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Dems, White House Spar Over Bolton; Secretary Rice to Putin: Russia Needs More Democracy; Chairman of Joint Chiefs to Retire; Illegal Aliens Part of Violent Street Gangs; Schwarzenegger Backs Off Tough Immigration Statement; States Debate Banning Outsourcing; Survey Reveals Companies Rethinking Outsourcing; Bush Signs Tougher Bankruptcy Law

Aired April 20, 2005 - 18:00   ET


KITTY PILGRIM, HOST: Thanks, Wolf. Have a great evening.
Well, tonight, collision course. A confrontation escalates over the president's nomination for U.N. ambassador. Some Republicans break ranks with the White House.

Also tonight, Governor Arnold Schwarzenegger says close our borders, but then he says he didn't really mean it. A U.S. senator joins us who wants to delay tough new measures against illegal aliens.

And Pope Benedict XVI lays out his goals. What does that mean for Catholics in this country? I'll be talking with a leading authority on the Catholic Church.

ANNOUNCER: This is LOU DOBBS, for news, debate and opinion, tonight. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening. Tonight the White House and leading senators are on a collision course over the nomination of John Bolton as U.N. ambassador. The White House today accused Senate Democrats of making, quote, "unsubstantiated accusations against Bolton."

The secretary of State strongly defended Bolton after an unexpected delay in his confirmation vote.

State Department correspondent Andrea Koppel reports.


ANDREA KOPPEL, CNN CORRESPONDENT (voice-over): From Moscow where she was meeting with Russia's president, Secretary of State Condoleezza Rice fired back at John Bolton's critics.

CONDOLEEZZA RICE, SECRETARY OF STATE: The president deserves to have the person at the United Nations that he thinks best to carry out this job. I think we make a mistake if suddenly comments about management style become part of the confirmation process.

KOPPEL: One likely target of Rice's criticism, Republican Senator George Voinovich of Ohio who out of the blue Tuesday broke ranks with the Republican-dominated Senate Foreign Relations Committee and refused to vote for Bolton. SEN. GEORGE VOINOVICH (R), OHIO: I think one's interpersonal skills and their relationship with their fellow man is a very important ingredient in anyone that works for me. I call it the kitchen test. We feel comfortable about the kitchen test. And I have heard enough today that gives me some real concern about Mr. Bolton.

KOPPEL: Until now, all eyes were focused on Senators Lincoln Chafee and Chuck Hagel, widely considered the only Republican wild cards. What happened? The Democrats made a last ditch appeal.

SEN. CHRIS DODD (D), CONNECTICUT: We have five different occasions here that we're looking into. That's quite a number of complaints, I might add, against one individual. A pattern of abuse, in my view.

KOPPEL: An aide to Voinovich told CNN the senator, who's met privately with Bolton but missed his Senate testimony last week, suddenly realized he need more time to investigate these new allegations.

Among them, did Bolton try to get a young career foreign service officer, Rexon Ryu, removed from his job in February 2003 because Bolton believed Ryu had withheld documents?

Did Bolton harass a subcontractor for USAID, Melody Townsel, in Kyrgyzstan in 1994 when he was out of government working as a private lawyer?

And did Bolton threaten to fire a senior Justice Department lawyer in 1988 who wanted extended maternity leave when Bolton headed up the Justice Department's civil division?


KOPPEL: A White House spokesman denied the Bolton nomination was lost and said the accusations had been trumped up by opponents of the president.

But with the committee vote now delayed until next month, Republicans are clearly worried, Senator John McCain at the White House today saying that he didn't want the Bolton nomination to, quote, "die the death of a thousand cuts," comparing it, Kitty, to the failed nomination of then Senator John Tower for secretary of Defense back in 1989 -- Kitty.

PILGRIM: Thanks very much, Andrea Koppel.

Well, Secretary of State Condoleezza Rice spoke about democracy in Russia during her trip to Moscow. And she declared that Russian President Vladimir Putin has too much power. Now Russia is a critical test in President Bush's promise to spread freedom around the world.

Jill Dougherty reports from Moscow.


RICE: (speaking Russian)

JILL DOUGHERTY, CNN CORRESPONDENT (voice-over): Getting her message across in Russian to a radio audience in Moscow not always an easy task for the U.S. secretary of State.

But at a Kremlin meeting with President Vladimir Putin, Condoleezza Rice knew what she wanted to say. Mr. Putin's Russia needs more democracy, a point she drove home in an interview with CNN.

RICE: Our goal has been to seek to persuade him that a strong and vibrant and vital Russia in the 21st century cannot be founded on a state that is so centralized that it does not permit alternative voices in the media.

DOUGHERTY: The U.S. secretary of State's criticism rubs Russia the wrong way, but what really worries Moscow is Washington's support for revolutions in Russia's post-Soviet neighborhood. Ukraine, Georgia, Kyrgyzstan, all have experienced people's uprisings.

