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LOU DOBBS TONIGHT

In Bush's Court; Supreme Battle; Missing Americans

Aired July 1, 2005 - 17:59   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, missing in Afghanistan. American soldiers in a desperate search for a missing U.S. reconnaissance team just days after 16 of our troops were killed in a helicopter crash.
China's energy assault. The chairman of the House Energy Committee says China's bid for one of our most prized energy assets is a clear threat to U.S. national security. He is our guest here tonight.

And Mexico's president, Vicente Fox, refuses to apologize for Mexican postage stamps that are tasteless and racially offensive. What in the world is President Fox thinking? We'll have a special report.

Our top story tonight is the resignation of Justice Sandra Day O'Connor, the first woman to sit on the U.S. Supreme Court. Her retirement sets the stage for a high-stakes battle over her successor, that could shift the balance of power on the court.

President Bush declared he will quickly nominate a replacement for Justice O'Connor. In a warning to Democrats, President Bush called for a dignified confirmation process to his nominee.

Dana Bash at the White House with the report.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Into the Rose Garden, the moment the president has been waiting four-and-a-half years for suddenly at hand.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I will choose a nominee in a timely manner so that the hearing and the vote can be completed before the new Supreme Court term begins.

BASH: Selecting a Supreme Court nominee is a little like picking a pope. That's how a senior official intensely involved in the process describes it.

C. BOYDEN GRAY, FMR. WHITE HOUSE COUNSEL: I know there's a team in the White House that has interviewed the candidates.

BASH: Within minutes of Mr. Bush hanging up the phone with Justice O'Connor, he gathered an Oval Office version of a conclave. The vice president; the White House counsel and her predecessor; the attorney general; political adviser Karl Rove, counselor Dan Bartlett; and by phone, the White House chief of staff, top advisers who have been working in top secret on a detailed process for years and had a short list ready to go.

GRAY: They've probably got about five possibilities on that list.

BASH: Though the exact list is closely held, Bush advisers say they include judges Michael Luttig and Harvey Wilkinson, now on the 4th Circuit Court of Appeals; Samuel Alito an appellate court judge in Philadelphia; John Roberts, on the D.C. Circuit; Emilio Garza, a Texan, on the 5th Circuit.

Helgi Walker worked in the Bush counsel's office, and back on day one, more than four years ago, she and her colleagues began scrutinizing records, writings, rulings, building profiles.

HELGI WALKER, FMR. BUSH ASSISTANT COUNSEL: To see what kind of issues in their background might make them harder to confirm than other candidates.

GRAY: You would be surprised what funny things can happen. As I say, there's nothing quite like a vacancy.

BASH: If Mr. Bush wants a woman to replace O'Connor, appellate Judge Edith Jones, another Texan, is mentioned by Bush advisers. A wildcard is attorney general and longtime Bush confidante, Alberto Gonzales, who would be the court's first Hispanic. Conservatives, however, call him too moderate because of abortion rulings as a Texas state justice.

BUSH: The nation also deserves a dignified process of confirmation in the United States Senate characterized by fair treatment, a fair hearing and a fair vote.

BASH: So far, Bush advisers have only consulted Republicans about potential candidates, although aides now say the president will reach out to leading Senate Democrats.

(END VIDEOTAPE)

BASH: And we're told that President Bush did actually speak with the Senate Democratic leader, Harry Reid, earlier in the week when he was here at the White House for a breakfast. He tried to call him again today but couldn't get through, but Mr. Bush did speak to the leading Democrat on the Senate Judiciary Committee, Senator Patrick Leahy.

The two just spoke generally about the process, not about any candidates. And Lou, I should tell you, an important thing about the timing here, the president is not going to make a decision, at least for a week. He is going to wait until he is back from his trip to Europe, and while there he is going to do some studying on the potential candidates that his advisers have been gathering for some time.

DOBBS: Dana, you said the president could not get through to the Senate minority leader?

BASH: He was on a plane. Senator Harry Reid was on a plane, heading back to his home state this morning when President Bush tried to call. And just before coming out here I tried to find out if the two had hooked up yet, and so far they have not.

DOBBS: Apparently neither using voice mail. Dana Bash from the White House. Thank you.

Senators on both sides of the aisle are tonight preparing for a major fight over Justice O'Connor's replacement. Many Republicans see her retirement as an opportunity to appoint a conservative to the Supreme Court. Democrats say a conservative nominee would face stiff opposition.

Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The democratic strategy? Immediately try to limit the president's choice to a moderate.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: ... mainstream conservative.

SEN. CHARLES SCHUMER (D), NEW YORK: ...mainstream Supreme Court justice.

SEN. DANIEL AKAKA (D), HAWAII: ... voice of reason and moderation.

HENRY: So they showered Sandra Day O'Connor with praise to make the case that her seat should stay centrist.

SCHUMER: We would expect the president to maintain the critical balance of the court that Justice O'Connor fought so long and hard for by nominating a consensus mainstream nominee.

