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LOU DOBBS TONIGHT

Bush, German Chancellor Agree on Iran; Cooperation Unlikely from China, Russia on Iran Problem; Democrats Delay Voting on Alito; Border Security Critics Speak Out; Maryland Law to Force Wal-Mart to Increase Health Care Benefits; Lobbyists Pay for Congressional Holiday Party; Latest Developments On Capitol Hill; National Guard Cuts; Technical Sergeant Daniel Libby A Hero; Curt Weldon Fighting For Able Danger Hearings

Aired January 13, 2006 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Thank you, Wolf.
Good evening, everybody.

Tonight, Iran's nuclear blackmail dominating a summit meeting between President Bush and the German chancellor. We'll be live at the White House.

And why the United Nations appears to be not only incapable but also unwilling to block Iran's nuclear ambitions. We'll have a special report.

And the Pentagon considering massive cuts in the National Guard at a time when the Guard is stretched to the limit breaking point. That story coming up.

And the latest on when the American people will finally hear the answers in the Able Danger scandal about pre-9/11 intelligence. Congressman Curt Weldon, the one lawmaker pushing for full disclosure, is our guest.

And you can't make this up. What passes for business as usual on Capitol Hill includes a lavish holiday party for congressmen paid for by the very lobbyists and companies that congressmen regulate. We'll have the special report.

Those stories and a great deal more coming right up.

But we begin with a global crisis over Iran's nuclear defiance. President Bush and the German chancellor, Angela Merkel, today declared that Iran's nuclear ambitions are a grave threat to the world and must be stopped, but as the president and Chancellor Merkel met in Washington, Iran threatened to escalate its nuclear confrontation with the west.

The White House says Tehran has only one goal, and that is to build nuclear weapons as fast as possible. Suzanne Malveaux is live tonight at the White House with the story -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, it was really the first official meeting between President Bush and Chancellor Merkel. And while both of them acknowledged they had differences over how to handle Iraq, they made it very clear that they're united on their approach over Iran.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: She's plenty capable. She's got kind of a spirit to her that is appealing.

ANGELA MERKEL, CHANCELLOR OF GERMAN: I'm very, very pleased that we've made such a good start here today.

MALVEAUX (voice-over): Chancellor Angela Merkel's first official visit to Washington was aimed at improving U.S./German relations, following the fall-out between Mr. Bush and her predecessor, Gerhard Schroeder, over the Iraq war. A top priority: confronting Iran.

BUSH: Iran armed with a nuclear weapon poses a grave threat to the security of the world.

MERKEL: We will certainly not be intimidated by a country such as Iran.

MALVEAUX: Iran defied an international agreement Tuesday when it reopened its Netanz nuclear site. The U.S. has joined Germany, Britain and France in calling for the International Atomic Energy Agency to haul Iran before the U.N. Security Council for possible sanctions.

MERKEL: I think this is going to be absolutely crucial for the Iranian s to see how serious we are about all of this.

MALVEAUX: But Mr. Bush backed away from insisting on imposing economic sanctions just yet. Many European allies would have a lot to lose. Germany is the world's top supplier of goods to Iran, exporting about $5 billion worth a year. Russia and China, who have veto power on the U.N. Security Council, have lucrative oil deals with Iran, which had led the Chinese to already express reservations about sanctioning the regime.

BUSH: We'll reach out to the Chinese and remind them once again that it's not in their interest or the world's interests for the Iranians to possess a weapon.

(END VIDEOTAPE)

MALVEAUX: And Lou, many political analysts say that it's not likely that anyone would endorse actually sanctioning Iranian oil, but they say there are some other measures, imposing travel bans, cutting on foreign investments and also isolating Iran diplomatically even further -- Lou.

DOBBS: Thank you, Suzanne. Suzanne Malveaux from the White House.

Communist China's declaration that the United Nations Security Council should not confront Iran demonstrates just how unlikely the prospects of a U.N. resolution to this crisis is. China is one of several countries with anti-American agendas that play a major role at the U.N. process.

Kitty Pilgrim has the report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The U.N. Security Council is rife with self-interest. Will key major countries stand up to Iran with sanctions? Not likely. Secretary-General Kofi Annan has just come out in favor of more talk.

SECRETARY-GENERAL KOFI ANNAN, UNITED NATIONS: The only viable solution lies in a negotiated one.