In her interview with CNN, Secretary Rice denied Washington is trying to ferment revolution but also said she sees nothing wrong with more people's revolutions in the region.

RICE: If it brings about democratic progress, why is it a bad thing for people to throw off the yoke of tyranny and decide that they want to control their own futures?

DOUGHERTY (on camera): The U.S. secretary says none of her comments are meant to attack or criticize Moscow. Still it seems clear the Bush administration may see Vladimir Putin as an ally in the war on terror, but it's losing faith in his devotion to democracy.

Jill Dougherty, CNN, Moscow.


PILGRIM: Big changes are ahead in senior leadership positions at the Pentagon. Now one of the most significant will be the selection of a new chairman of the Joint Chiefs of Staff. For the first time that post could be filled by a general from the Marine Corps.

Senior Pentagon correspondent Jamie McIntyre reports -- Jamie.

JAMIE MCINTYRE, CNN CORRESPONDENT: Well, Kitty, Joint Chiefs Chairman General Richard Myers is retiring as scheduled at the end of September. And sources at the Pentagon confirm that Defense Secretary Rumsfeld has made his recommendation for Myers' replacement.

Other officials, other administration officials tell us that that that choice is Marine General Peter Pace who, is currently serving as the vice chairman of the Joint Chiefs.

It would be only the second time that the vice chairman has gone on to become the chairman. General Myers was the first. And as you noted, the first time that a Marine Corps officer will have served in the post as the chief advisor to both the president and the defense secretary on military matters.

And since he is the chief advisor, it's the president that has to make the final decision on who he's comfortable with. The nomination of Pace, if it happens, would indicate that Defense Secretary Rumsfeld is satisfied with the advice that he's been getting from both Myers and General Pace, who have been working as a team over the last four years in the aftermath of September 11.

And sources also indicate that the likely choice to replace Pace is Ed Giambastiani, an admiral who was the top military aide to Rumsfeld. Again, the indication is that Rumsfeld is happy with some of the people who have been serving him -- Kitty.

PILGRIM: Jamie, what do we know about the personal style of General Pace?

MCINTYRE: Well, he's a low-key kind of guy. He's not a shake- them-up commander. He's very approachable. You can talk to him in the hallways. He's -- he obviously enjoys the confidence of Secretary Rumsfeld. And he stands in, of course, for the chairman whenever the chairman is not available.

He's -- he's not a rock the boat person. He's a very "Steady Eddie" kind of choice. And he will undoubtedly continue on the track that General Myers has in working with Rumsfeld in transforming the U.S. military to try to better meet the challenges of the 21st century.

PILGRIM: Thanks very much, Jamie McIntyre.

On Capitol Hill, a blunt warning today about the threat of Hispanic gangs to every American. Now the warning came from a top FBI agent during testimony to a House subcommittee. Many of the Hispanic gang members are illegal aliens.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Seventeen-year- old Brenda Paz was a former member of the Hispanic gang MS-13 in Northern Virginia. But she began cooperating with federal authorities. Her body was later found with her throat slashed, stabbed 16 times, with gang markings spray-painted in the area. It's an example of the brutality of the MS-13 gang.

CHRIS SWECKER, FBI: Today gangs are more violent, more organized and more widespread than ever before. They pose one of the greatest threats to the safety and security of all Americans.

SYLVESTER: Congress wants to reduce the gang's influence, starting with a review of U.S. immigration policy. MS-13 began in Los Angeles in the 1980s, but its roots go back to El Salvador. Many of the members arrested in the United States for violent crimes are illegal aliens. REP. DAN BURTON (R), INDIANA: There is strong evidence that our porous borders are providing easy passage for gang members and illegal immigrants and that children of illegal immigrants are prime targets for gang recruitment.

SYLVESTER: MS-13 is reaching into middle America. The gang has a presence in 31 states and the District of Columbia.

JOHN TORRES, IMMIGRATION AND CUSTOMS ENFORCEMENT: Community members are targeted by gangs for extortion, robberies, car jackings and home invasions. In the conduct of drive-by shooting the bullets fired by street gangs do not discriminate between a rival gang member and a sleeping infant in the same house.

SYLVESTER: Even more troublesome, the potential that Latin American street gangs could work with al Qaeda terrorists in the future.


SYLVESTER: There is no concrete evidence that the Hispanic gangs are already working with terrorists. But it was a concern brought up at the hearing. According to law enforcement officials, the gangs often work for the highest bidder, whether it's smuggling humans, weapons or even potentially terrorists -- Kitty.

PILGRIM: Thanks very much, Lisa Sylvester.

Yesterday Governor Arnold Schwarzenegger of California declared the government must close our borders to stop illegal aliens. It was a tough statement from a government in a state with many illegal and legal immigrants. But today Governor Schwarzenegger apologized for those remarks.

