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Congress Approves Highway Bill, Energy Bill; London Bombing Suspects Arrested

Aired July 29, 2005 - 18:00   ET


LOU DOBBS, HOST: Good evening everybody, we will be reporting on what is nothing else than what is an out of control pork barrel bribe fest for Congress. For votes, lawmakers approving a massive highway bill and energy bill with billions of dollars for subsidies for of all things, energy companies when oil is selling at more than $60 a barrel.
And communist China and corporate America are teaming up, joining up to fight it out with the U.S. government. The communists and corporate supremacists don't want any limits on technology exports that could create weapons that one day might be used against this country. The communists and corporate supremacists don't like that approach.

And a major break through in the hunt for radical Islamist terrorists responsible for the London bombing. Police capture key suspects in Britain and Italy. We will have dramatic videotape of the arrests.

We begin with a major split between President Bush and Senate Majority Leader Bill Frist over embryonic stem cell research. Senator Frist has declared he now supports legislation opposed by President Bush that would expand government funding for stem cell research. Scientists say stem cell research could lead to cures to a wide range of diseases, including Alzheimer's, cancer and paralysis. We have two reports tonight, Ed Henry on Capitol Hill, reporting on the widening divisions in the Republican Party over stem cell research and Suzanne Malveaux at the White House reporting on President Bush's determination to stand firm on this issue.

We begin with Ed Henry on Capitol Hill. Ed?

ED HENRY, CNN CORRESPONDENT: Lou, after four years of standing with the president shoulder to shoulder on stem cells, Bill Frist decided to go his own way and everybody is wondering why.


HENRY (voice-over): The Republican leader threw his weight behind increased taxpayer financing of embryonic stem cell research, defying the president's veto threat.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: I believe the president's policy should be modified. We should expand federal funding. HENRY: Frist said as a physician he believes loosening restrictions could help cure diseases like Alzheimer's and Parkinson's.

FRIST: It will define us as a civilized and ethical society forever in the eyes of history.

HENRY: Leading conservatives blasted the move on moral grounds and said it will damage Frist's presidential ambitions.

REP. TOM DELAY, (R-TX) MAJORITY LEADER: I think a candidate that believes in the destruction of life would have a very hard time appealing to the vast majority of the Republicans in this party.

HENRY: But it could play well with swing voters, especially after Nancy Reagan put out a statement saying Frist's decision has, quote, "the potential to alleviate so much suffering," a moderate group known as StemPAC was about to start running TV ads in the critical state of New Hampshire, chiding Frist for blocking the legislation.

ANNOUNCER: So why is Senator Bill Frist holding up a bipartisan stem cell research bill? Why is he preventing us from being the world leader in stem cell research.

HENRY: Frist aides insisted science not politics sparked the senator's decision and he won emotional praise from the bill's Republican sponsor, Arlen Specter, who is battling cancer.

SEN. ARLEN SPECTER, (R) CHAIRMAN, JUDICIARY COMMITTEE: Here's a man who really knows science and who really knows government so it is a very, very profound change. It's an earthquake.


HENRY: But it's unclear whether Frist's backing will get supporter to the magic number of 67 votes to override a presidential veto. Lou?

DOBBS: To the question of why did the majority leader change at this particular moment. The answer?

HENRY: Well, it's really unclear at this point. It appears that he has been feeling and leaning toward this way for a long time. But if he had done this months ago before the last election, it would have been much more embarrassing to the president, after much thought and contemplation, Bill Frist finally decided to go with what I think has been his gut all along, to go much further than the president, but he waited until after the last election. Now he feels he wants to break out and do it on his own and start launching his own presidential campaign and go away from the president on this, damn the consequences. It's unclear how this will play politically, Lou.

DOBBS: Ed Henry from Capitol Hill. The White House today declared President Bush is standing firm on his refusal to increase federal spending on embryonic stem cell research. The White House said President Bush believes taxpayer dollars must not be used to, quote, "destroy human life," Suzanne Malveaux reports from the White House.


SUZANNE MALVEAUX, CNN CORRESPONDENT (voice-over): The White House tried to put on its best face over the Senate leader's about face over stem cell research. The president and Senator Bill Frist appeared together at a White House bill signing shortly after Frist announced he opposed Mr. Bush's limits on funding for embryonic stem cell research. An aide said Frist called the president the night before, so not to blindside him.

At the White House Mr. Bush made a point to call the senator over for a quick chat. Aides to both say their discussions over the matter have been without hostility or irritation.

SCOTT MCCLELLAN, WHITE HOUSE SPOKESMAN: The president said you need to vote your conscience when it comes to this legislation. There's a lot of common understanding between the two.

MALVEAUX: But Frist's reversal could have a huge impact on the stem cell debate.

NORM ORENSTEIN, AMERICAN ENTERPRISE INSTITUTE: President's don't get perfect loyalty from their leaders, but when it comes to difficult and cutting edge issues, you will rarely have a leader break with the president in a kind of visible way.