PILGRIM: China is not leaping into action. Its U.N. ambassador says referring Iran to the Security Council might complicate the issue. The real issue: China imports 15 percent of its energy from Iran and wants to continue to do that to fuel its booming economy.

Don't count on the Russians backing strong sanctions against their business partner. Russia has been helping build Iran's nuclear facilities, and Moscow has other deals.

JOHN WOLFSTAHL, CENTER FOR STRATEGY AND INTERNATIONAL STUDIES: Iran has said that they're willing to buy up to $1 billion worth of advanced air defense and other conventional military equipment from Russia. That's a pretty big paycheck and not one that they want to just throw away.

PILGRIM: Even some countries beyond the big five on the Security Council are unlikely to back strong action against Iran. When Iran thumbed its nose at the U.N., cutting the seals off nuclear facilities, European foreign ministers declared negotiations with Iran at a dead end and urged U.N. action, but what kind of action?

PAUL SAUNDERS, NIXON CENTER: The French made very clear even today that they view sanctions as premature at this point.

PILGRIM: South Africa and India, with their energy needs, may be more interested in a watered down resolution on Iran than any strong call for economic sanctions.

(END VIDEOTAPE)

PILGRIM: Now, the big test comes on Monday. Officials from the European Union, Russia, China and the United States will meet in London to work out what needs to be in a Security Council resolution. And they have to structure one that would pat pass and also avoid vetoes from the Russians and the Chinese -- Lou.

DOBBS: With the enormous economic and political investment that both Russia and China have and around there is all but no likelihood that anything will happen at the United Nations?

PILGRIM: Yes. The best you can hope for is that they'll abstain.

DOBBS: Thank you very much. Kitty Pilgrim.

Turning to Iraq. Two American soldiers have been killed in a helicopter crash. The Kiowa reconnaissance helicopter crashed in Mosul, more than 200 miles northwest of Baghdad. The senior officer said the helicopter was probably shot down by insurgents.

Groups approaching the crash site under enemy fire; 2,214 troops now have been killed in Iraq since the war began.

In this country, Attorney General Alberto Gonzales has agreed to give public testimony before the Senate Judiciary Committee on the National Security Agency's secret domestic spying program. Critics say President Bush acted illegally when he authorized secret wiretaps without court warrants. But Gonzales today insisted the president acted within his constitutional powers to protect this country against terrorist threats.

The Senate Judiciary Committee today concluded five days of hearings on the nomination of Judge Samuel Alito to the Supreme Court. The committee's chairman, Senator Arlen Specter, declared his support for Alito's confirmation.

Democratic senators, however, indicated they will delay a committee vote for at least a week.

Alito seems certain to win the support of the full Senate and confirmation. Judge Alito completed three days of questioning yesterday, won wide praise for his performance from President Bush and Republican lawmakers.

Joining me now, our senior legal analyst, Jeffrey Toobin, who covered these hearings throughout.

Jeffrey, what can you say? This was a stunning yawner.

JEFFREY TOOBIN, CNN LEGAL ANALYST: It was a yawner. And the Roberts hearings were expected to be relatively uncontroversial. This was expected to be something of a confrontation, but the Democratic senators didn't make any headway at all, it seemed, on impeaching Judge Alito's character, his integrity or drawing him out on controversial issues.

DOBBS: Or doing anything -- if that is the purpose of the hearing, to disqualify him from confirmation, or to support him for his nomination.

It was peculiar process. This network invested, what, 20, 30 hours in broadcast time, as well as all of the other news networks, news organizations. For what?

TOOBIN: Ever since Robert Bork was rejected in 1987, Supreme Court nominees have decided, or in consultation with their advisors in the White House, to say as little as possible, because they feel that's the way to get confirmed. And so far they all have been confirmed since Robert Bork, but it is not a very enlightening experience for those of us who are watching.

DOBBS: And if it is not enlightening for senior legal analysts of CNN...

TOOBIN: That's right.

DOBBS: ... what in the world is it for the -- what is it for the rest of us?

TOOBIN: The job isn't to entertain me, Lou.

DOBBS: But they're supposed to elucidate...

TOOBIN: I mean but they're supposed to -- that's the problem. In fact, Joseph Biden suggested, I think semi-facetiously yesterday, that maybe they should do away with these hearings all together. Now, it's peculiar coming from him, since he was the biggest windbag on that whole committee and didn't ask a lot of questions.

DOBBS: But he had a lot of competition.

TOOBIN: He had a lot of competition. He did. But it was not much of a spectacle where you could have learned much.

