention to. And, therefore, we're taking action to assure that we're in a state of readiness and that we're making sure that if there's somebody that has untoward plans that we're interdicting them and looking for them.

THOMAS MENINO, BOSTON MAYOR: Public safety is our first priority. When it comes to public safety, we always err on the side of caution, whether the information is reliable or not.

(END VIDEO CLIP)

MESERVE: Officials say they receive reports on a weekly, if not daily basis, of terrorists coming across the border. Most do not pan out, but authorities try to check out each and every one. And that is exactly what they are trying to do in this instance -- Lou.

DOBBS: Jeanne do we know at what time federal authorities alerted state authorities, particularly, specifically, in Boston and Massachusetts?

MESERVE: Well, the mayor of Boston held a press conference within the last half hour. He said he was alerted this morning between 10:30 and 11.

DOBBS: Jeanne, thank you very much. Jeanne Meserve reporting from Washington. And of course, we will have here the very latest on this story as it develops through this hour and through the evening right here on CNN.

Homeland security officials have long acknowledge that terrorists could enter the United States from Mexico. They say terrorists could try to infiltrate the country by posing as drug smugglers or human traffickers.

Last July, law enforcement officers arrested a woman with a South African passport in McAllen, Texas, after she apparently waded across the Rio Grande. Officials originally said the woman was on a government watch list for potential terrorists. Those officials later retracted the statement.

We'll have much more on the immigration crisis in this country and the lack of border security later on this broadcast. In our "Face Off" tonight, a heated debate on whether the president's plan for so- called immigration reform will help prevent illegal immigration or actually encourage it.

Turning now to other news of import. Terrorists today in Iraq went on a bloody rampage. In Baghdad, they killed at least 25 Iraqis in just 90 minutes.

Suicide bombers exploded four bombs in coordinated attacks just 11 days before the Iraqi elections are scheduled to be held. Radical Islamists linked to the al Qaeda network claimed responsibility for the attacks.

Jeff Koinange reports from Baghdad.

(BEGIN VIDEOTAPE)

JEFF KOINANGE, CNN CORRESPONDENT (voice-over): Wave after wave of suicide attacks rocked Baghdad. Bombings that come amid heightened security leading up to the January 30 elections.

The first target, the Australian embassy in south central Baghdad. A suicide bomber detonated himself, killing a bystander and wounding several others. Among them, two Australian soldiers.

Less than half an hour later, an even more powerful car bomb exploded outside the Iraqi emergency police headquarters, leaving a trail of death in its wake.

A third car bomb went off outside an Iraqi military base, killing two Iraqi soldiers. While a fourth suicide bomber detonated himself at an Iraqi National Guard checkpoint.

The attacks marked one of the bloodiest days this month, and authorities say it could get worse before the elections.

MURRAY: I think it's a sign of what we said all along is that they will do anything they can to prevent these very important elections from happening as we get towards the end of the month. KOINANGE: That end of the month is coming at a high cost for Iraqis. Hundreds of Iraqi police and National Guardsmen have been bearing the brunt of an insurgency that seems intent to derail the elections.

But one thing the insurgents couldn't derail, the arrival of ballot boxes, bringing Iraqis one step closer to the polls.

(on camera) There are no plans for U.S. troops to leave here anytime soon. In fact, the U.S. presence is increasing for the elections, so it's expected those boots will be on the ground long after Iraqis go to the polls.

Jeff Koinange, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: American troops elsewhere in Iraq have been engaged in fierce fighting with insurgents.

In the northern city of Mosul, American soldiers fired on suspected enemy positions after gunmen ambushed the U.S. convoy. That attack occurred near an Iraqi polling place. There is no word on the number of casualties in the attack, if any.

And in the western city of Ramadi, American troops supported by heavy armor swept through that city after insurgents fired rockets at a U.S. patrol. The troops called in a helicopter gunship. Warplanes were called in as well as they hunted down the insurgents.

Tonight, there is a rising dispute about the number and effectiveness of Iraq's security forces that have been trained by the U.S. military. The Bush administration says the United States can only start to withdraw troops when Iraqis themselves can fight effectively the terrorists.

Secretary of State nominee Condoleezza Rice says Iraq has more than 120,000 soldiers and police. But a leading Democratic senator says Iraq has only 4,000 fully trained troops.

Our Pentagon Correspondent Barbara Starr has the report.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In Iraq, the election now just days away, and it is Iraqi security forces that are supposed to take the lead in making those elections safe and secure.

SEN. JOSEPH BIDEN (D), DELAWARE: You all don't do anything except parrot.

