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LOU DOBBS TONIGHT

Launch of Shuttle Discovery; Naming the Enemy; White House No Show; Losing the War on Drugs; CAFTA: Good or Bad?; Union Split

Aired July 26, 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, a successful launch for the Shuttle Discovery and NASA's new mission. We'll have a special report for you on what's next for this country's space program.

Also tonight, Congress expected to vote on a so-called free trade agreement with Central America this week. We'll have a debate between leading authorities tonight on whether CAFTA is about free trade or it's a corporate outsourcing program that will cost more middle class Americans their jobs. And on the subject of free trade, tonight I'll have a few choice words for a "Philadelphia Inquirer" columnist.

Also tonight, is the war on terror over? Tonight we'll be reporting on the new language of the Bush administration and what we on this broadcast call the war on radical Islamists.

And I'll be talking tonight with the leader of the Service Employees Union that has just broken with the AFL-CIO. Some say that decision has further weakened organized labor in this country.

We begin tonight with the launch of the Shuttle Discovery on America's first manned space flight in two-and-a-half years. Discovery today blasted off from the Kennedy Space Center on a mission to the International Space Station. Discovery lifted off exactly on schedule at 10:39 a.m. Eastern.

In the first eight minutes, Discovery accelerated to 17,000 miles an hour. A television camera aboard Discovery's giant external fuel tank provided never-before-seen images of the shuttle jettisoning the tank and moving away.

Tonight, the Discovery's commander, Eileen Collins, and the six other crew members thanked everyone who helped the shuttle return to space.

Miles O'Brien at the Kennedy Space Center with the report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Three, two, one, and liftoff of Space Shuttle Discovery, beginning America's new journey to the moon, Mars and beyond.

MILES O'BRIEN, CNN SPACE CORRESPONDENT (voice-over): It's been a long time coming, but in the end everything came together without a hitch. The weather was perfect, the countdown flawless and the faulty fuel gauge that kept the launch on hold and NASA engineers scratching their heads for nearly two weeks inexplicably worked without a hiccup. On cue and on time, the Shuttle Discovery rocketed into space, marking NASA's return to flight nearly two-and-a-half years after the loss of Columbia and her crew of seven.

MIKE GRIFFIN, NASA ADMINISTRATOR: Take note of what you saw here today: the competence and professionalism, the sheer gall, the pluckiness, the grittiness of this team that pulled this program out of the depths of despair two-and-a-half years ago and made it fly.

O'BRIEN: For Shuttle Commander Eileen Collins and her crew, the day unfolded in a carefully scripted ritual. The crew walked out amid lots of cheers and, frankly, some deep-rooted fears. Could it happen again?

In New York, crew member Charlie Carmada's mother watched, summoning help from an authority even higher than her son is now.

RAY CARMADA, CREW MEMBER'S MOTHER: I'll just try to think he's going for a plane ride and maybe I won't be so scared.

O'BRIEN: So far, so good. But what seemed to be a picture-perfect launch will be followed by a lot of poring over pictures, like this one, which shows some sort of debris falling off the external fuel tank, apparently harmlessly. That camera on the external tank even showed a never-before-seen view of the orbiter and the tank parting ways.

But that is just the start. In the next few days, NASA engineers will analyze a dizzying string of images of the launch, employing a new sophisticated network of tracking cameras positioned all around the launch site.

Miles O'Brien, CNN, at the Kennedy Space Center, Florida.

(END VIDEOTAPE)

DOBBS: And NASA officials hope the return of the shuttle to space marks the beginning of a new and successful phase in this country's space program. And the new administrator of NASA, Dr. Michael Griffin, has ambitious goals for the agency's future.

(BEGIN VIDEOTAPE)

DOBBS (voice-over): Today's successful launch of Discovery is not only NASA's return to flight...

UNIDENTIFIED MALE: Commander Collins reporting that the crew is doing well on orbit and...

DOBBS: ... but the beginning of a new mission.

WAYNE HALE, SHUTTLE DEPUTY PROGRAM MANAGER: And a great day. And to think that here we are today with Americans back in flight on an American vehicle is just a tremendous step, and it will be the first in many steps as we head out into the exploration of the solar system, back to the moon and on to Mars.

DOBBS: Discovery will deliver supplies to the International Space Station, which remains only half completed. The future of the space station remains in question and its role uncertain.

JOHN GLENN, FMR. ASTORNAUT: We've spent something like, I don't know, $55 or $60 billion on that, and our allies have spent another $15 billion or so. And now we're talking about only using it for just the research that would apply to going to the moon and to Mars.

DOBBS: NASA is trying to fast-track the next generation of crew exploration vehicles to be ready before 2014. That would be four years after NASA plans to retire the shuttle.

Realistically, the shuttle will likely fly about 15 more missions over the next five years. Next stop is Discovery's sister ship Atlantis, now in the vehicle assembly building, readying for launch in September.

JIM REILLY, ASTRONAUT: Today's demonstration of what looks to be a flawless launch is just one more indication that we're back in space and we're going to stay.

(END VIDEOTAPE)

DOBBS: And NASA plans to announce soon a strategy that will carry us not only back to the moon, but to Mars and beyond.