DOBBS: Now, Senate panel (ph) says the Democrats will delay the vote for a week. To what? To what end?

TOOBIN: Something could come up. I mean, there's really just nothing much -- no reason that seems particularly significant, but I don't think it's going to matter that much.

DOBBS: At what point do we as journalists, you as analyst, I as anchor, host, commentator, journalist, just say, this is utter and complete nonsense?

TOOBIN: We can say it right now. Doesn't mean it has any impact.

DOBBS: Seeking no impact, just seeking truth.

TOOBIN: Well, that's what we do.

DOBBS: Right. Jeffrey Toobin, thank you very much.

Still ahead, the radical opens border movement under pressure from Congress and now preparing to mobilize to stop key border security legislation. Our special report coming up.

Also tonight, maybe it's the jet lag. The outrageous new outsourcing comments from Senator Max Baucus. We'll have those, and his clarification.

And Wal-Mart's Maryland migraine. A tough new healthcare bill that could trigger a nationwide health coverage movement, and fuel corporate responsibility. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight our nation's radical open borders movement is ready to mobilize and take its case to the streets and certainly to Washington. These groups are vowing to do everything they can to defeat tough new border security enforcement legislation, which they now equate with McCarthyism.

Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: It was billed as an emergency meeting of southern California's Mexican and Latino leadership. The stated purpose: to devise strategy to defeat the Sensenbrenner border security bill, now being considered by the Senate.

ELVA MARTINEZ, CARECEN: We can defeat these racist legislation when we are united. (speaking Spanish)

WIAN: But the speeches were dominated by hate for border security (AUDIO GAP) war.

ARMANDO NAVARRO, NATIONAL ALLIANCE FOR HUMAN RIGHTS: We have the armor. We have the infantry. We have the artillery and we have to combine it under one organized command so we can win an effective, countervailing war against those racists that are trying to continue to discriminate and impede our development as a people.

JOHN TRASVINA, MALDEF: We have the heart. We've got the numbers, and we also have the law behind us.

ARNE CHANDLER, BORDER SECURITY ACTIVIST: The gentleman from Alda says that we have the law on our side, but he didn't seem to talk about us being a nation of laws and the fact that illegal immigration is illegal here.

WIAN: Supporters of expanded rights for illegal aliens lashed out at the small number of border security activists in attendance.

ENRIQUE MORONES, GENTE UNIDA COALITION: One thing that they have promoted is that racism is alive and well in the United States. (SPEAKING IN SPANISH)

WIAN: A Spanish expletive and minuteman go through. A shirt reading "who's the illegal alien, pilgrim?" Propaganda for those advocating the return of the southwest United States to Mexico, the mythical nation of Aslan.

UNIDENTIFIED MALE: You want to take back California, Arizona, New Mexico...

WIAN: U.S. Congressman Joe Baucus says he sees growing prejudice against Latinos because of this joke directed at him during a round of golf.

REP. JOE BACA (D), CALIFORNIA: And somebody said, "If you make that putt, I'm going to call the INS on you."

WIAN: Organizer Armando Navarro warned the Sensenbrenner bill is creating an atmosphere that will inevitably lead to conflict.

(END VIDEOTAPE)

WIAN: Department of Homeland Security is apparently keeping a close watch on these groups. One web master of a site promoting Aslan says he was interviewed by DHS agents who copied information from his computer hard drive -- Lou.

DOBBS: This is remarkable, and to hear these -- these predictable but nonetheless shameful and regrettable charges of racism in a discussion about immigration reform and border security. Is this all they have left?

WIAN: It seems like it's all they have left. And what was really disturbing to a lot folks was the fact that a U.S. congressman, Joe Baca, who represents a district in California, though he was not advocating the views of these groups, was appearing at the same forum where they were espousing these views. He had to have known that this was going to be happening there, Lou.

DOBBS: Well, it is very unlikely that any U.S. congressman would appear anywhere that he would not, or she would not, have an Opportunity to pander to a particularly supportive special interest group. Perhaps that is the case here for Congressman Baca. We'll see.

Thank you, Casey Wian.

Venezuelan strong man Hugo Chavez just struck yet another deal to deliver cheap home heating oil to low-income Americans. Officials announced today that thousands of low-income Rhode Island homeowners will be receiving cheap heating oil from Venezuelan oil giant Citgo.

Rhode Island becomes the fifth U.S. state to enter into an agreement with the leftist Venezuelan regime this winter.