HENRY: Senate Republicans seem slightly less aggressive, preferring to just hail O'Connor and leave the confirmation battle for another day.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: As the Senate moves forward to confirm a new nominee for the high court, it's important that we remember her legacy. America needs judges who are fair, independent, unbiased and committed to equal justice.

HENRY: While the fight to replace Chief Justice William Rehnquist would have been bitter, the battle for O'Connor's swing seat will be even fiercer, because it could provide the tipping point on issues like abortion and gay marriage.

SEN. ARLEN SPECTER (R), PENNSYLVANIA: This is a very polarized country when it comes to issues which have come to the Supreme Court of the United States. And I would expect people to want their choice. And everybody can't have their own way. That's why we have a president and that's why we have a senator.

HENRY: Arlen Specter said he expects to provide that balance with measured confirmation hearings in his Judiciary Committee. But the real power may rest in the hands of the so-called Gang of 14, who recently averted a nuclear showdown over filibusters against the president's lower court nominees, and are now urging the president to come to the middle on his first high court choice.

SEN. JOHN WARNER (R), VIRGINIA: This nomination of the first Supreme Court justice by this distinguished president gives him an opportunity to be a uniter, not a divider.

(END VIDEOTAPE)

HENRY: Democrats could be laying the groundwork for a filibuster if the president picks someone that they claim is out of the mainstream. Conservatives fire back that that could trigger the nuclear option by Senate Majority Leader Bill Frist to try to cut off any filibuster. Another sign, Lou, that this could get ugly real fast.

DOBBS: Ed Henry, thank you from Capitol Hill.

Justice O'Connor virtually unknown on the national scene when President Reagan nominated her to the Supreme Court in 1981. Her opinions were shaped in part by her upbringing on her family's ranch in Arizona.

Bruce Morton has the story.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN NATIONAL CORRESPONDENT (voice over): Years ago, senators didn't even question the Supreme Court nominees. Now, they not only ask questions, they sometimes refuse to give the nominee the job.

SEN. HARRY REID (D), NEVADA: The yeas are 42. The nays are 58. The nomination is not confirmed.

MORTON: That was the Senate in 1987 rejecting a Ronald Reagan nominee: Federal Appeals Judge Robert Bork. Bork had originally opposed issues that became part of the 1964 Civil Rights Act, feeling merchants had a right to refuse to serve blacks or anybody else.

He subsequently changed his mind and enforced the law as solicitor general. He also opposed the idea of a woman's right to an abortion, and said he'd vote to overturn Roe v. Wade, the decision establishing that right.

ROBERT BORK, FORMER SUPREME COURT NOMINEE: The question is never whether you like the statutes. The question is, is it in fact contrary to the principles of the Constitution.

MORTON: The Bork fight was angry, but it was, one way or another, mostly about issues. The most personal confirmation battle ever was probably Clarence Thomas, the first President Bush nominated conservative Thomas to replace liberal Thurgood Marshall, who'd been the first black justice.

Fireworks went off when Anita Hill, a law professor, accused him of sexual harassment when they'd worked together at the Equal Employment Opportunity Commission. He talked about pornographic movies, she claimed, and once about a can of Coca-Cola.

ANITA HILL, WITNESS AT THOMAS HEARING: He got up from the table at which we were working, went over to his desk to get the Coke, looked at the can and asked, who has put pubic hair on my Coke.

MORTON: Thomas angrily denounced the hearing.

CLARENCE THOMAS, SUPREME COURT JUSTICE: It is a message that unless you kowtow to an old order, this is what will happen to you. You will be lynched, destroyed, caricatured by a committee of the U.S. Senate rather than hung from a tree.

MORTON: The Senate confirmed him, 52-48, in 1991. There have been others. Lyndon Johnson tried to promote Abe Fortas from associate justice to chief justice, but Republicans filibustered, reports surfaced of Fortas taking lecture fees, giving political advice to the president, and Johnson withdraw the nomination, and Fortas later resigned.

Richard Nixon once nominated a Florida judge named G. Harold Carswell. He was criticized for having supported white supremacy and because law groups rated him mediocre.

One defender, Republican Roman Hruska of Nebraska, said, "There are a lot of mediocre judges and people and lawyers. They're entitled to a little representation, aren't they?" The Senate, 51-45, voted no. Carswell was not confirmed.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

DOBBS: Joining me now for more on Sandra Day O'Connor's legacy and the political battle surely ahead to name her replacement and confirm that replacement, Senior Legal Analyst Jeffrey Toobin, Chief National Correspondent John King.

Jeffrey, let me turn to you first. Described as the swink vote, perhaps occasionally as a fence sitter -- but I certainly don't hear that very often -- and also as a moderate, would you agree with the assessment?

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: You know, in this case, I think the conventional wisdom is exactly right. She has been the swing vote, not because she is trying to position herself that way. It just so happens that the way the votes have broken down during her years on the court, she has been in the middle on abortion, on gay sodomy, on affirmative action. Those have been the issues where her vote has been critical -- on Bush v. Gore. And that's why her departure is such a significant event in this court's history.