Turning now to the war in Iraq, four American soldiers have been killed by a roadside bomb in Baghdad. The military said the attack took place Sunday evening. 1,779 Americans have been killed in Iraq since the war began more than two years ago.

An apparent breakthrough tonight in the hunt for terrorists who killed 84 people in the Egyptian resort Sharm el-Sheikh. Egyptian police have identified a possible suicide bomber. Investigators say he's an Egyptian citizen who had links with Islamic fundamentalists.

Police in Britain today searched an apartment building in London used by one of the terrorists responsible for the failed bomb attacks last Thursday. Officials say those attacks may be connected to the bombings two weeks earlier that killed more than 50 people and wounded 700 others.

In the Netherlands, a court has sentenced a radical Islamist to life in prison for the murder of a controversial filmmaker, Theo van Gogh. Van Gogh, an outspoken critic of radical Islamists, was murdered in Amsterdam last November.

The Bush administration is using new language to describe what we on this broadcast call the war against radical Islamist terrorists. The administration no longer uses the phrase "the global war on terror." Officials now call it "the global struggle against violent extremism." Many members of the Bush administration have picked up the new language to convey an old message.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The war on terror, the theme of 1,000 speeches, including the State of the Union 2002. A goal often stated in military terms.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When I called our troops into action, I did so with complete confidence in their courage and skill. And tonight, thanks to them, we are winning the war on terror.

PILGRIM: A war seen in such conventional terms that during the campaign, President Bush drew criticism when he seemed to suggest in a TV interview the war would not be winnable.

MATT LAUER, "THE TODAY SHOW": Can we win it? Do you see that?

BUSH: I don't think you can win it, but I think you can create conditions so that the -- those who use terror as a tool are less acceptable in parts of the world.

PILGRIM: But now the phrase "war on terror" is being officially verbally edited by the administration to the "struggle against violent extremism." Witness the shift of language over the last month.

DONALD RUMSFELD, DEFENSE SECRETARY: What's taking place is a global struggle, and a global struggle against extremists.

Today's struggle against violent extremism.

GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: It's more than terrorism. I think it's violent extremists is the -- is the real enemy here. And terror is the method they use.

PILGRIM: As the images of military campaigns in Afghanistan and Iraq give way to the horror of civilian casualties of terrorists attacks in Iraq, Madrid, London and Egypt, the Pentagon spokesman today tried to define the goals of radical Islamists in new terms.

LAWRENCE DI RITA, PENTAGON SPOKESMAN: This is an ideology. There's a belief in the return to the caliphate, a sort of fundamentalist Islamic rule in the world under a single leadership.

(END VIDEOTAPE)

PILGRIM: Now, several things may be driving this change of language. Public opinion on the war in Iraq has shifted, and the number of civilian casualties in major cities is growing. The radical Islamist agenda, however, has not changed. It simply now has a new name -- Lou.

DOBBS: A different name. The fact is that the Pentagon spokesman talking about the return of the caliphate, the ideology of radical Islamism, the radical Islamists -- he is describing radical Islamists.

What is the aversion on the part of this administration to naming our enemy in clear, definitive terms?

PILGRIM: It seemed a marketed version for the last few years. And now I think there is a shift. One of the things may be the civilian nature of the casualties that's causing this.

DOBBS: It is -- it's fascinating that Secretary of State Condoleezza Rice within a month of having taken office did use the term "radical Islamists." Perhaps the rest of the administration might catch up to her lead.

Kitty Pilgrim. Thank you.

Tonight's quote of the day comes from British Prime Minister Tony Blair. Blair talked earlier on anti-terror legislation in the wake of this month's deadly attack in London.

Tony Blair said, "September 11 for me was a wakeup call. Do you know what I think the problem is? That a lot of the world woke up for a short time and then turned over and went back to sleep again."

Still ahead here, a critical hearing on our broken borders and immigration policy on Capitol Hill, but no one from President Bush's cabinet could attend, despite very serious and sincere invitations. How is it possible that the government could ignore our Congress? We'll have a special report.

Also, the great American giveaway, how the United States rewards illegal aliens who break our laws.

And much of this country is in the grip of a deadly heat wave tonight. More than 40 people have died. We'll have the report coming up next.

(COMMERCIAL BREAK)

DOBBS: The Senate Judiciary Committee today held a critical hearing on immigration and fixing our broken borders. Incredibly, no one from the Bush administration responded to the committee's request to be there because the White House pulled its witnesses, two top cabinet members, at the very last minute.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): There are two competing immigration bills in the Senate. The legislative sponsors, Senators Kennedy, McCain, Kyl and Cornyn, all showed up to answer questions. And a slate of immigration experts were there.

But oddly absent, Labor Secretary Elaine Chao and Homeland Security chief Michael Chertoff. Both were scheduled to attend, but pulled out before the hearing started.

Senate Judiciary Chairman Arlen Specter says immigration is too important an issue to put off. SEN. ARLEN SPECTER (R-PA), CHAIRMAN, JUDICIARY COMMMITTEE: We decided to go ahead with the hearing. We're going to do our work. And when the administration wants to chime in, we'll be ready to listen.