(BEGIN VIDEO CLIP)

SEN. JACK REED (D), RHODE ISLAND: In October I wrote nine largest oil companies in the world and asked them, because of the extraordinary increase in prices and extraordinary increase in profits, to help out low-income families. Citgo responded. I thank them for that.

(END VIDEO CLIP)

DOBBS: As Venezuela's Citgo tries to make friends in the United States, Venezuela's strongman, Chavez, continues to attack the United States. In his State of the Nation speech today, Chavez blasted the United States for what he calls, quote, "horrific imperialism."

The United States blocked Spain today from selling surveillance aircraft and sensitive U.S. technology to Venezuela. Chavez called the U.S. move an attack against his socialist revolution.

Obviously, Chavez is anti-U.S., and he has made numerous anti- Semitic comments, but this, so far, has not bothered those in five states, perfectly willing to accept his oil.

Just ahead tonight a top Democrat says fighting the outsourcing of American jobs to those cheap foreign markets is a lost cause. Not exactly an endorsement of outsourcing, but close enough. That story coming up.

And members of Congress in charge of government reform, well, they enjoyed an elaborate party at expense of -- you'll just never believe it. Lobbyists. We'll have that special report next.

And Americans demanding answers about what a secret Pentagon program knew about Mohamed Atta and the September 11th terrorists long before September 11. Congressman Curt Weldon is our guest. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight a stunning statement from the top Democrat sitting on the Senate Finance Committee. Senator Max Baucus of Montana saying the shipment of American jobs to chief foreign labor markets is here to stay and the American people will just have to learn to live with it.

In an interview with the Associated Press in India, Baucus said, quote, "The world is flat and we must work harder to better retrain our people. Offshoring is a fact of globalization. Opportunities for U.S. companies come from everywhere, including India," end quote.

Perhaps not surprisingly, Baucus made those comments while he was in Bangalore, there for five days in fact, on the way home from his visit to another cheap foreign labor market, communist China.

That brings us to the subject of our poll. Do you believe Senator Max Baucus should limit his pandering to his constituents in Montana instead of the citizens of India? Cast your vote at loudobbs.com. We'll have the results for you later in the broadcast.

There's pressure on Wal-Mart tonight to begin spending more money on employee health coverage, certainly in Maryland. The Maryland legislature last night overrode its governor's veto and passed a bill that is now a law, forcing Wal-Mart to spend at least eight percent of its payroll on health care. Now other states may follow Maryland's lead.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Wal-Mart is not only a leader in retail sales. It also leads companies with the number of employees on public assistance. In Maryland, 46 percent of the children of Wal-Mart employees are either on Medicaid or uninsured. State lawmakers say the retail giant has not been paying its fair share.

JOHN DONAGHUE (D), MARYLAND DELEGATE: All we're asking for here is that in their quest to be No. 1, offer adequate affordable health care to your employees.

ANNE HEALEY (D), MARYLAND DELEGATE: We're here to tell this bully to change his behavior. We don't want to hurt him. We don't want to kill him. We just want them to pay himself.

UNIDENTIFIED MALE: All in favor, say aye.

SYLVESTER: By a vote of 88 to 50, state lawmakers voted to override Republican Governor Robert Ehrlich's veto.

Companies with 10,000 or more employees are required to spend at least eight percent of its payroll on health insurance. In Maryland, Wal-Mart is the only company missing that mark. The AFL-CIO plans to push for similar legislation in 31 other states.

NAOMI WALKER, AFL-CIO: Wal-Mart last year made $10 billion in profits alone. And why should taxpayers and other businesses have to pick up their health care costs? They can certainly afford it.

SYLVESTER: Wal-Mart responded on its web site, saying more than three-fourths of Wal-Mart associates have health insurance, and every Wal-Mart associate in Maryland, both full-time and part-time, can become eligible for health coverage that costs as little as $23 a month.

Three-fourths of Wal-Mart employees have health insurance, but that's not because of Wal-Mart's doing. The company provides health insurance to fewer than half of its employees. The rest either get their insurance from their spouses or the government.

(END VIDEOTAPE)

SYLVESTER: And part-time workers, they have to wait two years to be eligible for health coverage. Now, business groups are threatening to sue to overturn the new law. But Maryland's attorney general has ruled the law is constitutional -- Lou.

DOBBS: This is a remarkable development, and it certainly says something about Governor Ehrlich and his -- his political power right now.

