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Lou Dobbs Tonight

Secretary Rice Visits Europe, Talks Tough on Iran; Conflicting Reports on Readiness of Iraqi Troops

Aired February 04, 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.


ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, February 4. Here now for an hour of news, debate and opinion is Lou Dobbs.
LOU DOBBS, HOST: Good evening.

Tonight, Secretary of State Condoleezza Rice traveling in Europe has won a promise from Germany to help in the rebuilding of Iraq. German Chancellor Gerhard Schroeder, a leading critic of the war in Iraq, says Germany is ready to help, if the Iraqis ask for that help.

Schroeder also said Germany and the United States are now in agreement on the need to stop Iran from developing nuclear weapons. Secretary Rice began her European tour in London, where Robin Oakley has the report.

(BEGIN VIDEOTAPE)

ROBIN OAKLEY, CNN CORRESPONDENT (voice-over): The choice of first stop on a seven-capital tour of Europe was deliberate. The U.S. said Condoleezza Rice has no better friend than Britain.

But after the diplomatic niceties, it was Iran which was the focus of strong words.

CONDOLEEZZA RICE, SECRETARY OF STATE: We have all been concerned about the abysmal human rights record of the Iranian regime.

OAKLEY: But that was just for starters.

RICE: Iran engages in activities that are destabilizing to the region in which it lives, particularly when it comes to support for terrorism.

OAKLEY: Dr. Rice accused the Iranians of undermining democratic efforts in Iraq and Afghanistan, but above all, she insisted...

RICE: Iran should not use the cover of civilian nuclear power development, an opportunity granted to it by NPT membership, to sustain a program that could lead to a nuclear weapon.

OAKLEY: And then came the key question for European allies. Did all this tough talk mean that the U.S. might consider an attack on Iran?

RICE: The question is simply not on the agenda at this point in time. You know, we have diplomatic means to do this. OAKLEY: And Iran, she said, would be influenced by seeing Iraqis and Afghans voting in free elections.

From her British hosts, who are working with France and Germany to persuade the Iranians not to pursue nuclear arms, a denial that fierce words from the U.S. were hindering their efforts.

JACK STRAW, BRITISH FOREIGN MINISTER: The efforts of the E-3 -- France, Germany and the United Kingdom -- with respect to Iran, to the extent that they have worked so far, have only worked because we've been backed by an international consensus, and absolutely fundamental to that international consensus has been the support that we have received in the IAEA board and in many other ways from the United States.

OAKLEY (on camera): Condoleezza Rice's forthright words on Iran left analysts in no doubt of the continuing muscularity of U.S. foreign policy in George Bush's second term.

But if that's making some European diplomats nervous, they were heartened, too, by her pledge of an enduring and active transatlantic partnership and by her promise to sustain the momentum of the Middle East peace process.

Robin Oakley, CNN, London.

(END VIDEOTAPE)

DOBBS: In Iraq tonight, Shiite religious and political groups with strong ties to Iran are leading the election results. Early results show a strong lead for Iraq Shiite coalition the United Iraqi Alliance over the secular party of interim Prime Minister Ayad Allawi. The Shiite coalition is backed by leading cleric Grand Ayatollah Ali Al-Sistani.

Election officials stress these results are preliminary and only account for ballots cast at 35 percent every the Iraqi polling stations, but, of course, the Shia are the vast majority of the Iraqi population. Final results will be coming in next week.

And three more American troops were killed in separate attacks in Iraq. One of them died in a bomb attack outside Tikrit that wounded seven other soldiers. A roadside bomb in Mosul killed another soldier, and a member of the 1st Marine Expeditionary Force was killed while on patrol south of Baghdad.

The Pentagon has said it hopes to reduce the number of American troops in Iraq to 135,000 this year as more Iraqi forces are trained. Many Democrats are questioning whether enough Iraqi forces will be ready in time to fulfill the promise. Today, a leading U.S. general in Iraq tried to crush those concerns.

Senior Pentagon correspondent Jamie McIntyre with the report.

(BEGIN VIDEOTAPE) JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): Of Iraq's 136,000 fully trained security forces, fewer than one third are capable of being deployed in the fight against insurgents, according to congressional testimony by the chairman of the joint chiefs.

GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: That's about 40,000 that can go anywhere in the country and -- and take on almost any -- any threat.

MCINTYRE: But a day after that report to Congress, the U.S. general in charge of training Iraqi forces insisted a full 130,000 Iraqis prevented terrorists from penetrating security at more than 5,000 polling sites on election day.

LT. GEN. DAVID PETRAEUS, MULTINATIONAL SECURITY TRANSITION COMMANDER: It was Iraqi police and soldiers who gave their lives to prevent several suicide vest bombers from blowing up large numbers of those standing in line to vote.

MCINTYRE: Skeptics in Congress continued to question if the capability and reliability of those Iraqi troops is being overstated. Maine Senator Susan Collins read from an e-mail she said was from someone deeply involved in the training of Iraqis.

SEN. SUSAN COLLINS (R), MAINE: "They've been lying about their numbers in order to get more money. They say they have 150 when there are only 100. The senior officers take a cut from the top. We have to let them take a week's leave every three weeks and they usually return late, if at all. We had 134 go on leave a week ago, and only 37 returned."

MCINTYRE: In his Pentagon teleconference from Baghdad, General Petraeus did not give a desertion rate but admitted few Iraqi units are at full strength.

PETRAEUS: Some are still receiving replacements for combat casualties and losses suffered due to severe intimidation.

MCINTYRE: But Petraeus said there's no shortage of volunteers, and the Pentagon released this photograph showing a large crowd at an Iraqi recruiting station the day after the elections.

(END VIDEOTAPE)

MCINTYRE: Now, next week some 3,500 more Iraqis are scheduled to complete their training, and General Petraeus says that will bring the manning levels up to 80 percent in the 90 different battalions that are now available. And of course, that strategy is key to the U.S. fulfilling its goal of withdrawing 15,000 American troops by spring in order to reduce those troop levels -- U.S. troop levels to 135,000 -- Lou.

DOBBS: A lot of numbers, Jamie. We know that only a third of those that have been trained are ready, in the estimation of the military. How soon before we have all of them trained and ready? MCINTYRE: Well, you know, they're all trained and equipped to some level. And what -- the point they're trying to make is not every one of these 135,000 has to be a commando that's going to go and fight insurgents. They do also need...

DOBBS: Jamie, I was just using the Pentagon's own expression, saying only a third of them are ready. When will they be a ready force?

MCINTYRE: Well, you know, the Pentagon says there's no quick answer to that. It has a lot to do -- again, it's not numbers. It's about how effective, what kind of leadership they have, what kind of cohesion. And they're just going to have to see how it works as they put these units out in the front and the U.S. troops move to the rear.

DOBBS: Jamie, thank you as always. Jamie McIntyre, senior Pentagon correspondent.

New reaction tonight to the preliminary report on the United Nations oil-for-food scandal. U.N. Secretary-General Kofi Annan today said he was shocked -- shocked to learn about the involvement of a high-level U.N. official in that scandal.

Our senior U.N. correspondent, Richard Roth, is here tonight and has the report -- Richard.

RICHARD ROTH, CNN CORRESPONDENT: Yes, Lou, the oil-for-food scandal is called that quite often, a scandal, but even after Paul Volcker's first report, nobody really knows how deep a scandal yet, how many people illegally profited.

There was more than enough time today to pick through the report and find other interesting nuggets, but all eyes were on the U.N. and the man at the top, Secretary-General Kofi Annan, who yesterday through an aide said he was shocked at the charges against the director of the oil-for-food program.

KOFI ANNAN, U.N. SECRETARY-GENERAL: Obviously, there were some hard knocks in the report, and we are concerned about it, and this is why we intend to take action promptly. And this is the first step.

(BEGIN VIDEO CLIP)

There's going to be other reports from the Volcker Commission, and we look forward to the completion of his work. And we are as determined as everyone to get to the bottom of this. We do not want this shadow to hang over the U.N. So we want to get to the bottom of it, get to the truth and take appropriate measures to deal with the gaps.

(END VIDEO CLIP)

ROTH: Kofi Annan also wrote to the entire U.N. staff. He said as chief administrator of the organization, he, of course, accepts responsibility for its management. He said that's why he set up the inquiry to get a clear idea of what was wrong. Of course, Lou, critics could say Annan originally wanted to have an internal probe run by the U.N., which at the time indicated Annan did not have a full grasp, perhaps, of the seriousness of the oil-for- food issue, the gathering storm.

And in his letter to the staff, he says he set up an inquiry, but that's happened before from Annan on Rwanda and other U.N. debacles. Again, open of Annan to take the blame in these follow-up investigations, but not capable of his team catching the problem beforehand.

But it should be noted that Paul Volcker says he did not find widespread corruption so far, financial abuse of all of that oil-for- food money.

Annan and his son, Kojo, their fate still to be determined in a follow-up report by Paul Volcker and whether there's any conflict of interest in the selection of various contractors.

The State Department today praised Kofi Annan's leadership and commitment on reform.

DOBBS: So we should all feel better. Richard Roth, thank you very much.

President Bush today is visiting three states to campaign for his plan to reform Social Security. President Bush warned that his critics are using what he called scare tactics to discredit his proposal.

White House Correspondent Dana Bash reports now from the president's final stop in Tampa, Florida -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president just wrapped up here in Florida, and listening to him at all five of his stops over the last two days, it was abundantly clear he knows exactly what his biggest hurdles are in trying to sell this plan for what he calls personal accounts for Social Security.