MALVEAUX: Frist is a close ally to the president and was instrumental in crafting the administration's stem cell policy.

GEORGE W. BUSH, U.S. PRESIDENT: We should not use public money to support the further destruction of human life.

MALVEAUX: The president has threatened to veto any legislation that would expand federal funding for embryonic stem cell research. But political analysts say Frist's clout as a doctor and antiabortion Republican could attract enough support from other senators to make the bill veto proof, undermining the president.

ORENSTEIN: The idea that he will veto a bill where there is such substantial public support and division in his own ranks is a tough thing to do.


MALVEAUX: Now, the White House tried to downplay this story but became frustrated in its inability to orchestrate the news, the intent from the White House today, to certainly highlight the president's recent legislative successes. Lou?

DOBBS: Suzanne, what is the White House reaction there? Because Senator Frist's actions today undercut the president in terms of putting forward his presidential aspirations, and, at the same time, in many cases, dominating in the media, over the achievements of this White House in passing both energy and transportation legislation as well as CAFTA.

MALVEAUX: Lou, quite frankly, many aides were frustrated, many caught flat-footed on this news, they felt perhaps that this was from Frist's office, that they just didn't quite get it. The fact that there was a window of opportunity here where there was good news for the president, and Congress, of course, going on its August recess, they really wanted to bring that about because of the recent bad news from the White House, and many just believe it was a missed opportunity.

DOBBS: Suzanne Malveaux from the White House. The White House today strongly hinted that President Bush will bypass the Senate and appoint John Bolton as U.S. ambassador to the United Nations when Congress recesses for the summer.

White House press secretary Scott McClellan declared it's important for the United States to have a U.N. ambassador in place as soon as possible. Democrats have repeatedly blocked Republican attempts to give Bolton an up or down vote in the Senate.

Congress today approved what is nothing less than an out of control pork barrel run for votes. Lawmakers voted in favor of a massive highway bill authorizing the government to spend more than $286 billion on highways and mass transit in every state of the union. Joe Johns has our report.


JOE JOHNS, CNN CORRESPONDENT (voice-over): It's supposed to be about highways, bridges and other transportation improvements but the first highway bill expected to make it to the president's desk in years is loaded up with goodies for the folks back home, goodies that make members of Congress look like they are doing something on Capitol Hill.

KEITH ASHDOWN, TAXPAYERS FOR COMMON SENSE: It's packed with pork for every congressional district in the nation. It's too expensive and it really doesn't deal with the nation's transportation problems, like congestion.

JOHNS: The numbers are staggering, more than 6,300 projects worth an estimated $24 billion according to a watchdog group, Taxpayers for Common Sense. A 200 million bridge in Alaska named for Don Young, the chairman of the House Transportation Committee, more than $16 million just for bike paths in the Minnesota congressional district of the committee's top Democrat, Jim Oberstar. All told, Oberstar's district will get more than $120 million for transportation projects, almost 10 times more than the average congressman. Why?

REP. JAMES OBERSTAR, (D) MN: Because I put in the most time, put in 31 years in the Congress.

JOHNS: The bill also funds horse trails, traffic lights and transit system, even a day care center in Illinois. Many members of Congress defend the bill as a creator of jobs.

OBERSTAR: This legislation is a real shining example of rousing our transportation funds to make society better.

JOHNS: Experts say there may be other unexpected giveaways that won't be noticed until the bill becomes law. Joe Johns, CNN, Washington.


DOBBS: And the Senate today also passed a mammoth energy bill one day after the House approved the same measure. President Bush will sign that bill into law sometime next week. But critics say the bill is laden with corporate subsidies. Congressman Henry Waxman the leading Democrat on the Committee on Government Reform recently discovered a $1.5 billion subsidy for research. Majority Leader Tom DeLay inserted this subsidy after it was already closed for further amendment. Normally research money is controlled by the government but more than $1 billion of this $1.5 billion will be controlled by a private consortium, the Texas Energy Center, located in Tom DeLay's home district in Sugarland, Texas. You've got to like that name, Sugarland.

Among the companies on the board, Halliburton and Marathon Oil. In total, the energy bill steers nearly $15 billion in tax breaks and subsidies to oil, gas and energy companies, all at a time when these companies are reporting record profits and oil prices are above $60 a barrel. Tonight's quote of the day comes from Congressman Ed Markey. This is what he had to say about that $15 billion giveaway.

"Right now, Adam Smith is spinning in his grave so fast that he would qualify as a subsidy in this bill as an energy source. That's how bad it is."

Congressman Markey referring to renowned economist Adam Smith. Markey also says the bill violates the principles of capitalism that ExxonMobil and Texaco could come to the American people's Social Security system, put up an only rig and drill into the savings of the American people.

Still of head, communist China, corporate American joining up, trying to block new limits on the export of U.S. technology that could be used by our enemies. We'll have a special report.

And heavily armed police capture key radical Islamist terrorists in London and Rome. We'll have a dramatic videotape of the arrests.