SYLVESTER: Indeed it does. And the thing about this is that this is going to be -- has been a test case for other states. And as we mentioned in the piece, other states have been watching very closely. So you can bet we'll be seeing more of this type of legislation, Lou.

DOBBS: Lisa, thank you very much. Fascinating. Appreciate it. Lisa Sylvester from Washington. Coming up next here, new revelations about a pricey holiday office party held in the nation's capital. In fact, on Capitol Hill. And the sponsors of that party are particularly interesting, given that this was a reform committee party. We'll have that special report.

And the Alito hearings mercifully ended. But did they accomplish anything? Well, that's one of the questions we'll ask three of the country's top political commentators.

And senior military commander speaking out against proposed cuts in the National Guard. That story and more still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight while Washington is suffering the beginnings of the fall out from a massive lobbying scandal, new details are emerging about a questionable office party attended by several members of Congress. The holiday party was paid for by several high-powered lobbying firms and government contractors. The guests of honor: none other than the members of the House Committee on Government Reform.

Christine Romans has the story.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Music by the band the Second Amendment, an open bar with hors d'oeuvres held in the Rayburn Congressional Office Building, it was the holiday party for the House Government Reform Committee, paid for by nine lobby firms and government contractors.

BETH DALEY, PROJECT ON GOVERNMENT OVERSIGHT: Do you think it really shows that the line between government and money special interests is becoming more and more frayed.

ROMANS: The Project on Government Oversight criticizes the committee's chairman, Republican Tom Davis of Virginia, for allowing his reform committee to be too cozy with special interests.

The congressman's office said the party was widely attended by federal officials, staff and members from both sides of the aisle. And a spokesman called the party completely appropriate, and within House ethics rules, and accused the authors of the report of a partisan attack.

Quote, "If tom Davis were to sneeze, they would accuse him of spreading bird flu."

Still, the Project on Government Oversight report lauds another Republican, Senator John Warner, also of Virginia. He pays for his Armed Services Committee holiday party himself.

And many committees, like the House International Relations Committee, requires staffers and members pay their own way. House ethics rules allow $50 per congressman or staffer to be paid for by lobbyists or contractors.

DALEY: All of this is legal, but that doesn't make it right.

ROMANS: In fact, she says if all nine firms each paid $50 per partygoer, that was quite a party.

FRANK CLEMENTE, PUBLIC CITIZEN: That was a huge gift to the chairman of that committee and to the staff, and it's just inappropriate. Our public space shouldn't be used that way.

ROMANS: His group, Public Citizen, is calling for a complete ban on gifts and travel.

(END VIDEOTAPE)

ROMANS: Most of the sponsors of this party did not return calls or would not comment, if they did. But UPS tells us they are proud to sponsor the party for such a large prestigious committee and they find it a nice way to ring in the new year.

A UPS spokesman didn't know how much that party cost but said they'd sponsor it against next year.

As for Chairman Tom Davis, his spokesman said they'd be happy to have lobbyists and contractors pay again next year, Lou. There's nothing wrong with that.

DOBBS: So generally what we're talking about, and just to be very clear, our interest in the story has nothing to do, frankly, with Davis, or whether it's Democrats or Republicans. It's the idea that something called the government, the committee on government reform would be in the midst of all of that is happening with lobbyists in Washington having a party paid for by sponsors.

But what I find interesting, Christine, as you sum it up, this committee apparently assumed somebody should be paying for it other than themselves?

ROMANS: John Warner over at the Senate, he pays for his own party. A lot of staffers are starting to pay for their own parties, as well. This committee wants to stick with the lobbyists and the contractors at this point.

DOBBS: Maybe the Senate Intelligence Committee should have the CIA pay for its. Maybe -- you know, the -- I don't know. It just goes on and on. The International Relations Committee, maybe they could have Russia kick in, maybe a little from China?

ROMANS: There you go.

DOBBS: Let's hope they're not, but, anyway.

Thank you very much, Christine.

Tonight, the field of Republicans hoping to replace Congressman Tom DeLay as majority leader is expanding. A third candidate, Congressman John Shadegg of Arizona, entered the race today saying the other two candidates, Congressman John Boehner of Ohio, Congressman Roy Blunt of Missouri, have been--well, they have just got too many ties to lobbyists.

All three candidates say they're the best qualified to clean up corruption on Capitol Hill.