STARR: In Washington, senators drawing their own political battle lines, asking Condoleezza Rice when 150,000 troops will come home. SEN. CHARLES NAGEL (R), NEBRASKA: Would you explain to this committee what you and the president see as an exit strategy for America from Iraq?

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: As Iraqis become more capable, then I would assume, certainly, our help will be needed less.

STARR: But Rice always saying she can't say when there might be a drawdown.

RICE: I am really reluctant to try to put a timetable on that because I think the goal is to get the mission accomplished, and that means that the Iraqis have to be capable of some things before we lessen our own responsibility.

STARR: No one can even agree how many capable Iraqi forces are on hand. The Pentagon says there are 127,000 trained Iraqi forces, fewer than half of what is required.

Senator Biden, who visited Iraq last month to talk to military trainers, claims there are just 4,000 fully trained troops, but acknowledges he is speaking only about Iraqi army forces.

A critical problem: police forces. Officially, there are 53,000 police across Iraq, but they have little training and are heavily targeted by insurgents. They may now start working more as commando- type units.

(END VIDEOTAPE)

STARR: And, Lou, a Pentagon review of Iraqi security forces is now underway. The idea is to get past those numbers and statistics and try and figure out how many Iraqi forces are actually capable of fighting and defending their country.

And make no mistake, Lou, that hearing on Capitol Hill was also sending a message not just to Condoleezza Rice at the State Department, but to Donald Rumsfeld here at the Pentagon, that Congress wants to know about an exit strategy from Iraq -- Lou.

DOBBS: Indeed, Barbara, but the most damning aspect of all of this is that apparently the United States government, in the form of the Pentagon, does not have hard numbers about how many Iraqi police and troops have been trained to this point.

STARR: Lou, by all accounts, that is exactly right. I can tell you that even before Christmas, senior military leaders in the theater were growing increasingly concerned about this very question.

What they have seen over the last months is an uneven performance by those Iraqi security forces. They've put them in the field. Some of them fight. Some of them do not. And what they have come to understand is they better figure out, as they say, why some of them don't fight and what the problem is. The feeling at this point is the strategy of a possible drawdown of U.S. forces from Iraq simply is not going to be possible until they determine that Iraqi security forces can really take over -- Lou.

DOBBS: Thank you very much.

Barbara Starr.

Secretary of State nominee Condoleezza Rice today acknowledged the administration has made some bad decisions on Iraq. Her admission came during some blunt questioning on the second day of her confirmation hearing on Capitol Hill.

Congressional Correspondent Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): after a Senate committee approved Condoleezza Rice's nomination by a wide margin, Republicans thought the full Senate would confirm Rice within hours of President Bush's inauguration and get his second term off to a running start.

But Democrats, led by Barbara Boxer, are now planning to delay the nomination. They want to stick a political thumb in the president's eye amid Democratic grumbling that the party is not standing up enough.

SEN. ROBERT BYRD (D), WEST VIRGINIA: George Bush pledged to work with Democrats to unite the country, didn't he?

HENRY: Boxer and Senator Byrd are planning to drag out Thursday's Senate floor debate until 7:00 p.m. when the inaugural balls start. Democrats believe Republicans will shut down the Senate to party, pushing the Rice vote back until next week.

The maneuver comes after Rice got an even more intense grilling on her second day of hearings, even though only two Democrats, Boxer and John Kerry, voted against her. Democrats zeroed in on Iraq charging Rice and her colleagues in the administration are not leveling with the American people.

SEN. BARBARA BOXER (D), CALIFORNIA: It's telling a half-truth to the American people. It's gaming the American people.

HENRY: The panel's top Democrat, Joe Biden, voted for Rice, but, first, he lashed out at her and Defense Secretary Donald Rumsfeld for both claiming 120,000 Iraqi officers have been trained. Biden insists it's only 4,000.

BIDEN: God love you. Please do me a favor. Start to tell the whole deal, and let's agree -- not agree. Let me cite a new definition of "trained." If you're able to take the place of a U.S. force. Let's call it that.

And I'd like you to think about it, and, in private, tell us later after you're secretary, which -- I'm about to vote for you in about five minutes. Tell us how many of those folks you think -- you think -- and for God's sake, don't listen to Rumsfeld. He doesn't know what in the hell he's talking about.

HENRY: Rice acknowledged there have been some bad decisions in Iraq, but she said progress is being made.

RICE: I know enough about history to stand back and to recognize that you judge decisions not at the moment, but in how it all adds up.