Casey Wian reports from Los Angeles -- Casey.


CASEY WIAN, CNN CORRESPONDENT (voice-over): It sure sounded like California Governor Arnold Schwarzenegger was talking tough when he was asked about immigration policy at a meeting of newspaper executives.

GOV. ARNOLD SCHWARZENEGGER, CALIFORNIA: Close the borders. Close the borders in California and all across Mexico and the United States, because I think it is just unfair to have all of those people coming across.

WIAN: But the governor's press secretary quickly told reporters that Schwarzenegger misspoke and what he meant to say was secure not close the borders. Today he blamed it on a language barrier.

It's difficult to gauge what the governor really believes should be done about illegal immigration, because his positions on the issue have been all over the map.

SCHWARZENEGGER: It is a national issue. There's not much that we can do here in California.

WIAN: He has refused to sign legislation that would give California driver's licenses to illegal aliens. But says he would sign a law that had the right security provisions. He now says he's waiting for federal action on the issue.

He supports the idea of a guest worker program and granting legal status to illegal aliens. Yet he also supported California's Proposition 187, which would have denied most public services to illegal aliens.

Last year, he paroled an illegal alien convicted of murder, who was eventually deported to Mexico by federal authorities. He also reportedly broke immigration laws himself when he first arrived in the United States by holding a job in violation of his visa.

And recently he's inspired some lawmakers to consider amending the Constitution to allow a foreign born citizen to become president of the United States.


WIAN: Schwarzenegger is correct, of course, in that controlling the borders is a federal responsibility. But his state is home to more illegal aliens than any other. And it's clear the governor continues to struggle with how to cope with the consequences of the federal government's failure to enforce immigration laws -- Kitty.

PILGRIM: Thanks very much, Casey Wian.

Up next, rethinking outsourcing. Many companies have discovered that outsourcing has failed to live up to expectations.

And "Assault on the Middle Class," a special report on the impact of the new personal bankruptcy law on working Americans.


PILGRIM: On Capitol Hill today, a bipartisan group of senators and congressmen spoke out against the Central American Free Trade Agreement. It's known as CAFTA.

The members of Congress were joined by several leaders of several groups, including the Sierra Club, the League of United Latin American Citizens and the AFL-CIO. One of the main forces in Congress behind the opposition to CAFTA is Senator Byron Dorgan of North Dakota.


SEN. BYRON DORGAN (D), NORTH DAKOTA: There is nothing in this trade agreement that protect this country's economic interests. And I for one, just speaking as one member of Congress, am sick and tired of being accused of being a protectionist, as if it was some pejorative term, for standing up for the economic interests of this country. Yes, I plead guilty. I want to protect the economic interests of our country, and I'm tired of that interest being sold out in trade agreement after trade agreement.


PILGRIM: Now one Republican Congressman who is against CAFTA gave an example of why he says the trade agreement should not pass. He told the story about members of Congress joining together on the steps of the Capitol shortly after September 11. He said they were all given flags, but there was more to the story.


REP. WALTER JONES (R), NORTH CAROLINA: My flag said "Made in China." I thought, how tragic and how sad. I folded it up and stuck it in my top pocket.


PILGRIM: The House Ways and Means Committee will hold a hearing tomorrow on CAFTA.

Well, we report here extensively on companies and government offices that ship American jobs to cheap foreign labor markets. Now it seems some states are fighting the trend. The number of states considering a ban on outsourcing state work is on the rise.

Bill Tucker reports.


BILL TUCKER, CNN CORRESPONDENT (voice-over): Should taxpayer dollars be going overseas or staying home and going to Americans? At least 40 states are now debating that issue, with some 112 different pieces of legislation that would prohibit their states from having state contract work or services performed by workers in a foreign country.

A bill to prohibit the state from taking taxpayer dollars and putting them in the pockets of foreign countries sits on the desk of New Jersey's governor. Maryland's governor has already signed a similar law.

But in other states such as Mississippi, Montana, Oklahoma, Washington State, the bills are expiring in the legislatures. In Colorado, a bill to prohibit outsourcing of state work was withdrawn by the original sponsor after a cost analysis showed it would cost the state at least $28 million more than the current practice of outsourcing the work overseas.

STUART ANDERSON, NATIONAL FOUNDATION FOR AMERICAN POLICY: The problem becomes if you overpay for services unnecessarily, that's less money that states would have for either tax relief or education or job training.

TUCKER: Perhaps that explains why the governor of New Jersey has not yet signed his state's bill, even though it's been on his desk for over a month. There's also the Supreme Court to consider, which has ruled that it is unconstitutional for states to prohibit work going to foreign countries, saying it usurps the federal government's role in setting trade and foreign policy.