Separately tonight, House speaker Dennis Hastert moving to oust Congressman Bob Ney from his post as chairman of the House Administration Committee. Ney under investigation, of course, for taking gifts from one high-powered lobbyist Jack Abramoff, who is now cooperating and has been for a year with federal prosecutors. Ney has repeatedly denied any wrongdoing.

The Senate Judiciary Committee appears all but certain to approve Judge Samuel Alito to the Supreme Court.

Joining me now to discuss all of the major developments this week, Ed Rollins, political consultant, former adviser to Ronald Reagan and John Fund, columnist for "The Wall Street Journal" and David Gergen, former adviser to four presidents.

Thanks for all of your being here.

Judge Alito moves to the Supreme Court, David.

DAVID GERGEN, FMR. PRESIDENTIAL ADVISER: Absolutely. They've been playing dodge ball all week and so far they grazed him a couple times, but they never really hit him.

DOBBS: How silly of is it of them, the Democrats, to postpone the vote? Is that just spite or how would you assess it?

GERGEN: I think it is really to see what happens with public opinion. The liberal groups do want to see if they can raise objections, public objections, to him, if perhaps they can get a little firestorm going out there in the public. And so that's one reason why the Democrats want to delay.

The other reason they want to delay, frankly, is if the public is pretty supportive of Alito then they, some of them, may break off. So it's really a chance to put fingers to the wind. But I think the big opportunity to develop opposition has come and gone.

DOBBS: Ed, would you say there also might be the motivation at least in put a week behind the events of this week and perhaps some of those people that both parties worry about would have forgotten about it?

ED ROLLINS, FMR. REAGAN W.H. POLITICAL DIRECTOR: Well, I don't think people are going to forget about it. It was an extraordinary week, and I think it is a terrible process.

And I think Joe Biden, who obviously filibustered all week, probably said it best, that maybe we ought to just have them send in the questions. They don't seem to accomplish very much. I think what they accomplish is that they take someone who isn't a superb judicial nominee and they basically batter him for a week, and they all look pretty foolish. And I think it's more about their own egos than it is about really pursuing ideology or any of the rest of it.

DOBBS: Let me just ask it this way, John, and then I'll turn to you,, but then I want to put this out to all three of you.

Is there any one of you, who based on what you learned this week and watching these hearings or in any part of the process of about almost 80 days since he has been nominated, any one of you think he's not qualified to be a Supreme Court justice?

JOHN FUND, COLUMNIST, WALL STREET JOURNAL: Supremely qualified, but these aren't hearings. These are speakings. The senators are speaking.

Look, I wish the next nomination for the Supreme Court does the following. After the next four-minute question that some senator windbag decides to ask them they just look at the senator and say, senator, could you repeat the question? And have the stenographer read it back.

The Senate would say, never mind and give up, and we could actually have perhaps question and answer rather than just statement.

DOBBS: Well, we got an answer in Maryland this week, David Gergen. And that was that the legislature there has some guts overriding the Maryland governor's veto of legislation requiring Wal- Mart to spend eight percent of its payroll on health care coverage.

GERGEN: Well they did have some guts, but whether that's the best answer in the long-term for how we deal with health care is a very difficult question.

I mean, if American companies are going to have to take an eight percent tax into the international arena to fight it out with the Chinese products, that's a pretty hefty bill.

We're caught in this dilemma here. You know, we obviously want companies to pay up and protect their employees. On the other hand, if you put eight percent on with this atrocious cost of health care in this country, it does put a lot of companies at disadvantage internationally.

DOBBS: Well, does the question come down, John Fund, to this, either companies or the government will be bearing the cost of health care insurance, and frankly, it doesn't mean a damn thing to international competitiveness, because people have to work, live and eat in this country?

FUND: Well, let's look at the real problem. I've looked at...

DOBBS: Let's look at the question though first.

FUND: No. The mandates on our companies from all of these states which require everything...

DOBBS: Oh, come on.

FUND: ...from plastic surgery to cosmetology to be covered.

DOBBS: My heart is bleeding. Corporate profits have never been higher.

FUND: If you want Wal-Mart to provide health insurance, also lift some of the mandates so they can...

DOBBS: John, just answer my question. Do you remember the question?

FUND: International competition is best served by not micromanaging our companies.

DOBBS: People live, work, eat, clothe their children, their families, educate them in this country. Do we not face a situation where there will either be corporate pay for health care coverage or it will be the government?

FUND: Let's first get rid of the mandates so we can actually have health care coverage that people can afford and companies can offer. I have a list of 131 things that Maryland requires people who provide health insurance to cover. That's about 130 more than are necessary. Let's have a basic plan.