(END VIDEOTAPE)

HENRY: Republicans believe the Democratic delay on the Rice vote will look too partisan and backfire. Outgoing Secretary of State Colin Powell has agreed to stay on, though, until Rice is confirmed. So, even if there's a delay, there will be no power vacuum at the State Department -- Lou.

DOBBS: Ed, thank you very much.

Ed Henry.

Outgoing Secretary of State Colin Powell today declared Condoleezza Rice will bring what he called gifted leadership to the State Department. Powell's comments came during an emotional farewell ceremony at the State Department. Secretary Powell praised his staff, saying they are in the first line of offense of America's foreign policy.

Iran today accused the United States of trying to disrupt its nuclear negotiations with Europe by threatening a military strike. The Iranian government said it would respond to what it called unwise measures. The Iranian statement follows comments by President Bush Monday. President Bush said he could not rule out the use of military force, if Iran does not abandon its nuclear weapons program.

There is unprecedented security in Washington tonight in advance of the president's inauguration. Anti-aircraft missiles have been deployed around the city and airspace will be restricted over Washington and the City of Baltimore.

Six thousand law-enforcement officials will be on hand for the event. Hundreds of security officials will be watching the crowd through cameras from multiple command centers.

Despite all the security, officials say there have been no specific threats related to the inauguration.

President Bush begins his second term with a bold agenda of domestic reforms, but President Bush is also leading a nation that's been at war for more than three years.

Senior White House Correspondent John King reports.

(BEGIN VIDEOTAPE) JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): A glimpse at George Washington's inaugural address as he prepares for one of his own and tries to set a softer, more optimistic tone after a first term defined by war and terror.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: It is a liberty speech. The president will talk about the power of freedom. Peace is secured by advancing freedom.

KING: But war remains an overriding theme. The inaugural's first official event, a salute to the troops.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Through your service and sacrifice in the war on terror, you are making America safer.

KING: The unprecedented security is both a sign of the times and a source of debate. Mr. Bush well aware his critics believe he overplays his greatest political strength.

BUSH: The enemy's dangerous, and I say that, you know, fully understanding that some are saying, well, the administration keeps crying wolf, I mean, but it is -- our most solemn duty is to protect the American people.

KING: There's little evidence in the polls of a post-election honeymoon. Mr. Bush's plans to revamp Social Security are a tough sell in Congress and with the American people, and the violent insurgency has significantly eroded support for the war in Iraq. Fifty-two percent of Americans now say it was a mistake to send U.S. troops to Iraq, up from 44 percent three months ago.

But Mr. Bush continues to get higher marks when it comes to securing the home front. Sixty-two percent of Americans say the president improved the nation's security in his first term, and 68 percent believe he will keep the country safe from terrorism in a second.

The president shies away from any talk of legacy, but is well aware one test of his is whether America is attacked again.

BUSH: There's a desire by people to kind of slip into the comfort zone of normal life, which we want, but I don't think the president has that luxury. The president must be always mindful that an enemy lurks.

(END VIDEOTAPE)

KING: I asked the president this nation's greatest security shortcoming, and he immediately answers human intelligence, a weakness cited as a factor in the 9/11 attacks and in the now we know false claim that Iraq had weapons of mass destruction, and a weakness, still, Mr. Bush says, as he embarks now on a second term -- Lou.

DOBBS: One that looks to be beginning with a measure more of candor, John. Is that the case? KING: Well, certainly, the administration is acknowledging it still has much work to do on the Homeland Security front, as you noted earlier and Ed Henry did in his piece about Condoleezza Rice.

Still some contention between the Democrats and the administration and even some Republicans in the administration over the assessments of how it is going in Iraq.

So you ask the question, is the administration being more candid, you might get a different answer depending on who you ask here in Washington -- Lou.

DOBBS: Thank you very much. I said only a measure, John.

John King from the White House.

More on the president's inauguration later. We'll tell you why it is so difficult to find any inauguration souvenirs that are actually made in the country the president leads and any that are not imported from specifically China and other cheap overseas labor markets.

And "Power Play." How an old-fashioned Latin American strongman -- some would call him a dictator -- believes he can threaten the United States, our oil supplies and get away with it.

(COMMERCIAL BREAK)

DOBBS: The second inaugural of President Bush has inspired the manufacture of thousands of collectibles -- buttons, T-shirts, magnets and more -- all marking the occasion, but good luck finding one that was actually made in the U.S. of A.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): An inaugural souvenir? There's lots to choose from. How about a baseball cap? This one is so patriotic, even the label is an American flag. But flip it over. Made in China!

This shirt carries an inaugural seal. Perfect if you are looking to buy a commemorative shirt made in Pakistan. Many of the popular, but unofficial collectibles being sold to mark the country's 55th inauguration are made overseas.

