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LOU DOBBS TONIGHT

House Blocks Compromise Agreement on Patriot Act; A Look Back at Year in Politics

Aired December 22, 2005 - 18:00   ET

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


KITTY PILGRIM, CNN ANCHOR: Good evening, everybody.
Tonight, high drama on Capitol Hill. The House blocks a compromise agreement on the Patriot Act at the last minute.

Also, Democrats and Republicans exchange charges over massive federal spending cuts and their impact on the middle class.

Plus, a scathing indictment of the way Mexico treats its illegal aliens as Mexico criticizes U.S. immigration policy.

And pilots accuse one of the country's biggest freight carriers of outsourcing work to foreign airlines.

Well, we begin tonight with an extraordinary power struggle in Washington over the Patriot Act. The Senate voted to extend the act for six months, but late today, the House blocked the Senate and moved to extend the act for just five weeks. At the center of this dispute, concerns about the impact of the act on American civil liberties.

Andrea Koppel reports from Capitol Hill -- Andrea.

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT: Kitty, in what's shaping up to be more of a hiccup than a serious hurdle, the chairman of the House Judiciary Committee, Republican James Sensenbrenner of Wisconsin, basically threw a wrench into Senate plans to get out of Dodge tonight. Instead, they're going to have to go back into session at 8:00 this evening.

That's because Mr. Sensenbrenner rejected the Senate deal that had been agreed to late last night in the wee hours, really, just before midnight in which they agreed to extend the provisions of the Patriot Act that were set to expire. They were set to extend them for six months.

Sensenbrenner said absolutely not. The only reason he agreed to a one-month extension, he said, was that he didn't want to put President Bush in the position of being the first president since Franklin Delano Roosevelt back in the 1930s to call a special session of Congress.

Instead, Sensenbrenner said he just absolutely had to reject the six-month extension.

(BEGIN VIDEO CLIP) REP. JAMES SENSENBRENNER (R), WISCONSIN: I did not want to leave the American public more vulnerable to a terrorist attack because a filibuster went on in the Senate. And I conceded the president's point on that.

The fact is, is that a six-month extension, in my opinion, would have simply allowed the Senate to duck the issue until the last week in June. Now, they came pretty close to wrecking everybody's Christmas.

(END VIDEO CLIP)

KOPPEL: Now, instead of expiring on December 31, what that means is that the Patriot Act would expire on February 3. But that's if the Senate signs off on it, Kitty. But the indications right now are promising.

We've heard from Senator Patrick Leahy, the Independent from Vermont, who had been pushing for this extension. And we also heard from Chuck Schumer, Democrat of New York. Mr. Schumer putting out a statement saying, "Whether for six months or just one, the key is that the Patriot Act will survive, while a compromise is negotiated."

But the jury is still out -- Kitty.

PILGRIM: All right. Thanks very much. Andrea Koppel.

Well, the House decision to block the Senate deal on the Patriot Act is a major setback for President Bush. Less than two hours earlier, the president called on Congress to approve a six-month extension.

Suzanne Malveaux reports -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, we're also learning as well a senior administration official saying that the president would be willing to sign off on this one-month extension if, in fact, the Senate agrees with the House proposal. All of this, of course, coming a day after the president failed to convince the Senate essentially to sign off on the whole Patriot Act in a robust fashion by the end of the year.

The president releasing this statement just within the last 20 minutes, saying, "I appreciate the strong commitment by the majority of the House and Senate to reauthorize the Patriot Act." It goes on to say, "Our nation's security must be above partisan politics."

All of this coming at a time, Kitty, when the president is trying to reaffirm his political clout.

(BEGIN VIDEOTAPE)

MALVEAUX (voice over): President Bush, heading to Camp David and his Texas ranch for the holidays, is eager to set the stage for a new year. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This has been a year of strong progress toward a freer, more peaceful world and a prosperous America.

MALVEAUX: Aides say for 2006 the emphasis will be on the progress in Iraq and strengthening the economy.

BUSH: We had three sets of elections in Iraq. It's an amazing moment in the history of liberty. People are working. We've added 4.5 million new jobs since April of 2003.

MALVEAUX: But the president arguably got coal for Christmas when Congress, heading for its recess, delivered Mr. Bush two significant legislative blows. First by blocking oil drilling in the Arctic, a key component of Mr. Bush's energy plan. And second, by refusing to renew the administration's broad anti-terrorism law, the Patriot Act, for another four years.

Instead, the Senate punted, extending it for six months, to later review provisions Democrats and some Republicans worry may violate civil liberties. The Senate and House are still negotiating.

SENSENBRENNER: Today's House passage and the Senate's expected passage later today of this five-week extension...

MALVEAUX: Despite the setback, in typical White House fashion Mr. Bush cast the outcome as a success.

BUSH: The Congress understand we've got to keep the Patriot Act in place, that we're still under -- under threat, there's still an enemy that wants to harm us.

MALVEAUX: Wednesday, the administration was able to push through $40 billion worth of cuts in the budget, but only after the vice president cut short an overseas trip to cast a tie-breaking vote in the Senate.