SYLVESTER: If the Senate Judiciary Committee could find time, even in the middle of the U.S. Supreme Court nomination buildup, why not the administration? One thought, the White House may not have been prepared to embrace either one of the bills.

The Cornyn-Kyl bill creates a guest worker program that would require illegal aliens return to their home country in order to be eligible. And it would have tough new workplace enforcement rules.

The McCain-Kennedy bill grants guest worker status to as many as 20 million illegal aliens, puts them on a path to get green cards, and increases immigration levels even further.

The two approaches point out a huge division within the Republican Party and within the administration.

STEVEN CAMAROTA, CENTER FOR IMMIGRATION STUDIES: On the one hand, they look at the public opinion polls. Most Americans want the law enforced. They would like a more moderate pace of immigration. But some very powerful interest groups, mainly the business community and the leadership of the ethnic lobbies, want more immigration and they want to legalize the illegal aliens. And the administration is simply torn between sort of public opinion and the interest groups.

SYLVESTER: Playing to the various audiences looks a lot like indecision.

(END VIDEOTAPE)

SYLVESTER: And we placed calls to the White House and the Labor Department to find out their explanation for not attending the hearing, but our calls were not returned.

The Homeland Security Department says it plans to testify at a later date. But today's hearing, DHS officials dismissed as a panel discussion -- Lou.

DOBBS: The Department of Homeland Security dismissed the Judiciary Committee as a panel discussion?

SYLVESTER: It is very confusing, their explanation, because it certainly looked like a hearing. You had senators asking questions. You had people testifying today. But the way they're phrasing this is that they say that it was a panel discussion.

DOBBS: Well, let me offer a personal opinion and give the Department of Homeland Security something to think about. The Department of Homeland Security is running nothing more than a sham in what it calls border security in this nation, and perhaps ought to be paying attention to panel discussions certainly with one of the most powerful branches of what is a three-branch government in this country. Lisa Sylvester. Thank you very much.

While the White House didn't bother to show up for that hearing today, its immigration policy is decidedly clear. That policy is straightforward: break U.S. immigration laws, and the benefits of American citizenship are all yours.

Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): A baby born to illegal aliens is an instant American citizen. There is free healthcare financed by taxpayers. It's required by federal law, and the government doesn't even allow hospitals to ask legal status.

The foreign-born children of illegal aliens receive a public school education, and in some states, in-state college tuition. All of these hallmarks of the American dream are a powerful draw.

REP. SHEILA JACKSON LEE (D), TEXAS: There is no doubt that the immigration system of America needs drastic reformation. In fact, it's Humpty Dumpty. It's fallen apart and the pieces need to be put back together again.

ROMANS: Cross the border, the reward is a job, and little to fear from the Department of Labor or immigration authorities. A vast ring of fake document dealers speeds this network: a fake or stolen Social Security card and a job in almost any American industry.

Occasionally, immigration authorities raid a high security location, like Seymour-Johnson Air Force Base this month. But for the most part, once here, illegal aliens can easily get a job, a bank account, even a home.

The IRS collects taxes from some illegal aliens, and mortgage lenders use that tax I.D. number to sell them mortgages, critics say, at low rates that are not even available to American citizens.

And with the blessing of federal banking regulators, banks like Wells Fargo open hundreds of bank accounts every day for people illegally in this country. A dozen other banks aggressively pushing into this market.

Even the man whose job it is to secure our borders has admitted it.

ROBERT BONNER, U.S. CUSTOMS AND BORDER PROTECTION: We're talking about numbers that are overwhelming.

ROMANS: This swelling population of illegal aliens is so accepted, they can even buy funeral insurance. So after they die here, they can be returned to their homelands.

(END VIDEOTAPE) ROMANS: From cradle to grave, the system as it is rewards illegal immigration and penalizes the people who wait in line and want to respect our laws. Constituents are starting to get through to Congress on this, but for now American immigration policy seems to favor the companies who exploit the labor at the expense of the citizens who pick up the tab -- Lou.

DOBBS: It is truly extraordinary. And the special interest groups in this country, corporate America, U.S. multinationals, those exploiting the commercial banks, mortgage lenders, all doing so in violation of the law, attracting that illegal labor force to this country, taxpayers paying for it, and then enjoying the benefits for the corporation or the employer. Or the banker.

Christine, remarkable. Thank you very much. Christine Romans.

ROMANS: You're welcome.

DOBBS: We'd like to know what you think about this issue. You know the Department of Homeland Security thinks the Judiciary Committee is simply holding panel discussions. Are you listening, Senator Specter?

The question tonight is, do you think our immigration laws should be enforced against businesses, banks, lenders and other institutions in this country that give illegal aliens the benefits of U.S. citizenship, yes or no? Cast your vote at LOUDOBBS.com. We'll have the results here later on the broadcast.

Not one of the immigration bills before Congress calls for forcibly removing any illegal aliens from this country. No calls for deportation. However, a liberal Washington so-called think tank has for some reason found it necessary to project the cost of just such a proposition: deportation.

The Center for American Progress's careful (ph) study says removing illegals from this country would cost more than $200 billion. That includes $6 billion each year to secure our borders and to legally process illegal aliens.