KEVIN KEARNS, U.S. BUSINESS & INDUSTRY COUNCIL: And if the other side, the outsourcers and their hired guns think they're going to stand on constitutional law and stop this tidal wave of sentiment in this country that wants to preserve good jobs, that wants to preserve manufacturing industries, that wants to preserve intact, stable communities, they're just barking up the wrong tree with legalistic arguments.


TUCKER: Some critics of trade policy argue that none of the state bills would be necessary if we had a national trade policy to protect the American workers and the American economy. And they point to the rising momentum in Congress to do something about the massive trade deficit. And they want to start with China, and you can see that momentum there, Kitty.

PILGRIM: It is a complicated issue, though, Bill.

TUCKER: It is. But as that last byte indicates, there's a lot of emotion also beginning to build in this debate, as well.

PILGRIM: Thanks very much, Bill Tucker.

Well, a number of companies that shift American jobs to cheap foreign labor markets apparently are now rethinking that decision. A new study of more than two dozen international companies finds outsourcing brings new risks and few rewards.


PILGRIM (voice-over): First, manufacturing was outsourced; then services such as call centers and customer service operations in remote cities in the United States, and then to cheap overseas labor markets like India.

But a recent report by Deloitte found of the companies surveyed 70 percent had significant negative experiences with outsourcing. And one in four were bringing the outsourced operations back in-house.

DR. ERIC K. CLEMONS, WHARTON: When I suggested even to, you know, to clients eight or nine years ago they already had scale, they already had control. Introducing a third party reduces control, puts it in the need for a profit motive. It's not surprising that the mega deals are backing off.

PILGRIM: Forty-four percent said outsourcing did not lead to cost savings.

Other worries: intellectual property and confidentiality risks. Too much outsourcing results in lack of control. And outsourcing relationships require more recordkeeping, attention, and hands-on management than anticipated.

One company remarked, quote, "Everything takes longer than you plan," unquote.

And another, "Outsourcing has caused us to lose focus on our core business. It has been more of a distraction then a benefit."


PILGRIM: The conclusion of that report indicated that outsourcing as we know it will increasingly lose luster. However, economists we talked to say that many companies still are continuing to send jobs overseas but under their own name and structure, not by hiring a third party.

Well, coming up next, the biggest overhaul of bankruptcy law in decades. Many Americans will find it more difficult to overcome their rising debt.

And then our immigration crisis. Why thousands of people seeking asylum in this country have a good chance of winning it. Stay with us.


PILGRIM: President Bush today signed a law that will make it more difficult for many Americans to file for bankruptcy. Critics say it's only part of the ongoing assault on this country's middle class. White House correspondent Dana Bash reports.


DANA BASH, CNN CORRESPONDENT (voice-over): Stephanie Birket had no health insurance for three days between jobs. In that 72-hour window, her son Christopher had a seizure.

STEPHANIE BIRKET, SON SUFFERED SEIZURE: Neurologist, another neurologist.

BASH: Some $30,000 in medical bills.

BIRKET: Twenty dollars a month to nine different places? On top of all my other bills, my car insurance, car payment.

BASH: She decided declaring bankruptcy, Chapter 7, was her only choice.

BIRKET: If not, I wasn't going to be able to ever get that bill paid.

BASH: Americans are filing for bankruptcy in record numbers, cresting a million in 1996, reaching 1.6 million last year.

The new law makes claiming bankruptcy harder, limiting judges' powers to forgive debt and imposing a means test on repayments. If you make more than the median income of your state, you pay back at least $6,000 over five years. Consumers must wait longer before filing again, and it makes child support a top priority for creditors' claims.

Boscov's, a family-run chain of 41 department stores, offers its own credit cards.

DEAN SHEAFFER, BOSCOV'S DEPARTMENT STORE: What we're trying to do is not take the sledgehammer. We're trying to take a scalpel and carve out this very small percentage of the people that are gaming the system.

BASH: Executive Dean Sheaffer says 50 percent of their losses come from people who declare bankruptcy and don't pay.

SHEAFFER: Somebody pays for that consumer, whether it's in the cost of higher credit, higher interest rates, whether it's in the cost of higher goods and services.

BASH: So will customers here now see effects of bankruptcy reform? Pay lower prices on ties, purses, belts? What about appliances, anything? Well, no. Boscov's will put its limited savings towards making their credit cards, at 21 percent interest, more available to its community.

Critics call this law a boon for the big credit card companies they say encourage people to spend beyond their means.

As for Stephanie, she falls below her state's median income and could still file Chapter 7 but would have to fill out more paperwork to prove it. She worries about others not abusing the system.

BIRKET: Pretty much you're stuck with medical bills. I mean, there's no way you can get around them, and they get really expensive. And it's not something that you just decide to go out and get. It's not a choice.


BASH: After the signing of the bill into law today, President Bush said he hopes that it would ensure that bankruptcy is only used as a last resort. But consumer advocates think that he may have just taken away the last resort for many Americans who inadvertently fall on hard times -- Kitty.

