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LOU DOBBS TONIGHT

Selling the Strategy; Reality of War; Red Star Rising; Nancy Grace Interview

Aired June 28, 2005 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Good evening, everybody. Tonight, can President Bush convince the American public to stay the course in Iraq? President Bush delivers a major speech on Iraq two hours from now. We'll have a preview.
China's massive naval buildup. China's navy could soon challenge U.S. military dominance in the Pacific. Did the Pentagon miss warning signs? We'll have a special report.

And Nancy Grace, host of "THE NANCY GRACE SHOW," says our criminal justice system is in crisis. She joins me here tonight to talk about our legal system, celebrity trials, her new book "Objection," and the role of 24/7 media.

We begin tonight with a crash of an Army Chinook helicopter in Afghanistan. Military officials say the MH-47 helicopter was carrying as many as 16 American troops on a mission near the Pakistan border. The helicopter crashed in a mountainous region where U.S. and Afghan troops have been fighting radical Islamist terrorists and insurgents.

Chinook helicopters carry more than 30 troops fully loaded, as well as three crew members. There is no word tonight on the number of American casualties, if any, or whether the helicopter was shot down.

The MH-47 Chinook is a twin rotor helicopter mainly used by U.S. Special Operations Forces. The Army has more than 400 Chinooks of all types. They're used extensively in Iraq and Afghanistan.

The helicopter crash comes just before a major speech tonight by President Bush on the global war on terror and radical Islamists. President Bush will deliver his address to the nation two hours from now in front of troops in Fort Bragg, North Carolina. President Bush is expected to acknowledge that the mission in Iraq is difficult and dangerous, but he'll say victory is vital to our security.

Dana Bash reports from Fort Bragg -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Lou.

Well, six in 10 Americans now do not think President Bush has a plan in Iraq, and the goal of tonight's speech is for Mr. Bush to explain to America that he actually does. And he will acknowledge the fact that Americans clearly are concerned, and make it personal, say that he, too, is concerned about the increasing violence, the suicide bombings that they see on their TV screens coming from Iraq. And we have an excerpt. He will say, "Like most Americans, I see the images of violence and bloodshed. Every picture is horrifying and the suffering is real. Amid all this violence, I know Americans ask the question, 'Is the sacrifice worth it?' It is worth it. And it is vital to the future security of our country, and tonight I will explain the reasons why."

Now, the latest CNN-"USA Today"-Gallup poll, Lou, shows that just 47 percent of Americans see Iraq as part of the war on terrorism. Half see it as a completely separate military action.

And the White House knows that is a trend that they're going to have to change. They're going to have to make Americans think and understand that Iraq is part of the global war on terrorism.

And so we have another excerpt where the president will say, "The terrorists can kill the innocent, but they cannot stop the advance of freedom. The only way our enemies can succeed is if we forget the lessons of September 11, if we abandon the Iraqi people to men like Zarqawi, and if we yield the future to the Middle East to men like bin Laden."

Now, there certainly has been a lot of controversy over the past couple of years about the apparent attempt to link Iraq and 9/11, perhaps Saddam Hussein and bin Laden. The White House has said that doesn't exist, but certainly Democrats already are saying that this is an attempt to make a link that doesn't exist.

But the White House says the president will actually quote Osama bin Laden tonight, saying that what we're seeing in the land of two rivers, referring to Iraq, is the beginning of World War III. And so essentially trying to imply that it is the terrorists who see this as the central front in the war on terrorism.

And Lou, finally, the president obviously is giving this major address, not in the White House, but at Fort Bragg. And the White House says that the president is better performance-wise, talking to an audience, but also, the White House wants to morph the idea for support for the mission, which is waning, and support for the troops, which is not -- Lou.

DOBBS: Dana, the stakes are extraordinarily high tonight for the president. His approval rating plummeting to the lowest level, opposition to this war mounting. This has to be an extraordinary performance by the president tonight. What is the mood there with the people traveling with the president?

BASH: There's anticipation, certainly. I actually asked one of the president's senior aides recently if they're worried that they're raising the expectations too high for this speech. And they simply said that they understand that this is a very important thing to happen.

Look, they hear the criticism. They understand that not just Democrats, but Republicans say that the president has to be straight with the American people, and has to give an update. And they say that part of the reason why the president's numbers are so low is that it's been some months -- six months since the president has had this kind of conversation, if you will, with the American people about what's going on in Iraq.

DOBBS: Of course, that is the president's choice. This appears not to be his choice, the timing this evening, reacting to these plummeting approval ratings.

At the same time, his vice president, Dick Cheney, in disagreement with his defense secretary, Donald Rumsfeld, on whether this insurgency in Iraq has been broken, or whether there will be a commitment to 12 years of engagement with that -- that insurgency. Even one of the leading generals at the Pentagon saying that the insurgency is no weaker than six months ago.

What is the plan there?

BASH: Well, that is one of the main reasons why the president is giving this kind of address, why they decided late last week to do this in a primetime setting. They won't admit this publicly, but privately, Bush aides, Lou, do understand that the American people are hearing very mixed messages.