And in broken borders, a radical Chicano group with a long history of violence threatens a confrontation with the citizen volunteers of the Minutemen patrolling our border with Mexico. That story and a great deal more coming right up.


DOBBS: Our national security and U.S. business interests appear to be on a collision course tonight over communist China. The Commerce Department wants restrictions on U.S. technology exports to China amid China's huge military build up. But U.S. technology firms are joining with the communist Chinese lobby in Washington to fight the Commerce Department. Christine Romans reports.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The Commerce Department is considering restricting sales of sensitive aircraft parts, computer chips, and machine tools, all American technology with a dual use, all on China's shopping list for its military. The Coalition for Employment Through Exports represents companies like Boeing and says government and business are headed for a major clash on sales to China, quote, "Do we see it as a threat or as a rising country which we need to trade and invest? That's the divide that's occurring between U.S. business and the Bush administration."

Defense experts say China has used U.S. technology to modernize its military. Business and trade groups say stronger dual use controls will hurt American companies.

BILL REINSCH, NATIONAL FOREIGN TRADE COUNCIL: The end result is likely to be a lot more problematic thank what Commerce is talking about right now. And it is likely to, worst case, prevent a lot of trade that is going on right now. And precludes some investment and even try to counteract investment that has already occurred.

ROMANS: Currently, less than two percent of exports to china require an export license, business groups fear that could rise to 10 percent. Proponents of stricter rules say it's a delicate balance.

PAUL FREEDENBERG, FORMER UNDERSECRETARY OF COMMERCE: The Chinese market now is 1.3 billion people, so you don't want to cut off that market to U.S. exporters. So you do have to strike a balance. That doesn't mean you sell everything that you can possibly sell -- certainly everything that's on the Chinese shopping list.

ROMANS: And it's a long list, including technology like Intel computer chips. Intel says, quote, "We want to be able to sell U.S. technology products in growing markets, but we understand the need for balance with national security concerns."


ROMANS: The people familiar with this process tell us there's a good deal of horse trading going on between business and commerce officials on this. Perhaps because of that that the Commerce Department did not want to comment for this story, Lou, but national security experts say they hope that the Commerce Department will have some regulations with teeth. They currently have dual use export controls, but national security experts want more.

DOBBS: It is interesting that Commerce Secretary Carlos Gutierrez is strong -- within the administration strong enough to take this position, because this administration has been catering to every U.S. multinational interest there is. The idea that there would be any question, a determination that something should not be exported because it would not be in our national interest how -- could there even be a debate? ROMANS: There is a very brisk debate. And on one side are national security experts, on the other side of the debate are companies who are selling and investing heavily in China.

DOBBS: With the partnership, of course, of the lobbyists, of the Chinese communist government. Christine, thank you very much.

The communist Chinese government is making dangerous alliances with radical regimes all around the world to meet its growing energy and natural resource needs. In return, Beijing is looking the other way as its trading partners violate international law. Kitty Pilgrim has the report.


KITTY PILGRIM, CNN CORRESPONDENT: China doesn't care who it deals with, as long as they have oil. Chinese officials are glad- handing the most reprehensible regimes in the world to get oil deals.

CLYDE PRESTOWITZ, AUTHOR, "THREE BILLION NEW CAPITALISTS": The Chinese are able to go to these countries and say we are not going to hassle you about human rights, we're not going to hassle you about democracy, or about your religion.

PILGRIM: Top of the list -- Iran, Sudan, and Myanmar. Iran on the list of states that sponsor terrorism, a repressive regime with nuclear ambitions. Yet China has a 25-year, $70 billion oil and natural gas deal. Iran is now China's second largest oil supplier.

DAN BLUMENTHAL, AMERICAN ENTERPRISE INSTITUTE: The Chinese offered them protection from the U.N. sanctions on the Iranian nuclear program.

PILGRIM: Sudan, another state sponsor of terrorism, a world pariah when it comes to human life in Darfur, but China is its largest oil customer.

BLUMENTHAL: And China similarly has said it would use its veto power in the United Nations to stop any tough actions against Sudan.

PILGRIM: The military dictatorship of Myanmar, shunned by the world community, cooperating with China to develop nearby oil and natural gas fields. U.S. diplomat Christopher Hill recently testified, "We are concerned that china's needs for energy and other resource could make China an obstacle to U.S. and international efforts to enforce norms of acceptable behavior.

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: We would certainly encourage the Chinese government to encourage responsible democratic behavior among these types of regimes.

PILGRIM: But doesn't the United States do oil deals with Venezuela? President Hugo Chavez rails against the United States and befriends Fidel Castro. Isn't Saudi Arabia our third largest supplier? Criticized for its human rights record.


PILGRIM: Now, the irony is not lost on U.S. lawmakers. The United States and China as the number one and number two consumers of oil are in clear competition. The new energy bill calls for a study of the security implications of China's oil grab but right now China is rapidly picking up allies in regimes that the United States won't deal with. Lou?

DOBBS: Kitty, thank you very much. Kitty Pilgrim.