A spokesman for Tom Tancredo called the study useless since no one is talking about solving our immigration crisis with mass deportation. But personally, I found a fascinating number in this otherwise worthless study with a straw-man proposition. Pointing out that it would only cost $6 billion to secure our borders, I hope will attract the attention of people who want to deal seriously with homeland security in this country.

Coming up next, the White House refuses to release records from Judge John Roberts' work in the first Bush administration. How could it affect his upcoming confirmation hearings for the Supreme Court? That story is next.

And then protecting the millions of us who ride the subway every day. Congressman Peter King of the Homeland Security Committee joins me here next. Stay with us. (COMMERCIAL BREAK)

DOBBS: The White House today refused to back down on its battle with Democrats over Supreme Court nominee John Roberts' legal writings. Democrats want to examine all the documents from Roberts' service in the Reagan and first Bush administrations. But the White House says it will not release papers from Roberts' service as U.S. deputy solicitor general.

Suzanne Malveaux reports.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): Documents from Judge Roberts' early work at Reagan's Justice Department were delivered to Capitol Hill Tuesday, the beginning of a process to provide the Senate Judiciary Committee with a fuller picture of Roberts' record.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I think it goes above and beyond what the Senate needs to do their job. It's more than what they need.

MALVEAUX: But Senate Democrats also want Roberts' documents from much later, internal memos from his four years as deputy solicitor general under the first President Bush. Democrats say those documents will give them a better sense of Roberts' thinking in how he might rule on abortion and other Supreme Court cases. But the White House refuses to make those papers public, claiming attorney-client privilege.

MCCLELLAN: It would stifle the candid, honest and thorough advice that solicitor generals depend on from their attorneys if that privilege was not protected.

MALVEAUX: As deputy solicitor general, Roberts argued cases before the Supreme Court on behalf of the U.S. government. Former Clinton White House Counsel Jack Quinn believes the Bush administration's position is appropriate.

JACK QUINN, FMR. WHITE HOUSE COUNSEL: It would be terrible if the public had unfettered access to the advice that a president gets. If that is the case, presidents won't get very good advice.

MALVEAUX: The Senate is largely split down party lines over the matter.

SEN. HARRY REID (D-NV), MINORITY LEADER: If it's only the documents we've seen in the "New York Times" and the "Washington Post," I think we need a little more than that.

SPECTER: It's an executive branch decision. That's where the privilege lies.

(END VIDEOTAPE) MALVEAUX: Now, the White House appears to be using history as its guide. Both Judges Bork and Rehnquist both served in the solicitor general's office before their Supreme Court nominations. Bork released his records and he didn't make it. Rehnquist refused and he did -- Wolf. Sorry -- Lou.

DOBBS: Suzanne, thank you very much. Suzanne Malveaux.

Are we prepared to handle a terrorist attack like the deadly attacks in London? I'll be talking with a leading congressman who sought answers to that question today on Capitol Hill.

The debate over so-called free trade. My next guests will give us two very different views of one extraordinarily controversial issue now facing Congress and the country.

And how modern technology we use every day is fueling a forgotten war. The dangerous, often deadly, war on drugs.

That special report, a great deal more still ahead here.

(COMMERCIAL BREAK)

DOBBS: The nation's deadly heat wave gripping the East Coast tonight. Temperatures in the low to mid 90s being reported as far north as Boston. New York City today hitting 95 degrees.

The Southeastern part of the country, including Raleigh, North Carolina, 100-degree heat. In Washington, D.C., today, temperatures rose to 97 degrees. High humidity factored in. It felt, we're told, more like 106 degrees.

I've never quite understood how people calculated what it felt like.

Electricity demand in the nation's capital is expected to break an all-time record by this evening. And the scorching heat wave continues in the Midwest and Southwestern part of the country. Phoenix, Arizona, once again posting triple-digit temperatures.

More than 40 people across the country have died in this heat wave so far. Heat-related deaths being reported as far East as New Jersey.

Turning now to homeland security after this month's deadly London bombings. A House subcommittee today asked a critically important question: are we in this country prepared for a terrorist attack on our mass transit systems?

Joining me now from Capitol Hill, the chairman of the Subcommittee on Emergency Preparedness, Congressman Pete King of New York.

Congressman, are we ready?

REP. PETE KING (D), NEW YORK: Lou, we're better than we were on September 11, but we still have a good ways to go. And one thing the hearings showed today is there is no magic answer, there's no silver bullet, but there has to be more research and there has to be better coordination by the federal government.

DOBBS: I suppose a lot of people, Congressman, would be curious why this would even be an issue almost four years after September 11. Yes, the London bombings were recent, but the experience of the city in which we're broadcasting from seemed like it would have been more than an ample reason for the country to awaken to the dangers and the vulnerabilities.

KING: Well, a lot has been done, especially in New York, for instance. The federal government has given about $190 million alone to the MTA, as far as hardening the tunnels, coming up with different sensor devices. So progress has been made, but it's a lot more difficult than aviation. And also, quite frankly, when the money is made available to cities and municipalities, they seem to prefer to put it into other aspects, like the police and fire, rather than mass transit.

So I agree with you, the country should have been more awake. It was somewhat awake, but the attacks in London really woke up the country and I think we should take advantage of that momentum now to try to get going.