That is why they want the president to come out in a very specific, very well-crafted, from their point of view, and very specifically scripted way to try to explain from his perspective, the commander-in-chief, exactly where we are. Because they understand that the American people are hearing perhaps some mixed messages. As you mentioned, from the vice president on the one hand, the secretary of defense and the military brass on the other.

DOBBS: And to be clear, Dana, the administration has said there is no other option but victory in Iraq. Tonight, will the American people watching and listening to President Bush hear a statement by this president as to how victory will be achieved in Iraq?

BASH: The president is not going to give specifics. They've been very clear in terms of timetables. But they insist that the president will be talking broadly about not just progress that they say has been made, but about the political transition in the future and the military attempt to train Iraqi security forces.

That, of course, is the end game. The White House has been clear about that. The president, too, that when they can make sure that Iraqi security forces are trained and ready, then the U.S. troops can start to come home.

The White House says the president is going to be more specific about that. We'll see when we hear the speech in just a few hours.

DOBBS: Yes, we will, in just about an hour and 53 minutes. Dana Bash reporting from Fort bragg where the president will be speaking to the nation.

In Iraq today, two American soldiers were killed in separate attacks. One soldier was killed by a bomb near the town of Tikrit. The second killed by a suicide bomber near Balad.

Insurgents also attacked Iraqis today. A leading member of the Iraqi Transitional Assembly was killed by a suicide bomber in Baghdad.

In the northern city of Kirkuk, a senior police officer was wounded in a bomb attack on his convoy. Two of the officer's bodyguards were killed in that attack.

President Bush's speech tonight follows a five-day public relations offensive on Iraq by administration and military officials. Those officials have tried to highlight what they say are significant U.S. successes against the insurgents. But those successes have come at an extraordinarily high price.

More than 1,700 of our troops have been killed in Iraq. More than 13,000 wounded.

Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): U.S. troops still very much on the offensive one year after sovereignty was transferred to the new government of Iraq. The year mainly punctuated by the argument of whether things are getting better or worse.

There are now about 500 attacks a week. That's lower than the 900 or so six months ago.

There are about 138,000 U.S. troops in Iraq now, down from the peak of 153,000 around the January elections. But it has been a deadly year.

In the last 12 months, 883 troops have died in Iraq. Most of them in combat. More than a thousand Iraqi civilians killed in attacks in just the last three months.

GEN. GEORGE CASEY, COMMANDER, MULTINATIONAL FORCES IN IRAQ: The most significant thing -- and I need to see in the next year -- is the progress of this political process in Iraq. All right? That will do more than anything we will do militarily to draw people away from the insurgency.

STARR: As President Bush makes his case to stay the course to have Iraqis write a constitution and rely more on their own security forces, American support is shaken. The latest CNN-"USA Today"-Gallup poll shows 53 percent of those questioned say it was a mistake to have gone to war in Iraq, 51 percent say the U.S. should set a timetable for withdrawal. And what of the insurgency?

GEN. JOHN ABIZAID, COMMANDER, CENTRAL COMMAND: In terms of comparison from six months ago, in terms of foreign fighters, I believe there are more foreign fighters coming into Iraq than there were six months ago. In terms of the overall strength of the insurgency, I'd say it's about the same as it was. STARR: But for ordinary Iraqis, is life better one year later? This man says his neighborhood hasn't had electricity in four days. Families are still filling buckets with water. But there are some signs of reconstruction.

(END VIDEOTAPE)

STARR: Now, Lou, the Pentagon says no change in military strategy, but Iraqis certainly hoping for a better life this time next year -- Lou.

DOBBS: Barbara, thank you very much. Barbara Starr reporting from the Pentagon.

Still ahead, China's escalating military buildup and threat to this country.

Also, the Senate passes a sweeping energy bill, but will it do anything to cut our dependency on foreign oil? We'll have a special report.

And the IRS has signed a multimillion-dollar data processing deal with a company that sold the personal information of nearly 150,000 Americans to identity thieves. Go figure.

(COMMERCIAL BREAK)

DOBBS: The global war on terror and radical Islamists has overshadowed China's rapidly escalating military threat to the United States. The Pentagon was due to release a report on China's huge military modernization program weeks ago, but it now appears Pentagon officials are struggling to understand the true extent of China's military capabilities and the threat they represent.

Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): China's army is already the largest in the world. And it is rapidly building its navy. At such a speed, experts say dominance in the Pacific is years, not decades away.

That China has a voracious appetite for weaponry is no secret. For five years now, China has been the world's largest importer of arms. Its primary weapons source, Russia. From 1993 to 2002, China bought almost $11 billion in weaponry from Russia, but it is China's submarine buildup that is most threatening.

ARTHUR HERMAN, HISTORIAN & AUTHOR: We know it has massive numbers of tanks and artillery and men. It's this new aspect, this naval buildup, and particularly this shift of naval strategy to the submarine and anti-submarine warfare that's particularly worrisome, and that's got Pentagon planners so jumpy right now.