Up next support growing in Congress tonight for a new citizens' patrol group for our broken borders, and remarkable new developments in London's terrorist manhunt. Four dramatic arrests of radical Islamist terrorist suspects spanning from London to Rome. Stay with us.


DOBBS: In London today, police rounded up all four suspects in the failed London bombings last week. Dramatic raids taking place in London. One suspect was caught in Rome today. Police now believe they have rounded up all four suspects in the failed London bomb attacks last week. James Mates report.


JAMES MATES, ITV CORRESPONDENT (voice-over): The moment the police close in on the suspected Hackney bus bomber. The sound of shots is almost certainly tear gas rounds being fired into the flat from the top floor balcony. Shortly you will see wasps of gas flowing back out of the now open door.

Eyewitnesses spoke of hearing voices at this time inside the flat shouting at men to take their clothes off and come outside. Both men seem to be suffering from the effects of gas.

The sound of shouted orders from the police can be heard though the words are hard to make out. The identity of the man on the right, the first to be turned around and taken away is unknown. But police officers have told ITV news they believe him to be the man who tried to explode a device on a train near Oval Tube Station in South London. The man on the left is believed to be and wears a striking resemblance to the photograph of Muktar Said Ibrahim. He is alleged to have attempted to blow up himself and the number 26 bus in Hackney on July 21st.

An armed policeman covering every move, he is then ordered to approach and turn around.

Ibrahim was born in East Africa, coming from Eritrea to this country as a child. Despite having served more than two years in jail as a violent criminal, he was given British citizenship less than a year ago. As Ibrahim was lead away, police are confident that eight days after these men tried but failed to bring brutal carnage to London's transport system, they and their accomplices are now safely into custody. James Mates, ITV News.


DOBBS: The failure of the United States to capture Osama bin Laden almost four years after September 11th is the subject of an exchange during the White House briefing today. A reporter asked White House press secretary Scott McClellan about that failure.




QUESTION: Yeah. Exactly ...

MCCLELLAN: Fuzzy math here.

QUESTION: 1,241 days after Pearl Harbor, Adolf Hitler was dead, and today it's 1,417 days after 9/11, Osama bin Laden is still alive, we get a pretty good idea he's in western Pakistan. Why can't we get this guy?


DOBBS: Scott McClellan's answer, we will spare you, but we thought you would love that question. Still ahead here, new tensions on our broken border with Mexican. The Minutemen Project being threatened in Texas bye a militant group vowing to use force against Minutemen voluntary citizen patrols.

And the move to create a government-run citizens border patrol. I will be talking to the congressman behind this proposal. He says it will help maintain and secure our borders.

And the huge challenges, facing our army reserves. Recruitment has falling, reserve troops heading home from the battlefield, the chief of the army reserves, my guest here next.


DOBBS: New threats tonight to the volunteer Minuteman Project, a militant group calling itself the Brown Berets is vowing to stop Minutemen volunteer border patrol teams in Southern Texas. The Brown Berets say they are ready to use force. Casey Wian reports.


CASEY WIAN, CNN CORRESPONDENT (voice-over): In the late '60s and early '70s, the brown berets were the Chicano equivalent of the Black Panthers. They marched, battled police, and even staged an invasion of California's Catalina's Island, claiming it for Mexico. The Brown Berets largely disbanded but in recent years, some of the aging radicals have dusted off their uniforms and reformed, often to fight gang violence and promote education. Now a Texas Brown Beret group says it plans to physically confront the Minutemen when the civilian volunteers patrol the Texas border in October.

PABLO DELGADO, BROWN BERETS: We monitor the system, and when there's a threat to the Mexican American community we are there.

WIAN: Delgado go calls himself the Brown Beret prime minister. He was allowed to speak at a Southern Texas Democratic Party press conference held this week to denounce the Minutemen.

DELGADO: And have communicated with me their sincere interest in organizing a confrontation, physical confrontation against the Minutemen.

WIAN: Though he gave the Brown Berets a platform, party chairman Maldonado says he does not support their actions. Threats of violence are nothing new to the Minutemen. There are reports of a bounty on the heads of California Minutemen by Mexican drug cartels, and anti- Minutemen protesters appear to be doing everything they can to spark a physical confrontation, so far without success.

Meanwhile the Minutemen continue to do what they said they would do all along, monitor the border, report suspected illegal activities to the Border Patrol and not engage in confrontation.


WIAN: Now, we spoke to a leader of the Minuteman Project who happens to be a Latino and he says the Minutemen are not worried about the Brown Berets, because, as he put it, the Minutemen have the law on their side -- Lou.

DOBBS: This is remarkable and even goes to the level of bean unfortunate for one thing. Middle-agent -- aging militants is, first of all sort of -- creates some irony and I think a credibility issue, if you will. How serious does this appear to be? Are they really trying to actively contend with the Minutemen volunteers?