One of the things we learned today is that there is so much technology out there -- some of it good, some of it bad -- and yet the federal government has no clearinghouse. There's no one -- for instance, if the MTA in New York, if someone comes to them with an expensive piece of technology, they have no way of checking that with anyone to find out if it's any good. They would have to look into it themselves. They would have to test it out, which takes up valuable time and money. So, that's just one example of how the federal government should be doing more.

DOBBS: Well, another example, Congressman, if I may, the Department of Homeland Security supposed to have submitted a report to Congress titled the National Strategy for Transportation Security. That was supposed to have been delivered on the 1st of April.

We contacted the department to find out just where that report stands, when you could expect, among others, to receive it. And this is what they told us over at Homeland Security: "The report is under final review with the Department of Homeland Security. We expect to provide a report to Congress within the coming weeks."

How critical is this report? How important is it to the prevention and response to a terrorist attack? And why in the world wouldn't the Department of Homeland Security be meeting a deadline?

KING: We believe it's very important. In fact, virtually every member of the subcommittee today raised that point. We hammered it home. And while Democrats and Republicans have made it clear as of today to Secretary Chertoff that the report has to be done as soon as possible, the only reason that I give -- and I'll say this in defense of Mike Chertoff. He didn't really take office until sometime in March and he was doing a total review of the department. So, I'm willing to give him somewhat of the benefit of the doubt on this, as to why it's not done.

But is -- it has to be done. And really, there's no more excuse from here on in for any missed deadlines. Again, the fact is Tom Ridge was out. It took several months for Mike Chertoff to come in and then he was doing a -- an exhaustive review, because a lot has to be changed in that department.

DOBBS: Pete King, as always, we thank you for being here.

KING: Lou, thank you.

DOBBS: Congressman Peter King.

Still ahead, our nation's so-called free trade policy. Why is it failing U.S. workers? Why do we have a $4 trillion debt if it's all free? A debate between two authorities with differing views on CAFTA, coming up.

And America's forgotten war on drugs. You remember. Potent marijuana, sophisticated smugglers, a billion-dollar illegal business. Hundreds-of-millions of dollars in what is not only a forgotten war, but a war that appears to be lost.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Sony-BMG has agreed to pay $10 million in a modern-day payola scandal involving some of the country's biggest names in music. Sony-BMG has also agreed to end its pay-to-play policy. Joining us now with details, A.J. Hammer. He's the co-host of SHOWBIZ TONIGHT on CNN's HEADLINE NEWS -- A.J.?

A.J. HAMMER, HOST, SHOWBIZ TONIGHT: Well, Lou, if you were to go through some of these documents that New York State Attorney General Elliott Spitzer uncovered in implicating Sony-BMG, you would think that this pay-for-play or payola was standard practice in the music business.

Basically, the record company's promoters were either through bribes or through trips or merchandise, getting their songs played on radio stations throughout the country. This is a big deal, and it's only beginning to unfold, because the investigation will continue looking at other music companies, like Warner and EMI and Universal as well.

But Sony-BMG has agreed to pay this $10 million fine which is actually going to be distributed through a philanthropy organization. At the same time, they're going to have to review their practices of promoting records. They are going to have to appoint a person who will basically act in oversight of all the promotional activities of the record label.

And if you look at some of the documents, among those that I saw, one radio station in Buffalo, New York, had a program director who was given a trip to Miami for he and three of his buds, worth about 4,000 bucks for getting a song by the rock band Franz Ferdinand on the air.

I saw another document where record promoters said, what will it take for me to get my Jennifer Lopez song played on your radio station? If you can dream it, we will pay it.

DOBBS: Well, that's pretty impressive payola. Where does this investigation go from here, A.J.?

HAMMER: Well, basically, Lou, the FCC is going to get involved at this point. It's a federal and state crime to have your record company pay for the air play of songs on radio stations. At this level, it's only been a statewide investigation, but it's going to get federal. The FCC is going to join in.

Also, radio companies, conglomerates like Clear Channel and Infinity are being investigated as well. So, it's just going to continue to unfold. What they're hoping though, is a precedent has been set here with the Sony-BMG settlement and that the other labels will follow suit.

DOBBS: Of course, we thought things had been settled back in the '60s in the original payola case.

HAMMER: We did.

DOBBS: A.J. Hammer. He'll be on the air with SHOWBIZ TONIGHT on HEADLINE NEWS in just about 23 minutes. Thank you, A.J.

HAMMER: You got it, Lou.

DOBBS: The Chinese government tonight, playing down speculation that it will continue to revalue its currency. The Chinese Central Bank nudged its currency higher against the dollar last week by 2 percent. Today, the Chinese Central Bank said the move was a one-time deal, not the beginning of a more substantial revaluation.

This week, Congress is expected to vote on the Central American Free Trade agreement. Tonight we have a debate for you on so-called free trade. Alan Tonelson is a research fellow with the U.S. Business and Industry Council Educational Foundation, who says American trade policy is really an outsourcing policy.

And Geoffrey Colvin. He is the senior editor-at-large at "Fortune" magazine and he disagrees strongly, saying our trade policy isn't the real reason our workers are struggling to compete.