Among the biggest, certainly, is trying to make it clear to older Americans, those 55 and over, that they are not going to lose benefits. He repeated that, especially here in Florida, where those voters are abundant, and they actually do go out and vote.

Now Mr. Bush also made appeals over and over to younger workers, younger Americans, that the Social Security trust fund, in his words, will go bust in their lifetime and not to listen to critics who say that he's exaggerating that figure.

But, earlier today in Omaha, Nebraska, the president did admit that this idea for personal accounts will not alone save the system.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I fully recognize a personal retirement account is not the only thing needed to make -- to solve Social Security permanently, but it's a part of a solution, and I believe I have a responsibility, as someone who's put the issue on the table, to be a constructive voice in coming up with a solution that will save Social Security for younger workers.

(END VIDEO CLIP)

BASH: Now the goal of this tour, of course, is to try to pressure Democrats up for reelection in red states that they should go his way on this idea. Florida's target was Senator Bill Nelson. He did not show up for this event today. His office said he had a family commitment, but he certainly has been quite cool to this idea.

But back in Nebraska, Senator Ben Nelson told us that he's keeping an open mind, that he is willing to listen to the president, but he certainly wants more details and wants to see the numbers. But he certainly didn't seem to mind being a target.

In fact, he seemed to be having some fun with it. He showed us a cartoon by Jeff Karturba (ph) of The Omaha World Herald actually poking fun at the White House, targeting him, with the president's stop there today, and the senator told us that he signed that cartoon and gave it to the president when riding with him in the limousine -- Lou.

DOBBS: Dana, thank you very much.

And Senator Ben Nelson will be our guest here tonight.

Next, surprising and disappointing news for millions of out-of- work Americans.

(COMMERCIAL BREAK)

DOBBS: Tonight, further and startling new evidence of the assault of this country's middle class. The number of new jobs in this country has once again fallen behind our population growth, and prices on just about everything are rising faster than most Americans' paychecks.

Kitty Pilgrim has the report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): Even the president today admitted that job creation is less than perfect.

BUSH: We're making progress. I assure you, however, we will not rest on our laurels. There's more things we can do to create an environment in which jobs continue to expand.

PILGRIM: The 133,000 jobs created is far short of the 200,000 economists were predicting. Economists say while some industries are doing well, others are sinking, creating a two-tiered system that has emerged in the last few years -- those who are doing well and many in the middle class who aren't. JOHN SILVIA, CHIEF ECONOMIST, WACHOVIA: You're getting almost two different faces of the labor force. There are a number of people, particularly in the service professions, that are doing quite well, and their average hourly earnings are outpacing inflation, but then you've got a mass of people, particularly, for example, let's say, in nondurable manufacturing or in the leisure and hospitality industry whose wages and benefits are not keeping up with inflation.

PILGRIM: Proof that the middle class is being squeezed can be found in the prices of everything compared to wages. The latest numbers show consumer prices were up 3.3 percent, but wages lagged at least a percentage point behind. Manufacturing particularly is still struggling. Twenty-five thousand more jobs lost last month. Construction lost 9,000 jobs.

Economists say some people are just simply dropping out of the workforce. Young people are trying other routes, going back for more education. And adult women are also participating less than they were in the workforce. Economists see that as a sign the current job prospects are dim for both those groups.

(END VIDEOTAPE)

PILGRIM: Now economists say one reason why wages are lagging is that health-care costs are putting the pressure on companies. As they pay more out for benefits, they're putting less into the actual paycheck, and that's something that's very hard to reverse -- Lou.

DOBBS: After about four years, even though last year was remarkable in that 2.2 million jobs were created, but over the past -- we're now entering the fifth year in which jobs continue to be created at a tepid pace, and the pay levels are suddenly static in some cases in decline. It's highly questionable how long this can be sustained.

PILGRIM: Yes, it really is. When you look at the numbers sector by sector, it paints a very bleak picture. Overall, it tends to look a little more optimistic, but then when you start to break it out, it really doesn't.

DOBBS: Five-point-two percent unemployment rate. But that's good news. Let's have a sunny outlook here on this.

PILGRIM: Well, the 5.2 percent, economists are telling me, is a product of a lot of people dropping out of looking for work, and so that is maybe an artificially positive number, that low level.

DOBBS: I wasn't communicating about that sunny outlook.

Kitty, thank you very much for giving us the real news.

Kitty Pilgrim.

Appreciate it.

Well, more and more American companies are exporting jobs to cheap foreign labor markets. According to a new report, those companies are making the decision to outsource without consideration of the substantial risks that are involved.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN FINANCIAL NEWS (voice-over): Like a stampede, American companies seem to be giving little thought as to where they're headed when it comes to outsourcing.

A recent survey found that, in four years, 73 percent of North American companies surveyed expect to outsource goods and services to China and 60 percent to India.

The motivation? Massive cost savings, but, as some companies have learned, even after careful consideration, the decision to offshore can carry a higher-than-expected price.

UNIDENTIFIED MALE: What kind of software were you using to do that?

TUCKER: Everdream, an IT services company based in California, got its wake-up call, when, after moving some of its call centers offshore, customer satisfaction dramatically dropped, creating concern within the country.

GARY GRIFFITHS, CEO, EVERDREAM: It was the first time in five years at Everdream there were days when I was afraid to pick up the phone to talk to yet another customer who was upset with a poor service industries.

TUCKER: Hayward Industries which manufacturers pool products opened up a plant in China, only to experience high training costs and problems with quality control, which led to a longer manufacturing process, none of which were anticipated.

PAUL ADELBERG, VICE PRESIDENT, HAYWARD INDUSTRIES: A word of advice to companies -- they better do their homework, and I would also venture to say because it seems like the in thing to do for some manufacturers, in a lot of cases, I would say that companies are making a big mistake by going to China or offshore manufacturing.

(END VIDEOTAPE)

TUCKER: Adelberg goes on to point out that China -- or going into China is a lot easier than getting out, and, Lou, that's largely because companies after having invested so much money to go there are embarrassed to admit they made a mistake and just simply get out.

DOBBS: And we know for a fact that many of the world's largest multinationals are in China. They're having a very difficult time making money. They're not admitting this to their shareholders in many cases not even their board of directors, but also having a difficult time, if they do make money, in getting that money out of the China. The story is complicated, but the results are become increasingly clear. Bill, thank you very much.

Bill Tucker.

Well, some city officials in Middletown, Ohio, apparently have no sense of humor. Imagine that. They have suspended that city's tax superintendent without pay for one week because she has a sense of humor and insisted on a joke. They say that joke was no laughing matter.

In an effort to poke a little fun at the monotony of taxes and to change perhaps the stolid bureaucratic atmosphere, tax superintendent Linda Stubs (ph) added some funny lines to the city's tax forms. For example, "If we can tax it, we will." and "Free advice: If you don't have a profit in a five-year period, you might want to consider another line of work."

Now I think that's funny, don't you? Middletown's finance director said revised forms were sent out immediately at a cost of $5,500. Well, I think the tax superintendent should at least be given a cheer for trying.

Next here, how the Chinese manufacturers are trying to steal one of these country's most popular brands. That's a great relationship.

(COMMERCIAL BREAK)

DOBBS: A lot of U.S. companies have rushed to export their manufacturing operations into China, offshoring to China, trying to save money on labor and production costs. Now many of those very same companies are being forced to spend a lot of time, money and energy trying to protect the brands and their other intellectual property from those cheap Chinese counterfeiters, but very effective counterfeiters, as Christine Romans now reports.

(BEGIN VIDEOTAPE)

STU HERRINGTON, CALLAWAY GOLF: There she about be. This is a typical example, probably as good an example of how it is that they use inferior materials.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): Stu Herrington is the brand cop for Callaway Golf. It's his job to make sure counterfeit golf clubs stay off the market.

HERRINGTON: I have counterfeits here in my office that at a glance can fool me, until I look very, very carefully at certain differences that I know about and that we know about here, but which would elude a consumer.

Take a look at this one.

ROMANS: His job gets harder every day. Callaway, like most sporting goods companies, makes golf clubs in China, and piracy experts say China is the wild west of intellectual property rights, a breeding ground for counterfeiters.

The International Chamber of Commerce says up to 7 percent of world trade is counterfeit, much of it from China, and the United States trade representative estimates counterfeits cost American business $250 billion a year. It's one of the risks of manufacturing outsourcing.

KEVIN RIVETTE, BOSTON CONSULTING GROUP: One of the things that we found is many of the companies going over there that haven't thought about it, haven't thought that their innovation, if not protected, is really philanthropy.

ROMANS: U.S. Immigration and Customs Enforcement last year seized $138 million of counterfeit goods, up sharply from the prior year.

NANCY FORMAN, U.S. IMMIGRATION & CUSTOMS ENFORCEMENT: There are many countries involved in the manufacturing of counterfeit goods. China certainly leads the list, but we're working with the Chinese to attack this problem.

ROMANS: Meanwhile, more companies, like Callaway Golf, are spending heavily to protect their factories and supply chains, waiting for China's laws to catch up with its manufacturing explosion.

HERRINGTON: Sooner or later, China will get out of the business of being known as the counterfeiter to the world.

(END VIDEOTAPE)

ROMANS: Until then, there's a booming business in intellectual property lawyers and consultants, Lou, as these companies try to protect what they've got. Our source there at Boston Consulting wanted to let you know that it is a booming business, those IP lawyers, and they are being off-shored because they cost $350 an hour about.