ROMANS: Jumpy, he says, because China is clearly gearing up for a confrontation in the Straits of Taiwan.

BATES GILL, CSIS: In the past five to seven years or so, the Chinese military has definitely developed in a way that gives increasing pause and concern to our operators and commanders and political decision-makers about whether or not interceding, intervening in the Taiwan strait can be done.

ROMANS: Of course, China's subs are inferior to our own. But many are alarmed that China's military plans include at least 10 attack subs fitted with advanced Russian-made torpedoes, torpedoes that could cripple U.S. aircraft carriers.

KEITH CRANE, RAND: I think they will be investing enough to really potentially cause problems in their immediate neighborhood. They want to be in a position where they don't have to back down in front of the United States or some other military power.

(END VIDEOTAPE)

ROMANS: Even as the United States has an embargo against direct arms sales to China, our trade policy has allowed American corporations to sell priceless sensitive technology to the Chinese. With our help, China has perfected the art of exploiting so-called dual-use technology, crafting advanced weapon systems from ostensibly commercial purchases to say nothing, Lou, of the suspected 3,000 front companies with spies that are stealing military technology outright.

DOBBS: Stealing that technology with the specific mandate and orders from Beijing to do so, operating in this country. And interestingly, the number of news organizations in this country, and politicians as well, that ever refer to China as "communist China," as if to somehow, with rhetoric, diminish the reality of this threat, so that trade can continue to be pursued.

ROMANS: It's very interesting when you think how China thinks in generations. China doesn't -- a few years of capitalist whiffs in the Chinese culture does not make Chinese not -- China not a communist country.

DOBBS: Christine Romans, thank you.

Turning to this country's economic security, Congress today moved a step closer to giving President Bush an energy bill before the August recess, as he has requested. The Senate overwhelmingly passed a wide-ranging energy bill with the support of both Republicans and Democratic lawmakers. But critics say neither the House nor the Senate version goes far enough to reduce our dependency on foreign oil.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Oil prices near $60 a barrel, consumers hemorrhaging money at the gas pump. President Bush pushing for a new energy bill by August. But the House and Senate versions are still very far apart, and both leave much unresolved.

SEN. JON CORZINE (D), NEW JERSEY: The reality is that this bill does nothing to address near-term gas prices, natural gas prices. The consumer's going to see very little, if any, relief. And I don't think we have actually moved against our energy dependence on foreign oil, foreign energy sources by this bill.

PILGRIM: Half of people polled in the most recent CNN-"USA Today"-Gallup poll disapprove of how President Bush is handling energy policy.

The Senate version avoids contentious issues like drilling in the Arctic National Wildlife Refuge. It doesn't impose mileage standards and doesn't eliminate SUV loopholes, all ways to cut down on the use of fossil fuels. But the bill gives some $18 billion in tax breaks to the industry.

DANIEL LASHOF, NATURAL RESOURCES DEFENSE COUNCIL: The House bill moves backwards. It would actually increase our oil consumption. The Senate bill is somewhat better, but it's not the fundamental change that we need. And I think the issue is that the entrenched energy companies don't want to see fundamental change.

PILGRIM: The president is anxious to get it passed, even as he schedules photo ops to push nuclear energy.

DENNIS O'BRIEN, INSTITUTE FOR ENERGY, ECONOMICS & POLICY: I think everybody just wants to get rid of this bill and to get it done, get the process over, so that everybody can claim a piece of the victory both on the Democrat, as well as the Republicans, as well as the executive branch.

(END VIDEOTAPE)

PILGRIM: Now, Congress has tried in the last five years to pas an energy bill. But in the past, they haven't been able to reconcile the House and Senate versions of the bill. Well, that could be where they're headed right now, once again -- Lou.

DOBBS: And some would suggest that would be the most positive outcome possible. Kitty, thank you very much. Kitty Pilgrim.

Up next, selling your security. A company now infamous for its role in the identity theft crisis has just won a contract with the IRS to prevent the leaking of your personal data. Our special report is next.

And then, the government loses its battle to block a controversial new study on bioterrorism. Why our government says that study could make our nation's milk supply vulnerable to terrorists.

That story, a great deal more, coming right up.

(COMMERCIAL BREAK)

DOBBS: An alarming report on the terrorist threat to our nation's milk supply was released today over the objections of the Homeland Security Department. The National Academy of Sciences warns in that report that radical Islamist terrorists could easily poison the U.S. milk supply with deadly botulism toxin. It says just a small amount of the toxin could sicken as many as 500,000 people.

The Health and Human Services Department had asked the academy not to publish the report, saying the report is a virtual how-to manual for would-be attackers. But the academy says all of the information in the report can be easily found over the Internet.

This next story falls into the category of, you can't make this up. The Internal Revenue Service has just signed a multimillion- dollar contract with a company that will process data on American taxpayers. The company that won the contract is ChoicePoint, the same company that just sold the personal information of thousands of Americans to identity thieves.