WIAN: It's hard to say. We tried to put in a call to the leader of this Brown Beret group. None of our calls were returned. We weren't able to get in touch with them, but I will tell you that the California Minutemen say that they have undergone a lot of almost violent confrontations with protesters every weekend since they've been patrolling the California border. They say it's getting worse. So, there's a precedent for these protesters actively confronting and physically confronting the Minutemen, Lou.

DOBBS: Yes. I was really referring specifically to this group, the Brown Berets. Your reporting and the videotape that you have shared with our audience here, showing what some of those protest groups, principally promoting Aztlan or the take-over of some of the southwestern part of the United States by Mexico, all of that kind of nonsense. No protest at all; the president of the United States has called the Minutemen volunteers, citizens doing great civic work, called them vigilantes, but there's not been a single word about the conduct of those protesters.

WIAN: And there's not been any evidence that any of those Minutemen have engaged in anything other than monitoring the border and reporting what they see to the border patrol. Meanwhile, their opponents are saying: We're going to smash the border and this land belongs to Mexico -- Lou?

DOBBS: And I notice that the ACLU and the Southern Poverty Law Center went so far as to talk about racism among that group, the Minute men, which I find one of the most reprehensible and despicable distortions I've ever seen by two organizations that do such good work in this country. But what they have done there is and I will tell -- I'd like to just say it straight to their faces -- and I would guess I'm doing so right now, it's absolutely reprehensible what they have done.

Casey Wian, thank you for your excellent reporting.

WIAN: Thank you.

DOBBS: Support is rising in Congress tonight for a new citizen's patrol group for our broken borders. That group would be run by the United States government and it would build on the success of the Minutemen project.

Congressman John Culberson of Texas is leading the fight for a U.S. border protection corps. He's our guest tonight from Washington.

Good to have you with us.

REP. JOHN CULBERSON (R), TEXAS: Good to be here.

DOBBS: Let's start was these volunteers. You -- another Texan, Congressman, as I've just mentioned, has called the Minutemen and other volunteers on the borders: Vigilantes. You're quite a different -- you're at quite the different odds with the president of the United States here.

CULBERSON: I don't believe so, Lou. In fact, the bill that I have filed with 46 co-sponsors of this legislation, is based on the longest and most honorable tradition in America and that is of law- abiding citizens stepping forward as volunteers to be deputized and enforce the law and fill the breech.

In our frontiers whenever the federal authorities can't get there with enough law enforcement or enough military, whenever America has faced a threat, citizen volunteers in the form of a militia have stepped forward and my bill, HR 3622, which I filed today, authorizes a national militia, a lawful group of citizens who would step forward to volunteer; deputized to serve under the governors; to serve under the direction of local and state law enforcement officials; to enforce the law and protect our borders.

Because -- With a focus here, Lou, is America is engaged in a war on terror; with individuals who will sneak into this country. We know that al Qaeda is sending individuals in over the southern border, adopting fake Hispanic identities and America will never win the War on Terror until we secure our borders. So, the focus of my bill is to allow honest law-abiding American citizens who want to help win this war, do so by volunteering in a lawful government-sponsored militia force to deploy along our borders.

DOBBS: Well, Congressman, everything you're saying makes absolutely perfect sense. It makes absolutely no sense that there would be any question in the nation's capitol about the necessity of securing our borders, yet it has not been accomplished in the almost four years since September 11th. How would the volunteers be trained in this border patrol corps and what has been the reaction of those border-state governors?

CULBERSON: I've had a very good reaction from Texas Governor Rick Perry, who is very open to the idea. His homeland security director has informed me the governor's approach initially would be to deploy these citizen militia forces who would be sworn in, again, to uphold the law, have the right to keep and bare arms and use whatever force is necessary under state law and under the direction of local law enforcement officials. In Texas, the intention would be to employ them along the border under the direction of the local sheriff as a neighborhood-watch-border-patrol program.

The key to this, Lou, is that the Congress would sanction this, authorize it. They would be law enforcement officers to protect our borders and there's $6.8 billion of unspent homeland security money that's sitting there untouched. After two years, that would flow directly to these states that -- whose governors step forward and say: We need the help on the border, we want these border protection cops volunteers to come to Texas and we'll pay your reasonable expenses and equip you, train you.

And that money would also pay for housing any individuals that are picked up crossing the border illegally and then the federal officials would have to screen them to be sure there's no terrorists or criminals among them and they would be returned to their home country or prosecuted if they're criminals.

DOBBS: Congressman Culberson, thank you for the innovative idea. Thanks for sharing those...

CULBERSON: Thank you.

DOBBS: ... Thoughts with us and introducing your legislation...

CULBERSON: Thank you.

DOBBS: But we're out of time, but how soon do you think the Congress will take up your legislation?

CULBERSON: I'm very optimistic. I've gotten strong support in the House and I am very optimistic we'll see action on it this fall. The founders left us all the tools to solve our problems, if we'll just step up and use them.

DOBBS: Congressman John Culberson, thank you for being here.

CULBERSON: Thank you, sir.