Political Americana sells inaugural merchandise just one block from the White House.

JIM WARLICK, POLITICAL AMERICANA: A lot of things that are made that we use these days, there's not a supplier in the United States. I know we try and a lot of people try to get items made in the United States, but sometimes you just can't -- you can't find a manufacturer for it. And it's going to get worse and worse, too. SYLVESTER: The AFL-CIO union label group says it's a self- fulfilling prophecy. Big-box retailers like Wal-Mart no longer wants American goods, so the U.S. factories are run out of business. Then when it comes time to U.S. inauguration T-shirts and toys made in the USA, there are few U.S. manufacturers still around.

MATT BATES, AFL-CIO: It is obscene, and it's extraordinarily damaging to the economy, but it's very, very profitable for them. And, of course, they're celebrating. They're very happy about it.

SYLVESTER: So, if you can't actually make it to this year's inauguration celebration, you can always buy a George W. Bush doll crafted in the People's Republic of China or settle for a 2005 inauguration mug made in -- Where else? -- China.

(END VIDEOTAPE)

SYLVESTER: There is one place where you can buy inaugural items that are still made in the USA. The official inauguration committee Web site, inauguralgiftshop.com, sells a handful of items, including accessories, apparel and buttons, and all are made in America -- Lou.

DOBBS: Well, at least we have that.

Thank you very much.

Lisa Sylvester.

Well, another product made in China was recalled today. The Consumer Product Safety Commission says Martha Stewart paper lanterns are prone to overheating, melting and catching fire. For the last three years, more goods made in China are recalled from American store shelves than goods made in any other country.

Christine Romans has the story.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): The Batmobile, this Nerf football and even this Rock 'N Roller baby stroller -- all recalled from store shelves last year, all deemed unsafe for American consumers, all made in China.

KIM KLEMAN, CONSUMER REPORTS: What we're getting are toys that don't meet federal safety standards. They're -- the parts are too small. They don't have adequate warning labels. So young kids could choke. You have a real problem with counterfeit products, counterfeit electrical products.

ROMANS: As American companies search the globe for the absolute cheapest products to sell to Americans, the consumer goods on our shelves are often now from countries with weak product safety oversight, made by manufacturers who bypass safety for a few extra cents of profit.

RACHEL WEINTRAUB, CONSUMER FEDERATION OF AMERICA: If you look solely at price point, consumers are going to get hurt and injured and exposed to potentially dangerous things, and that should not be happening in our country or anywhere else.

ROMANS: The chairman of the Consumer Product Safety Commission has traveled to China to educate manufacturers and politicians about higher U.S. standards for safety. He says they're listening.

HAL STRATTON, CONSUMER PRODUCT SAFETY COMMISSION: It's natural that as we have more consumer products imported from a country like China that we're probably naturally going to have more recalls.

ROMANS: Recalls like this remote-control toy, another dangerous product made in China that was recalled last year. China is the biggest source for dangerous consumer goods, but India is the source of the largest toy recall ever in the history of the Consumer Products Safety Commission: 150 million necklaces for children sold in vending machines.

(END VIDEOTAPE)

ROMANS: Now those vending machine necklaces were full of lead. They sold for a quarter, 50 cents. They potentially harmed thousands of kids. They are thankfully off the market now but many harmful imported products are not, exploding electrical cords, dangerous toys and games that have not yet been recalled, Lou.

And I brought one to show you. This is an exacto knife, a cutter, for children.

DOBBS: For children?

ROMANS: Age 3 and up. And the package is on the market now. The package from China says "choking hazard." I would say the hazard is cutting hazard.

DOBBS: That is remarkable.

ROMANS: It's on the market right now.

DOBBS: Baby's first exacto knife?

ROMANS: I guess so.

DOBBS: That's a remarkable, remarkable situation. And what really the Consumer Product Safety Commission is saying is the United States has not only lost control of its borders and much of its economy, but also the standards that our society will meet, and, of course, people need to exercise a little individual responsibility to be very careful.

ROMANS: Indeed.

DOBBS: Christine, thank you. Excellent report.

The same White House adviser who famously told us that outsourcing American jobs to cheap foreign labor markets is a good thing and who has no problem with $7 trillion in national debt, who also has no problem adding another $2 trillion on to that debt, top White House economic adviser Gregory Mankiw called those who opposed the president's plan to privatize a portion of Social Security the ostrich caucus.

In a prepared remark for the Council of Foreign Relations, Mankiw said, "Reasonable people can debate what kinds of reforms are best, but don't let the ostrich caucus convince you to put your head in the sand."