Geoff, you said in your recent article that as many as four million jobs are likely to be outsourced and yet you also say the trade policy isn't the reason. What's the deal?

GEOFFREY COLVIN, SENIOR EDITOR, "FORTUNE": The problem is that lots of American workers, millions and millions of them and more every day, are not competitive in an increasingly global economy. In other words, it's possible for workers around the world to compete for all kinds of information-based jobs and they can do many of these jobs at least as well as Americans can and often for a lot less money. And so a lot of Americans are not prepared for the new global labor market they are about to be in.

DOBBS: Al, what do you think?

ALAN TONELSON, U.S. BUSINESS AND INDUSTRY COUNCIL: Lou, the key to understanding why the relative competitiveness of the United States has in fact been suffering in recent years, is recognizing that this great improvement in the scientific and technological prowess of countries like China and like India -- low-income countries all over the world -- it hasn't been the result of a spontaneous act of nature. It's been the result of multinational companies, in particular U.S. multinational companies, actively transferring scientific, technological and managerial know-how to very low-income countries.

DOBBS: Is Alan wrong?

COLVIN: No, Alan is right about that. In fact, Alan and I agree on a great deal of the underlying facts here. I think where we disagree is the right policy prescription.

DOBBS: Well, let's talk about CAFTA then.

COLVIN: Yes. That's what it comes down to for today.

DOBBS: Let's move to CAFTA. Is it an outsourcing agreement? Or is it a, quote-unquote, free trade agreement?

COLVIN: Well, I would say it's a trade agreement and outsourcing is trade. And so, it is going to happen.

DOBBS: Ah, nifty. Nifty.

COLVIN: Yes.

DOBBS: Outsourcing is trade?

TONELSON: Well, Lou, as I see it and I think as most people see it, looking at it from...

DOBBS: Let me be clear, outsourcing American jobs.

COLVIN: Yes. Absolutely right. Absolutely.

TONELSON: Through the lens of common sense, trade implies a two- way economic relationship. You buy and sell. And it's got to be roughly --

DOBBS: Well not if you're America.

TONELSON: Not if you're America, that's right, or not lately anyway. And it's got to be roughly proportional and roughly balanced, or else it breaks down. And what we have with this latest free trade agreement, so-called, is the U.S. attempting to expand trade with six micro economies full of desperately poor people where there is no market.

COLVIN: Of course, Alan is right. The dollars are actually pretty small in this whole thing.

DOBBS: Well wait a minute, they're small? Are you kidding me? The Bush administration says this is, they're getting -- China straightened out --

COLVIN: It's puzzling, isn't it?

DOBBS: It's going to --

COLVIN: The heat surrounding this is enormous. But the dollars are not.

DOBBS: Let me read something to you both -- this from Dennis Hastert, the speaker of the House, on CAFTA -- quote, "This agreement, CAFTA, will also mean a lot to the millions of Hispanic Americans with families still living in Central America by creating a mutually beneficial economic relationship, CAFTA strengthens our ties and friendships." Good Lord.

COLVIN: That is far from the strongest argument in favor of CAFTA. But I mean, the largest -- I think the larger point here is that it's going to help some people and it's going to hurt some people. You have farmers and ranchers in favor of it.

DOBBS: Well then I can't wait to do it.

COLVIN: Everybody who uses sugar is in favor of it, because it would begin to chip away at our ridiculous sugar price support policy. Other companies, including, especially the companies that Alan's organization represents, largely small manufacturers, are being hurt in general by globalization. And they do need help. But I don't think the best way to help them is building a wall around the whole U.S. economy.

DOBBS: Wait a minute. You either build a wall or you sign CAFTA, those are the options here, Jeff? Come on. Don't do that. You sound like a member of the Bush administration when you pull that kind of polarized --

COLVIN: No. Now come on. That's absolutely true. I mean, if we don't sign CAFTA, we are maintaining a wall around part of the U.S. economy. Because we cannot get into the Central American countries tariff-free the way a lot of their products get into our country tariff-free.

DOBBS: Go ahead.

TONELSON: Well, Lou, one reason that this trade agreement has acquired such importance is that it's simply the latest of a long string of outsourcing agreements. If you look at the objects of U.S. trade policy recently, we're not talking about opening up the enormous Japanese market, which is still hermetically sealed, the second biggest national economy in the world. That's been off the screen in Washington since 1995. Nobody talks about expanding trade with Europe because there's no outsourcing potential. The people earn too much. We expand with Central America, with Sub-Saharan Africa --

COLVIN: Look. It would be wonderful to open up Japan. And if we can do it --

DOBBS: How about Europe?

COLVIN: It would be great if we could do it. Why not? Why not? Look, economists for 200 years have agreed that free trade increases the wealth of a nation.

DOBBS: Then why are we $4 trillion in debt with a $7 billion deficit?

COLVIN: Well it's a great question and it's a big problem. But the problem is not caused by our trade policy, it's caused by Americans who spend too much and don't save like they should.

TONELSON: Well it's getting a little more complicated than that because in fact many economists, like the esteemed Nobel Laureate, our Paul Samuelson, and now saying, you know, this type of trade, this type of outsourcing doesn't fit the model.