DOBBS: For crying out loud.

ROMANS: They're being off-shored for $60 an hour to cheaper overseas labor market.

DOBBS: Outsourcing the IP lawyers. There's a wonderful irony in that. But, also, I mean, this is pathetic.

Now it strikes me there's a suggestion within corporate America right now that they're somehow being hurt by all of this, the whole point of there being a China to exploit a market, and they have basically given away that intellectual property -- the brands, the designs, the blueprints.

Perhaps we won't see the Chinese catch up quite so quickly with their IP laws. It seems it's very good business for them to do that.

Christine Romans.

A fascinating report. Thank you.

ROMANS: You're welcome. DOBBS: That brings us to the subject of our poll tonight. Do American companies that send their manufacturing overseas deserve to have their products counterfeited? It's a pretty simple straightforward proposition. Yes or no. Cast your vote at loudobbs.com. We'll have the results for you later in the broadcast.

Next, a Democrat who could be critically, critically important to the president's agenda.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Here now for more news, debate and opinion, Lou Dobbs.

DOBBS: U.S. Senator Ben Nelson, Democrat of Nebraska, has emerged as President Bush's point man within the Democratic Party on the issue of Social Security.

In fact, The Washington Post wrote, "Perhaps no Democrat plays a more pivotal role, for now at least, than Senator Ben Nelson, who has expressed more willingness to work with the president than has any other senator in his party."

I asked Senator Nelson why he has lined up with the president.

(BEGIN VIDEOTAPE)

SEN. BEN NELSON (D), NEBRASKA: Well, if the president wants to step forward, as I think he is, to deal with the issue, and he's prepared to come forward with a plan, I think we ought to do what we can to work with him.

I think the whole goal here is, first of all, to do no harm, but secondly to see if there is a way to improve the situation. We've got a growing deficit, if you will, in the budget. I want to make sure that doesn't increase. But, at the same time, I hate to see the under-funded liability and the future insolvency of Social Security to go untouched.

DOBBS: Until a couple weeks ago, the president, as you know, Senator, was talking about a crisis. And then the State of the Union address, he said point-blank the system's going to be bankrupt in 2042. As you know, there's a great disagreement about whether or not the system will be insolvent in 2052, or 2062, based on assumptions.

NELSON: CBO or GAO numbers, yes.

DOBBS: So here we have a situation in which we may be dealing with an issue that is, at first, highly fluid, unpredictable, but total disagreement in Washington and nearly everywhere else on just how serious the problem is. Of all the problems to take on, why do you believe President Bush has chosen this one?

NELSON: Well, he told me today very personally that he sees the problem. He wants to bring this to the attention of the American people. And he feels an obligation to come forward with a solution, not simply to point out the problem, but to come up with a solution.

And I'm anxious to see what that plan is, because a plan may or may not work. The numbers may or may not add up. But I think we have to see the entire plan before we end up with the debating and the challenging of empty boxes. And he has moved from some concept to content, and now we need to go to the calculation.

DOBBS: You're obviously important in the calculus that the administration has put together to push this plan through, yet I don't hear you saying that you're 100 percent on board. The fact is, many in your party could be very upset with you since they are opposing, at least the leadership of your party on Capitol Hill, is opposing the president on this issue. How much pressure are you under?

NELSON: I'm not under any pressure. The only pressure I feel is from people back home. And my party understands I'm an independent- minded person. And I sometimes chart my own course. In this case, I'm anxious to take a look at what the plan might consist of. And I'm certainly ready to do that before I'm ready to say that it can't be done or that there won't be a plan that could do it.

DOBBS: On the question of your party, Senator, you've also said that your party needs to rethink and express what it stands for. Do you believe that that is a major issue right now for the Democratic Party, that there is an unclear message on the part of the party organization?

NELSON: Well, if you're not careful, and I think we probably weren't in the last election, the other side can define you. If you haven't defined yourself well enough, they'll define you. They'll try to do it anyway, but I think they were successful in defining the Democrats as wanting to ban the Bible, burn the flag, promote same-sex marriage, rewrite the Pledge of Allegiance, take away the guns, just one thing right after another. And I think the Democratic Party represents a lot of people, and those are not part of the Democratic platform.

DOBBS: Howard Dean looks to be the odds-on favorite to lead the party. Are you comfortable with that? Do you think he'll be a positive force for the Democratic Party and address the issues you just mentioned?

NELSON: Well, the DNC chair will be a person who, number one, can raise money -- and Howard Dean has shown that he can raise money -- to organize. He has shown he can organize. But I think it's more behind-the-scenes to get things done, and organized, and develop a party that's prepared to be effective in the off-presidential year elections, as well as in the next presidential year elections.

So I think Howard is one who can do that. I think the others are, as well. And what I hope, at the end of the day that, whether Howard's the chair, or whoever is the chair, will recognize they have to represent all Democrats and that they'll reach out to all of us.

DOBBS: And you mentioned the elections upcoming, the 2006 elections are upon us rather quickly. Do you believe the Republicans are running great risk on the issue of Social Security? Do you believe the Democrats are running great risk in opposing it?

NELSON: I think everybody runs risks talking about Social Security. But I think one of the ways you reduce the risk is to let the American people know that, whatever plan is out there, that we have to be sure it doesn't reduce benefits for people above 55 or below 55, and that you're not going to add to the deficit. And I think that's what we need to do.

DOBBS: Senator Ben Nelson, good to have you with us.

NELSON: It's good to be with you, Lou. Thank you.

DOBBS: And joining me now, three of the country's top political journalists in Washington, Ron Brownstein of the "Los Angeles Times," Karen Tumulty of "Time" magazine, and from Boston tonight, Roger Simon of "U.S. News and World Report." Good to see you all.

Roger, let me begin with you. We just heard Senator Ben Nelson lining up with the president, at least at this point. Do you believe the president's going to be able to make some inroads with the Democrats?

ROGER SIMON, "U.S. NEWS AND WORLD REPORT": Well, if he keeps kissing people like he kissed Joe Lieberman, maybe he'll have some success. But Senator Nelson seems to me, as I think you indicated, Lou, left himself an awful lot of wiggle room on this.

DOBBS: Yes.

SIMON: He says he's for it if it doesn't increase the deficit. Is there anyone who imagines this happening without an increase in the deficit? I haven't seen any estimates that it would. Some people are saying it'll be $1, $2, $3 trillion increase in the deficit. And he also said he wants to do no harm -- first, do no harm. The opposition is suggesting that you're going to do a lot of harm by privatizing Social Security.

DOBBS: Karen, do you think we could get Congress and the White House to sign something that says, "First, we will do no harm," make that sort of a lasting pledge in Washington?

KAREN TUMULTY, "TIME" MAGAZINE: I think that would probably violate the code for every other law they've passed lately.

The other thing, by the way, that Senator Nelson just said that he wouldn't support is anything that would reduce benefits for people under 55. That's something else that is not likely to be in the bill.

In fact, the administration is already talking about changing the formula under which benefits are calculated, from a formula that's based on wage increases to a formula that's based on price increases. That sounds like green eyeshade talk, but, in fact, what you're talking about is a very sharp reduction in benefits.

DOBBS: Ron, there's talk already that the Republicans are planning a delay in this, just going to push it back, despite the fact the president is spending two days out on the campaign trail, if you will, for the Social Security proposal, just push it back. What do you think of those reports? And, secondly, do you think it's a wise decision? Or what will be the impact?

RON BROWNSTEIN, "THE LOS ANGELES TIMES": I think it's -- the reports are correct, and I think it's indispensable for them. There is no consensus in the country, and certainly no consensus in the Congress, on what to do.

The basic problem, I think, right now, is that, in the past, the president has moved forward his agenda by getting House Republicans to push it aggressively and then putting pressure on the Senate to follow suit, isolating some red-state Democrats in the end and trying to get them to cross the line.

The entire process, Lou, has sort of broken down now. The House is very reluctant to move unless they feel that the Senate will go along with something. And yesterday, 43 Senate Democrats, everyone except Ben Nelson, signed a letter that said they would not support a plan that increased the deficit.

Now, if they hold to that, the idea of carving out accounts from Social Security cannot pass, because they can filibuster it. So the House doesn't want to go out on a limb without the Senate. The subcommittee chairman of the Ways and Means who would handle this issue first said today in "New York Times" and "The Washington Post" that he doesn't believe carved-out accounts are the way to do.

So President Bush has a lot of work to do to build a political consensus with this, and they need time. Even time may not be enough. They may need a new direction.

DOBBS: Or new idea.

Karen, let's turn to Condoleezza Rice. The secretary of state saying that there is no plan to attack Iran on the agenda at this time. That sounds like there could be. What do you take the secretary of state's message to be for the Iranians?

TUMULTY: Well, I think that one thing she was trying to do was sort of calm people down after the State of the Union address when the president did, in fact, single out Iran and, in fact, he sounded like he was encouraging dissidents in Iran to rise up against their leadership.

The other thing that she did that was significant was she made it very, very clear to the Europeans that the United States is not going to join in their efforts to come up with some sort of diplomatic solution to getting Iran to get off its program of building -- or moving toward building nuclear weapons.

So I think, at this point, everyone -- the subject of the U.S. and its posture toward Iran, which was already very, very sensitive, is even more sensitive this week.