DOBBS: The construction of her position legally as a conservative moderate, do you -- do you believe that that's a fair assessment?

TOOBIN: Absolutely. I think mostly she's a pragmatist. She is someone who believes the court should never get too far ahead of public opinion. She is not someone who has a grand theory of constitutional law.

DOBBS: Fairly cast then as the swing vote, the conservative moderate between liberals and conservatives in the court?

TOOBIN: Absolutely fair.

DOBBS: John King, can a conservative moderate move through the nomination and confirmation process successfully if styled as a conservative moderate?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: A conservative moderate, sure. And the Democrats tried to bait the president into that today with their just overwhelming praise of Justice O'Connor, a Reagan appointee getting this flowery praise from liberals Ted Kennedy and Chuck Schumer.

They're trying to bait the president and trying to shape public opinion on day one of this battle, saying, why don't you send us another Sandra Day O'Connor? Of course the right doesn't like a lot of her decisions.

While they're paying respect to her today, they want someone more conservative because they see the possibility here and the golden opportunity from the conservative perspective to tip the court to the right substantially.

DOBBS: And dating back to the contested presidential election of 2000, the great concern amongst liberals has been a conservative president, if he is truly to be styled a conservative president. Putting forward that conservative justice and challenging Roe v. Wade and affirmative action, what's the likelihood?

KING: It could be a fascinating debate. If Mr. Bush picks, as he said today, someone who faithfully interprets the Constitution, most take that as strict construction, no reference to a right of privacy in the initial Constitution, no reference to abortion in the Constitution.

Most conservatives take that as a key word for someone who would overturn Roe v. Wade. Yet when the president is asked about this, he says his personal opinion is abortion should only be legal, rape, incest, and life of the mother, but that he's a realist. And he doesn't see the country as ready for that.

Well, we're going to have a political debate about that.

TOOBIN: He's also said that the justices he most admires are Clarence Thomas and Antonin Scalia, not Justice O'Connor. So I think it is much more likely he's going to pick a justice in the Scalia- Thomas mold, who is at the right edge of constitutional thought.

DOBBS: As we conclude here, a practical matter. Can the Democrats, in point of fact, successfully stop the confirmation of the person, man or woman, that the president puts forward here?

KING: I think the answer is, no. They can have a nuclear option -- they can have a filibuster. If they do, the Republicans will invoke the nuclear option, and then you will get a vote, you'll have a new justice, and then you'll have this fight carry over perhaps into a Rehnquist resignation and without a doubt into the 2006 congressional elections.

TOOBIN: When the Democrats stopped Robert Bork, they had the majority in the Senate. They don't have the majority anymore, and I think that's going to make things almost impossible for the Democrats, in the absence of some sort of scandal.

DOBBS: Jeffrey Toobin, John King, thank you both.

That brings us to the subject of our poll this evening. Do you believe the next justice appointed to the Supreme Court should be more liberal or more conservative than Justice O'Connor? Cast your vote at loudobbs.com. We will have the results later in the broadcast.

Still ahead here, a desperate search in Afghanistan for a missing U.S. reconnaissance team. We'll have the latest for you from the Pentagon.

And China racing ahead with its bid for one of our largest and most prized energy assets amid rising anger in Congress. We'll have a special report here next.

(COMMERCIAL BREAK)

DOBBS: American soldiers are tonight searching a remote area of Afghanistan for a team of U.S. Special Operations troops that have been missing for days. The reconnaissance team disappeared after a battle with insurgents, a helicopter bringing in reinforcements was shot down. All 16 Americans onboard were killed.

Jaime McIntyre reports from the Pentagon.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): U.S. military search teams got a break in the weather Friday as rain and clouds cleared up. But by nightfall there was still no sign of a small reconnaissance team of Special Operations troops missing in the rugged mountains of eastern Afghanistan.

The recon team has been unaccounted for since Tuesday, when an MH-47 helicopter carrying 16 U.S. troops, including an eight-man Navy SEAL team, was shot down as it attempted to land with reinforcements. The Pentagon won't say how many troops are missing or when they last made contact.

LARRY DI RITA, PENTAGON SPOKESMAN: I think people can appreciate that it's a sensitive matter and we are trying to be precise in how we talk and trying not to disrupt ongoing operations.

MCINTYRE: The U.S. military has acknowledged an unmanned Predator spy plane was lost during the search, but says every available asset is involved in trying to locate the missing troops.

A U.S. military spokesman in Afghanistan dismissed claims by a purported Taliban spokesman that a U.S. serviceman has been captured, saying there is no evidence that any members of the team have been caught or killed.

At the Coronado Navy Base outside San Diego, where some of the Navy SEALs were stationed, a flag at half-staff marks the deadliest day for U.S. forces in Afghanistan since the Taliban was toppled in 2002. And there are trends that suggest Taliban and al Qaeda remnants are trying to disrupt scheduled Afghan elections in September by fostering an Iraqi-style insurgency.