DOBBS: Right. Gentlemen, we're going to have to continue. We thank you both for your views. It's a tough one. I don't think I have to tell either of you where I come down.

COLVIN: I know where you come down.

DOBBS: Thank you.

A few personal notes now, if I may, about a column in the "Philadelphia Inquirer," with this question, as its lead, "Will China's decision to un-peg its currency to the U.S. dollar make Lou Dobbs shut up?" Written by a nasty piece of business by the name of Andrew Cassel, who calls me pompous, portly and a protectionist.

First, let me answer Cassel's question. No, it won't. By the way, Andrew, bad timing. The People's Bank of China now says that 2 percent revaluation is a one-time deal. Now, we'll see whether that turns out to be the truth, but either way, it ain't enough -- nor will it be -- to salve our projected $170 billion deficit this year with China. And Treasury Secretary John Snow, who hails this revaluation, can't say with any specificity at all what U.S. exports to China could possibly benefit.

And Andrew complains that with my ever-report on this broadcast interview and commentary, that I bash China and demand that America get tough with China. No bashing, Andrew, unless you consider my reference to China as a communist authoritarian nation as bashing. I notice, instead, you call China quote, "A country with one-party rule, a weak legal system, poor environmental record, and so on." End quote. As to get tough, Andrew, guilty as charged. If we don't demand a reciprocal trade relationship with China, there is absolutely no limit to our potential deficit. I want expanded U.S. trade with China, it's just that I prefer the Chinese balance the relationship with purchases of U.S. products and services. Andrew, that is called balanced trade, not protectionism.

And, Andrew, you and your ilk are nothing more or less than corporate supremacists, and your mindless faith-based understanding of economics is what got this country in this mess in the first place. Now, I'll leave the portly discussion, if I may, for another day.

Coming up next here, a marijuana drug smuggling ring that's becoming more sophisticated, and tougher to beat. We'll have a special report for you.

And Andy Stern, the president of the Service Employees International Union, who's just broken with the AFL-CIO. Some say he has further weakened organized labor in this country. He is my guest here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight U.S. officials are trying to shut down a billion- dollar drug smuggling operation along the Canadian border. Mostly they're seizing highly potent marijuana grown in BC, known as "BC Bud". Last week officials shut down a sophisticated tunnel used to transport the drugs. But Border Patrol agents say it's an uphill battle trying to defeat the drug traffickers.

Katherine Barrett with the story from Lynden, Washington.

(BEGIN VIDEOTAPE)

KATHERINE BARRETT, CNN CORRESPONDENT (voice over): Soon the corn will be high enough to give cover to smugglers. Until then, they'll keep gunning pot-laden pickup trucks through the raspberry rows.

RICK HOLLAND, U.S. BORDER PATROL: If the sensors don't go off and nobody sees them and you see a vehicle with red smeared on the side of it, you know it's driven through the berry fields. And most of the farmers, well, all of the farmers, and all of their workers will not do that.

BARRETT: Or they simply walk in through the woods, the contraband stuffed into hockey bags like this one, a $150,000 load.

Even after investing in layers of high-tech detection, and tripling personnel after 9/11, officials admit, "BC Bud", super- strength marijuana from the Canadian province of British Columbia, still floods across the Northwest border by air, land and sea.

KEVIN ANDERSON, U.S. CUSTOMS AND BORDER PROTECTION: The kayakers, they can fit about, probably close to 100 pounds in the kayak. It will usually be one person with a three-man kayak. JOSEPH GUILIANO, U.S. BORDER PATROL: It's a constant situation of one-upmanship between us and them. They have people following us as much as we have people following them. It's not unusual to find them with radios, cell phones, BlackBerry's, night vision equipment, virtually the same technologies we're using.

BARRETT: There has been some success. Customs and Border Patrol have seized more than 11,000 pounds of marijuana between the Pacific and Montana since October.

UNIDENTIFIED MALE: We have a low flyer...

BARRETT: Even so, there are places where it seems all too easy.

(on camera): For several miles in this section of the Canadian border, the United States and Canada are separated by just this 10- foot-wide ditch. Border Patrol agents tell us smugglers' cars traveling on opposite sides can swap a load of "BC Bud" marijuana in just 40 seconds. Now, they're even tunneling under the roads.

(voice-over): The problem is not confined to the Northwest.

RODNEY BENSON, DRUG ENFORCEMENT ADMINISTRATION: We're seeing more and more "BC Bud" seizures occurring in a variety of different cities in the United States. And we're seeing that scope of distribution increase.

BARRETT: "BC Bud" sells for a premium, $2,500 a pound or more. The source, some 20,000 indoor growing operations in houses throughout British Columbia.

Canada has been criticized for its lax treatment of growers and traffickers. That may be changing. In March, four Canadian Police officers were shot and killed after stumbling on a growing operation in Alberta. The tragedy exposed the type of people authorities say run the "BC Bud" business.

INSPECTOR PAUL NADEAU, ROYAL CANADIAN MOUNTED POLICE: In majority of cases, they had several prior convictions for some type of criminal activity in Canada. Over 40 percent will have been involved in some type of violent crime. So we're not talking about passive, peace- loving hippies that are doing this. It's criminal organizations.