Lisa Sylvester has the story.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): ChoicePoint collects information on American consumers and sells the data to insurance agencies, creditors and employers. In February, the company announced that it sold personal data on 145,000 Americans to identity thieves posing as legitimate businesses. Critics say that alone should have kept the company from receiving a $20 million contract to process data files for the Internal Revenue Service.

BETH GIVENS, PRIVACY RIGHTS CLEARINGHOUSE: I think it's highly questionable that the federal government would award a contract with a company that has such a poor track record. Not only involving the security breach, which was widely publicized, but also it's been sued by a number of individuals for erroneous data.

SYLVESTER: Lawmakers are demanding more oversight of companies that collect and sell personal data after security breaches involving ChoicePoint, Bank of America, Visa and MasterCard.

REP. JAN SCHAKOWSKY (D), ILLINOIS: It's a great concern for Americans across the political spectrum. They simply don't want big business or big brother looking into their private information. And I think particularly sensitive is IRS information.

SYLVESTER: The ChoicePoint announcement comes as the Internal Revenue Service is investigating security flaws of its own. Investigators with the Government Accountability Office were able to tap into the IRS's database without authorization. They could have changed, deleted or copied taxpayer information.

GREGORY WILSHUSEN, GAO: What we found was that IRS did not effectively implement computer controls to protect the confidentiality, integrity and availability of its taxpayer and financial information.

SYLVESTER: In a statement, the IRS said it has "no evidence that any taxpayers' private information has ever been compromised through a breach of our data systems. ChoicePoint emphasizes that it will have no access to IRS taxpayer financial information. This is an automated process. ChoicePoint is committed to taking a leadership role in implementing the best policies and procedures in our industry."

(END VIDEOTAPE)

SYLVESTER: That's little comfort to some in Congress. Lawmakers have proposed a series of privacy bills, including one that would prohibit the buying and selling of Social Security numbers -- Lou.

DOBBS: That would be very nice if we could stop that. The efforts to improve security just never end, do they? This is a remarkable story, Lisa. Did the IRS have any explanation for its choice of ChoicePoint?

SYLVESTER: Well, at this point, one of -- that's one of the things that a number of members of Congress would like to find out, particularly Congressman Ed Markey. He has sent a letter to the IRS asking them to explain how this process worked, why was ChoicePoint ultimately selected, and to have them answer some other serious questions, Lou. So he's going to try to stop this deal.

DOBBS: Thank you very much. Lisa Sylvester from -- with a story like this, it had to be Washington. Thanks, Lisa.

When we continue, President Bush's tough sell on Iraq. A panel discussion on what's at stake tonight as the president addresses the nation on victory in Iraq.

And China awash with cash and capital. Why does it need our money to build nuclear power plants? Alarming new information on a dangerous proposal to use taxpayer money to help out our Chinese friends.

And in lawless Nuevo Laredo, Mexico, it's becoming impossible to tell the criminals from innocent citizens. We'll tell you about a daring raid with surprising results next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight in "Broken Borders," a new report blasting President Bush's proposed immigration policy. The report by Judicial Watch says the plan is sending the wrong message to illegal aliens who think it gives them a green light to sneak across our border with Mexico. Judicial Watch says illegal aliens think the proposed temporary worker program, as suggested by the president, is an outright illegal alien amnesty program and says the proposal has led to a spike in illegal immigration.

Forty-five percent of illegal aliens polled said they crossed the border because they believe the United States will grant them amnesty.

And dramatic pictures tonight from lawless Nuevo Laredo, Mexico. Mexican troops and federal agents launched this daytime raid on drug gang safe houses over the weekend. They were looking for the more than 40 Americans who have been taken hostage in and around Nuevo Laredo.

So far this year, police freed dozens of hostages. All of the hostages were Mexican citizens. Many of them are now being questioned by police. Police say of the 44 hostages they managed to free, dozens may be members of rival drug gangs.

More now on our top story. President Bush tonight speaks to the nation in a little over 90 minutes to an increasingly skeptical American public about the war in Iraq. The White House says President Bush will be specific in detailing his strategy for defeating the insurgency. Seventeen hundred forty-one of our troops have been killed in Iraq.

Joining me now for more on the president's speech and Iraq, Frank Gaffney. He is the founder and president of the Center for Security Policy, joining us tonight from Los Angeles. In Washington, D.C., Marine Colonel Thomas Hammes, an expert on insurgent warfare, the author of "The Sling and the Stone." And Bill Schneider, our senior political analyst. Thanks to all of you for being here.

Let me turn to you, Frank, first of all. In your op-ed piece today in "The Washington Times," suggesting that the president has been distracted, if you will, by domestic issues. Surely not.

FRANK GAFFNEY, CENTER FOR SECURITY POLICY: Oh, say it ain't so. Look, I think he has. Perhaps as a matter of deliberate strategy, he decided that he would use his political capital after the election on principally domestic fronts. Unfortunately, the war doesn't stop because the president wants to work on domestic agenda. In fact, I think if anything, what we're seeing tonight is the result of recognition on his part that he needs to return to the war presidency that got him reelected, that I think carried him through the first term, and that importantly, is going to be the thing that will determine the success or failure of his second term, and indeed, his legacy in history.