DOBBS: And, Roger, the idea that, at least the president could be focused on Social Security reform, while at least giving some nod to immigration reform, another initiative that has very few particulars, what is the mood in Washington on immigration reform? What is the likelihood of actually creating border security in this country and taking control of our immigration laws and policies?

SIMON: I think there's a general feeling among a number of lawmakers that immigration reform is a matter of national security and our borders ought to be more secure. You're even seeing that from people like Senator Hillary Clinton.

On the other hand, George Bush has been very, very clear in almost every public speech he makes on this subject that he believes that illegal immigrants are taking jobs that Americans don't want, a premise that's been challenged on this show many times and we ought to stop harassing people who are just looking for work and instead concentrating on terrorists, whatever that means.

I think there's a real conflict here between the president and, once again, members of his own party, members of both parties.

DOBBS: Well, we appreciate it, Roger Simon, Karen Tumulty, and Ron Brownstein. Thank you very much for being with us tonight.

An outrageous story tonight out of Colorado where a woman has sued, and sued successful, two teenage girls who were trying to do something nice for all of their neighbors. The two girls delivered a package of cookies to their neighbors, a surprise, and a message that said, "With those cookies, have a great night."

So how was their kindness and sweetness repaid? One of their neighbors said their presence on her doorstep triggered an anxiety attack that actually sent her to the hospital. The girls' families offered to pay the woman's bills, but she chose to sue instead. And ultimately she won. The girls were ordered to pay nearly $900 in medical and legal costs.

No good deed goes unpunished, sometimes.

Next, how dozens of states are hoping to follow Arizona's lead and keep millions of illegal aliens from enjoying the benefits of U.S. citizenship.

(COMMERCIAL BREAK)

DOBBS: My next guest is the founder and the chair of Protect Arizona Now. Kathy McKee led the effort to pass Arizona's Proposition 200, which cracks down on benefits for illegal aliens.

Now McKee is expanding that effort nationwide with Protect America Now. She says she's received calls from nearly every state in the country asking for advice on how to fight illegal immigration.

Kathy McKee joins us tonight from Kansas City, Missouri. Kathy, good to have you with us. You and the citizens of Arizona have got to be extraordinarily proud that you successfully did something that the federal government couldn't, and that is actually create legislation and law -- law, to more exact -- on the issue of immigration. Tell us about Protect America Now.

KATHY MCKEE, PROTECT AMERICA NOW: Well, during the last two years while we were working to get our initiative on the ballot, and passed, and baby-sitting it through court, we were contacted by every state in the union but Hawaii and multiple people in most states. I had 28 pages full of people's names and phone numbers calling or e- mailing saying, "What can we do? Our government just won't do anything. And we're frustrated, but we don't know what to do."

DOBBS: Is it your sense that there will be a true nationwide effort, state-by-state admittedly, to try to take control of the immigration issue?

MCKEE: Oh, yes, because people really do realize that, while illegals know that they're breaking our laws -- we don't want to let them off scot-free -- they realize that the villain in all of this is the government, it's the federal government from the White House, through Congress, through the governors of almost every state, the mayors of major cities. They don't care what the overwhelming number of citizens want done, and they're making us pay for this invasion to boot.

So there's only 23 other states -- we're counting the District of Columbia -- that have citizen initiatives. And so some of them, like Arkansas, which has really hit the ground running, is trying to -- some of those states are trying to let the legislatures do their jobs. Because if we have to do initiatives because the legislatures won't do their jobs -- just like Congress and the president won't -- we're not going to be as cheerful or as kind about it as we were in Arizona.

DOBBS: The idea that the vast majority of Americans are not receiving adequate representation on the issue of immigration. In poll after poll, 70 percent of all American citizens, and by the way, it doesn't matter one whit what their ethnic background is or what...

MCKEE: It doesn't.

DOBBS: And people will not pay attention to that. Seventy percent of those people polled want this government, the U.S. government, the federal government, to take control of the borders and take control of immigration policy.

Are you seeing a sense that, in state legislators, that they're awakening to the will of the people on this issue?

MCKEE: Oh, yes. And it's not that easy for them, either. In Arizona, we have 15 bills in our state legislature right now. And since people who are sympathetic to our cause comprise a majority in both the house and the senate, I'm thinking all 15 of those should pass. And if they don't, or the governor vetoes them like she did our voter I.D. bill a couple of years ago, and we have to do another initiative, like I said, we're not going to take any hostages. Because we shouldn't have to do this.

And I talked to -- I'm working with legislators in other states, as well as groups in other states. And I think at least 12 or 15 other states are going to take definitive strong steps this legislative season to stop this bleeding of our education system, our medical system, increase in crime and everything else.

DOBBS: Kathy McKee, if people are interested in contacting you for more information about Protect America Now, getting involved, what should they do?

MCKEE: Oh, thank you. We have a Web site. It's called www.pan2005.com.

DOBBS: We've got it.

MCKEE: OK. Lou Dobbs for president.

DOBBS: Oh, no, don't -- no, no. We have got enough folks interested in that particular job. I love mine.

Kathy McKee, thanks.

MCKEE: Thank you.

DOBBS: Taking a look now at some of your thoughts on the issue of illegal immigration tonight.

Ruth Winter in Paso Robles, California: "The reasons always given for the need of illegal Mexican labor is that they do the jobs Americans will not do. Americans would work at those jobs if they were paid at least minimum wage. The Mexican workers are willing to work for almost any amount, and that makes it impossible for an American worker to compete."

Jackson Hoffman of Grafton, North Dakota: "It is bad enough that American companies are exporting our jobs to less expensive foreign workers, now the president proposes we simply import the foreign workers themselves to fill the remaining jobs that need to be performed domestically."

Anthony Irving in Gainesville, Virginia: "Is it just me or does anyone else find it amazing that our government can track a cow born in Canada almost three years ago right to the stall where she sleeps in the state of Washington, and they can track her calves to their stalls, but they are unable to locate 11 million illegal aliens wandering around our country? Perhaps we should give each of them a cow."

Send us your thoughts at loudobbs@cnn.com.

Scientists say an asteroid expected to pass by Earth in 2029 will be, for the first time ever, visible to the naked eye. They say it will fly closer to Earth than any large asteroid has ever before. The space phenomenon will be visible only in Europe, Africa and Western Asia.

A reminder to vote in our poll tonight. The question, "Do American companies that send their manufacturing overseas deserve to have their products counterfeited? Yes or no?" Cast your vote at loudobbs.com. We'll have the results coming up later in the broadcast.

Next, in our weekly segment honoring our men and women in uniform, in "Heroes," one Marine's bold life-changing decision.

(COMMERCIAL BREAK)

DOBBS: Now, "Heroes," our weekly salute to the men and women who serve and defend our country. Tonight, the inspiring story of Marine Staff Sergeant Mark Graunke. The explosives expert was just doing his job in Iraq when tragedy struck. Despite debilitating injuries, Graunke found the strength and the determination to fulfill his lifelong dream. Casey Wian has his story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: Mark and Lena Graunke (ph) are building a new life after two years of marriage. When they met, Mark hoped to be a career marriage, but July 3, 2003, in an Iraqi farmer's field, all that changed. Staff Sergeant Graunke was an explosives expert, called in to disarm small bombs, a job he had done successfully 40,000 times before.

SSGT. MARK GRAUNKE (RET.), U.S. MARINE CORPS: The day that all this happened to me, I had worked on about 200 of them. And the last one that I picked up blew up in my hand. I stayed awake for about 45 minutes after the explosion. I knew exactly what had happened to me.

I didn't know about my eye, but I knew that my hand was gone on this side. I knew that, you know, something traumatic had happened to this hand. I knew both of my legs were bloody, but I didn't know the extent of the injuries to my legs.

WIAN: Graunke lost consciousness and woke up two weeks later at the Bethesda Naval Medical Center. Doctors worked to heal his arms and what was left of one hand and desperately tried to save his shattered leg. But Graunke wasn't convinced it was possible.

GRAUNKE: It took me two months to make my decision. And, in the end, I decided I would be better off having my leg amputated. And I thought that the amputation was in my best interest for, you know, my future, my family, mental and emotional reasons.

WIAN: The Navy doctors refused to amputate, so Graunke transferred to the Walter Reed Army Medical Center, where doctors performed the surgery.

GRAUNKE: I woke up and felt like a weight had been lifted off my chest.

WIAN: Graunke began a courageous struggle to rebuild his body.

GRAUNKE: I was wondering if I was going to be able to get back on my motorcycle, if I was going to be able to rock climb again, how it was going to affect my family life and a future, if I was going to have kids. WIAN: Seventeen months after the amputation, at home in Flower Mound, Texas, Mark has one answer. He and his wife are expecting a baby in May.

Casey Wian, CNN, reporting.

(END VIDEOTAPE)

DOBBS: And we wish them the best.

Still ahead here, the results of our poll and a preview of what's ahead Monday.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll tonight. Almost 90 percent of you say American companies that send their manufacturing overseas deserve to have their products counterfeited; 11 percent of you say no.

And we thank you for voting. And we thank you for being with us tonight. Please join us here Monday. I'll be talking with the author of "China, Inc.," how the rise of the next superpower challenges America and the world.

Also Monday, I'll be joined by the powerful chairman of the Senate Appropriations Committee, as he begins to deal with the president's budget.

And "America at Risk," gaping holes in security, from our nuclear power plants to our railroads and our highways. We'll have our special report beginning Monday. Please be with us.

For all of us here, thanks for joining us. Have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is coming up next here on CNN.