DOBBS: Are any companies making any money in Maryland?

FUND: Yes, of course.

DOBBS: They are.

FUND: But guess what, Virginia, which has far fewer mandates, is growing far faster. And that is just one state over.

DOBBS: And which has the highest trade deficit?

FUND: You know, one of the great things about this country is we don't measure trade deficit by state.

DOBBS: That's exactly right, we don't.

FUND: And we wouldn't, and we couldn't, because it's meaningless.

DOBBS: It's meaningless.

ROLLINS: Well, the issue that is meaningful though, a trillion of the two and a half trillion dollar federal budget is now some sort of health care, whether it is Medicaid or Medicare.

And obviously you have got to get control of those costs, as they are only escalating, and new program are being added. And you want to sit here and talk about deficits. I mean, that's part of the driving force here.

GERGEN: Yes, but here's the thing though. Lou, to go back to your original point, either the companies are going have to cover it or the government's going to have to cover it.

Now, if you really put a handicap on the companies in the international competition then we're driven to think about what the government is going to do to help. You have to be able to consider one or the other.

So the real question then comes, are we paying enough taxes? If we're going to have a health care system, it doesn't tax Wal-Mart.

DOBBS: You are going to send John Fund into a complete epileptic fit here. He's willing to risk that. Tell us about it. Do you think that's the way we are going to go?

FUND: Fewer mandates, more health coverage.

DOBBS: More health coverage paid for by...

FUND: Paid for by people who lower costs because we're finally going to have some competition doing health care plans rather than the third party payment, which means that nobody pays the direct cost. It's born by the government or by corporations.

We need to have health savings account, which mean that people actually can pay for their own coverage and help bring costs down. They can save their own money.

DOBBS: Turning to Iran. Let's see if we can agree on this, gentlemen.

Ed Rollins, first to you, the United Nations going to be able to resolve the Iranian defiance?

ROLLINS: I mean, they never have been able to be very effective on sanctions before. And as long as Iran has oil, they're going to have lots of people that are going to violate any sanctions that are put forth.

I think it's very critical though that the world unite behind the United States and our allies and make sure that they don't move forward with this nuclear plan. Because once it occurs, you know, the Middle East will be far more chaotic than it is today.

DOBBS: Hard to imagine, but there it is, John?

FUND: This is a rare moment. We might get the Germans and the French to actually join with us in doing the right thing.

DOBBS: And, David, it is even possible that we would join with the Germans and French and the British, as the Europeans have taken the lead here?

GERGEN: Absolutely. It's a big step forward to have the Germans, the French and the British now to say that these negotiations aren't working. And they have finally come around to a position in the United States has been advancing.

But I think the real question is, Lou, do we try to stop Iran before they have nuclear weapons or before they develop the capability to develop nuclear weapons. It's the latter that's really important, as the Israelis are pointing out.

And that means that we've got to act here probably in the next 12 to 18 months. Not wait. A lot of people are acting as though this is a three or four-year down the road problem. But, as the Israelis point out, once they get the know-how to do it, it's only a matter of time before they do it.

So you have got to stop them early. This is going to be a really urgent problem.

DOBBS: And are we trapped politically in this country when we talk about international relations, our diplomacy, foreign affairs, to whatever degree it exists in this government now?

Are we fully acknowledging the limitations of our military might, our capacity to carry on a military conflict and frankly our power to influence nuclear proliferation, John?

FUND: I think that we do have a limit in what we can do around the world. I think Iraq showed that. We have to use proven force, but if we don't use force, we're sleep slipping back into something even worse, which is isolationism. We have to target our force and apply it selectively but firmly.

ROLLINS: We have to fight the fight effectively. I think part of the problem, which is proven once again, is without the proper plans you end up with diminished results.

DOBBS: Ed Rollins, David Gergen, John Fund, thank you very much, gentlemen.

Still ahead, U.S. National Guard under fire in Iraq and facing severe budget cuts back here. A special report next.

And from computer whiz to decorated war hero, in our salute to our men and women in uniform tonight, "Heroes." Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Pentagon tonight is considering massive cuts in the National Guard to pay for high technology weapons that some critics say are relics of the Cold War. The proposed cuts come at a time when the National Guard is stretched to the breaking point by wars in Iraq and Afghanistan, as well as duties in this country. Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In the aftermath of Hurricane Katrina, 50,000 National Guard troops responded to this country's worst natural disaster.