DOBBS: Well, my God, we are talking about more than 1,700 Americans killed, 13,000 Americans wounded. Colonel Hammes, you have been in Iraq. You have trained Iraqis. What is -- what in the world are we doing talking about a refocus of the executive vision of this war at this late stage?

COL. THOMAS HAMMES, AUTHOR, "THE SLING AND THE STONE": Well, unfortunately, that's where we are. But I think it's a good thing that we are finally refocusing.

The combination of the movement by Congress to set a date, as well as the U.S. Army's recruiting problems -- because the U.S. Army's inability to recruit directly reflects America's uncertainty about the war. Until we get a well-expressed, well-funded, well-resourced and well-led plan, we're not going to get there.

DOBBS: Colonel, let me ask you this. Vision and strategy critically important to success, but so are adequately armored humvees. So are armored vests that protect our troops. So is the amount of ammunition we can provide our men and women in combat. These are also contributing, are they not, to a clear signal of a lack of support for our troops?

HAMMES: The signal that we have not yet moved out of a peacetime procurement program. We're having problems procuring proper armor, good rifle sights, certain types of ammunition, and just as important, equipment for Iraqi forces, because we're still using a peacetime system. And we have not shaken the system up and made it act like there's a war on.

DOBBS: Colonel, at two-and-a-half years into this war, you, a distinguished officer of the United States Marine Corps, to talk about a transition from a peacetime procurement process -- isn't it about time somebody in that Pentagon responsible for procurement, the security, the safety, the well-being of our troops got lifted out of his seat?

HAMMES: Well, how you solve it is beyond my expertise. I've never done a tour in the Pentagon. It clearly has to be solved. And hopefully, the recent spate of talks by four-star generals and now this evening by the president indicates the administration is focusing on the problem. And with good effort, they can support the plan that, frankly, Ambassador Negroponte and General Casey put together a good structure to make it work. They just haven't been resourced and backed up from the United States.

DOBBS: Colonel, you said that you had not had a tour at the Pentagon. You said that with a great deal of pride, did you not?

HAMMES: It's one of those luckier aspects of a 30-year tour.

DOBBS: Well, Colonel, indeed, and we appreciate your insight.

Bill Schneider, you're looking at these numbers. You're looking at them carefully, as obviously is the White House, the president's pollsters and strategists, political strategists. What does he have to do tonight, in your judgment, to deal with Frank Gaffney's concerns, Colonel Hammes' concerns?

BILL SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the colonel just mentioned the word "plan," and that's what people are waiting to hear. What is the plan in Iraq? They're not sure there is one, because they see mounting violence and chaos in Iraq, disorder there, mounting, increasing numbers of casualties.

Americans need to be reassured. They don't want to pull out right away. They want to see that there's a victory strategy there, and step by step, how we're going to get there. Because the number of Americans who say they do not believe Bush has a clear plan in Iraq has been going up. You see it here. In January, people were split almost 50/50. Now, 61 to 37, they say Bush does not have a clear plan for the situation in Iraq, and they want to hear it tonight.

DOBBS: They want to hear it, in your judgment. Anything less than an outline for a path to victory, will that satisfy the American public?

SCHNEIDER: They want to know what victory means, and what's the way -- how are we going to get there? What is it going to look like? What are the benchmarks along the way, the milestones that they can look for to show that we're succeeding? That's exactly what they want.

DOBBS: Frank Gaffney, what does the president have to do specifically, directly tonight, to win the confidence of the -- win back, I should say, the confidence of the American people?

GAFFNEY: I think there are a couple of key points. The most important, it seems to me, Lou, is he needs to put Iraq in context. This is not the only war we're fighting. This is one front in a global war. He needs to make it clear that the strategy for enabling the Iraqi people, as we have the Afghani people, to prevail over internal enemies and those that are coming in across their borders, rests ultimately with the Iraqis themselves, the native peoples themselves. And we're doing sensible things. Barry McCaffrey, General McCaffrey had a terrific op-ed in yesterday's "Wall Street Journal" that laid out the kinds of success we're achieving. I think he needs to communicate that to the American people, and promise that he is staying on this case and is not being distracted, because ultimately, that's what they've rehired him to do.

DOBBS: And in context, Frank, may I also add, this is the only war in which we're engaged in which more than 1,700 Americans, our men and women in uniform, had been killed.

Frank Gaffney, we thank you for being here.

GAFFNEY: That's an argument for staying the course.

DOBBS: Bill Schneider, thank you all.

GAFFNEY: Thank you, Lou.

DOBBS: That brings us to the subject of our poll tonight. Do you believe the broadcast networks should be broadcasting the president's speech in prime-time tonight? Yes or no? We'd like to know what you think. Cast your vote at loudobbs.com. We'll bring you the results here later in the broadcast.