Thank you, Gregory Mankiw.

That brings us to the subject of our poll tonight. Do you believe privatizing Social Security is a good idea? That is yes or, if you're a member of the ostrich caucus, you may vote no. Cast your vote at loudobbs.com. We'll have the results for you later in the show. I assure you that was a facetious comment about the ostrich caucus.

Also tonight, "Tough Talk" against one of this country's largest suppliers of oil. How Secretary of State nominee Condoleezza Rice is answering years of antagonism from Venezuelan President Hugo Chavez.

And then our "Face Off" tonight. A debate on our immigration crisis. How the White House is defending the president's plan to give millions of illegal aliens legal status. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Updating you now on our top story tonight, a possible terrorist threat in this country. Federal agents are looking for at least four people, four Chinese nationals and two who are believed to be Iraqis, who illegally crossed our border with Mexico. Federal, state and local authorities are looking for those people. Sources say they may be carrying dangerous materials, heading to Boston by way of New York. These reports are based on one source, a source whose information, obviously, has not been corroborated, but authorities very much on the lookout.

The governor of the state of Massachusetts, Mitt Romney, just updated reporters on this ongoing investigation.

(BEGIN VIDEO CLIP)

GOV. MITT ROMNEY (R), MASSACHUSETTS: None of the individuals that we're looking for is believed to be in Massachusetts, at this point. They're believed to be out of state. And yet we do have names and identification of people who we want to speak with, and law enforcement is looking for those individuals. And we, obviously, hope to be able to speak with them and to get the information that we're seeking.

(END VIDEO CLIP)

DOBBS: Governor Romney urged the public not to panic and to go about their business at usual. We will, of course, here be bringing you the very latest on the developments in this story and throughout the evening right here on CNN.

Well, President Bush has said immigration reform will be a top priority of his second term. During hearings on the confirmation of Condoleezza Rice as secretary of state, members of the Senate Foreign Relations Committee asked Rice about the president's plan to legalize millions of illegal aliens in this country.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, SECRETARY OF STATE NOMINEE: He has a proposal on the table for temporary worker program that would serve the purposes -- purposes in a humanitarian sense, in that it would help to alleviate what is really a humanitarian crisis for us. It would help us economically because matching willing workers and willing employers is an extremely important thing for our economy, when Americans -- when there are jobs that Americans will not take. It's not an amnesty, and the president's been very clear about that.

(END VIDEO CLIP)

DOBBS: Immigration reform, if that's what you can call it, is the subject of our "Face-Off" tonight. Joining me now from Washington, D.C., is Frank Sharry. He is the executive director of the National Immigration Forum. He supports the president's guest worker program. And from Fresno, California, Victor Davis Hanson, author, senior fellow at the Hoover Institution, who says the president's plan will only encourage illegal immigration.

Gentlemen, good to have you both here. Frank Sharry, Condoleezza Rice's statement that illegal immigration is a matter of a humanitarian crisis -- your reaction to that?

FRANK SHARRY, EXEC. DIR., NATIONAL IMMIGRATION FORUM: Well, it is a humanitarian crisis. We have thousands of people dying at our borders who are trying to get in to do jobs that Americans don't want.

But more fundamentally is that we have a broken immigration system that has obvious vulnerabilities. And if we're going to get control of our system and control of our borders, we have to have both carrots and sticks. We can't just enforce bad laws and maintain these bad laws which don't allow legal channels. We have to both allow people to come in legally who want to work, and at the same time, have much -- have those laws be more strictly enforced. It's a combination of both liberalized migration channels and tougher enforcement, not just one or the other.

DOBBS: And Victor, your thoughts?

VICTOR DAVIS HANSON, SR. FELLOW, HOOVER INSTITUTION: [OFF-MIKE] -- had the level of illegal aliens residing and had highest unemployment because employers would prefer to hire people without education who are in the shadows and can't collectively bargain, and pay them in cash. It's a moral issue.

Think of 14,000 people here illegally from Mexico who are in the California prison system. It costs us $400 million in our state, and yet the start-up cost of one UC campus is $20 million. We could fund 20 new UC campuses for their first year, at a time when Mexican- American citizens who are here legally or second generation can't find access to the University of California.

These are all different issues -- environmental, national security, and yes, humane -- that we don't even talk about because of the demagoguery on the laissez-faire right and the therapeutic ethnic left.

DOBBS: Where are you in that spectrum, Frank?

(LAUGHTER)

DOBBS: I haven't heard that expression before.