(END VIDEOTAPE)

MALVEAUX: And Kitty, of course, while all that is taking place, Bush aides say that the president will move forward, trying to push forward in small legislative victories in the areas of health care, technology, as well as immigration. At the same time, trying to reassure those Republicans up for midterm elections that they'll be safe -- Kitty.

PILGRIM: All right. Thanks very much. Suzanne Malveaux.

Well, we will be following the latest developments on the Patriot Act throughout the evening here on CNN.

And joining me now for more on the president's terrible year, political challenges ahead, our senior political analyst, Bill Schneider.

Bill, how difficult has this year been for President Bush? WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the queen of England once used the phrase "annus horribilis," horrible year. That was about her family. But take a look at what kind of year President Bush has had politically.

Just after he gave his State of the Union speech in February, his job approval was 57 percent. By November it had reached a low point of 37. Now, the latest figure, 41 percent, it's just up a few points from that, but even though people are feeling better this year about the economy.

The economy is, the latest figures show, is moving along at a pretty nice clip. So Kitty, it's not the economy, stupid. That's no offense.

PILGRIM: Well, if it's not the economy, what is it, Bill?

SCHNEIDER: It's Iraq. When Americans are asked, "What do you think is the most important problem that the president and Congress should deal with?" Iraq overshadows everything else.

Only half as many people are concerned about the economy, followed by health care and immigration. And the problem that President Bush is most concerned about most, terrorism, you can see, is way down on that list.

You k now, this year the president lost on torture, he lost on the Patriot Act, on Alaska oil drilling. He lost on the guest worker program. And the one program he's been promoting all year, his Social Security reform, went exactly nowhere.

PILGRIM: Now, what about the other big plan the president was proud of, the prescription drug plan? That did pass Congress, Bill.

SCHNEIDER: It certainly did. But we have new figures just out within the last hour, where we asked seniors, Americans 65 and older, do they plan to participate in the new Medicare prescription drug program? And you can see here, by two to one, seniors say they don't want anything to do with it.

Why not? Most seniors say they don't understand it, they do not believe it will save them a lot of money, and it looks to them like a giveaway to the big pharmaceutical companies.

So even that achievement which he got doesn't seem to count for much.

PILGRIM: Thanks very much. Bill Schneider.

Well, let's go to the latest from the war in Iraq. Another soldier killed today in a bomb attack in Baghdad. The military is also reporting the deaths of two other American soldiers earlier this week -- 2,161 American troops have been killed in Iraq since the war began.

Separately, insurgents killed four Iraqi police commandos at a checkpoint in southern Baghdad. Six other police commandos were wounded.

Defense Secretary Donald Rumsfeld went to Iraq today for an unannounced visit. Rumsfeld hinted that the number of American troops in Iraq could soon drop below the average forced level this year.

Barbara Starr reports from the Pentagon.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice over): Defense Secretary Donald Rumsfeld arrived in Iraq to wish the troops a happy holiday and meet with his commanders to make final plans to reduce troop levels early in the new year.

Just before landing, Rumsfeld said he still wasn't ready to make any announcements about bringing home some of the more than 150,000 troops now on duty.

DONALD RUMSFELD, SECRETARY OF DEFENSE: As you know, we make plans for all kind of possibilities. And when we get specific recommendations from General Abizaid and General Casey, why, we have the task then of considering those recommendations.

STARR: Senior military officials tell CNN it's a done deal. Twenty thousand troops in Iraq for election security are going to be heading home. That will leave about 138,000 troops in place.

An additional 3,700 soldiers from the 1st Armored Division now in Kuwait will stay there as a backup security force. Also, 3,700 solders from the 1st Infantry Division at Fort Riley, Kansas, will have their deployment orders canceled. But some may go to train Iraqi forces.

Commanders say 2006 will see a change in strategy: less combat for troops.

LT. GEN. JAMES CONWAY, U.S. MARINE CORPS: The typical things that you might see associated with combat operations, cordon and knock (ph) patrols, sweeps, those types of things that you've been reading about American soldiers and Marines doing over the last year, you're going to read increasingly about Iraqi units doing those things.

(END VIDEOTAPE)

STARR: Now, Kitty, with the strategy now shifting away a little bit from combat for U.S. forces, and them being in a more supporting role to the Iraqis, the Pentagon clearly hopes that in 2006 it can convince Congress and the American people that the central issue is no longer precisely how many U.S. troops are in Iraq, but more focus on the job that they are doing -- Kitty.

PILGRIM: Thanks very much. Barbara Starr.

Well, British Prime Minister Tony Blair has also been talking about possible troop cuts in Iraq. Blair today visited British troops in the southern city -- the Iraqi city of Basra, and he indicated that Britain could start reducing the number of troops in Iraq in six months. Britain has a thousand troops in Iraq. That's the highest number after the United States.

While Britain and the United States focus on Iraq, there's new concern tonight about communist China's rising military challenge. Japan's foreign minister today bluntly described China as a threat.

Meanwhile, a top Chinese general who said China might launch nuclear strikes against the United States has been reprimanded, but only mildly. One Chinese source told Reuters the punishment could not be too harsh because China would be weak toward the United States.