Stay with CNN for complete coverage of the president's speech tonight. Anderson Cooper has special live coverage beginning at the top of this hour. Paula Zahn and Wolf Blitzer will be in Washington for the president's speech at 8:00 p.m. Eastern. At 9:00 p.m., our Larry King will have exclusive reaction from Senator John McCain and Senator John Kerry.

When we continue here, alarming new details about our nation's deeply flawed China policy. Why your tax dollars may soon be going to build Chinese nuclear power plants.

And Nancy Grace. She says prosecutors need more power in our judicial system. She says the very survival of our court system is at stake. Nancy Grace is our guest coming up. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Communist China is aggressively pursuing its economic and national security interests globally, and so far the United States hasn't done much to counteract its initiatives.

A shocking example tonight: American taxpayers may soon be asked to subsidize the construction of nuclear power plants in China. My guest tonight says that's simply absurd.

Joining me now from Capitol Hill, Congressman Bernie Sanders. Congressman, how in the world could this be going on?

REP. BERNIE SANDERS (I), VERMONT: You got me, Lou, and that's why we're offering an amendment to prohibit it.

On top of all of the rest, the absurdity of subsidizing nuclear power plants in China, do you know who owns the Westinghouse Electric Company in the United States that would get the subsidy? It's the British government.

(LAUGHTER)

SANDERS: The British government owns that particular company. So we are subsidizing the British government to build nuclear power plants in communist China. May make sense to some people, not to me.

DOBBS: Congressman, I laugh because really, the only other choice is either outright indifference, or simply to cry. What do you suppose the reaction will be to your -- to your legislation?

SANDERS: I think we've got a good chance to win it. I think a lot of Democrats are sympathetic to us, and as are conservative Republicans. The National Taxpayers Union is supporting us. Environmental groups are supporting us. Common sense is supporting us. I think we stand a pretty good chance to win.

DOBBS: Well, I thought you did too, until you said "common sense." Let me ask you, Congressman, your view about the Chinese bid for Unocal, your position?

SANDERS: I'm strongly opposed to that. I mean, we're in the midst of an energy crisis. Oil prices -- the gas pump are soaring. I think, we should not be giving the Chinese government power over the energy that the American people need.

DOBBS: And on Iraq, the president goes before the nation tonight. Are you expecting the president to be specific in his outline for victory in Iraq?

SANDERS: I hope he is. We have -- as you've indicated, the casualties have been very serious and I think the American people do not want to see our troops there for five years, ten years. I think they want an exit strategy, and they want to know when our troops are beginning to come home. DOBBS: Congressman Bernie Sanders, we thank you for being here.

SANDERS: Thank you.

DOBBS: Coming up next, "CNN HEADLINE NEWS" has Nancy Grace, she's our guest. In her new book, she says celebrity justice is throwing U.S. courts into crisis.

And: A U.S. defense expert says China's bid to purchase Unocal represents a dangerous form of economic warfare. He is my guest next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now: China's aggressive bid to buy Unocal, one of the country's largest oil companies and the dangers of a Chinese take-over for U.S. national security.

My guest tonight says China is engaging in outright economic warfare. He says American lives will hang in the balance, if this sale of Unocal to the Chinese is approved. He should know, he's the former strategic trade adviser to the secretary of defense.

Joining me now, Peter Leitner senior fellow at the Center for Advanced Defense Studies at George Washington University.

Peter, good to have you here.

PETER LEITNER, CTR. FOR ADVANCED DEFENSE STUDIES: My pleasure to be here.

DOBBS: This proposal by CNOOC, the Chinese overseas oil company, is bold, it is brash and it has been met with calm indifference by this administration. Are you surprised?

LEITNER: Not at all. So far, the last several administrations have not seen a form of foreign direct investment that they wouldn't accept, no matter how dangerous it is.

DOBBS: Why is the purchase of Unocal, in your judgment, in a strategic sense, critical to the United States, and important to the Chinese?

LEITNER: Well, there are three reasons. One is the -- the three large reasons: One is that the Chinese have long been trying to achieve world domination, at least domination over the United States, for a whole series of minerals called rare earth minerals: Lanthanites, a whole series of products, that are absolutely critical to our industrial base. Particularly our military industrial base.

Because these minerals, which are all drawn from one mine in California, which the Chinese have been waging a very bitter struggle against for the last seven years, are essential to our JDAM missile -- JDAM guided projectiles, our cruise missiles, just about everything high tech in the military uses rare-earth magnets. DOBBS: And the second?

LEITNER: And the second one is the Chinese -- this particular -- the Chinese Offshore Oil Company is involved in some of the most dangerous waters in the world in terms of future conflicts. Two major flash points: One in the South China Sea by exploring in the disputed Spratly Islands and creating all kinds of havoc among the Asian countries, and also in the East China Sea, over a group of islands called the Senkakus, which are a direct dispute between China and Japan over ownership.

DOBBS: Right.

And your suggestion is that, in point of fact, there could be an intervention in those disputed areas with the Chinese as owners and the United States would have absolutely nothing it could do one way or the other about it?