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 February 4, 2005 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, February 4. Here now for an hour of news, debate and opinion is Lou Dobbs.
LOU DOBBS, HOST: Good evening.

Tonight, Secretary of State Condoleezza Rice traveling in Europe has won a promise from Germany to help in the rebuilding of Iraq. German Chancellor Gerhard Schroeder, a leading critic of the war in Iraq, says Germany is ready to help, if the Iraqis ask for that help.

Schroeder also said Germany and the United States are now in agreement on the need to stop Iran from developing nuclear weapons. Secretary Rice began her European tour in London, where Robin Oakley has the report.

(BEGIN VIDEOTAPE)

ROBIN OAKLEY, CNN CORRESPONDENT (voice-over): The choice of first stop on a seven-capital tour of Europe was deliberate. The U.S. said Condoleezza Rice has no better friend than Britain.

But after the diplomatic niceties, it was Iran which was the focus of strong words.

CONDOLEEZZA RICE, SECRETARY OF STATE: We have all been concerned about the abysmal human rights record of the Iranian regime.

OAKLEY: But that was just for starters.

RICE: Iran engages in activities that are destabilizing to the region in which it lives, particularly when it comes to support for terrorism.

OAKLEY: Dr. Rice accused the Iranians of undermining democratic efforts in Iraq and Afghanistan, but above all, she insisted...

RICE: Iran should not use the cover of civilian nuclear power development, an opportunity granted to it by NPT membership, to sustain a program that could lead to a nuclear weapon.

OAKLEY: And then came the key question for European allies. Did all this tough talk mean that the U.S. might consider an attack on Iran?

RICE: The question is simply not on the agenda at this point in time. You know, we have diplomatic means to do this. OAKLEY: And Iran, she said, would be influenced by seeing Iraqis and Afghans voting in free elections.

From her British hosts, who are working with France and Germany to persuade the Iranians not to pursue nuclear arms, a denial that fierce words from the U.S. were hindering their efforts.

JACK STRAW, BRITISH FOREIGN MINISTER: The efforts of the E-3 -- France, Germany and the United Kingdom -- with respect to Iran, to the extent that they have worked so far, have only worked because we've been backed by an international consensus, and absolutely fundamental to that international consensus has been the support that we have received in the IAEA board and in many other ways from the United States.

OAKLEY (on camera): Condoleezza Rice's forthright words on Iran left analysts in no doubt of the continuing muscularity of U.S. foreign policy in George Bush's second term.

But if that's making some European diplomats nervous, they were heartened, too, by her pledge of an enduring and active transatlantic partnership and by her promise to sustain the momentum of the Middle East peace process.

Robin Oakley, CNN, London.

(END VIDEOTAPE)

DOBBS: In Iraq tonight, Shiite religious and political groups with strong ties to Iran are leading the election results. Early results show a strong lead for Iraq Shiite coalition the United Iraqi Alliance over the secular party of interim Prime Minister Ayad Allawi. The Shiite coalition is backed by leading cleric Grand Ayatollah Ali Al-Sistani.

Election officials stress these results are preliminary and only account for ballots cast at 35 percent every the Iraqi polling stations, but, of course, the Shia are the vast majority of the Iraqi population. Final results will be coming in next week.

And three more American troops were killed in separate attacks in Iraq. One of them died in a bomb attack outside Tikrit that wounded seven other soldiers. A roadside bomb in Mosul killed another soldier, and a member of the 1st Marine Expeditionary Force was killed while on patrol south of Baghdad.

The Pentagon has said it hopes to reduce the number of American troops in Iraq to 135,000 this year as more Iraqi forces are trained. Many Democrats are questioning whether enough Iraqi forces will be ready in time to fulfill the promise. Today, a leading U.S. general in Iraq tried to crush those concerns.

Senior Pentagon correspondent Jamie McIntyre with the report.

(BEGIN VIDEOTAPE) JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): Of Iraq's 136,000 fully trained security forces, fewer than one third are capable of being deployed in the fight against insurgents, according to congressional testimony by the chairman of the joint chiefs.

GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: That's about 40,000 that can go anywhere in the country and -- and take on almost any -- any threat.

MCINTYRE: But a day after that report to Congress, the U.S. general in charge of training Iraqi forces insisted a full 130,000 Iraqis prevented terrorists from penetrating security at more than 5,000 polling sites on election day.

LT. GEN. DAVID PETRAEUS, MULTINATIONAL SECURITY TRANSITION COMMANDER: It was Iraqi police and soldiers who gave their lives to prevent several suicide vest bombers from blowing up large numbers of those standing in line to vote.

MCINTYRE: Skeptics in Congress continued to question if the capability and reliability of those Iraqi troops is being overstated. Maine Senator Susan Collins read from an e-mail she said was from someone deeply involved in the training of Iraqis.

SEN. SUSAN COLLINS (R), MAINE: "They've been lying about their numbers in order to get more money. They say they have 150 when there are only 100. The senior officers take a cut from the top. We have to let them take a week's leave every three weeks and they usually return late, if at all. We had 134 go on leave a week ago, and only 37 returned."

MCINTYRE: In his Pentagon teleconference from Baghdad, General Petraeus did not give a desertion rate but admitted few Iraqi units are at full strength.

PETRAEUS: Some are still receiving replacements for combat casualties and losses suffered due to severe intimidation.

MCINTYRE: But Petraeus said there's no shortage of volunteers, and the Pentagon released this photograph showing a large crowd at an Iraqi recruiting station the day after the elections.

(END VIDEOTAPE)

MCINTYRE: Now, next week some 3,500 more Iraqis are scheduled to complete their training, and General Petraeus says that will bring the manning levels up to 80 percent in the 90 different battalions that are now available. And of course, that strategy is key to the U.S. fulfilling its goal of withdrawing 15,000 American troops by spring in order to reduce those troop levels -- U.S. troop levels to 135,000 -- Lou.

DOBBS: A lot of numbers, Jamie. We know that only a third of those that have been trained are ready, in the estimation of the military. How soon before we have all of them trained and ready? MCINTYRE: Well, you know, they're all trained and equipped to some level. And what -- the point they're trying to make is not every one of these 135,000 has to be a commando that's going to go and fight insurgents. They do also need...

DOBBS: Jamie, I was just using the Pentagon's own expression, saying only a third of them are ready. When will they be a ready force?

MCINTYRE: Well, you know, the Pentagon says there's no quick answer to that. It has a lot to do -- again, it's not numbers. It's about how effective, what kind of leadership they have, what kind of cohesion. And they're just going to have to see how it works as they put these units out in the front and the U.S. troops move to the rear.

DOBBS: Jamie, thank you as always. Jamie McIntyre, senior Pentagon correspondent.

New reaction tonight to the preliminary report on the United Nations oil-for-food scandal. U.N. Secretary-General Kofi Annan today said he was shocked -- shocked to learn about the involvement of a high-level U.N. official in that scandal.

Our senior U.N. correspondent, Richard Roth, is here tonight and has the report -- Richard.

RICHARD ROTH, CNN CORRESPONDENT: Yes, Lou, the oil-for-food scandal is called that quite often, a scandal, but even after Paul Volcker's first report, nobody really knows how deep a scandal yet, how many people illegally profited.

There was more than enough time today to pick through the report and find other interesting nuggets, but all eyes were on the U.N. and the man at the top, Secretary-General Kofi Annan, who yesterday through an aide said he was shocked at the charges against the director of the oil-for-food program.

KOFI ANNAN, U.N. SECRETARY-GENERAL: Obviously, there were some hard knocks in the report, and we are concerned about it, and this is why we intend to take action promptly. And this is the first step.

(BEGIN VIDEO CLIP)

There's going to be other reports from the Volcker Commission, and we look forward to the completion of his work. And we are as determined as everyone to get to the bottom of this. We do not want this shadow to hang over the U.N. So we want to get to the bottom of it, get to the truth and take appropriate measures to deal with the gaps.

(END VIDEO CLIP)

ROTH: Kofi Annan also wrote to the entire U.N. staff. He said as chief administrator of the organization, he, of course, accepts responsibility for its management. He said that's why he set up the inquiry to get a clear idea of what was wrong. Of course, Lou, critics could say Annan originally wanted to have an internal probe run by the U.N., which at the time indicated Annan did not have a full grasp, perhaps, of the seriousness of the oil-for- food issue, the gathering storm.

And in his letter to the staff, he says he set up an inquiry, but that's happened before from Annan on Rwanda and other U.N. debacles. Again, open of Annan to take the blame in these follow-up investigations, but not capable of his team catching the problem beforehand.

But it should be noted that Paul Volcker says he did not find widespread corruption so far, financial abuse of all of that oil-for- food money.

Annan and his son, Kojo, their fate still to be determined in a follow-up report by Paul Volcker and whether there's any conflict of interest in the selection of various contractors.

The State Department today praised Kofi Annan's leadership and commitment on reform.

DOBBS: So we should all feel better. Richard Roth, thank you very much.

President Bush today is visiting three states to campaign for his plan to reform Social Security. President Bush warned that his critics are using what he called scare tactics to discredit his proposal.

White House Correspondent Dana Bash reports now from the president's final stop in Tampa, Florida -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president just wrapped up here in Florida, and listening to him at all five of his stops over the last two days, it was abundantly clear he knows exactly what his biggest hurdles are in trying to sell this plan for what he calls personal accounts for Social Security.