SHARRY: Well, we find ourselves in the middle that want laws that work. We have laws that don't work. We have a regulatory regime that's out of step with economic reality. We have a declining number of U.S.-born workers who are interested in the service and agricultural jobs that immigrants are filling. So when it comes time for a professional couple to find a nanny or a hotel to find a housekeeper or a landscaper to find a worker, the Americans want to go work in the office and go to college. It's the immigrants that are filling those jobs. So to say that they're all criminals and it causes unemployment...

DOBBS: Whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa! Frank, I'm not going to let you get away with that, and you know it. No one has accused everyone of being a criminal. Have they?

SHARRY: No. Well, look...

DOBBS: I mean, come on. Let's not indulge in that sort of nonsense.

SHARRY: Oh, well, look...

DOBBS: The fact of the matter is there's a real issue here.

SHARRY: But -- but...

DOBBS: It is economic. It's societal.

SHARRY: Of course.

DOBBS: And does it not appall you that the United States government -- because you agree with Condoleezza Rice that there is a humanitarian issue here, why in the world has the United States government not demanded of Mexico that it begin to take care of its own people?

SHARRY: Well, I think it has, and it will continue to do so. Look...

DOBBS: Oh, come on, Frank! Name one time.

SHARRY: Well...

DOBBS: We just heard the interior minister of Mexico say that he would demand rights for Mexican citizens in this country...

SHARRY: Lou...

DOBBS: ... who come here illegally.

SHARRY: ... let's not demagogue Mexico. Let's come up with a solution.

DOBBS: That's not demagoguing! You're simply evading...

SHARRY: Let...

DOBBS: ... and I don't think you should be doing that, do you?

SHARRY: No, I'm interested in U.S. immigration policies that serve American interests. And right now, our system is broken. And the president has made a good start on a set of principles that need to be added to by the likes of John McCain and Ted Kennedy and others, so that we have a bipartisan reform package that...

DOBBS: Oh, who needs a bipartisan reform package! I don't care whether it's Republican or Democrat...

SHARRY: Well, you like...

DOBBS: ... so long as it's effective.

SHARRY: You like the status quo?

DOBBS: So long as it's -- absolutely not, Frank.

SHARRY: Well, then what's the solution, Lou? That's the question.

DOBBS: Here's the -- would you like me to offer it or -- well, let's...

SHARRY: Please!

DOBBS: I'm suddenly in the middle of your debate, Victor. You respond first, and then I'll post a footnote, if I may.

HANSON: We're always going to have a 10 to 12 percent unemployment in counties such as my own when an employer has the option of hiring somebody off the books who is not able -- either doesn't have English or is here illegally and does not see this as an entry-level job but as a job that will exist in perpetuity until he's 50 or 60, and needs the entitlement industry to subsidize the employer who never paid into health insurance. In 1970, we -- believe me, we had lawns that were mowed...

DOBBS: Right. Victor, let me go -- let me go to the...

HANSON: ... people were able to go to a restaurant...

DOBBS: I think Frank really -- you know, this is -- we've reached a point where we need to be talking about real solutions. And we don't need any more border games.

SHARRY: Yes.

DOBBS: What is the solution, Victor?

HANSON: I think it's very simple. We need to have tough employer sanctions. We need a verifiable ID. We need to have a one- time amnesty, not rolling amnesty, for people who are here 10 years, 15 years. And especially, we need to tell Mexico that we're not going to allow them to subsidize their own economy with $12 billion of remittances by exporting potential people they can't feed or house.

And we got to -- one last thing that's not necessarily extraneous. We need to change the attitude toward the melting pot and not the salad bowl, so people realize that we're here to integrate, intermarry, assimilate, and bilingualism, separatism, ethnic solvenism (ph) -- it's not going to create a climate where you can live in a perpetual apartheid society. So we need to do a multi-faceted task that sends the message to Mexico that if you come across to the United States, you're going to come legally and you're going to assimilate into the mainstream of American culture, as we did so wonderfully in the past.

DOBBS: You got a problem with that, Frank?

SHARRY: Well, actually, I think our proposal issue is very much along the same direction. We have to make sure that people come out of the shadows who are here, who have been working and plan to stay here and assimilate into American society. We have to have legal channels for workers and family members, so that they can come legally, with rights and without smugglers.

And we need to enforce realistic limits effectively, but we have to have limits that are expanded and realistic if we're going to be able to enforce them and reverse the incentives. There's too many Americans who wink and nod at illegal immigration now because they know our steps are so out of step with reality. Let's bring in law...

DOBBS: You mean like corporate America and some of the companies who support your organization?