UNIDENTIFIED MALE: There is one that we see a little bit troubling, and that is the increased presence of IEDs. I think if you charted it over time, you would see more attacks tied into IEDs than perhaps we had in the last six to 10 months.

(END VIDEOTAPE)

MCINTYRE: The missing troops are among the most highly trained in the U.S. military, capable of sustaining themselves on the ground for days, even in the harshest conditions. Right now the top priority in Afghanistan is finding those troops and bringing them back safely -- Lou.

DOBBS: Jamie, thank you very much.

Jamie Mcintyre from the Pentagon.

Turning now to the rising anger on Capitol Hill over China's efforts to take over one of our most important energy companies. Congress is planning hearings now on China's bid for Unocal as soon as next week. Meanwhile, China is aggressively trying to push the U.S. government to approve the bid.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): China is trying to railroad its bid for Unocal through U.S. government regulators as fast as it can. The Chinese company CNOOC filed a notice with the U.S. Committee on Foreign Investment, or CFIUS, putting pressure for a formal review conducted in an expeditious manner. Why the rush? Unocal shareholders vote on a competing bid from Chevron on August 10. Unocal today was surprised at the Chinese action, saying it didn't know the Chinese were demanding such a quick review.

The Treasury Review Committee does work quickly, typically in less than 45 days, and has only ever turned down one foreign investment in the U.S. since 1988. But Congress isn't going to let this deal get rubberstamped. The House plans hearings after the July 4th recess.

The real issue is it isn't a business deal at all. Some say it's a Chinese oil grab.

JOAN CLAYBROOK, PUBLIC CITIZEN: This is a government-owned bid, essentially, because it's 70 percent ownership of this company by China. It really is China buying our assets, and our strategic assets. From a national security point of view and a strategic point of view, I think that it ought to be rejected.

PILGRIM: Chevron says so, too. "The CNOOC bid is not a commercial transaction. U.S. policymakers are right to ask whether any foreign government buying into any industry and subsidizing it with public funds has a right to do that in competition with private enterprise."

China has been looking to buy up energy supplies for economic and military reasons. China is clearly thinking strategically. In Moscow today, Chinese President Hu Jintao and Russian President Vladimir Putin reaffirmed their friendship. Together they warned the United States not to attempt to dominate global or other countries' domestic affairs.

(END VIDEOTAPE)

PILGRIM: But China seems to have no trouble trying to interfere in U.S. domestic affairs by taking its bid for Unocal directly to the U.S. administration -- Lou.

DOBBS: And a remarkable handshake, if you will, between the Chinese and Russian leaders, the idea that they would be together jointly warning the United States about anything.

PILGRIM: Yes, it's a disturbing image.

DOBBS: Kitty Pilgrim, thank you.

When we continue, more on the fight to keep Unocal American. The chairman of the House Energy Committee is our guest. He's working to fight back against China's power grab.

And in the pharmaceutical industry, putting profits over the safety of American people. Why drug companies have been ignoring calls to help the U.S. plan for a bioterror attack.

And Mexico sinks deeper into another racial controversy. Mexico says the White House and other critics of his controversial new postage stamps should mind their own business. We'll pay attention to that business here next.

(COMMERCIAL BREAK)

DOBBS: Tonight, the latest threat to our national security could be the greed of big pharmaceutical companies. Congress has launched an unprecedented bipartisan push for new drugs to protect Americans in the event of a bioterrorist attack. But the pharmaceutical industry has virtually ignored the so-called Bioshield project, mainly because they won't profit from it.

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Anthrax, bubonic plague, botulism toxin -- the government urgently wants vaccines and treatments for these deadly threats. And lawmakers plan to spend big to get America's drug companies to help.

Big drug companies avoid the vaccine business; too much risk, too little reward. And they have avoided the Bioshield project like the plague. So legislation working its way through Congress includes such drug company incentives as liability protection, more tax credits, and most controversial, a free pass to keep any drug it wants free from generic competition for two more years.

MERRILL GOOZNER, CENTER FOR SCIENCE & THE PUBLIC INTEREST: This creating of an incentive structure, which is to give extensions on patents for drugs that are already on the market, is the equivalent of taxing the healthcare system to pay for research which isn't even proven yet.

ROMANS: Predictably, the generic pharmaceutical industry is outraged and says a big drug company could just test a product already on the market and get up to two more years to sell a blockbuster drug before its patent expires.

KATHLEEN JAEGER, GENERAL PHARMACEUTICAL ASSN: Under these proposals, the American people will get nothing more than the products they already have in their medicine cabinet today.

ROMANS: While some call it a blank check for the pharmaceutical industry, others say protecting the country against infectious diseases, terrorist or otherwise, can't be done without the most powerful industry in healthcare.

UNIDENTIFIED MALE: It's going to take clever and forceful activity to obtain the kind of incentives that will bring big pharma back into the picture. But I believe that that goal is certainly attainable.

ROMANS: The drug industry lobby group says it has no position on Bioshield.