Among the biggest, certainly, is trying to make it clear to older Americans, those 55 and over, that they are not going to lose benefits. He repeated that, especially here in Florida, where those voters are abundant, and they actually do go out and vote.

Now Mr. Bush also made appeals over and over to younger workers, younger Americans, that the Social Security trust fund, in his words, will go bust in their lifetime and not to listen to critics who say that he's exaggerating that figure.

But, earlier today in Omaha, Nebraska, the president did admit that this idea for personal accounts will not alone save the system.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I fully recognize a personal retirement account is not the only thing needed to make -- to solve Social Security permanently, but it's a part of a solution, and I believe I have a responsibility, as someone who's put the issue on the table, to be a constructive voice in coming up with a solution that will save Social Security for younger workers.

(END VIDEO CLIP)

BASH: Now the goal of this tour, of course, is to try to pressure Democrats up for reelection in red states that they should go his way on this idea. Florida's target was Senator Bill Nelson. He did not show up for this event today. His office said he had a family commitment, but he certainly has been quite cool to this idea.

But back in Nebraska, Senator Ben Nelson told us that he's keeping an open mind, that he is willing to listen to the president, but he certainly wants more details and wants to see the numbers. But he certainly didn't seem to mind being a target.

In fact, he seemed to be having some fun with it. He showed us a cartoon by Jeff Karturba (ph) of The Omaha World Herald actually poking fun at the White House, targeting him, with the president's stop there today, and the senator told us that he signed that cartoon and gave it to the president when riding with him in the limousine -- Lou.

DOBBS: Dana, thank you very much.

And Senator Ben Nelson will be our guest here tonight.

Next, surprising and disappointing news for millions of out-of- work Americans.

(COMMERCIAL BREAK)

DOBBS: Tonight, further and startling new evidence of the assault of this country's middle class. The number of new jobs in this country has once again fallen behind our population growth, and prices on just about everything are rising faster than most Americans' paychecks.

Kitty Pilgrim has the report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): Even the president today admitted that job creation is less than perfect.

BUSH: We're making progress. I assure you, however, we will not rest on our laurels. There's more things we can do to create an environment in which jobs continue to expand.

PILGRIM: The 133,000 jobs created is far short of the 200,000 economists were predicting. Economists say while some industries are doing well, others are sinking, creating a two-tiered system that has emerged in the last few years -- those who are doing well and many in the middle class who aren't. JOHN SILVIA, CHIEF ECONOMIST, WACHOVIA: You're getting almost two different faces of the labor force. There are a number of people, particularly in the service professions, that are doing quite well, and their average hourly earnings are outpacing inflation, but then you've got a mass of people, particularly, for example, let's say, in nondurable manufacturing or in the leisure and hospitality industry whose wages and benefits are not keeping up with inflation.

PILGRIM: Proof that the middle class is being squeezed can be found in the prices of everything compared to wages. The latest numbers show consumer prices were up 3.3 percent, but wages lagged at least a percentage point behind. Manufacturing particularly is still struggling. Twenty-five thousand more jobs lost last month. Construction lost 9,000 jobs.

Economists say some people are just simply dropping out of the workforce. Young people are trying other routes, going back for more education. And adult women are also participating less than they were in the workforce. Economists see that as a sign the current job prospects are dim for both those groups.

(END VIDEOTAPE)

PILGRIM: Now economists say one reason why wages are lagging is that health-care costs are putting the pressure on companies. As they pay more out for benefits, they're putting less into the actual paycheck, and that's something that's very hard to reverse -- Lou.

DOBBS: After about four years, even though last year was remarkable in that 2.2 million jobs were created, but over the past -- we're now entering the fifth year in which jobs continue to be created at a tepid pace, and the pay levels are suddenly static in some cases in decline. It's highly questionable how long this can be sustained.

PILGRIM: Yes, it really is. When you look at the numbers sector by sector, it paints a very bleak picture. Overall, it tends to look a little more optimistic, but then when you start to break it out, it really doesn't.

DOBBS: Five-point-two percent unemployment rate. But that's good news. Let's have a sunny outlook here on this.

PILGRIM: Well, the 5.2 percent, economists are telling me, is a product of a lot of people dropping out of looking for work, and so that is maybe an artificially positive number, that low level.

DOBBS: I wasn't communicating about that sunny outlook.

Kitty, thank you very much for giving us the real news.

Kitty Pilgrim.

Appreciate it.

Well, more and more American companies are exporting jobs to cheap foreign labor markets. According to a new report, those companies are making the decision to outsource without consideration of the substantial risks that are involved.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN FINANCIAL NEWS (voice-over): Like a stampede, American companies seem to be giving little thought as to where they're headed when it comes to outsourcing.

A recent survey found that, in four years, 73 percent of North American companies surveyed expect to outsource goods and services to China and 60 percent to India.

The motivation? Massive cost savings, but, as some companies have learned, even after careful consideration, the decision to offshore can carry a higher-than-expected price.

UNIDENTIFIED MALE: What kind of software were you using to do that?

TUCKER: Everdream, an IT services company based in California, got its wake-up call, when, after moving some of its call centers offshore, customer satisfaction dramatically dropped, creating concern within the country.

GARY GRIFFITHS, CEO, EVERDREAM: It was the first time in five years at Everdream there were days when I was afraid to pick up the phone to talk to yet another customer who was upset with a poor service industries.

TUCKER: Hayward Industries which manufacturers pool products opened up a plant in China, only to experience high training costs and problems with quality control, which led to a longer manufacturing process, none of which were anticipated.

PAUL ADELBERG, VICE PRESIDENT, HAYWARD INDUSTRIES: A word of advice to companies -- they better do their homework, and I would also venture to say because it seems like the in thing to do for some manufacturers, in a lot of cases, I would say that companies are making a big mistake by going to China or offshore manufacturing.

(END VIDEOTAPE)

TUCKER: Adelberg goes on to point out that China -- or going into China is a lot easier than getting out, and, Lou, that's largely because companies after having invested so much money to go there are embarrassed to admit they made a mistake and just simply get out.

DOBBS: And we know for a fact that many of the world's largest multinationals are in China. They're having a very difficult time making money. They're not admitting this to their shareholders in many cases not even their board of directors, but also having a difficult time, if they do make money, in getting that money out of the China. The story is complicated, but the results are become increasingly clear. Bill, thank you very much.

Bill Tucker.

Well, some city officials in Middletown, Ohio, apparently have no sense of humor. Imagine that. They have suspended that city's tax superintendent without pay for one week because she has a sense of humor and insisted on a joke. They say that joke was no laughing matter.

In an effort to poke a little fun at the monotony of taxes and to change perhaps the stolid bureaucratic atmosphere, tax superintendent Linda Stubs (ph) added some funny lines to the city's tax forms. For example, "If we can tax it, we will." and "Free advice: If you don't have a profit in a five-year period, you might want to consider another line of work."

Now I think that's funny, don't you? Middletown's finance director said revised forms were sent out immediately at a cost of $5,500. Well, I think the tax superintendent should at least be given a cheer for trying.

Next here, how the Chinese manufacturers are trying to steal one of these country's most popular brands. That's a great relationship.

(COMMERCIAL BREAK)

DOBBS: A lot of U.S. companies have rushed to export their manufacturing operations into China, offshoring to China, trying to save money on labor and production costs. Now many of those very same companies are being forced to spend a lot of time, money and energy trying to protect the brands and their other intellectual property from those cheap Chinese counterfeiters, but very effective counterfeiters, as Christine Romans now reports.

(BEGIN VIDEOTAPE)

STU HERRINGTON, CALLAWAY GOLF: There she about be. This is a typical example, probably as good an example of how it is that they use inferior materials.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT (voice-over): Stu Herrington is the brand cop for Callaway Golf. It's his job to make sure counterfeit golf clubs stay off the market.

HERRINGTON: I have counterfeits here in my office that at a glance can fool me, until I look very, very carefully at certain differences that I know about and that we know about here, but which would elude a consumer.

Take a look at this one.

ROMANS: His job gets harder every day. Callaway, like most sporting goods companies, makes golf clubs in China, and piracy experts say China is the wild west of intellectual property rights, a breeding ground for counterfeiters.

The International Chamber of Commerce says up to 7 percent of world trade is counterfeit, much of it from China, and the United States trade representative estimates counterfeits cost American business $250 billion a year. It's one of the risks of manufacturing outsourcing.

KEVIN RIVETTE, BOSTON CONSULTING GROUP: One of the things that we found is many of the companies going over there that haven't thought about it, haven't thought that their innovation, if not protected, is really philanthropy.

ROMANS: U.S. Immigration and Customs Enforcement last year seized $138 million of counterfeit goods, up sharply from the prior year.

NANCY FORMAN, U.S. IMMIGRATION & CUSTOMS ENFORCEMENT: There are many countries involved in the manufacturing of counterfeit goods. China certainly leads the list, but we're working with the Chinese to attack this problem.

ROMANS: Meanwhile, more companies, like Callaway Golf, are spending heavily to protect their factories and supply chains, waiting for China's laws to catch up with its manufacturing explosion.

HERRINGTON: Sooner or later, China will get out of the business of being known as the counterfeiter to the world.

(END VIDEOTAPE)

ROMANS: Until then, there's a booming business in intellectual property lawyers and consultants, Lou, as these companies try to protect what they've got. Our source there at Boston Consulting wanted to let you know that it is a booming business, those IP lawyers, and they are being off-shored because they cost $350 an hour about.