Still to come, the New York City transit strike is over. And we'll tell you how both sides reached the deal.

Plus, new security rules are enforced at our nation's airports. We'll have a special report on what those rules mean for you.

And Mexico's hypocrisy. How Mexico is abusing illegal aliens while criticizing U.S. immigration policies.

(COMMERCIAL BREAK)

PILGRIM: Three days of commuting chaos are finally coming to an end in New York City tonight. Transit workers are heading back to work after their union voted to continue negotiations but to end its illegal strike.

Adaora Udoji is live outside Penn Station with the very latest -- Adaora.

ADAORA UDOJI, CNN CORRESPONDENT: Hi there, Kitty.

You see the sea of people here at Penn Station? Well, their commute tomorrow is going to be a whole lot easier, as you said.

Three and a half hours ago, the union president announced that he was directing transit workers to return to work after three days of carrying on a strike. And right now, they are trying to do just that.

It's going to be tough, though, for some of them, because there certainly is lots of traffic. Many of them relying on the subways or trains to get to work.

Mayor Michael Bloomberg is estimating it should take anywhere between 10 to 18 hours to get the subways and the buses back on their normal schedules. But we've even heard some reports, Kitty, in the last 45 minutes or so that there are some buses that are operating at this hour.

Now, this is all the result of marathon sessions with state mediators who were sitting down with both sides in the last 24 hours and trying to figure out exactly where they could bridge the gap. They were able to get the union to agree to end the strike, and they will continue -- the union and the Mass Transit Authority will continue to negotiate. So these workers are going back to work without a contract.

But to recap, great news here in New York City for seven million people. Every expectation that tomorrow morning, the subways and buses should be running normally, which means that they can move on.

So hopefully all of this nightmare commuting will be nothing but a memory shortly. Not to mention, I should I also mention, Kitty, it's supposed to get warmer tomorrow. It's been frigid as people have been walking the last couple of days. But we're going to see the temperatures in the 40s. So we're going to have our subways and buses, and we'll also get some warmer weather -- Kitty.

PILGRIM: All that good news all at once. Thanks very much. Adaora Udoji.

Thanks, Adaora.

Well, another strike could -- on the horizon could impact the entire country. We wanted to tell you pilots for UPS say they're fighting to stop the company from outsourcing work to pilots from cheap foreign labor markets. And today their union took a critical step towards calling a strike.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice over): The Independent Pilots Association represents 2,700 UPS pilots. The union announced after more than three years of negotiating with the company it has reached an impasse. The pilots are now asking the mediator to release them from further talks, setting the stage for a strike.

The number one issue? Outsourcing.

CAPT. TOM NICHOLSON, PRESIDENT, UPS PILOTS UNION: Well, the company is exploding into the international markets, and they will not commit that they won't subcontract our work. Literally, nothing else matters in the contract, whether it's money, pensions, health benefits, work rules, if we don't have the work.

SYLVESTER: According to the union, six times a week a China airline 747 arrives in Nashville carrying cargo as part of UPS supply chain solutions. Union leaders say that work should be done by their pilots, but the company says the union has nothing to complain about, pilots are well paid. The average salary, $175,000 a year.

In a statement, UPS said, "We feel we have reasonable offers on the table. We've said from the beginning pilots will receive pay increases. We've been negotiating increases in vacations, pensions, scheduling, work rules, all the areas of the contract."

UPS adds it has no reason to believe the mediator will grant the union's request to lead the talks.

Economists say the UPS negotiations highlight a larger issue, globalization. Job security, not salary, is the sticking point. It's a concern for many American workers, regardless of income bracket.

ROSS EISENBERRY, ECONOMIC POLICY INSTITUTE: There are millions of American jobs at risk, and people with a college education who have been insulated from this in the past are increasingly going to be faced with the same kind of threats that blue collar workers have faced.

(END VIDEOTAPE)

SYLVESTER: UPS pilots will not walk off the job immediately. The mediator has to make a recommendation to the national mediation board. The board is expected to vote in two weeks whether to release the union from the talks, and if that happens, that will trigger a 30- day cooling off period. And after that, the pilots will be free to strike.

The company doubts things will go that far, but the unions says its executive board has unanimous strike authorization from the pilots -- Kitty.

PILGRIM: Thanks very much. Lisa Sylvester.

Well, Whirlpool is another step closer to buying former rival Maytag. Maytag shareholders today approved the almost $1.8 billion deal. It now goes before the Justice Department.

Now, the vote comes almost two weeks after Whirlpool announced it will lay off 730 American workers at its refrigerator plants in Arkansas. The company is building a new plant in Mexico, where it plans to hire 1,000 people.

Rhode Island's official state Christmas tree didn't make it to Christmas. The tree has been dying gradually over the past few weeks after state workers sprayed it with a flame retardant chemical.

Now, the workers were following a strict new fire code enacted after the deadly Rhode Island nightclub fire two years ago. That code has since been changed to exempt certain Christmas trees.

Now, here's the tree after it was unveiled just three weeks ago. State officials say a replacement is on the way.