SHARRY: Corporate America and professional couples and county governments. Everybody, Lou. We're all complicit in this because...

DOBBS: No, we're not all complicit! There you go again, as the saying goes. We're not all complicit. Some people are very, very adamant about...

SHARRY: Lou, I beg to differ. I beg to differ. I'm guessing that in New York, in your studios, that who cleans that building when the lights go out are people, some of whom are here legally and some of whom are not. I mean, it's just the reality of the labor force in America that the low-wage service sector and agriculture jobs are primarily being done now by immigrants because the number of...

DOBBS: Well, why are you willing to support a system that is exploitive of people...

SHARRY: I'm not. I'm...

DOBBS: ... who we all respect, who have a terrific work ethics...

SHARRY: Right.

DOBBS: ... who are outstanding human beings?

SHARRY: Oh, exactly.

DOBBS: Why would you support a system that does that?

SHARRY: We want a reformed system that does away with the incentives for abuse and exploitation. Right now, you have undocumented workers who are easy to be taken advantage of, and they under -- and the bottom-feeder employers...

DOBBS: Frank -- Frank...

SHARRY: ... undercut the decent employers.

DOBBS: All right, as a condition precedent (ph), you asked me, I said I'd put a footnote in this. Here's the response to your question on what I personally would do, since you were kind enough to ask.

SHARRY: Please.

DOBBS: The first thing I'd do is I would end the PR border games, and I would make certain that our borders and our ports are absolutely secure, no matter what it costs, because you cannot control immigration, legal or illegal, if you do not have control of our borders. And you cannot even discuss homeland security unless we are in control of our borders and our ports. Anything else is a fiction and a shameful lie that's being perpetrated, frankly, in many quarters right now on the part of both parties. And it's time for us all to wake up.

And thirdly, I'd come to an understanding about how we're going to deal with the illegal aliens we have here. And I would do it not on the basis of what corporate America or those who want to hire and exploit workers want to do, and call that economics and a free market system. I would do so based on a policy that says we're going to bring the skilled -- the skills, the people who are necessary to keep this society growing.

We are the most diverse racial, ethnic society on the face of the earth. We have everything to be proud of. There's nothing racist here. There's nothing xenophobic. It's simply about preserving the national interest, don't you think, Frank?

SHARRY: Well, I like your plan. I think that... DOBBS: We have a deal, and we get to conclude it. I will send the papers down for your signature right away.

(LAUGHTER)

DOBBS: Frank, thank you very much. Victor Davis Hanson, we thank you both.

Never ask a question, Frank, unless you want an answer. I try to remember that myself from time to time.

Coming up next, a bold new proposal to substantially raise the benefit for the military families who lose a loved one in combat. I'll be talking with one of the senators supporting that proposal and advancing it through the U.S. Congress. And our special report, "Assault on the Middle Class," why nearly 100,000 Americans may no longer be able to afford a college education. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My guest tonight will introduce legislation next week to raise the family benefits for American troops killed in combat to $100,000. The families of troops killed now receive $12,000. Senator Jeff Sessions of Alabama will sponsor the bill, along with Senator Joseph Lieberman. Senator Sessions has just returned from Iraq and joins us tonight from Capitol Hill.

Senator, I think we all would be quick to say thank you for putting forward this legislation that's overdue, and we're grateful for you doing so. Just coming back from Iraq today -- the worst wave of violence in weeks in Iraq -- what is it going to take, in your assessment, based on your experience to bring the situation under control and bring stability to Iraq?

SEN. JEFF SESSIONS (R), ALABAMA: First, I want to thank you for those kind words. It is important that we say to our soldiers, If something happens to you in combat, your family will be well taken care of.

We did have a good review of the situation in Iraq. In many ways, the violence has been down from what it was in November, but it's still very high. These terrorists are very determined. They are targeting the weakest links in the system. They're very hard to deal with.

I think several things have to occur. We need to raise up the training of the local forces, police and military. We need to continue our military efforts to identify and destroy these bad guys. And we need this election to go well, and we need -- the Iraqi people need to rise up and take control of their country and defend their country from these nihilist attackers.

DOBBS: And Senator, as you point out, that was the crux of a -- really, a contest between Condoleezza Rice and Senator Joseph Biden today.

SESSIONS: Yes.

DOBBS: And remarkably, our reporting from the Pentagon -- Barbara Starr reporting that there is, indeed, wide, wide differences between the Pentagon, what they are saying, the Bush administration, and what other people who have visited Iraq recently, who have been there, are seeing as the number of trained troops and police, Iraqi troops and police.