DOBBS: For crying out loud.

ROMANS: They're being off-shored for $60 an hour to cheaper overseas labor market.

DOBBS: Outsourcing the IP lawyers. There's a wonderful irony in that. But, also, I mean, this is pathetic.

Now it strikes me there's a suggestion within corporate America right now that they're somehow being hurt by all of this, the whole point of there being a China to exploit a market, and they have basically given away that intellectual property -- the brands, the designs, the blueprints.

Perhaps we won't see the Chinese catch up quite so quickly with their IP laws. It seems it's very good business for them to do that.

Christine Romans.

A fascinating report. Thank you.

ROMANS: You're welcome. DOBBS: That brings us to the subject of our poll tonight. Do American companies that send their manufacturing overseas deserve to have their products counterfeited? It's a pretty simple straightforward proposition. Yes or no. Cast your vote at loudobbs.com. We'll have the results for you later in the broadcast.

Next, a Democrat who could be critically, critically important to the president's agenda.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Here now for more news, debate and opinion, Lou Dobbs.

DOBBS: U.S. Senator Ben Nelson, Democrat of Nebraska, has emerged as President Bush's point man within the Democratic Party on the issue of Social Security.

In fact, The Washington Post wrote, "Perhaps no Democrat plays a more pivotal role, for now at least, than Senator Ben Nelson, who has expressed more willingness to work with the president than has any other senator in his party."

I asked Senator Nelson why he has lined up with the president.

(BEGIN VIDEOTAPE)

SEN. BEN NELSON (D), NEBRASKA: Well, if the president wants to step forward, as I think he is, to deal with the issue, and he's prepared to come forward with a plan, I think we ought to do what we can to work with him.

I think the whole goal here is, first of all, to do no harm, but secondly to see if there is a way to improve the situation. We've got a growing deficit, if you will, in the budget. I want to make sure that doesn't increase. But, at the same time, I hate to see the under-funded liability and the future insolvency of Social Security to go untouched.

DOBBS: Until a couple weeks ago, the president, as you know, Senator, was talking about a crisis. And then the State of the Union address, he said point-blank the system's going to be bankrupt in 2042. As you know, there's a great disagreement about whether or not the system will be insolvent in 2052, or 2062, based on assumptions.

NELSON: CBO or GAO numbers, yes.

DOBBS: So here we have a situation in which we may be dealing with an issue that is, at first, highly fluid, unpredictable, but total disagreement in Washington and nearly everywhere else on just how serious the problem is. Of all the problems to take on, why do you believe President Bush has chosen this one?

NELSON: Well, he told me today very personally that he sees the problem. He wants to bring this to the attention of the American people. And he feels an obligation to come forward with a solution, not simply to point out the problem, but to come up with a solution.

And I'm anxious to see what that plan is, because a plan may or may not work. The numbers may or may not add up. But I think we have to see the entire plan before we end up with the debating and the challenging of empty boxes. And he has moved from some concept to content, and now we need to go to the calculation.

DOBBS: You're obviously important in the calculus that the administration has put together to push this plan through, yet I don't hear you saying that you're 100 percent on board. The fact is, many in your party could be very upset with you since they are opposing, at least the leadership of your party on Capitol Hill, is opposing the president on this issue. How much pressure are you under?

NELSON: I'm not under any pressure. The only pressure I feel is from people back home. And my party understands I'm an independent- minded person. And I sometimes chart my own course. In this case, I'm anxious to take a look at what the plan might consist of. And I'm certainly ready to do that before I'm ready to say that it can't be done or that there won't be a plan that could do it.

DOBBS: On the question of your party, Senator, you've also said that your party needs to rethink and express what it stands for. Do you believe that that is a major issue right now for the Democratic Party, that there is an unclear message on the part of the party organization?

NELSON: Well, if you're not careful, and I think we probably weren't in the last election, the other side can define you. If you haven't defined yourself well enough, they'll define you. They'll try to do it anyway, but I think they were successful in defining the Democrats as wanting to ban the Bible, burn the flag, promote same-sex marriage, rewrite the Pledge of Allegiance, take away the guns, just one thing right after another. And I think the Democratic Party represents a lot of people, and those are not part of the Democratic platform.

DOBBS: Howard Dean looks to be the odds-on favorite to lead the party. Are you comfortable with that? Do you think he'll be a positive force for the Democratic Party and address the issues you just mentioned?

NELSON: Well, the DNC chair will be a person who, number one, can raise money -- and Howard Dean has shown that he can raise money -- to organize. He has shown he can organize. But I think it's more behind-the-scenes to get things done, and organized, and develop a party that's prepared to be effective in the off-presidential year elections, as well as in the next presidential year elections.

So I think Howard is one who can do that. I think the others are, as well. And what I hope, at the end of the day that, whether Howard's the chair, or whoever is the chair, will recognize they have to represent all Democrats and that they'll reach out to all of us.

DOBBS: And you mentioned the elections upcoming, the 2006 elections are upon us rather quickly. Do you believe the Republicans are running great risk on the issue of Social Security? Do you believe the Democrats are running great risk in opposing it?

NELSON: I think everybody runs risks talking about Social Security. But I think one of the ways you reduce the risk is to let the American people know that, whatever plan is out there, that we have to be sure it doesn't reduce benefits for people above 55 or below 55, and that you're not going to add to the deficit. And I think that's what we need to do.

DOBBS: Senator Ben Nelson, good to have you with us.

NELSON: It's good to be with you, Lou. Thank you.

DOBBS: And joining me now, three of the country's top political journalists in Washington, Ron Brownstein of the "Los Angeles Times," Karen Tumulty of "Time" magazine, and from Boston tonight, Roger Simon of "U.S. News and World Report." Good to see you all.

Roger, let me begin with you. We just heard Senator Ben Nelson lining up with the president, at least at this point. Do you believe the president's going to be able to make some inroads with the Democrats?

ROGER SIMON, "U.S. NEWS AND WORLD REPORT": Well, if he keeps kissing people like he kissed Joe Lieberman, maybe he'll have some success. But Senator Nelson seems to me, as I think you indicated, Lou, left himself an awful lot of wiggle room on this.

DOBBS: Yes.

SIMON: He says he's for it if it doesn't increase the deficit. Is there anyone who imagines this happening without an increase in the deficit? I haven't seen any estimates that it would. Some people are saying it'll be $1, $2, $3 trillion increase in the deficit. And he also said he wants to do no harm -- first, do no harm. The opposition is suggesting that you're going to do a lot of harm by privatizing Social Security.

DOBBS: Karen, do you think we could get Congress and the White House to sign something that says, "First, we will do no harm," make that sort of a lasting pledge in Washington?

KAREN TUMULTY, "TIME" MAGAZINE: I think that would probably violate the code for every other law they've passed lately.

The other thing, by the way, that Senator Nelson just said that he wouldn't support is anything that would reduce benefits for people under 55. That's something else that is not likely to be in the bill.

In fact, the administration is already talking about changing the formula under which benefits are calculated, from a formula that's based on wage increases to a formula that's based on price increases. That sounds like green eyeshade talk, but, in fact, what you're talking about is a very sharp reduction in benefits.

DOBBS: Ron, there's talk already that the Republicans are planning a delay in this, just going to push it back, despite the fact the president is spending two days out on the campaign trail, if you will, for the Social Security proposal, just push it back. What do you think of those reports? And, secondly, do you think it's a wise decision? Or what will be the impact?

RON BROWNSTEIN, "THE LOS ANGELES TIMES": I think it's -- the reports are correct, and I think it's indispensable for them. There is no consensus in the country, and certainly no consensus in the Congress, on what to do.

The basic problem, I think, right now, is that, in the past, the president has moved forward his agenda by getting House Republicans to push it aggressively and then putting pressure on the Senate to follow suit, isolating some red-state Democrats in the end and trying to get them to cross the line.

The entire process, Lou, has sort of broken down now. The House is very reluctant to move unless they feel that the Senate will go along with something. And yesterday, 43 Senate Democrats, everyone except Ben Nelson, signed a letter that said they would not support a plan that increased the deficit.

Now, if they hold to that, the idea of carving out accounts from Social Security cannot pass, because they can filibuster it. So the House doesn't want to go out on a limb without the Senate. The subcommittee chairman of the Ways and Means who would handle this issue first said today in "New York Times" and "The Washington Post" that he doesn't believe carved-out accounts are the way to do.

So President Bush has a lot of work to do to build a political consensus with this, and they need time. Even time may not be enough. They may need a new direction.

DOBBS: Or new idea.

Karen, let's turn to Condoleezza Rice. The secretary of state saying that there is no plan to attack Iran on the agenda at this time. That sounds like there could be. What do you take the secretary of state's message to be for the Iranians?

TUMULTY: Well, I think that one thing she was trying to do was sort of calm people down after the State of the Union address when the president did, in fact, single out Iran and, in fact, he sounded like he was encouraging dissidents in Iran to rise up against their leadership.

The other thing that she did that was significant was she made it very, very clear to the Europeans that the United States is not going to join in their efforts to come up with some sort of diplomatic solution to getting Iran to get off its program of building -- or moving toward building nuclear weapons.

So I think, at this point, everyone -- the subject of the U.S. and its posture toward Iran, which was already very, very sensitive, is even more sensitive this week.

DOBBS: And, Roger, the idea that, at least the president could be focused on Social Security reform, while at least giving some nod to immigration reform, another initiative that has very few particulars, what is the mood in Washington on immigration reform? What is the likelihood of actually creating border security in this country and taking control of our immigration laws and policies?