(END VIDEOTAPE)

ROMANS: Indeed, even this generous legislation in front of Congress has generated virtually no interest at all from the big drug companies. Universities and small biotech companies have taken on this task, but consider this: we need almost 60 different tests, vaccines and treatments to properly react to a bioterror attack. Today we have just two -- Lou.

DOBBS: And in addition to this, Dr. Anthony Fauci at the National Institutes of Health just getting American pharmaceutical companies involved in the vaccine against the possibility of avian flu, the bird influenza pandemic that is so roundly feared.

ROMANS: Absolutely. These two goals can be merged together. You just need industry to really get involved.

DOBBS: And government to awaken a bit. Christine, thank you.

ROMANS: You're welcome.

DOBBS: Christine Romans.

Coming up next, the final battle over CAFTA. Critics of the so- called free trade deal are aggressively planning for their last chance to kill it. Our special report is next.

And then China's assault on our nation's vital energy resources. One congressman urging President Bush to block China's power grab in this country is our guest here.

And it's becoming more and more difficult for Mexico's government to deny that it is racist. The latest comments from Mexican President Vicente Fox about Mexico's controversial new stamps are in many quarters simply unbelievable.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Mexican president Vincente Fox is under severe criticism, refusing once again to apologize for stunning acts of racial insensitivity. As we reported to you yesterday, a series of postage stamps now on sale in Mexico depicting black racial stereotypes, those postage stamps have come under fire from African-American leaders, the White House has also condemned them, but President Fox is defiant. He says the stamps will stay on sale. And in our "Quote of the Day" Fox said of the critics, quote, "They don't have information, frankly. All Mexico loves the character."

A Mexican government official spokesperson went further saying, quote, "The government of Mexico emphatically rejects these complaints which are the products of lack of knowledge, or people seeking publicity."

President Fox, of course, forced to back off racially offensive comments he made just two months ago when Fox said Mexican migrant works in the United States do work that even African-Americans don't. He says he regrets that the comment was offensive. President Fox says he was misinterpreted.

The final and deciding vote on Central American Free Trade Agreement is expected to come in the House of Representatives this month. The Senate passed CAFTA late last night by one of the smallest margins ever for a free trade agreement, 54-45. CAFTA's fate in the House is less certain and for good reason. Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: On this vote the yeas are 54, the nays are 45, the amendment -- the bill is a pass.

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): CAFTA squeaked through the Senate after heavy lobbying from the White House. Supporters argued that removing tariffs from the Central American countries will benefit consumers.

SEN. CHARLES GRASSLEY, (R) IOWA: Because we believe in freedom, we believe in choice for our consumers, we believe that the consumer ought to have the benefit of choice of quality and price.

SYLVESTER: But opponents fired back.

SEN. BYRON DORGAN, (D) NORTH DAKOTA: Your employer has the freedom to get rid of you and hire somebody for 30 cents an hour. That's freedom. Yes, that's freedom. What does it do to country we have built?

SYLVESTER: The slim margin of victory compared to past trade votes suggests withering support for the idea of blanket free trade. The U.S. Morocco trade agreement sailed through the Senate with 85 yes votes. The trade deal with Australia passed with 80 in favor, with Singapore, 66 voted yes, the North American Free Trade Agreement passed with 61 votes, but CAFTA had only 54 yes votes.

The Central American agreement now heads to the House where the opposition is even stronger. Sugar farmers, and labor unions are leading the fight.

ERNEST BAYNARD, AMERICANS FOR FAIR TRADE: The CAFTA agreement took some jabs in the Senate. But the main event is in the House. And it's going to take some body blows from people on both sides of the aisle.

SYLVESTER: House lawmakers now head back to their districts for holiday recess, where they will get an earful from their constituents.

(END VIDEOTAPE)

SYLVESTER: And many of those constituents oppose CAFTA, but that has to be weighed against the heavy arm twisting and the favors being offered by the Bush administration to secure votes -- Lou.

DOBBS: And Lisa, as you've just reported, these Congressman in the House will be hearing from their constituents up close and personal on this issue. It won't be simply a matter of administrative arm twisting. Lisa, thank you very much. Lisa Sylvester from Washington.

Turning now to the outrage that is building over billions of dollars the federal government is paying to offshore tax evaders. My next guest is working to block government contracts for U.S. companies that relocate overseas in order to avoid paying U.S. taxes.

Congresswoman Rosa DeLauro introduced legislation that would do just that. Amazingly it failed in the House of Representatives with strong opposition in both parties. Congresswoman Rosa Delauro joins us tonight from her home district New Haven, Connecticut. Congresswoman, good to have you here.

REP. ROSA DELAURO, (D) CONNECTICUT: Thank you very much, Lou. Good to be with you.

DOBBS: The legislation, it would have been a close battle were it not for what appears to be the defection of, what, 28 Democrats?

DELAURO: Well, we had about 86 percent of the Democrats who voted for it. There were about 91 percent of the Republicans who voted against it.

Lou, I would have loved to have had 100 percent of my colleagues, but I think one gets an experience -- this is not a Democratic or a Republican issue. I think there ought to be overwhelming support for this effort.