LEITNER: Well, if anything, it might even be more negative than that. It might be that we have American stockholders in this Chinese company, lobbying our Congressmen and the president not to intervene, or to support the Chinese in a war, or conflict with our otherwise allies.

DOBBS: And the third major reason that you see?

LEITNER: The third huge reason is technology transfer. The type of technology that Unocal holds as an offshore oil company dealing in the depths of the ocean, directly affect our ability to project power, the ability of the Chinese to do undersea mapping and other things necessary for them to effectively engage in submarine warfare and also, be able to disrupt our assets that we have on the ocean floor, as well as, be able to station Chinese missile-launching submarines off our coast in hiding areas, which that technology would provide them.

DOBBS: Do you believe, and we're out of time here, Peter, I'm sorry, but do you believe that the administration should come out and just forthrightly say: This deal is not going to happen?

LEITNER: I think it should be rejected out of hand, because it's --from the reasons that the Congressman stated a minute ago in terms of energy dependence of a time of economic -- energy crisis as well as these very strategic reason. There is no good reason for the United States, for U.S. stockholders in Unocal to allow this takeover to proceed.

DOBBS: Dr. Peter Leitner. We thank you for being here.

LEITNER: Thank you for letting me. Thanks.

LEITNER: Coming up at the top of the hour here on CNN: ANDERSON COOPER 360 to preview the president's speech to the nation.

Joining us now with the preview, Anderson.

ANDERSON COOPER, HOST: Yes. Thanks very much, Lou.

Extensive coverage, tonight, on a number of stories: First, on Aruba, Natalee Holloway's mom says she's devastated about what's happening in the investigation into her daughter's disappearance.

We'll go live there.

And: Special coverage of President Bush's speech -- talking directly to the American people, making his case for the war in Iraq. The speech comes as support for both the president and the war, lagging one year after sovereignty was handed over to the Iraqi people.

We'll look at what has improved and what has not, in Baghdad -- Lou?

DOBBS: Anderson, thank you very much. Looking forward to it.

Take a look now, at some of your thoughts:

Harry in Las Vegas, Nevada, wrote to say, "between the Christian conservatives, Communist China and political lobbyists, I don't see how this country is going to survive another hundred years.

Many of you wrote in about China's possible takeover of Unocal.

Michael in Decatur, Georgia, said, "President Bush has created a new middle class in China, strengthened their economy, and helped them develop a stronger military while systematically destroying out middle class and weakening out military. There must be a picture of George W. Bush in every household in China."

Bob Wilson in Mississippi, "I feel that China's bid for Unocal was an outright attack on our country. If we allow China to take control of our oil, we will not be able to defend this country when the time comes. The government needs to step in and stop this immediately."

On yesterday's Supreme Court rulings:

Walt Walker in Cary, Illinois, wrote to say, "Our nation is in deep trouble. This is not the nation our founding fathers had in mind. They intended that we would have freedom for religion, not from religion. Our courts are ruling in reverse."

Send us your thoughts at LouDobbs@CNN.com. Each of you whose e- mail is read here receives a copy of my book, "Exporting America," and if you want our e-mail newsletter each day, sign up on our Web site: LouDobbs.com

Still ahead here: The results of our poll, a preview of what's ahead tomorrow and I'll be talking with "HEADLINE NEWS'" own Nancy Grace, the author of the new book, "Objection!" She says highly-paid defense attorneys are ruining our court systems. What about those poor, beleaguered defense attorneys? I'll defend them next when Nancy Grace joins me. Stay with us. (COMMERCIAL BREAK)

DOBBS: Tonight, a stunning decision in the federal government's case against Richard Scrushy, the founder of HealthSouth Corporation. A jury acquitted Scrushy on all charges. Scrushy faced 36 counts, including accounting fraud, money laundering and conspiracy charges. The jury's decision to acquit runs counter to victories federal prosecutors scored in recent high-profile cases, including convictions against Dennis Kozlowski of Tyco, John Rigas of Adelphia and Bernard Ebbers, the former CEO of WorldCom.

And earlier today, prosecutors asked a judge to impose a sentence of between 15 and 25 years against Ebbers. In march, Ebbers was convicted of accounting fraud. A mere $11 billion involved. His sentencing is scheduled for the 13th of July.

Nancy Grace says our criminal justice system is in crisis, blaming high-priced defense attorneys, a system that stacks the deck against prosecutors. She even blames the cable news media, the news media that she is certainly a welcome part of. Nancy Grace is the host of "NANCY GRACE," airs every night on CNN HEADLINE NEWS. She is also the author of a best-selling new book called "Objection!," where she calls for bold changes to our court system. Nancy, it is great to have you here.

NANCY GRACE, HOST, "NANCY GRACE": Thank you, friend.

DOBBS: Let's start with the Richard Scrushy trial. I had a lot of discussion on this, a lot of surprise. What do you think of the verdict?