SIMON: I think there's a general feeling among a number of lawmakers that immigration reform is a matter of national security and our borders ought to be more secure. You're even seeing that from people like Senator Hillary Clinton.

On the other hand, George Bush has been very, very clear in almost every public speech he makes on this subject that he believes that illegal immigrants are taking jobs that Americans don't want, a premise that's been challenged on this show many times and we ought to stop harassing people who are just looking for work and instead concentrating on terrorists, whatever that means.

I think there's a real conflict here between the president and, once again, members of his own party, members of both parties.

DOBBS: Well, we appreciate it, Roger Simon, Karen Tumulty, and Ron Brownstein. Thank you very much for being with us tonight.

An outrageous story tonight out of Colorado where a woman has sued, and sued successful, two teenage girls who were trying to do something nice for all of their neighbors. The two girls delivered a package of cookies to their neighbors, a surprise, and a message that said, "With those cookies, have a great night."

So how was their kindness and sweetness repaid? One of their neighbors said their presence on her doorstep triggered an anxiety attack that actually sent her to the hospital. The girls' families offered to pay the woman's bills, but she chose to sue instead. And ultimately she won. The girls were ordered to pay nearly $900 in medical and legal costs.

No good deed goes unpunished, sometimes.

Next, how dozens of states are hoping to follow Arizona's lead and keep millions of illegal aliens from enjoying the benefits of U.S. citizenship.

(COMMERCIAL BREAK)

DOBBS: My next guest is the founder and the chair of Protect Arizona Now. Kathy McKee led the effort to pass Arizona's Proposition 200, which cracks down on benefits for illegal aliens.

Now McKee is expanding that effort nationwide with Protect America Now. She says she's received calls from nearly every state in the country asking for advice on how to fight illegal immigration.

Kathy McKee joins us tonight from Kansas City, Missouri. Kathy, good to have you with us. You and the citizens of Arizona have got to be extraordinarily proud that you successfully did something that the federal government couldn't, and that is actually create legislation and law -- law, to more exact -- on the issue of immigration. Tell us about Protect America Now.

KATHY MCKEE, PROTECT AMERICA NOW: Well, during the last two years while we were working to get our initiative on the ballot, and passed, and baby-sitting it through court, we were contacted by every state in the union but Hawaii and multiple people in most states. I had 28 pages full of people's names and phone numbers calling or e- mailing saying, "What can we do? Our government just won't do anything. And we're frustrated, but we don't know what to do."

DOBBS: Is it your sense that there will be a true nationwide effort, state-by-state admittedly, to try to take control of the immigration issue?

MCKEE: Oh, yes, because people really do realize that, while illegals know that they're breaking our laws -- we don't want to let them off scot-free -- they realize that the villain in all of this is the government, it's the federal government from the White House, through Congress, through the governors of almost every state, the mayors of major cities. They don't care what the overwhelming number of citizens want done, and they're making us pay for this invasion to boot.

So there's only 23 other states -- we're counting the District of Columbia -- that have citizen initiatives. And so some of them, like Arkansas, which has really hit the ground running, is trying to -- some of those states are trying to let the legislatures do their jobs. Because if we have to do initiatives because the legislatures won't do their jobs -- just like Congress and the president won't -- we're not going to be as cheerful or as kind about it as we were in Arizona.

DOBBS: The idea that the vast majority of Americans are not receiving adequate representation on the issue of immigration. In poll after poll, 70 percent of all American citizens, and by the way, it doesn't matter one whit what their ethnic background is or what...

MCKEE: It doesn't.

DOBBS: And people will not pay attention to that. Seventy percent of those people polled want this government, the U.S. government, the federal government, to take control of the borders and take control of immigration policy.

Are you seeing a sense that, in state legislators, that they're awakening to the will of the people on this issue?

MCKEE: Oh, yes. And it's not that easy for them, either. In Arizona, we have 15 bills in our state legislature right now. And since people who are sympathetic to our cause comprise a majority in both the house and the senate, I'm thinking all 15 of those should pass. And if they don't, or the governor vetoes them like she did our voter I.D. bill a couple of years ago, and we have to do another initiative, like I said, we're not going to take any hostages. Because we shouldn't have to do this.

And I talked to -- I'm working with legislators in other states, as well as groups in other states. And I think at least 12 or 15 other states are going to take definitive strong steps this legislative season to stop this bleeding of our education system, our medical system, increase in crime and everything else.

DOBBS: Kathy McKee, if people are interested in contacting you for more information about Protect America Now, getting involved, what should they do?

MCKEE: Oh, thank you. We have a Web site. It's called www.pan2005.com.

DOBBS: We've got it.

MCKEE: OK. Lou Dobbs for president.

DOBBS: Oh, no, don't -- no, no. We have got enough folks interested in that particular job. I love mine.

Kathy McKee, thanks.

MCKEE: Thank you.

DOBBS: Taking a look now at some of your thoughts on the issue of illegal immigration tonight.

Ruth Winter in Paso Robles, California: "The reasons always given for the need of illegal Mexican labor is that they do the jobs Americans will not do. Americans would work at those jobs if they were paid at least minimum wage. The Mexican workers are willing to work for almost any amount, and that makes it impossible for an American worker to compete."

Jackson Hoffman of Grafton, North Dakota: "It is bad enough that American companies are exporting our jobs to less expensive foreign workers, now the president proposes we simply import the foreign workers themselves to fill the remaining jobs that need to be performed domestically."

Anthony Irving in Gainesville, Virginia: "Is it just me or does anyone else find it amazing that our government can track a cow born in Canada almost three years ago right to the stall where she sleeps in the state of Washington, and they can track her calves to their stalls, but they are unable to locate 11 million illegal aliens wandering around our country? Perhaps we should give each of them a cow."

Send us your thoughts at loudobbs@cnn.com.

Scientists say an asteroid expected to pass by Earth in 2029 will be, for the first time ever, visible to the naked eye. They say it will fly closer to Earth than any large asteroid has ever before. The space phenomenon will be visible only in Europe, Africa and Western Asia.

A reminder to vote in our poll tonight. The question, "Do American companies that send their manufacturing overseas deserve to have their products counterfeited? Yes or no?" Cast your vote at loudobbs.com. We'll have the results coming up later in the broadcast.

Next, in our weekly segment honoring our men and women in uniform, in "Heroes," one Marine's bold life-changing decision.

(COMMERCIAL BREAK)

DOBBS: Now, "Heroes," our weekly salute to the men and women who serve and defend our country. Tonight, the inspiring story of Marine Staff Sergeant Mark Graunke. The explosives expert was just doing his job in Iraq when tragedy struck. Despite debilitating injuries, Graunke found the strength and the determination to fulfill his lifelong dream. Casey Wian has his story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: Mark and Lena Graunke (ph) are building a new life after two years of marriage. When they met, Mark hoped to be a career marriage, but July 3, 2003, in an Iraqi farmer's field, all that changed. Staff Sergeant Graunke was an explosives expert, called in to disarm small bombs, a job he had done successfully 40,000 times before.

SSGT. MARK GRAUNKE (RET.), U.S. MARINE CORPS: The day that all this happened to me, I had worked on about 200 of them. And the last one that I picked up blew up in my hand. I stayed awake for about 45 minutes after the explosion. I knew exactly what had happened to me.

I didn't know about my eye, but I knew that my hand was gone on this side. I knew that, you know, something traumatic had happened to this hand. I knew both of my legs were bloody, but I didn't know the extent of the injuries to my legs.

WIAN: Graunke lost consciousness and woke up two weeks later at the Bethesda Naval Medical Center. Doctors worked to heal his arms and what was left of one hand and desperately tried to save his shattered leg. But Graunke wasn't convinced it was possible.

GRAUNKE: It took me two months to make my decision. And, in the end, I decided I would be better off having my leg amputated. And I thought that the amputation was in my best interest for, you know, my future, my family, mental and emotional reasons.

WIAN: The Navy doctors refused to amputate, so Graunke transferred to the Walter Reed Army Medical Center, where doctors performed the surgery.

GRAUNKE: I woke up and felt like a weight had been lifted off my chest.

WIAN: Graunke began a courageous struggle to rebuild his body.

GRAUNKE: I was wondering if I was going to be able to get back on my motorcycle, if I was going to be able to rock climb again, how it was going to affect my family life and a future, if I was going to have kids. WIAN: Seventeen months after the amputation, at home in Flower Mound, Texas, Mark has one answer. He and his wife are expecting a baby in May.

Casey Wian, CNN, reporting.

(END VIDEOTAPE)

DOBBS: And we wish them the best.

Still ahead here, the results of our poll and a preview of what's ahead Monday.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll tonight. Almost 90 percent of you say American companies that send their manufacturing overseas deserve to have their products counterfeited; 11 percent of you say no.

And we thank you for voting. And we thank you for being with us tonight. Please join us here Monday. I'll be talking with the author of "China, Inc.," how the rise of the next superpower challenges America and the world.

Also Monday, I'll be joined by the powerful chairman of the Senate Appropriations Committee, as he begins to deal with the president's budget.

And "America at Risk," gaping holes in security, from our nuclear power plants to our railroads and our highways. We'll have our special report beginning Monday. Please be with us.

For all of us here, thanks for joining us. Have a very pleasant weekend. Good night from New York. "ANDERSON COOPER 360" is coming up next here on CNN.

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