PILGRIM: Thanks very much. Dana Bash.

Well, that does bring us to the subject of tonight's poll. Do you think the new tighter bankruptcy law is fair to all Americans? Yes or no? Cast your vote at, and we'll bring you the results later in the broadcast.

Coming up, thousands of people seeking political asylum in this country are clogging our immigration courts. Our special report is next.

And then the Senate debate over immigration reform. One senator will tell us why he believes the Senate should put off considering the Real I.D. Act.

And then the first day and the first mass for Pope Benedict XVI. I'll talk with one leading Catholic priest about what the mass reveals about the new papacy. Stay with us.


PILGRIM: In a moment, one of a dozen senators who demanded the Real I.D. Act be taken off the table. But now here are some of the other important stories that we're following tonight.

Zacarias Moussaoui is expected to appear in a federal court in Virginia this Friday. He will plead guilty for his role in the September 11 attacks. Moussaoui is the only person in the United States to be charged in those attacks.

Senator James Jeffords of Vermont has announced he will not run for reelection. Jeffords angered Republicans in 2001 when he quit the party and became an Independent, giving control of the Senate to the Democrats.

And the National Education Association is suing the Department of Education over the "No Child Left Behind Act." The association says the Bush administration isn't giving schools enough money to comply with the act. The NEA says this is the first national lawsuit calling on the administration to cover the cost of the law.

Well, now our special report on the invasion of illegal aliens into this country and its impact on our courts. Thousands of people seek asylum in our immigration courts each year, and a surprisingly large number of them receive it.

Christine Romans reports.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): In these drab immigration courtrooms, 34,000 asylum cases were decided last year, 38 percent of those requests were granted. Citizens of China, far more than any other country, are given political asylum in the United States.

LORY ROSENBERG, FMR. IMMIGRATION JUDGE: We began to see an increase about 12 years ago, and the claims that were being made by these individuals, mostly men, were that they were the victims of their totalitarian government's mandatory family-planning policy.

ROMANS: China's one-child policy became a compelling claim for Chinese illegals already in the country, and a lucrative opportunity for human smugglers known as "snake heads." They charge up to $60,000 to bring a Chinese national into the U.S., often under horrific conditions. Once here, so-called "runners" guide the Chinese illegals to store-front intermediaries, known on the street as travel agents, who steer them through the immigration courts with asylum claims.

MATTHEW DUNN, AMERICAN IMMIGRATION LAWYERS ASSN.: They are showing these Chinese asylum cases, there is some form of repetition. You see, often, that they'll be similar statements, similar claims, and it becomes very difficult for an immigration judge to decipher what is indeed the truth.

ROMANS: Many doubt it is persecution that drives Chinese immigration to this country.

PETER KWONG, HUNTER COLLEGE: Yes, there are millions of people who want to come to the United States, but the fact of the matter is, if they can't find jobs, they won't come.

We know the current situation, that economic motivation is the primary one, and so most people come here for economic reasons, and political asylum is a justification for that.

ROMANS: Others come legally, on student or tourist visas, and then claim asylum. The immigration courts are clogged with all these applications and their appeals.


(on camera): As it is, it's a lucrative cycle, not likely to end so long as employers here are gorging themselves on cheap labor, as some of these folks put it, and as long as there are smugglers who will charge people to come here, and as long as there are workers who can somehow scrape the money to get together to get here.

PILGRIM: The number of Chinese, though, seeking asylum are -- it's declining, isn't it?

ROMANS: It's not necessarily declining as much as leveling off at this point, and the -- Professor Kwong told us that the reason why is because the economy is getting better in China, and ironically, there is a wealth of very dangerous, cheap, low-paying, under-the- radar jobs there, as well, so there are folks who come here for those same sort of underground jobs or you could stay there. More people are deciding to stay there, at least for right now.

PILGRIM: Thanks very much, Christine Romans.

Well, we have reported extensively here on the Real I.D. Act with aims to stop illegal aliens and terrorists from obtaining driver's licenses in this country. My next guest is one of the 12 senators who called on the Senate leadership to put off the debate on that bill. Senator John Sununu is also here to discuss a Social Security reform plan that he reintroduced today and he joins us from Capitol Hill. Thanks for being with us, Senator.


PILGRIM: Let's start with the Real I.D. Act. Why do you believe it's important to postpone this? Isn't it so critical? We should act on it soon.

SUNUNU: Well, the way it's set up now -- it's -- the House has tried to attach it to an appropriations bill, and I think this is a very important issue. You just did a report about asylum, regarding immigration. We have got people who want to change the Farm Worker Program, seasonal worker program.

This deserves to be a full Senate debate, over a period of weeks, and I think our leadership should have set aside time in April or early May to do this in a thorough, complete way, rather than try to attach one provision here or there to a spending bill. The appropriations bills are meant to just handle federal expenditures. So, unfortunately, we have ended up with a disorganized, ad hoc debate on the Senate floor, rather than a more thoughtful debate focused on all of these important immigration issues you mentioned.