The fact that the United States military doesn't even know how many Iraqis have been trained to this point, I personally, I just -- can you explain that to the American people, how it could even be? It's one thing to have a dispute over the level of training and the number trained, but not to even know the number of Iraqis in the military and in law enforcement in that country is astounding, is it not?

SESSIONS: Well, General Petraeus, who's in charge of that, met with us and talked with us about that situation. He has decided that it's not helpful to give out exact numbers. What did occur, when he was sent there to enhance this training, he made a determination to reduce the numbers that were being stated as fact because he didn't think they were sufficiently trained. And he was determined to have a lower number and build from that. He is turning out large numbers of soldiers and policemen now.

I believe they're going to be better trained, they're going to be much better equipped, much better armed. They're going to have an infrastructure that will support them. If their precinct is under attack, they will know somebody will come to help them. And he's doing the slow, hard things, and he's identifying leaders. He told us that a unit will not function well unless it has a good leader.

DOBBS: Absolutely.

SESSIONS: So there are some good leaders there. But we've got -- we can't -- some are not. And that's been harmful, too.

DOBBS: Well, Senator Sessions, we thank you for sharing your thoughts with us here tonight. And again, we look forward to the introduction of your bill next week, raising the family benefits for Americans killed in combat. Thank you, Senator Sessions.

SESSIONS: Thank you.

DOBBS: Coming up next, "Assault on the Middle Class," our special report, the rising cost of education in this country, why nearly 100,000 of our students could see their financial aid slashed. Our special report is next.

(COMMERCIAL BREAK)

DOBBS: "Assault on the Middle Class, our special reports this week. Tonight: More students than ever before in this country will graduate from high school, and one of the biggest questions they and their families will face is how and whether they can afford a college education. And it doesn't help that the amount of financial aid and grants available to those students are not keeping pace with the rise in inflation and tuition. Bill Tucker has the story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): For students like Kehli Faulkner, a college campus is a hard-one place to be.

KEHLI FAULKNER, COLLEGE STUDENT: Personally, for me, I would say that trying to hold down two jobs, go to school, live off campus, pay my rent, pay my bills, pay my insurance, eat, you know, and then pay for the outstanding cost of my educational books, after I already paid for tuition, it's kind of like, I would say, a slap in the face.

TUCKER: Kehli is not alone. The total price of a four-year public college as a share of family income has risen to 70 percent. That is up from 42 percent in the mid-1970s. Kehli's mom has already put two children through college.

BRENDA FAULKNER, KEHLI'S MOTHER: You know, there's not enough. We can get student -- we can get loans, we can get federal grants, we can get financial aid. But there's still not enough support for the kids.

TUCKER: College costs typically rise faster than the rate of inflation, but in the past two years, the cost of public colleges has exploded, up 20 percent.

TRAVIS REINDL, AMER. ASSN. OF STATE COLLEGES AND UNIV.: You start losing your eligibility for the Pell grant in about the middle $40,000 range. It varies because every student is a little bit different in the formula, but your average student starts to fall out of eligibility around about $45,000 or so.

TUCKER: Adding insult to injury, some 90,000 students who were once eligible for Pell grants will lose them because of changes in the way eligibility is calculated. President Bush announced a plan to increase the maximum size of a Pell grant, but that plan would not increase the number of students eligible for the grants.

BRIAN FITZGERALD, BUSINESS HIGHER EDUCATION FORUM: We will make a serious mistake and have a really long-term impact on our economic growth if we fail to give the next generation of Americans the same opportunity to attend four-year college and get a college degree that the Baby Boom generation had.

(END VIDEOTAPE)

TUCKER: The Business Higher Education Forum says that unless adequate financial aid is made available, some 4.5 million college- qualified high school seniors will not be able to afford to go to a four-year college, Lou.

DOBBS: That's astounding, and a disgrace for a country that is a superpower and the world's wealthiest. Thanks very much, Bill Tucker.

Still ahead here, the results of our poll and a preview of what's ahead tomorrow. (COMMERCIAL BREAK)

DOBBS: Now the results of our poll tonight: 7 percent of you say privatizing Social Security is a good idea, 93 percent of you are in what presidential economic adviser Gregory Mankiew calls the "ostrich caucus" and do not think it is a good idea.

Thanks for being with us here tonight. Please join us tomorrow. It's inauguration day for President Bush. Former adviser to four American presidents David Gergen will be among our guests. Condoleezza Rice faced tough questions on trade and our exploding deficits. We'll be talking with the senator who pressed Rice on what the State Department should be doing all about that. Please be with us.

For all of us here, good night from New York. "CNN SPECIAL REPORT: Defending America" is next.

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