DOBBS: Well, we'd like to know how you feel about this issue. Do you support Congressman Culberson's bill to create a federal border auxiliary protection core made up of citizen volunteers? Yes or no, cast your vote at We'll have the results coming up here later.

Coming up next: A recruiting crisis is in the U.S. Army Reserve. The Reserve's commander, Lieutenant General James Helmly, will be here to tell us how the Reserve is trying to attract more volunteers.

And our weekly salute to our nation's heroes: Our men and women in uniform. Tonight, why one American says the day he was severely wounded in Iraq was one of the west days of his life.

Stay with us.


DOBBS: My guest now is the commander of 205 Army Reserve troops serving this country. Lieutenant General James Helmly is in charge of the U.S. Army Reserve command and General, it is good to have you here.

LT. GEN. JAMES HELMLY, COMMANDER, U.S. ARMY RESERVE: Well, thank you for the opportunity to meet with you.

DOBBS: General, you wrote a memo and it was last December, saying the wars in Iraq and Afghanistan have effectively put the Reserve in danger of becoming a broken force. Do you still feel the same way?

HELMLY: I stand by the memorandum. The memorandum was a professionally prepared memorandum intended in confidence and used professional kind of language. I have to say that since then, while it was not intended for public distribution...

DOBBS: Right.

HELMLY: ... We have addressed many of the issues. The Congress has been most generous and DOD most supportive in improving recruiting and retention benefits and entitlements. We have seen an improvement in our recruitment. We have seen a marked improvement in retentions since then.

DOBBS: All right, when you say an improvement in recruiting, that's from disappointing levels over the course of the beginning of this year. The fact is, Thomas Hall the assistant secretary of defense for reserve affairs who you know well, said the Reserves had missed its target by 21 percent. To that point, while it is an improvement, because it's an overall number, what can you do to improve recruiting, before we take on other issues.

HELMLY: Recruiting, in my judgment, we have not addressed the operative issue, which is that fundamental to that is not so much entitlements and benefits and draws, it is what we call a call to duty...

HELMLY: ...benefits and draws. It is what we call a call to duty. And that is to recognize that the freedom of our nation is guaranteed by soldiers, sailors, airmen and marines and that serving is an obligation of citizenship. I was most pleased in the president's speech to hear the president issuing a call to duty to our young people.

DOBBS: A call to duty that is made all the more difficult when our men and women serving in Iraq and Afghanistan don't have adequate body armor, their humvees are not up-armored, they have munitions that are being provided -- not being provided, made in adequate numbers and amounts in the United States, we are dependent upon Canada and Israel, obviously, for some ammunition, the shortages, the extended tours. These are all difficult, difficult issues. When a man and a woman respond to a call for duty, don't they have a right to expect from the Pentagon the very highest call to duty, that is, to provide them every opportunity to succeed in their mission?

HELMLY: Every right to expect that and we have an obligation as senior leadership to provide that. I think this point in time is an opportune time to recognize that when this conflict, the campaign in Iraq began, that the stresses and strains on our army became visible. You noted the shortage of humvees.

In two year's time our army has gone from less than 300 to over 8,000 up-armored humvees. We have sufficient body armor for every man, woman in uniform, civilian contractors, civilian employees across the theater. Now we issue that to our trainees in basic training so they grow accustomed during training to wearing the weight and the bulk of such body armor.

DOBBS: Is it your sense you are going to be able meet your yearly goals this year in recruiting?

HELMLY: I believe in my best professional judgment, we will come in about 95 percent of our annual recruiting goal. We will come in under strength this year. We are on the path through retention to help right that. And we will get back to our authorized strength over the next two to three years.

DOBBS: We are out of time, general, as we often are on this broadcast. But are you satisfied with the direction now that -- and I will say this generally, that the Pentagon is taking now to meet the needs of the reserves and reservists?

HELMLY: I am personally pleased and rewarded by that. And I am most appreciated by the support of the Congress.

DOBBS: General Helmly, thank you very much for being here.

HELMLY: Thank you for having me.

DOBBS: Still ahead, all the week's headlines, including the passage of CAFTA, the massive energy and highway bills. I will be talking with three of the country's very best political journalists. Later here "Heroes," our weekly salute to the men and woman who serve the nation in uniform. How one army specialist is coping with a devastating insurgent attack in Baghdad.


UNIDENTIFIED MALE: One door may have closed that day but a million more have opened.


DOBBS: His story is next. Stay with us.


DOBBS: President Bush may be claiming victory on two votes: CAFTA, the energy bill and now transportation, but he's having less success convincing the public he's doing a good job. A new Gallup poll just out shows President Bush's approval rating is now at an all- time low, 51 percent disapprove of the way President Bush is handling his job.

Joining me now to discuss this and a lot more, three of the top political journalists in this country. In Chicago, Ron Brownstein of the "Los Angeles Times," in Washington, Karen Tumulty of "Time" magazine. our senior political analyst Bill Schneider, where else, Washington, D.C. Good to have you all here.

Let's start, Ron, with you way out in Chicago. 51 percent? That's ugly.