PILGRIM: And yet, the architects of this legislation -- some of them argue this is not an immigration issue. This is a terrorism issue and this is tightening up identification on people who are potentially terrorists. What do you say to that?

SUNUNU: Well, it's a little bit of both. I mean, I think it obviously involves illegal aliens, illegal immigration. We should also include issues regarding border security. We need to add border security. We need to do a much better job with technology. A recent report this week talked about the hundreds of millions that may have been wasted and -- in securing our borders.

On the specifics of the Real I.D. Act, on the substance, I have concerns that the federal government -- should it be in the business of issuing a national I.D. card? I think there are things that we can do to encourage the states to improve the way drivers' licenses are issued, but the states ought to be part of the solution. They ought to be participating in setting these standards, and we did pass part of our 9/11 Intelligence Reform Bill, a process that is written into law today, that calls for stronger standards, but allows the states to participate in setting those standards, something the Real I.D. Act doesn't do.

PILGRIM: Well, the Real I.D. Act was initially part of that Intelligence Reform Bill, the 9/11 Bill. It was stripped out under the understanding it would be acted on soon. Why delay it one more time?

SUNUNU: Well, it was -- it wasn't just stripped out. It was modified to put into law a process to set standards for driver's license, but a process that includes the states. The states issue drivers' licenses. I think they should do that. I don't think they should be issued and defined and created at the federal level. We have a process written into law to improve the standards and to include the states, so this is an alternative.

In fact, this would strike the existing provision, that I just described, and replace it with something that sets the standards, sets the definitions for how you can apply, who can apply, what the protection on a driver's license has to be, how they're issued, when they expire. And I don't think that the federal government should define a national I.D. card and control its issue. I think that is a bit of an overreach. Now, this is an important issue. We should deal with this issue. The point, as I mentioned, of the letter we sent, was to do this debate effectively in a comprehensive way over a period of a week or two on the Senate floor, which I think would be much more appropriate and result in more effective legislation.

PILGRIM: Senator, let's change topics for a second. You've introduced legislation to address the $12 trillion deficit that the Social Security system faces eventually. How is your proposal different than that of President Bush's?

SUNUNU: Well, first, ours is complete. It's a comprehensive bill, a piece of legislation that we have introduced, that's been scored by the Social Security actuary as making the Social Security system permanently solvent, and I think that's important, because, as you described, we've got a $12 trillion shortfall, and we shouldn't say, there's no problem, we have no solutions and just leave that shortfall to our children.

I have decided to do something about it with Paul Ryan. Our bill lets workers set aside some of their payroll taxes in a personal account, if they choose -- it is their option. There are no changes for anyone 55 or older, no choice, no changes to the benefit structure. You own that account. It's your money. It earns a higher rate of return than you will ever get from Social Security. You can leave it to your children, and when you put the money in a personal account, the federal government can't spend it, and that's extremely important.

We do recognize Social Security is a safety net, and so we maintain the same guaranteed minimum benefit structure that's written into law today. We don't touch that, but over time, these accounts grow, and for many, for most workers, they will grow to a lever -- level -- that they can provide a benefit above and beyond what Social Security promises to pay today. We make the system solvent. We give people more opportunity, especially at the lower and middle income levels. It's a better system, a stronger system, and I think one that will give younger workers real confidence in it for years to come.

PILGRIM: All right. Thanks very much, Senator John Sununu.

SUNUNU: Great to be with you.

PILGRIM: Thank you, Senator.

SUNUNU: Thank you, Kitty.

PILGRIM: All right. Let's take a look at some of your thoughts -- and we love doing this.

Peggy Nielson in Ojai, California write, "I just got a letter from Intuit Payroll Systems, that's a payroll processing company. They're closing down their India call center. They cite their customers' 'hesitation about our decision to locate some support positions outside the U.S.' It's good to know that we do have a say, as customers. We need to keep up the pressure." Michael Maynard of Houston, Texas: "I just finished talking to customer services at Sallie Mae, a U.S. government-funded student loan program, only to find out I was talking to someone in India. How appalling to think our tax dollars are being outsourced?"

Judy, in Belvedere, Illinois: "I feel like this country is finally waking up to the fact that the illegal population is draining our country of millions of dollars of tax-payers' money. Maybe if everybody citizen -- if every day citizens say, enough is enough, our government that is supposed to represent us will wake up."

Ray from Michigan, "isn't hiring illegal aliens just another way to outsource labor? The money doesn't stay in the United States."

Well many of you also wrote in about a phone number we gave out last night. And you can call this number to report suspected violations of Immigration and Customs laws. And we'll give that you number again: it's 866-DHS-2-ICE. That's also been posted on our Web site. And you can find it at

We absolutely love hearing from you. Send us your thoughts at And each of you whose e-mail is read on the broadcast will receive a copy of Lou's book, "Exporting America."