As you pointed out, these are industries that go offshore. They set up a shell corporation in order to diminish their tax obligation to the United States. And then they have the audacity to come back and to ask for taxpayer's dollars for federal contracts. And you know what, they get them. It's about $1.4 billion in contracts. And we lose about $5 billion in revenue every single year. That's an outrage.

DOBBS: Congresswoman, why would there be opposition to this? You said it's not a Republican or a Democratic issue. I think I agree with you, but for a different reason. Mainly from my perspective, because corporate America has such overwhelming influence on both parties. What is your reason?

DELAURO: Well, I think that there -- I think there were, you know -- there was heavy lobbying on this issue. There were about some 25 or 26 corporations who have gone offshore, you know, to dodge paying their taxes. And they were, you know, all over the Hill and calling people to, you know, to -- and there was a lot of misinformation.

They kept talking about the legislation was retroactive. It is not. It's prospective. And we have legislation that already exists. And it affects the Department of Homeland Security. And that ban is in place. This is -- we put good corporate citizens at risk and at a disadvantage because these corporations are -- look, they can go off as you know and do whatever they want. But they should not -- we should not be in the business of allowing them to have federal contracts. And as I say, I am going to continue at this.

DOBBS: Well, good for you.

DELAURO: And I wish that we did have 100 percent of my colleagues on the Democratic side. And certainly more than the 20 votes we had on the Republican side. The vote was 190-231, but we are going to continue at it. And I think if the American public understands this -- no one can really understand it -- but to understand the outrage of it, we will be able to pass this legislation as we should.

DOBBS: Congresswoman, we thank you for being with us. Congresswoman Delauro, thanks.

DELAURO: Thank you.

DOBBS: Coming up my next here, my guest the chairman of the House Energy Committee calling on President Bush to block the Chinese assault on U.S. energy assets. He warns the Chinese are not friendly competitors nor allies of democracy.

An American hero returns home wounded from Iraq. Now he is rebuilding his life, honoring his brothers in arms. We'll have his story next.

(COMMERCIAL BREAK)

DOBBS: Tonight, the Chinese threat to America's energy security. Should a company that is 70 percent owned by the Chinese government be allowed to buy the American oil giant Unocal? Many in Congress now are finding that prospect deeply troubling.

This week the chairman of the House Energy and Commerce Committee co-wrote a letter to President Bush urging him to stop the sale, saying China is using aggressive tactics to lock up energy supplies around the world.

The chairman of the House Energy Committee, Congressman Joe Barton joins us tonight from Dallas, Texas. Congressman, good to have you here.

REP. JOE BARTON, (R) TEXAS: It's always good to be on your show.

DOBBS: Congressman, it is -- first, a few facts that are stipulated. CNOOC, the Chinese national overseas oil company is 70 percent owned by the Chinese government. Saying that this is an enterprise deal that is commercial in nature, and this administration has refused to offer one word of position on this. Why is that, in your opinion?

BARTON: Well, I think the Bush administration is in a little bit of a pickle. And I'm a Republican and personal friend of the president, but obviously, we want a strong and positive relationship with the Chinese people, and unfortunately, that means we have to have a positive relationship with the Chinese government, which is communist. So the Bush administration wants that.

But on the other hand, they understand that it's not in our strategic interests to let a front company for the communist Chinese purchase a strategic asset, which in this case would be oil reserves and pipelines in the United States.

DOBBS: The House last night voted by a margin of 333 to 92 in favor of the measure that would block the Bush administration from approving CNOC's attempt to acquire Unocal. Do you think that that will have an effect on the sale, or prospective sale, or as the Bush administration calls it, hypothetical sale?

BARTON: Well, it's hypothetical because there are two competing bids. What I plan to do as chairman of the Energy and Commerce Committee, next week we are on the July 4th district work period, so I won't be in Washington, but in the very near future after that, in addition to chairing the energy conference to try to get an energy bill for the American people to the president's desk before the August recess, I am going to hold at least one hearing on this proposed deal, bring in some of our trade officials and some of our experts, and put the facts out in public so the American people can decide for themselves.

DOBBS: You know, I commend you for holding hearings, Congressman Barton, but at the same time, it is, on its face, it seems to me rather clear that the Chinese are asking the United States to do something they would never permit a U.S. company to do. Do you think that the Chinese would permit the controlling ownership or -- let alone outright ownership of a Chinese entity or commodity corporation?

BARTON: Well, under current Chinese law, a U.S. company can't have a controlling interest in a company in China. The Chinese government is providing, in the form of a loan, the $18.5 billion to purchase the company. The U.S. government couldn't loan ExxonMobil $18 billion. I mean, it's farcical on the face that we should sit by and let what is purported to be just a pure commercial transaction happen, when, in effect, this is a strategic decision. We wouldn't let the Chinese buy McDonnell Douglas. We wouldn't let them buy Lockheed Martin. We wouldn't let them do many of those things.