RON BROWNSTEIN, LOS ANGELES TIMES: Well, 44 percent is the lowest number he has had. And when you look inside, you see the polarization that has been a hallmark of the Bush presidency, and he still about 85, 86 percent of Republicans approve, only 17 percent of Democrats, only 36 percent of independents.

Look, he is faced this, pretty much since the beginning of the second term. He's been under 50 most of the time. Doubts about Iraq, doubts about the economy. The House -- the congressional Republicans are hoping the kinds of things they did this week, action on bread and butter bills like energy and transportation and CAFTA, as disputed as it is, is the way back to a higher approval rating not only for him but for them. And they are looking at numbers even lower than he is.

DOBBS: They are looking at terrible numbers in Congress. And it doesn't matter which party you are in Congress, you're in trouble. And I can't imagine why? Can you Karen? Because the biggest pork in my memory, over the past decade certainly in transportation and energy, this is absolutely amazing the give-away that was necessary for CAFTA.

KAREN TUMULTY, TIME: Although, the way voters tend to look at that is you know whether they get their own bike path or they're own airport runway or their own highway in their district. So, all in all these Congressmen are going back to their districts today starting tomorrow on their August recess, and they will be talking about this highway bill a lot. And specifically, they will be talking about the very things they got into the bill.

Because I think Ron is right. I think Congress has decided and the president has decided that the way they are going to fix those slumping approval numbers are to actually get a few things done.

DOBBS: What would you say they have done here? In point of fact, the energy bill doesn't do anything about high gasoline prices. When you look at the transportation bill, the president says he's going to veto it. He said he's going to veto it on two different levels over the course of the last two years. They've obviously in excess of that now, because there's a lot of pork.

Just what has this congress done?

TUMULTY: Well, this energy was essentially the best they thought they could get through Congress. It has been stuck in Congress since the first day practically of President Bush's presidency.

DOBBS: I'm just asking you, what in the heck does that energy bill accomplish beside provide $15 billion in subsidies for companies that don't even need it?

TUMULTY: Well, again, this is something that I think that it does not immediately address gasoline prices, that's for sure. But it gives subsidies to some alternative forms of energy development. It also, by the way, did not address fuel efficiency standards, another thing that a lot of experts said needs to be done. But it, again, it's better than no bill at all. I think it's the political calculation that you hear from Congress right now.

BROWNSTEIN: Lou, this is the cost of benefits of the kind of governing strategy of the Republicans. On the one hand, I think any kind of dispassionate observer would have to admit that what we have seen over this past week is a remarkable ability to hold the party together on tough votes and pass by very narrow margins something like CAFTA, with only 15 Democratic votes. Getting a lot of Republicans to vote who didn't want to.

On the other hand, the price of that kind of party unity is that you pass an agenda that is much more appealing only to one slice of the electorate. The energy bill is clearly aimed at Republican constituencies, not Democratic constituencies. They're holding the party together, but they are passing an agenda that is dividing and polarizing the county.

So that is the benefit and the cost of the approach they've chosen.

DOBBS: Yeah. I -- Bill Schneider, help me out here, because, I mean, Ron's taking the long view here, but I don't understand, Republican or Democrat, if gasoline prices are higher, our dependency...

Lisa Sylvester, Heidi Collins

the benefit and the cost of the approach they have chosen.

DOBBS: Bill Schneider, help me out here, because I mean, Ron's taking the long view here, but I don't understand, Republican or Democrat, if gasoline prices are higher, our dependency on foreign oil remains the same, and you are subsidizing oil companies instead of providing support for working men and women in this country, just what in the world -- you know, who is your constituency?

SCHNEIDER: What Congress is doing, Lou, is spending money. It's what they always do, whether a Democratic Congress or a Republican Congress, and a lot of voters, as Karen said, a lot of voters like that.

DOBBS: So that's how we got to this record?


DOBBS: Help me out here, because sometimes I'm a little slow, Bill. Is that how we got to these record budget deficits?

SCHNEIDER: Yeah, including not just spending money, but giving tax cuts. Constituents kind of like all that. These bills are squealing with pork. But the important stuff, and this is why the approval rating is low, the important stuff, there is no progress on. Iraq, still very controversial, no end in sight, despite the talk of a revolt. Social Security, the president's top priority, that's getting nowhere. Immigration reform, he's facing a revolt. Stem cell research, the majority leader is now in revolt against his policy. Those are some of the important things that aren't getting anywhere.

DOBBS: Well, the stem cell research, the leader of the Senate -- the majority leader has decided to break with the president, and that has just about -- I wiped out most of the headlines that would have been put down as achievements for the administration over the last three days. What do you make of that, Ron?

BROWNSTEIN: Well, I think it's a remarkable gesture by Frist. I mean, Bill Frist was clearly, I think, hurt in public opinion by his intervention in the Terri Schiavo case, where he seemed to be offering a diagnosis on the floor of the Senate based on a videotape, and here's he's attacking back, clearly not only trying to center (INAUDIBLE) medical doctor.