Coming up next, rising tensions in Asia. A former ambassador to China will tell us how a bitter dispute between China and Japan will impact the United States.

And then Pope Benedict XVI shares his hopes for his papacy. We'll have insights and analysis from one of this country's leading authorities on the Catholic Church. Stay with us.


PILGRIM: Relations between two of Asia's strongest powers are at their worst state in three decades. China and Japan are arguing over issues rooted in the past, but their dispute reflects the rise of China as Asia's pre-eminent power. Now, that dispute has led to violent anti-Japanese protests in China. And it also presents the United States with some fairly difficult choices.

My guest says the way the United States responds to this dispute could have a crucial impact on the outcome. James Lilley is a former ambassador to China and South Korea. He's now a senior fellow at the American Enterprise Institute. It's always nice to see you, Ambassador.


PILGRIM: Let's talk about China and Japan. Tensions really on rise. We've seen demonstrations in China that look fairly alarming from the size of them. How do you assess this?

LILLEY: Well, there's a lot of sound and fury here. I think it signifies something. You are quite right, historic passions are high. And the Chinese are accusing the Japanese of going to the shrine, Yasukuni Shrine and showing their respect for war criminals that were hanged. And they are saying the Japanese textbooks falsify history and play down the Japanese brutal occupation of China.

And then they are arguing over some uninhabited islands sitting on top of possible large oil reserves. There's a lot of things they are having trouble about. But it's just boiling up right now. And the Chinese see some value in turning the heat on the Japanese by releasing the mobs.

PILGRIM: Is the argument over the past a proxy for future bickering over the oil reserves?

LILLEY: Oh, of course they are all linked. And the thing is, China is trying to make Japan fess up to its brutal crimes of history. The Japanese did have a very brutal occupation of China between '37 and '45.

But the other side of the coin is, China has a lot to answer for too. Their history in many cases is distorted -- on the Korean War, on the Great Leap Forward which probably killed 30 million Chinese, and also on the Tiananmen Massacre. They don't tell the truth.

PILGRIM: Where's the United States stand in this? Is there something that the United States should be doing at this point?

LILLEY: The United States is a pacifier. We're in a pretty good role on this. We have good relations with China, good relations with Japan. Our major purpose is to keep the place secure and stable. And the American presence of deployed forces keeps it that way in view of Chinese military modernization.

The second thing we want to see them do is to focus on the economic factor. They are both big trading partners of each other, big trading partners of ours. Concentrate on economics. Get a level playing field. Get the prosperity of your people moving and stop this wrangling over historic things that happened 60 years and sometimes hundreds of years ago.

PILGRIM: Let's talk about current tensions that might accelerate. China is in a massive military building phase. And recently passed what they called an anti-secession law, a law that authorizes the use of force against Taiwan. This increased tensions. There was a statement out of Washington and Tokyo about it which irked the Chinese. Is this a dangerous situation?

LILLEY: I don't think so. I the this anti-secession law went into being a long time ago when the Chinese were very concerned about the provocations, as they perceived it, of the Taiwan president talking about moving towards independence. They wanted to pass this law saying there was no option.

But, the situation in -- political situation in Taiwan turned against the Taiwanese president, he lost the legislative elections. He backed off on some of his rhetoric. So, they had this thing going and they couldn't stop it. Because any Chinese leader that would say we're against anti-secession would be in real trouble. So, the thing went through with 2,800 to zero. But it doesn't change anything. It is exactly what they have been saying all along. They did emphasize afterwards that they were really intent on the peaceful portions of it, not the single sentence or two that emphasized nonpeaceful means.

PILGRIM: Is that credible?

LILLEY: I think so. Because it's what they have been saying since around 1950. So, I don't think they really changed the dynamic that much.

PILGRIM: One quick one. And that's the U.S.-Chinese trade relationship. There are many who suggest that China is too much a part of the U.S. economy and that gives them enormous leverage should tensions rise. What do you say to that?

LILLEY: Well, first of all the Chinese can do things to take some care of this thing. They can lose loosen up the exchange rates. That's one thing. They can open up the markets, that's a second thing.

But the third thing is they buy up probably 60 to 70 billion Treasury certificates a year and float our deficits. So they are also very dependent for their stability and their growth on the American export market and they don't want to do anything to disturb that market. So we've got leverage on them, too.

PILGRIM: All Right. Thanks very much. Ambassador James Lilley, always a pleasure.


PILGRIM: Well here's a funny story. Elephants on the loose in South Korea gave a 6-ton surprise to the staff at one Seoul restaurant. The elephants smashed through a plate glass window, charged into the restaurant while their handlers watched helplessly. And the elephants sent one restaurant worker fleeing. And then they took over the kitchen.