And coming up next, the holiday travel season begins with major changes to airport security rules. Are they helping passengers feel any more safe? Well, that's next.

And then, local officials in two states join forces to fight illegal aliens. The crisis in illegal aliens. And we'll have a special report. One of those officials joins us with more on the plan.

So stay with us.

(COMMERCIAL BREAK)

PILGRIM: A controversial new airline security rules went into effect at airports around the country today. Passengers can, once again, carry sharp objects onto commercial flights.

Kathleen Koch reports from Washington.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice over): Holiday air travelers found a new security equation in place. Added, more random screenings and more thorough pat-downs, shoes swabbed for explosive residue. Subtracted, a ban on most scissors, screwdriver, pliers and other small tools.

KIP HAWLEY, DIRECTOR, TSA: Virtually any object can cause harm: my hands, tie, belt, you know, whatever. But our perspective at TSA and Homeland Security is the system and what can hurt the United States. And the big threat is explosives to the United States. Scissors and small tools do not represent much of a threat to the country.

KOCH: The government says screeners will now have more time to look for bombs, which have become more sophisticated and harder to detect. But critics warn the decision could leave aircraft and their crew vulnerable to terrorists.

REP. EDWARD MARKEY (D), MASSACHUSETTS: TSA can't have it both ways. If this knife is too dangerous to be in a passenger cabin, then this scissors is too dangerous to be in a passenger cabin.

PORTIA REDICK-WHITE, TRANSPORTATION WORKERS UNION OF AMERICA: It's a step backward as opposed to a step forward. I mean, four inches doesn't seem like a lot. However, this is four inches, and from the fulcrum here, that's -- that's a long blade. And this can injure and this can harm.

KOCH: Passengers have mixed feelings about the changes.

UNIDENTIFIED FEMALE: I'm comfortable with it. I don't think it's going to make any difference. I share my husband's opinion. And I've had two cuticle snippers confiscated. So I'm kind of glad I can carry that stuff.

UNIDENTIFIED MALE: In some ways, for those of us on the plane, it feels like -- those feel like weapons to us -- to me. And it makes me a little bit nervous. And so we're going to keep on flying, and I still feel like everybody will do a good job, but I would have been perfectly happy if they had kept it just the way it was.

KOCH (on camera): The government doesn't think allowing items like these poses an undue risk, pointing out that since 9/11, cockpit doors have been hardened, pilots armed, and there are more federal air marshals on board U.S. aircraft.

Kathleen Koch, CNN, Reagan National Airport.

(END VIDEOTAPE)

PILGRIM: We want to hear from you on national security. And as we reported, the House voted to extend the Patriot Act for five weeks. The Senate wanted a six-month extension.

Now, do you believe the Patriot Act should be extended -- yes, for six months, as the Senate approved; yes, for four years, as President Bush wanted; yes, indefinitely; or not at all?

Cast your vote at LouDobbs.com. We'll bring you the results a little bit later in the broadcast.

Coming up, local governments forced to join forces in the fight against illegal aliens, as the federal government drops the ball on a national crisis.

And just wait until you hear about Mexico's dirty little secret: its very own illegal alien embarrassment. Our special report on Mexico's shameful hypocrisy next.

(COMMERCIAL BREAK)

PILGRIM: Coming up, a surprise alliance in this nation's growing day labor crisis. But first, a look at the headlines.

A California jury tonight is ordering Wal-Mart to pay more than $170 million to thousands of workers who said they were being denied lunch breaks. No word yet on whether Wal-Mart will appeal that decision.

A three-day New York City transit strike is over. Transit workers are heading back to work, and union officials will resume negotiations with management.

And investigators have found the cockpit voice recorder of that seaplane that crashed off of Miami Beach, Florida. They say it's too damaged to give any clues into what caused the accident. Twenty people were killed.

Also, tonight, a surprising partnership is being forged across state lines in the battle against illegal aliens. Local officials from New York and Connecticut are joining forces to stop illegal aliens from looking for work on their streets, work that should be going to American citizens instead.

Bill Tucker reports from Danbury, Connecticut.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice over): Illegal immigrant day laborers are part of the landscape in Suffolk County, New York. Their presence known, their impact on the community real.

STEVE LEVY (D), SUFFOLK COUNTY, NEW YORK, EXEC.: We estimate, and this is very speculative, over 40,000 illegal immigrants in Suffolk County today. And that puts tremendous stress on our local infrastructure. Our emergency rooms get overwhelmed. We have a large number of people in our school districts we don't know, you know, where their parents came from.

TUCKER: The same problems are just as real and overwhelming in Danbury, Connecticut.

MARK BOUGHTON (R), MAYOR OF DANBURY, CONNECTICUT: Our social services agencies become strained because of the overflow of people that have so many tremendous needs.

Our education system becomes strained because of the extra services we have to offer. So, at any facet of -- of the community, you will see an area that's going to struggle to do this.

TUCKER (on camera): Suffolk County, New York, and Danbury, Connecticut, are 100 miles apart. They're in different states and Boughton and Levy members of different political parties. Yet, they are united by the same problems. And they believe there are a lot more elected officials just like them across the country.