DOBBS: Well, Congressman Barton, again, we commend you on the hearings you are going to hold on this issue, and your efforts to get the energy legislation through and into action for the president before the August recess. Thanks for spending part of your Independence Day holiday with us here on this broadcast. Congressman Joe Barton.

BARTON: My pleasure. We hope to give the president a two-fer here in the next month.

DOBBS: There you go. A reminder now to vote in our poll. Do you believe the next justice appointed to the Supreme Court should be more liberal or more conservative than Justice O'Connor? Cast your vote at LouDobbs.com. We'll have the results at the end of the broadcast.

Still ahead here, "Newsmakers." We'll be talking with three of the nation's top journalists about the week's major stories, including the first vacancy on the Supreme Court in more than a decade.

Later, in our weekly tribute to our men and women in uniform, "Heroes," how one soldier's lifelong dream was cut terribly short in Iraq. His story is coming up. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me tonight from Washington, Ron Brownstein, the national political correspondent for "The Los Angeles Times." "Time" magazine national correspondent Karen Tumulty. Here in our studio, Jim Ellis, chief of correspondents, "BusinessWeek" magazine. Thanks for being here.

A big week. Let's start with the most recent development and perhaps the biggest. Ron, the move now to create a successor to Sandra Day O'Connor, going to be simple?

RON BROWNSTEIN, LOS ANGELES TIMES: Apocalypse now, Lou. Look, as much as people were gearing up for the possible retirement of Chief Justice William Rehnquist, his retirement would not have changed the balance of power on the court. He is a reliable conservative vote, and the president would have presumably replaced him with another conservative.

Sandra Day O'Connor has been at the tipping point on a long series of controversial economic and social issues, so the fight to replace her I think will be even more explosive and intense than the fight to replace Rehnquist would have been, simply because what is at stake is nothing less than the balance of power on the Supreme Court.

DOBBS: Will there be, in your judgment, Karen, a nuclear option employed in this? Are we going to see the filibuster, the nuclear option, and a resolution to what has been a building history of confrontation over these appointments, judicial appointments?

KAREN TUMULTY, TIME MAGAZINE: Well, of course, it's hard to know until we know who this candidate will be, and we are not going to know that. The president has said not until after he returns from the G-8 next Friday. He's promised to consult with both Democrats and Republicans in the United States Senate.

But the fact is the -- this is -- if I can throw in my own metaphor here -- really the Super Bowl for the interest groups on both the left and the right. And I know my own e-mail was bombarded today with, you know, both sides really sort of squaring up for the fight. And interestingly enough, just about every e-mail I got ended with a fund-raising appeal.

DOBBS: A fund-raising appeal, and your inbox, Jim?

JIM ELLIS, BUSINESSWEEK: It was amazing. I mean, people are really fired up about this, because a lot of people had expected that if the chief justice retired, you know, he would be replaced, and I don't think a lot of Democrats were even fighting the notion that he would be replaced by another conservative.

But now, when you have the woman who has been, you know, right at the sort of forefront of making sure they have had winning votes on things like affirmative action in the University of Michigan case, you know, upholding Roe v. Wade in at least three different instances on the case, and being very forceful about the separation of church and state -- big things for the Republican majority, particularly for the base.

So now it's going to be a real fight. I think that this is actually a lot more serious, because the Democrats can't really afford to let him win on this.

DOBBS: They can't afford, Ron. Is there any way they could stop him?

BROWNSTEIN: Well, I mean, it's a very complicated equation for the Democrats, because as Karen said, a lot depends on who is nominated. Lou, it's worth remembering that every Supreme Court justice sitting now, except for Clarence Thomas, received more than 60 votes in confirmation. So it can be done. You can have a broad consensus candidate that can avoid a filibuster.

But Democrats, obviously would have the opportunity to filibuster. The question would be, as you were suggesting before, if they do filibuster, will the seven Republicans who broke from the party earlier this spring to oppose a filibuster ban face pressure to reconsider. The pressure, in all likelihood would be enormous.

And in fact, John McCain today, I thought, on CNN sent a shot across the bow of some of the Democrats, he said he thought that any person President Bush appointed would not meet the standard they set of extraordinary circumstances that justify a filibuster. So, it's a very complicated equation for both sides.

DOBBS: And for both sides, the stakes obviously high, indeed for the nation. The focus being, Karen, principally, on the part of liberals, and conservatives, at the broader edges of the political spectrum, respectively, Row v. Wade and affirmative action, give us your take.

TUMULTY: Well, that's right. This is the issue that drives all the others. The polls generally show that the public favors keeping abortion legal in the broadest sense by a margin of roughly 2-1. And that has not changed in decades. Basically the public is pretty well settled here.

And so this will be the first -- but where we have seen this battle fought over the last 15 or 20 years are on sort of the side issues: parental notification, partial birth abortion, not the actual question of should abortion remain legal or not. With this court fight, that is the question you are going to get to.

And so in some ways, it would almost make sense for the White House to look for a candidate who has not made a lot of rulings, or expressed a lot of opinions on that central question.