A total of six elephants broke free from their handlers while they were on parade at an amusement park. Well, good to know all of them were recaptured. Police blame the incident on what they call careless zoo keepers.

A reminder now to vote on tonight's poll. Do you think that the new tighter bankruptcy law is fair to all Americans? That's a yes or no vote. Cast your vote We'll bring you the results in just a few minutes.

And next, what changes are ahead for the Catholic Church after the election of a new pope? A leading expert on the papacy will join me.

(COMMERCIAL BREAK) PILGRIM: The newly elected leader of more than a billion Catholics around the world has led his first mass as pope. Pope Benedict XVI held the mass in the Sistine Chapel. And during the homily he set his goals for the goals -- for the Catholic Church. Now, Pope Benedict said he wants to work toward unity among Christians and with other faiths.

Joining me now is Father John Paris, professor of Bioethics at Boston College. And thanks very much for joining us.


PILGRIM: Father, some are saying, it's a new pope but it's the same program. And in fact, we did hear Pope Benedict talk about continuity. What will we see that's different from John Paul?

PARIS: He is a new man, and he's his own man. And he's going to set the papacy on a course that he himself will choose. Now, he did have a terribly difficult task when he was in the Congregation for the Doctrine of Faith. His job was to be the disciplinarian. Now his job is to be the pastor of 1.1 billion people. That's a very different role. And we have no idea, nor do I suspect does he, how he's going to fulfill that.

PILGRIM: Some say it maybe very Euro-centric. He's been very outspoken about the decline in attendance in Europe. He's also been very outspoken about the Muslim issues in Europe. What's his thinking on that?

PARIS: Well, the thinking on the Muslim issue is a real problem -- when he was saying Turkey ought to face to the East and not to the West. And Turkey, of course, wants to face to the West. And we simply cannot divide the world into East and West, to the Muslims and the Christians. They inhabit similar places. The Muslims are in France, they're in England, the United States. And those issues have to be addressed and addressed in a serious way with dialogue and understanding, rather than simply saying stay on your side of the street.

PILGRIM: American Catholics are wondering, what's in it for them?

What is in it for American Catholics and their so-called issues.

PARIS: American Catholics are going to be rather disappointed I suspect. The issues that they have are the issues of feminism, the role of women in the church, sexual practices. These are areas in which I think continuity and stability and similar policies will be in play with this pontiff. Those are not the areas that I believe that he will find the place or the time to make changes and move. So, the Americans on the liberal side of the political ecclesiastical spectrum, I suspect, will be rather disappointed at his responses in those area.

PILGRIM: Pope Benedict is the oldest pope to be elected in 300 years. Do you think his age will factor into any of his thinking? PARIS: He's already said it. He said that, he expects a short pontificate, and he wants to do as his predecessor, Benedict XV, to be known as a man of peace in the short period of reign that he's given for his papacy.

PILGRIM: One of the big issues in the world is AIDS. Where do you see him coming down on this?

PARIS: That's probably the most pressing problem that the Catholic Church is going to face in the largest area of growth, namely in Africa. And HIV/AIDS is devastating -- millions and millions of patients, people have this lethal disease. And the church's response must be more than saying no. It has to address the issue. It has to do it in a positive, not a negative way.

PILGRIM: Very big challenges for a new era. Thank you for explaining it to us. Father John Paris, thank you.

PARIS: Thanks, Kitty.

PILGRIM: One teacher's very unique view of the education crisis in this country in our "Quote of the Day." Plus the results of "Tonight's Poll," and a preview of what's ahead tomorrow. Stay with us.


PILGRIM: Tonight's "Quote of the Day" comes from a teacher who is named the National Teacher of the Year today at the White House. Jason Kamras feels that teachers need better training, salaries and resources to prepare students for the future. He put it like this, "If the shareholders of GM said that by the year 2014 we want to have X number of perfect cars coming off the assembly line, but we're going to give you technology from the 1980s, we're going to pay you non- competitive salaries, and we're not going to train you any more than you have already been trained, is that fair?"

Well, we don't think it's fair. It's also a pretty tough analogy. GM, by the way, lost more than a billion dollars last quarter.

Well, all right, let's take a look at the results of "Tonight's Poll."

Ninety-one percent of you think the new tighter bankruptcy law is not fair to all Americans, and 9 percent think it is.

Thanks for being with us tonight. Please join us tomorrow. "Broken Borders" -- why criminal illegal aliens have so many rights in our nations appeals courts, and what's one senator doing to change all that.

And then the chairman and the ranking Democrat of the House Energy and Commerce Committee have two very different views on the energy bill. They will vote on the bill tomorrow. And they will be our guests to discuss those issues. Also, I'll be joined by a senator. He's trying to block President Bush's nomination for U.S. trade representative.

For all of us here, good night from New York. "ANDERSON COOPER 360" starts right now -- Anderson.



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