(voice-over): Letters have gone out from each of their offices to mayors and local government executives, announcing the formation of the Mayors and Executives For Immigration Reform Coalition.

A summit is planned for this February in Washington, D.C. The response has been immediate.

BOUGHTON: We're getting calls literally every day related to the formation of the coalition. We're going to launch a Web site after the 1st of the year called ReformtheLaw.org.

TUCKER: The message is nonpartisan and straightforward.

LEVY: We're saying, federal government, it's your responsibility. Deal with it. Step up to the plate, because your ignoring of this problem for the last several decades has had tremendous pressure -- placed tremendous pressure on local governments.

TUCKER: And in communities across the country.

Bill Tucker, CNN, Danbury, Connecticut.

(END VIDEOTAPE)

PILGRIM: Joining me tonight from Babylon, Long Island, with more on this new illegal alien enforcement every is Suffolk County Executive Steve Levy.

And thanks for being with us, sir.

LEVY: Thank you, Kitty.

PILGRIM: You estimate about 40,000 illegal aliens in Suffolk County. One of the things you're asking for is reimbursement to communities of the cost of hosting these. Do you think you will actually get that?

LEVY: Well, certainly, over the last couple of years, there has been far more attention focused on this issue. And we're starting to make the link between the abdication of the federal government's role in this regard and the impact on property taxes.

We think we have a coalition that's very broad-based, from Maine to California, from executives and mayors alike, who are going to be pressuring their congressional delegation to give us some -- some type of break, because our property taxpayers are bearing the brunt.

PILGRIM: Yes. It -- it makes perfect sense.

You're also talking about putting more authority into the hands of local law enforcement. What would you like done?

LEVY: Well, first and foremost, we want the federal government to do its job. And that's secure the borders, because, before you can talk about having more legal immigration, which we are, by the way, in favor of, you first have to eliminate or at least mitigate the illegal immigration.

We also have been asking for more powers on the local level. What we did last year was meet with some of the ICE officials, Immigration and Customs Enforcement officials, to make sure that, when we have an arrest of a suspected felon, we can at least cross- reference that name with the immigration list, and, if they're not here properly, make sure that there are federal authorities that can take that person and get them out of our county.

PILGRIM: You have made a lot of coalition in this. Many people have stepped forward, many local officials. And, yet, you say you're not aligned with any political group, and not going to be. Why is that? Why not build a big...

(CROSSTALK)

LEVY: Well, because this -- well, what we mean by that is, we're not going to be partisan. I'm a Democratic county executive in what was once a predominantly Republican area.

Mark Boughton, the mayor of Danbury, Connecticut, is a Republican mayor in a predominantly Democratic area. And we are both facing the same dilemma, the pressure that illegal immigration is having on our schools, on our jails, on our health care services, and on the housing market, where we see 30, 40, 50 people in one single-family home turning neighborhoods upside down.

We need help from the federal government to secure the borders. But, if they're not going to do that, at the very least, give us reimbursement for having to pick up the pieces to your failed policy.

PILGRIM: You know, you also authored a bill which passed yesterday that helps crack down on the landlords of those single- family homes, where they just pile in lots of illegal aliens. How confident are that you this will clear up the problem?

LEVY: Well, it's certainly going to help.

Over the last 10 years, we have seen more and more instances of, in one specific case, 60 people in a 900-square-foot house. This was a tinderbox ready to explode. And it takes months and months to get the search warrants that gather the evidence.

We passed a new far-sweeping housing plan that will allow us to get these landlords in court much easier. That's just the tip of the iceberg, though. The -- the cost that's having to be borne by our local taxpayers because of undocumented individuals going to our emergency rooms, that's picked up by the local hospitals, who are suffering, it has a major impact.

And I just want to add, Kitty, we're not against immigration. We -- we like immigration. We understand the benefits, culturally and economically, but it has to be done controlled, orderly and legal.

PILGRIM: Well, we wish you every success at the two-day summit that you have called for early next year. And thanks for being with us this evening, Steve Levy.

LEVY: Thank you so much, Kitty.

PILGRIM: Tonight, there are new fears that the growing illegal alien crisis is threatening the very heart of our nation's bedrock notion of one person, one vote.

New Census Bureau figures show explosive new population growth in the Southern and Western United States, states that have seen a flood of illegal aliens. Now, in just the last year, the population of Nevada and Arizona have jumped 3.5 percent, Texas, 1.7 percent, Florida, 2.4 percent.

Now, these states are growing at such a rapid rate, they could pick up a sizable number of new House seats in the 2010 congressional reapportionment. Now, for instance, Texas and Florida could gain as many as three House seats apiece, at the expense of Ohio and New York, which could lose as many as two House seats apiece.

A move has begun in Congress to change the U.S. Constitution, so that the census counts only American citizen, not illegal aliens, who now influence census results.

Coming up, the fight to build a 700-mile fence along our southern border. I will talk to a leading supporter of the border fence initiative, Arizona Congressman J.D. Hayworth.