GRACE: Well, I am a little bit surprised, especially after the vendetta against people like Martha Stewart, and a success rate lately with other CEOs.

But if you think about the way it was presented to the jury, there were things that jurors could grasp on to in the other cases, such as the $6,000 shower curtain, exorbitant spending, like pigs at the trough. I don't think it was brought home in those simple terms to this jury.

Those were a lot of counts, too. And the state has to be very selective on what they want to go forward with.

DOBBS: Well, there was also an interesting art in this by the defense attorneys, too. Because Mr. Scrushy suddenly found religion. He was even attending black churches, and certainly ennobled apparently by the experience in the eyes of the jury.

GRACE: Well, Lou, don't get me wrong, I'm all for finding religion. But I find it highly coincidental when people get a felony charge against them, they suddenly get religious? And I don't think the state ever brought that little fact home to the jury. And I find that very disturbing. Not that someone's religious, but that they try to use that to sway other people. DOBBS: Well, defense attorneys aren't your favorite people to begin with, and when a verdict comes down as it did in the Michael Jackson trial, high-profile celebrity, doesn't get much higher. You ate a crow sandwich over at the...

GRACE: I sure did. I had three helpings. It's the other white meat. Long story short on that, people ask you as a legal expert, a so-called legal expert, to out on a limb and give a prediction.

DOBBS: Right.

GRACE: And I did. There's no way you can tell what 12 jurors are going to do. And they certainly...

DOBBS: Then why did you make the forecast?

GRACE: Because having tried so many cases, and studied the law for so long, I can make an educated guess. And also, just the sheer numbers of how many little boys, separated in time and space, had the same story against Jackson. I foolishly and naively, Lou, believed that Lady Justice would keep her blindfold off as to celebrity, wealth and power. She did not.

DOBBS: Well, now, you blame the 24-hour cable news media in part for what's going on. You're part of the...

GRACE: I never said cable, Lou.

DOBBS: Well, I'm trying to think of what else is 24-hour. Perhaps you can help me, Counselor?

GRACE: Yeah, I will. It's not so much the media itself as when the media allows itself to be a tool for the dissemination of false evidence. For instance, I don't have to look far. Look at trials that you can recall. The state, the victims' family in Scott Peterson never spoke out why. Because you don't want the judge to bar you from trying the case, or to get a change in venue. It always hurts the state. But you always heard the defense floating one cookie theory after the next. And the media never challenged it. I don't like it when the media anchors sit there and read a prompter and don't think to test what they are hearing.

DOBBS: Well, testing what one is hearing, in this case, a prominent personality on cable who makes her living testing the trials that are going on, particularly Michael Jackson. How do you sort of explain your own sort of cross-purposes there?

GRACE: Well, Lou, actually, I consider myself, hopefully, to be part of the solution, not part of the problem. If you will notice, not only at Court TV, but on HEADLINE NEWS as well, I bring on at least two if not three defense attorneys to take the other side. So both sides will be represented. Believe me, they test me as much as I test them.

DOBBS: Have you been looking at the tapes of your show?

GRACE: No.

DOBBS: They're not testing you as much as you test them. But it was -- you're going to have to get at least three or four, Nancy.

The idea that Richard Scrushy, you focus on Michael Jackson, Scott Peterson. Where was the Richard Scrushy trial on "NANCY GRACE?" What about the broader, more difficult white-collar crime trials? Do you give as much time to those as you think you should?

GRACE: Well, having prosecuted white-collar crimes as well in the antitrust division with the feds, I find it very interesting. However, to me, being a victim of violent crime, I find that more compelling and more of a cause than who has whose hand in somebody else's pocket.

DOBBS: Even when it's $11 billion?

GRACE: I'm more concerned about a crime -- hey, look, my parents are on a pension, and I don't like when white-collar crime hurts regular, everyday working class people.

DOBBS: So, Counselor, if I may inquire, are you going to put more of that white-collar crime on there?

GRACE: I'd be happy to, but you've got to come on as a guest, Lou Dobbs.

DOBBS: Be my pleasure. We'll raise...

GRACE: You're on the hot seat, buddy!

DOBBS: You've got it. Nancy Grace. The book is "Objection." Doing great, number seven.

GRACE: Please pronounce it correctly. It's "Objection!"

DOBBS: Well -- do it one more time.

GRACE: "Objection!"

DOBBS: OK. We'll continue to work on this. One more time.

GRACE: "Objection!"

DOBBS: The results of our poll now. Nancy Grace, thank you.

Sixty-seven percent of you say the broadcast network should not broadcast the president's speech tonight in prime-time; 33 percent say they should.

Thanks for being with us tonight. Please join us here tomorrow. "Red Storm." Congressman Duncan Hunter urging President Bush to stop China from buying our nation's vital energy resources and assets. He's my guest.

And conscience in the workplace. Imagine that. One whistle- blower says he was fired for simply raising questions at his job. We'll have his story tomorrow. Please be with us.

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

ANDERSON COOPER, HOST, "ANDERSON COOPER 360": Lou, thanks very much.

END

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