BARRETT: And Customs officials say these profit-minded groups could easily move more dangerous cargo.

MARK BEATTY, U.S. CUSTOMS AND BORDER PROTECTION: If marijuana can be smuggled into our country, you know, what else can be? And that's our fear.

BARRETT: Those risking their lives to secure both sides of the border agree, no amount of enforcement will bring victory until America's insatiable demand for the drug diminishes.

Katherine Barrett for CNN.

(END VIDEOTAPE)

DOBBS: Still ahead, the results of our poll, a look at what's ahead tomorrow, and disorganized labor. Division of labor. The AFL-CIO in crisis. I'll be talking with one of the labor leaders who is responsible for part of that crisis. He's our guest here next.

(COMMERCIAL BREAK)

DOBBS: The AFL-CIO is a half century old this week, and now breaking apart. The Teamsters, the Service Employees International announcing their split from the coalition yesterday.

Joining me tonight, the president of the Service Employees Union, Andy Stern.

Andy, why is it necessary for you to break with the AFL-CIO?

ANDY STERN, PRESIDENT, SEIU: Well, Lou, I don't need to tell you that we are living through the most profound, the most significant, the most transformic economic revolution in world history. And American workers are not doing very well. They have less job security, less pay raises, more expensive health care, more debt. And we need a strong and growing labor movement if workers are going to have their work valued and rewarded in this economy.

DOBBS: As you know, Richard Trumka and John Sweeney say that you're weakening organized labor in this country by reducing the strength of other unions that are gathered under the AFL-CIO banner. How do you respond?

STERN: I say we are trying to rebuild the strength of American workers so they can have their work rewarded. We're doing that by the way that we know how to do it best, which is to grow stronger, to be new, innovative, dynamic and flexible. Where workers need to be united is in our communities and at the bargaining tables, not in big office buildings in Washington, D.C. And that's where the unity has been lacking. And that's where we intend to bring back a growing and dynamic labor movement.

DOBBS: What is the attraction for workers now in any industry for union membership, Andy, whether yours or any other? Union membership is down to 8 percent. It's the lowest it's been in almost 70 years.

STERN: Well, yesterday I was at a bill signing with Governor Blagojevich here in Illinois. And I was with Angenita Tanner. Angenita is a child care worker. She takes care of kids in her home every day. And yesterday, she got a chance to change her life through her union.

On Thursday, Florence Aguilar, who's a janitor in Houston, has made minimum wage her whole life and has no benefits, is going to be part of an action for the first time in history to give janitors in Houston, Texas, a chance to live the American dream.

Unions work. But they only work when they're growing stronger, when they're flexible, when they're dynamic and when they're innovative. This is a very different economy from the 1930s, and unions need to change.

DOBBS: The unions need to change. Just how are you going to change? What will be the appeal that you will -- the message that you at least and whatever other unions you affiliate with -- I presume the Teamsters and others -- what will you say to the American worker?

STERN: We're going to say to the American workers that American workers make $9,000 more in unions than not in unions. That unions are still the best anti-poverty program, the best job, the best health and safety program, but only if we're reaching out and talking to workers. Only if we're building effective partnerships with our employers. Only if we're recognizing the needs of a new global economy. That's what we're going to do, is talk to people about changing their lives by uniting their strengths.

DOBBS: Andy Stern, good to have you here.

STERN: Good to have you, Lou.

DOBBS: Now, the results of tonight's poll: 97 percent of you say our immigration laws should be enforced against businesses, banks, lenders and other institutions that give illegal aliens the benefits of U.S. citizenship without responsibility.

Taking a look now at some of your thoughts. Gilbert in Fresno, California wrote in to say: "I would like to know why it is OK to do business with communist China and not communist Cuba."

Good question.

Nick in Phoenix, Arizona: "If 20 million illegal aliens in the United States do not pay taxes, obey rules and laws, why should I?"

And Pam in Portsmouth, Virginia: "People keep talking about drafting a constitution for Iraq. Why don't we give them ours? It was written by a lot of really smart men, it's worked for over 200 years, and we're not using it anymore."

We love hearing from you. Send us your thoughts at LOUDOBBS.com. Each of you whose e-mail is read on the broadcast receives a copy of my book, "Exporting America." And our e-mail newsletter, you can sign up at LOUDOBBS.com.

Now, our daily check on how long correspondent Judith Miller of the "New York Times" has been in prison. The Pulitzer Prize-winning "New York Times" reporter has now been in jail for 20 days. She refused to reveal her confidential sources in the White House CIA leak case. Twenty days.

That's our broadcast for tonight. We thank you for being with us. Please join us here tomorrow.

So-called energy reform could pass Congress this week. Nobel Prize winner and former World Bank Chief Joseph Stiglitz warns that legislation will only add to our energy crisis. He's my guest.

We hope you'll be with us. For all of us here, thanks for being with us tonight. Good night from New York.

ANDERSON COOPER 360 starts right now. Here's Heidi Collins -- Heidi.

HEIDI COLLINS, GUEST HOST, ANDERSON COOPER 360: Hi, Lou. Thanks so much.

END

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