Plus, painful cuts to crucial programs. A Congress supposed to be working for the middle class has just cut key middle-class aid. Congressmen from both sides of the debate will join me.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Tonight, the Mexican government is sinking to new lows in its efforts to stop the construction of a U.S. border fence. Mexico is now looking to drum up anti-American support from neighboring Latin American governments.

But, in a new report, Mexico is being blasted for gross hypocrisy in its own illegal alien crisis.

Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Mexico's National Human Rights Commission now admits, the Mexican government already employs some of the same border security policies it's criticizing the United States for even considering.

Among other things, the House-approved Sensenbrenner border security bill would make illegal entry into the United States a criminal act. It's now a civil law violation. Illegal entry is already criminal in Mexico, punishable by up to two years in prison and $28,000 in fines.

Mexico also uses local police and the military to enforce its immigration laws. Efforts to do that in the United States have prompted outrage by the government of Mexican President Vicente Fox.

JOSE LUIS SOBERANES, PRESIDENT, MEXICO HUMAN RIGHTS COMMISSION (through translator): One of the saddest national failings on immigration issues is the contradiction in demanding that the United States respect migrants' rights, which we are not capable of quarantine in the south.

WIAN: Examples of Mexico's abuse of its own illegal aliens, who are mostly Central Americans en route to the United States, include terrible conditions inside detention facilities, which often lack running water, basic sanitary supplies, and are breeding grounds for infectious diseases, no facilities to separate men from women and children, unacceptably long stays in custody, and mistreatment by law enforcement officers.

The report found 76 percent of jails holding illegal aliens in Mexico are either in bad or very bad condition. U.S. illegal alien detention facilities are five-star, by comparison.

Meanwhile, Mexican officials continued their assault on U.S. efforts to control illegal immigration. Foreign Secretary Luis Ernesto Derbez is calling for other Latin American governments to join together to fight U.S. border security efforts.

And Hugo Chavez, the Marxist president of Venezuela, ended his war of words with his Mexican counterpart. After Vicente Fox criticized the U.S. proposal to add about 700 miles of fencing along its southern border, Chavez praised his former adversary.

MARC ROSENBLUM, MIGRATION POLICY INSTITUTE: Chavez is sort of anticipating what will be a very real response in Mexico if this enforcement-only bill moves ahead and certainly if some of these measures to erect more border fencing move ahead.

WIAN: In other words expect more Mexican criticism of U.S. actions to strengthen border security.

(END VIDEOTAPE)

WIAN: Mexico and other Latin American nations don't see the issue of illegal immigration as simply a U.S. domestic problem. It's also a critical or, as some would say, foolish part of their economic strategies -- Kitty.

PILGRIM: Fascinating. Thanks very much, Casey Wian.

WIAN: OK.

PILGRIM: Well, my next guest is one of the many Americans blasting the Mexican government for trying to block the fence.

Congressman J.D. Hayworth of Arizona joins us tonight from Phoenix.

And thank you very much for being with us, sir.

REP. J.D. HAYWORTH (R), ARIZONA: Kitty, good to be with you. And merry Christmas.

PILGRIM: Merry Christmas.

I read your remarks about President Vicente Fox. And they are quite, quite strong. And let's quote from them. We have them here. You basically have told him to shut up. "President Fox should shut up about all of this, because he is only fanning the flames of poor relations between our two nations. He needs to cease and desist."

Do you think that -- this has been something of a campaign for Mr. Fox -- do you think he will listen if we start to talk like this?

HAYWORTH: Well, I think we have to step away from diplomatic niceties and lay our cards on the table.

And the fact is, Kitty, as Casey pointed out in the preceding report, Mexico is guilty of rank hypocrisy.

Go to their southern state of Chiapas. Take a look at how the Mexican government treats those who come from Central America and cross its border illegally, and you see a profound difference. And, yet, the Mexicans have the temerity to lecture the United States about our sovereign rights and our rights to protect our nation?

The fact is, diplomatic niceties only take you so far. And I would go further tonight, Kitty, and say that, sadly, President Fox has been a very real disappointment. We thought he would come in, embrace economic reforms. We thought that he would try to build his economy and add jobs to Mexico.

But, instead, Mexico has become more and more of an economic basket case, dependent on remittances, to the tune of $17 billion a year at last -- at last count, chiefly from illegals who come to the country.

And the Mexican government has been a willing accomplice in aiding and abetting illegal immigration to the United States.

PILGRIM: You know, you have also spoken out very strongly against the guest worker program, which you feel is an amnesty for illegal workers here in the United States.

And we do have a clip of one of your comments from that. And here it is. We will read it to you, as you probably can't see it: "The worker scheme is based on the same defeatist notion that we cannot stop it, so we might as well legalize it, by the proponents of legalizing drugs and prostitution."

You're lumping it with some very serious issues.

"Legalization has not worked for those vices. It will not work for illegal immigrants" -- very strong language, and yet there are many people who support the guest worker program. Do you really think this is de facto amnesty for anyone who is here in the United States?

HAYWORTH: Kitty, undoubtedly, guest worker equals amnesty equals surrender.