DOBBS: You know, this is one of the great artifices, put forward a nominee about whom you know very little so they can be confirmed. It's really a disservice to everyone.

ELLIS: Well, but it's the nature of sort of the political process, at least as far as it goes with confirmations. That's exactly what happened with Justice Souter. I mean, basically, people did not really know what his background was. And so he sailed through confirmation, while you had somebody like Justice -- Judge Bork, who had a hell of a time because he had written extensively, he had spoken extensively and had very, very strong views. A long paper trail that people could pick apart.

So, if you really are the administration right now, you are thinking two things. No. 1, maybe I ought to go the stealth route, grab somebody who really has not -- who is conservative, but hasn't thrown out. Or do the safe thing and go for a woman or a Hispanic.

BROWNSTEIN: Lou, real quickly. I think one of the keys to George Bush's personality is that he learned more from his father's mistakes than his successes. And I think the conservative movement has been very disappointed in Judge Souter. And I think there will be enormous pressure on this president to pick someone about whom they feel more confident based on their record.

DOBBS: And very quickly, the president goes before the nation to stay the course in Iraq. Effective, Karen?

TUMULTY: Well, it really hasn't moved the polls all that much. The public has great misgiving about this war. It's very nervous. But at the same time, people do support staying there and seeing it through to the end.

DOBBS: Do you agree, Jim?

ELLIS: I think that, unfortunately, there's no alternative. Right now, the president didn't do a very good job of linking terrorism with Iraq, but I think enough voters realize now that if we pull, it just sets up civil war so we might as well stay.

DOBBS: Jim Ellis, Ron Brownstein, Karen Tumulty, as always, thank you all.

Still ahead here, the results of our poll, a preview of what's ahead next week. And in "Heroes" the story of one soldier seriously wounded in Iraq now working to honor his comrades in arms. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now our weekly tribute to the men and women who protect and serve this country, "Heroes." Tonight, the story of Army staff sergeant Luke Wilson who dreamed of being a soldier since he was three. The dream was cut short after an insurgent ambush in Iraq.

Bill Tucker has his story tonight.

(BEGIN VIDEOTAPE)

STAFF SGT. LUKE WILSON, U.S. ARMY: You see where the shrapnel was hit. Tore holes through the fender.

BILL TUCKER, CNN CORRESPONDENT (voice-over): This is a special day for Luke Wilson, his friend and Army buddy, King Cooper is visiting on leave from the fighting in Iraq.

WILSON: And some of the RPGs.

UNIDENTIFIED MALE: The RPGs.

TUCKER: Looking at the pictures takes Wilson back to the years he served. And the day his life changed forever in Iraq.

A former staff sergeant in the Oregon National Guard, Wilson was ambushed on only his second day in combat driving in a convoy.

WILSON: The RPG hit and it like, it went through right about here, right through my calf.

TUCKER: Wilson knew his leg was mangled, but he kept on fighting as the vehicles moved forward out of harm's way.

WILSON: For a split second there, I was staring at the stars going so this is where it's going to end. This is how I'm going to die.

TUCKER: Wilson lost six pints of blood in 15 minutes.

WILSON: Since I lost so much blood, they thought I was going to die. So they brought a chaplain in.

TUCKER: In Baghdad Wilson's leg was amputated, he was devastated.

WILSON: I was in the Rangers. I was jumping out of planes, then I went in the guard. And I'm in combat. I finally got my dream. And now I'm missing a leg. It was, at that point in time, I wish I would have been dead.

TUCKER: He spent a year at the Walter Reed Army Medical Center, long days of grueling therapy and long nights of missing his buddies still fighting in Iraq.

WILSON: First two weeks at Walter Reed, I refused to sleep. I was just stuck to the news, wanting to know what was going on. You know, praying to God my guys were OK.

TUCKER: Wilson's unit lost nine men in Iraq. To honor them and to honor the soldiers who helped save his life, Wilson is now involved in building a memorial.

WILSON: I've kind of taken help in this memorial. If it wasn't of Baldwin or Mollero (ph), my name would have been on that memorial.

TUCKER: Bill Tucker, CNN, reporting.

(END VIDEOTAPE)

DOBBS: Luke Wilson was discharged from the Army April 1. In addition to working on that memorial in Salem, Oregon, Wilson uses his experience to help other soldiers adjust to their return to home.

We would like, also, to point out to you tonight the Horatio Alger Association is offering the first ever national military scholarship program for veterans of Iraq and Afghanistan. The Horatio Alger Association says we are proud to honor the brave men and women of our armed forces who have faithfully served our country in the Middle East. Helping veterans to attain a college only seems fitting in light of the sacrifices they have made.

The results of our poll. 80 percent of you say the next justice appointed to the Supreme Court should be more liberal than Justice O'Connor. 20 percent say conservative.

Thanks for being with us tonight. Have a great holiday weekend. For all of us here, good night from New York. Happy July Fourth. "ANDERSON COOPER 360" begins with Heidi Collins sitting in -- Heidi.

END

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