DOBBS: His medical school classmates said point blank that's what he was doing.

BROWNSTEIN: Yes, exactly. And I think, you know, and so -- so what you have, you know, what you have is I think a demonstration here, again, as John Kerry showed in a very different way, how tough it is to run for president from the Senate, because you have very different calculations at both levels. And here, every time he moves one way or the other, in this role as majority leader, he faces alienating some portion of the Republican constituency that he's going to have to court as soon as he's done with this job.

DOBBS: Karen?

TUMULTY: And this -- but this also is going to put the president in a very, very difficult situation, because it now looks as though this bill is headed for the president's desk, possibly as early as early September. This would be the first veto of the entire Bush presidency. And I think that the president did not want to be vetoing as his first veto a bill that has such strong support among voters, and particularly swing voters.

SCHNEIDER: And if he does veto it, Lou...

DOBBS: Go ahead, Bill.

SCHNEIDER: Yeah, if he does veto this bill, it will acquire enormous symbolic significance to Republican voters. Bush's first veto, and Frist defied him on it.

DOBBS: Defied him on it, and Bill, I want each of you to tell me what you think the impact is. We are watching organized labor in this country basically disintegrate. This is a bigger problem in the minds of some for the Democratic Party than it is for organized labor, which has already been just devastated. Your thoughts, Bill.

SCHNEIDER: Well, it's a problem for the Democrats, no question, because one of the reasons why these unions have left is they thought they were spending -- wasting too much money on politics. Can they turn around the trend of decline in organized labor? I am not so sure.

DOBBS: Karen?

TUMULTY: Well, I think this -- in a lot of leaders of organized leaders say, however, that unless they turn their focus away from politics and back into organizing, which is what these dissident unions are trying to do, they have no hope at all.

DOBBS: Ron, 10 seconds.

BROWNSTEIN: Frist notwithstanding, the big story for Republicans this week is Republicans coalescing. I think we see Democrats dividing. Not only the unions splitting, but the battle between the Democratic Leadership Council and the left erupted again this week. Democrats are fragmenting under pressure; Republicans seem to be coming together.

DOBBS: Ron in Chicago, Karen and Bill in Washington, D.C., thank you all. Still ahead, "Heroes," our tribute to the men and women who serve this country in uniform. One Army specialist's life never the same after an insurgent attack in Baghdad. His story is next.


DOBBS: "Heroes," our weekly salute to our men and women in uniform. Tonight, the story of Army Specialist Kevin Pannell. His patrol was attacked by insurgents in Baghdad, and his life changed forever. Lisa Sylvester has his story.


SPEC. KEVIN PANNELL, U.S. ARMY: How are you doing, sir?

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Twenty-six-year- old Kevin Pannell is upbeat, friendly and self-confident. He's also a double amputee. He lost both legs while serving with the 1st Cavalry Division in Iraq. His job was one of the most difficult: Patrolling on foot in a dangerous section of downtown Baghdad.

On Friday, June 13th last year, his squad was moving down an alley when insurgents lobbed three grenades at the soldiers. Two grenades landed at Pannell's feet.

PANNELL: I remember seeing the blast all around me, to the sides and in front of me. It was just -- the dust was just up -- was kicked up from it. It knocked me down, and I stood right back up.

SYLVESTER: But his legs were mangled. He was flown to Walter Reed Army Medical Center, and began physical therapy, eventually being outfitted with prosthetic legs.

PANNELL: A person asked me one time if there was anything I could change about that day, what would it have been? That's actually -- I mean, that's asking me to write somebody else's name on those grenades, and I would never do it. Never.

SYLVESTER: Looking back, there was no heartache for Pannell, only hope.

PANNELL: I tell everybody June the 13th, 2004 was the worst day of my live, but it was the best day of the rest of my life. You know? Because it's changed so much for me. I'm a better person for it.

SYLVESTER: Pannell realized there was very little he could not do, even without his legs. He completed his first marathon in Miami, and took up skiing.

He also became a public speaker as a member of the Amputee Coalition of America, and returns to Walter Reed to help other wounded soldiers.

PANNELL: I was walking in less than three months, and I got two of those things, you know? It's not a big deal at all.

SYLVESTER: He stays optimistic by challenging himself to do more and be more, now that he's had a second chance at life.

PANNELL: One door may have closed that day, but a million more have opened. So I'm going to go check out some of the doors.

SYLVESTER: Lisa Sylvester, CNN, Washington.


DOBBS: That's why we call the segment "Heroes."

Now the results of our poll: 85 percent of you support Congressman Culberson's bill to create a federal border protection corps made up of citizen volunteers.

And finally tonight, Judith Miller, the Pulitzer Prize-winning "New York Times" reporter has now been in prison for 23 days for protecting her confidential sources in the White House-CIA leak case.

Thanks for being with us tonight. Please join us here next week, of course. For all of us here, have a great weekend. Good night from New York. "ANDERSON COOPER 360" starts right now with Heidi Collins -- Heidi.


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