And I believe the American people reject that defeatist notion, and it is time for the vast majority of Americans to step forward and say enough is enough, because, if we fail to take action, I fear that the House-passed Sensenbrenner bill, when we return to Washington at the start of the new year, by February, I expect it will simply be a vehicle for a guest worker amnesty plan.

And, so, it is incumbent upon the American people to tell their incumbents in Washington, D.C., that enough is enough.

One other note: A guest worker plan has something against it, and it's called history. Never, ever in history has a guest worker program worked.

And Kitty, I would just refer everyone to what has gone on in France, with the recent unrest there, caused by the descendants of initial guest workers brought into do the work that the French would not do. Sound familiar?

PILGRIM: J.D. Hayworth is not afraid to speak his mind on this program.

Thanks for being with us, sir.

HAYWORTH: Thank you, Kitty.

PILGRIM: A reminder now to vote in tonight's poll: Do you believe the Patriot Act should be extended? Answers: yes for six months, as the Senate approved; yes for four years, as President Bush wanted; yes indefinitely; or not at all.

Cast your vote at LouDobbs.com. We will bring you the results in just a few minutes.

Now, coming up, round two for a controversial new spending cut bill in the House. The Senate has sent back the bill with billions of dollars in cuts to federal programs. We will talk to two congressmen on opposing sides of this issue next.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Coming up at the top of the hour here on CNN, "THE SITUATION ROOM" and Wolf Blitzer -- Wolf.

WOLF BLITZER, HOST, "THE SITUATION ROOM": Thanks very much, Kitty.

We're following some important news, a CNN exclusive, Hurricane Katrina as it happened. See the storm unfold right before your eyes. We will talk to the man who stayed in his house as disaster hit and captured the whole thing on tape. Find out why he's now fighting with the insurance company to rebuild his home. It's really an amazing story. You are going to see it right here, new videotape, very dramatic, Kitty, right at top of the hour.

PILGRIM: Thanks very much, Wolf.

Well, much of the drama on Capitol Hill this week centered around nearly $40 billion in proposed cuts to federal program like Medicare and education. Both houses narrowly approved the bill last week, but last-minute changes in the Senate will force the House to reconsider the measure early next year.

In a minute, I'm going talk to Congressman David Dreier of California, who supports the bill.

But, first Congressman John Spratt of South Carolina, who has been a vocal critic of the proposed cuts. And he joins us now.

Thanks for being with us, sir.

REP. JOHN SPRATT (D), SOUTH CAROLINA: Sure. Thank you.

PILGRIM: Who are the biggest losers in this?

SPRATT: Who are the biggest losers?

Children, if you want to pick out a class of American citizens. This bill cuts federal contributions to child care, cuts federal contributions to foster care, cuts and raise the co-pays and premiums that children may have to pay under the so-called SCHIP program -- and students.

Fully a third of the bill comes from raising the costs of student loans by raising the interest rates they must pay and the -- and the origination fees they pay on student -- federally guaranteed student loans.

PILGRIM: Are there any revisions, as this goes back, that are acceptable to you? SPRATT: Oh, sure there's some revisions in this bill that are acceptable to me.

And, conceivably, if David Dreier and I sat across the table, we might have reached a package on which we could reach agreement. There are also some things in this bill where they have just ignored some glaring opportunities to save money.

For example, we're about to implement a billion -- a trillion- dollar, over 10 years, prescription drug bill. Written into that bill is a provision which prohibits the federal government from bargaining for better drug prices. So, we're going to pay this trillion dollars.

Instead of running the government like a business, like Wal-Mart, using our purchasing clout to drive down prices, we're not going to do that. They're passing up a real opportunity for savings by rescinding that language, which was indefensible and unbelievable to start with.

PILGRIM: Will this help the deficit at all?

SPRATT: It won't help the deficit when you pair it with all the other action. That's the key point.

There -- this bill is a spending reconciliation bill, a spending cut bill, which achieves about $39.7 billion in spending reductions. On the other hand, waiting in the wings is a tax cut reconciliation bill. And if you add in all the tax cuts that have been passed since the budget resolution passed the House, the total of those, over five years, comes to $122 billion.

Subtract the $122 billion from the $40 billion in spending cuts and the net result is an $82 billion addition to the deficit. It increases the deficit. It does not decrease the deficit.

PILGRIM: One of the big thing is, this was rushed through in the middle night, 700 pages. Do you think more time needs to be spent on this?

SPRATT: Absolutely. Absolutely.

Listen, I'm the ranking Democrat on the Budget Committee. We have got a stack of papers that high an hour before we came to the floor. There were provisions in it, I'm sure, which we have yet not unearthed.

And, so, this is no way to spend -- or save $42 billion. And I hope it doesn't happen again, but I guess it probably will.

PILGRIM: All right, well, thank you very much for giving us your viewpoint on this...

SPRATT: Sure.

PILGRIM: ... Representative John Spratt of South Carolina. Thank you, sir.

And joining me now is Congressman David Dreier of California. He's the chairman of the House Rules Committee.

And thanks for being here.

REP. DAVID DREIER (R), CALIFORNIA: You bet, Kitty. Merry Christmas.

PILGRIM: Merry Christmas to you, sir.

With a -- such a small margin of voting in the bill, how do you think this might change, as it moves through the legislative process?

DREIER: You know, the -- the point that needs to be made is that it has made it through the legislative process.

And we must recognize that this reconciliation bill, designed to rein in mandatory spending, has passed -- passed both houses of Congress. And we really saw little more than a game played by the Senate, where they made points of order against a couple of minor provisions.

The sad thing is that, by virtue of Nancy Pelosi, the ranking minority leader, the Democratic leader in the House, not agreeing to allow this measure to be considered immediately, it is going to end up denying a billion dollars, a billion dollars in the Low Income Heating Energy Assistance Program, LIHEAP. And I think that's a -- a very sad message to send to our seniors.

What we're doing with this measure is, we are re-prioritizing. We're bringing about reforms. Also, by denying this, Kitty, what we're doing is, we are preventing a couple of billion dollars from getting to people who need medical aid in the area impacted by Hurricane Katrina.

So, what we have done is, we have brought about very meaningful, positive reforms by taking programs like dealing with asset dumping on Medicaid, so that people with a three-quarter-of-a-million-dollar home don't dump that off onto someone else and then qualify for a program for the indigent. We're instead saying that that asset should be used to pay just for their housing as they move into a retirement home.

These are commonsense reforms that we're putting into place, trying to rein in mandatory spending and not having any Democratic support.

PILGRIM: Let me interject here, though. Let me interject here a bit, though.

(CROSSTALK)

DREIER: Sure.

PILGRIM: Because although there are so many common -- as you say, commonsense issues in this, there are some very punitive things for the American middle class. And many take issue with the student loan cuts, $13 billion. At the same time, that we're trying to boost education, we're cutting student loans. And, in fact, the -- even the math and science allocation is less than was recommended by the Senate. So, how can you really say that this is going to be good for education if you're cutting?

DREIER: Kitty, I will tell you that -- that -- that we are going to focus on education. There is going to be a lowering of interest rates that will inure to the benefit of young people who are looking to gain access to student loans.

And the other thing that I think is really important for us to note is that the single most important thing that we can do is to keep the economy growing. And that's what the tax reconciliation measure has done.

And, you know, we keep hearing the tax cuts that we put into place have exacerbated the deficit, when, in fact, we got a $94 billion reduction in the deficit this year over last as we cut taxes. Why? Because, as you all have to report on this program regularly, when you're talking about outsourcing and the loss of American jobs, we have a 5 percent unemployment rate, 215,000 jobs created last month alone, and a booming, strong, bold recovery.

And that is because of those tax cuts. And, also, I will tell you that reform, in many of these programs, Kitty, does inure to the benefit of the middle class and the -- the poor. Why? Because what we're doing is, we are seeing a more efficient government, the more efficient dispensing of these very important programs for those who are truly in need.

PILGRIM: Congressman David Dreier, thank you very much.

DREIER: Always good to be with you.

PILGRIM: Still ahead; the results of tonight's poll; a tribute to our troops.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The results of tonight's poll.

Twenty percent of you said the Patriot Act should be extended for six months. Six percent said it should be extended for four years. Seven percent said it should be extended indefinitely. And 67 percent of you said it should not be extended at all.

Finally tonight, our tribute to the troops -- each night, we share some of the thoughts of some of the brave men and women serving this nation far from home this holiday season.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is Specialist Jorge Ledesma (ph), stationed here in Tallil, Iraq. I just want to wish everybody back home, my mother, my father, brothers, sisters a happy holiday. And I want to give out shout-out to everyone in Washington Heights, New York. Happy holidays.

UNIDENTIFIED FEMALE: Hi. My name is Sergeant 1st Class Tracy Davis (ph).

And I want to say hello to my daughter, Kyra (ph), who is Texas. And I want to say merry Christmas and happy holidays.

UNIDENTIFIED MALE: This is Major Frankie Delgado (ph), United States Marine Corps, and the Combined Joint Task Force-Horn of Africa.

I want to wish my parents, Billi (ph) and Lou Johnson (ph), of Eastland, Texas, a merry Christmas and a happy holidays. I love you, and I will see you soon.

UNIDENTIFIED MALE: Hi. This is 1st Lieutenant Steven Rugy (ph) with the 11th ACR out of Mosul Iraq, 5 Courage (ph).

I would just like to say happy holidays to everyone back home, to my mom, and, Besse (ph) and James (ph). Thinking about you. See you guys shortly.

UNIDENTIFIED MALE: Hello. This is Specialist Clarence Harris (ph), representing HSE-548 (ph), wishing Fort Drum in the North Country happy holidays.

UNIDENTIFIED MALE AND FEMALES: Happy holidays!

(END VIDEO CLIP)

PILGRIM: We wish them all our very best.

Well, thanks for being with us tonight. Please join us tomorrow. We will have much more on the fiery debate over the proposed border fence. Congressman Peter King and Congressman Henry Cuellar are on opposite sides of this issue. And they join us.

Also, former presidential adviser David Gergen and John Fund of "The Wall Street Journal" are our guests.

For all of us here, good night from New York.

"THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.

BLITZER: Thanks very much, Kitty.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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