In Iraq, one-third of American ground combat forces are National Guard troops. But now, the Defense Department is considering massive cuts in the Guard to save money.

Senior commanders tell CNN the cuts, if approved by the Pentagon and Congress, could seriously hurt the Guard's ability to respond to a natural disaster, a terrorist attack, or even an outbreak of bird flu. Guard commanders, known as adjutants general, say they have to be prepared 24/7.

BRIG. GEN. STEPHEN M. KOPER (RET.), PRESIDENT NATIONAL GUARD ASSN.: Mother Nature doesn't consult with the adjutant general and come ashore where all of his forces are. He has to be prepared to respond anywhere in the state.

STARR: Military sources confirm to CNN the Guard could be forced to trim 17,000 troops next year. The number of brigades would be cut from 34 to 28. More than 200 Army National Guard armories and 14 Air National Guard units across the country could be eliminated. And what about the war in Iraq?

KOPER: By the Army's own testimony, they could not prosecute the conflict without the Guard and the Army Reserve. And so the consequence of making cuts at this stage of a shooting war just does not make any sense to us at all.

(END VIDEOTAPE)

STARR: And, Lou, these potential cuts in the National Guard indeed are part of the army's budget plan for next year. But it's Washington politics. Some of the critics are already leaking these details in hopes it will never be approved by Congress, Lou.

DOBBS: One is just -- it's breathtaking that the proposal would be in front of anyone at a time when the National Guard or reserves are stretched to the limit, and the duties for our men and women in uniform have never been greater.

STARR: Well, that is what many people in the National Guard and the state governors especially, who control these forces on the state level, are very concerned about.

Army officials say they want to make these cuts in order to save about $11 billion, and use that money for these future weapons and for a more agile, more responsive future force, but the Guard in all 54 states and territories is very concerned, Lou.

DOBBS: I would think they're outraged, particularly the governors of Louisiana, the Gulf states, the Rocky Mountain states, the Pacific Coast states in particular, where they're screaming for help because of the number of men and women and materiel that are in Iraq and in the Middle East instead of working on natural disasters in their states. A remarkable situation. Thank you very much, Barbara Starr.

STARR: Sure.

DOBBS: Our weekly tribute now to our nation's heroes, the men and women who bravely serve this nation around the world. Tonight, the story of Air Force Technical Sergeant Daniel Libby, a computer specialist who spent most of his time behind a desk before he was deployed to Iraq. Six months later, he's a decorated war hero. Bill Tucker has his story.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Technical Sergeant Daniel Libby never imagined that he was destined for glory. He joined the Air Force out of high school to avoid a dead-end job in the High Desert of Hesperia, California. He wanted to be a pararescuer, but he's color blind.

TECH. SGT. DANIEL LIBBY, U.S. AIR FORCE: So the Air Force is very restrictive on what jobs are available for somebody whose got color vision problems and they made me an office clerk. I absolutely hated it. Two years into the service I was ready to get out. I just didn't want anything else to do with it. To me, it was just like one of those dead-end jobs.

TUCKER: His career was saved when he was transferred into a security forces squad. He got a high level security clearance, picked up computer skills, and volunteered to go to Iraq.

LIBBY: I was supposed to go to the Air Logistics Group out at Baghdad International Airport where I was going to do staff support.

TUCKER: But before he landed, orders changed. He was sent to the Green Zone to work for the army. With his top-secret security clearance, he was put to work in intelligence.

LIBBY: Some of the work that I was involved in over there kept people out of a building prior to an attack, who saved the lives of some of our guys. We processed information that led to the arrest of several terrorists and a seizure of about 95,000 pounds of explosives.

TUCKER: Not content to gather intelligence from behind a desk, Libby trained to go out on patrol. In May of 2004, he found himself in an ambush.

LIBBY: We got out of our vehicles, took up defensive fighting positions around our vehicles, and started engaging targets. The engagement lasted under a minute. We had three terrorists that were killed and no injuries on our side and we back on the road.

UNIDENTIFIED MALE: Staff Sergeant Daniel S. Libby has distinguished himself by exceptional, meritorious service ...

TUCKER: For his courage under fire and his life-saving intelligence gathering, Libby was awarded a Bronze Star.

LIBBY: It's definitely satisfying, and it makes you feel like I had the opportunity to tap some potential that I had that wasn't being used.

This is a classic example of a drive-by attack.

TUCKER: Now Libby passes on his experience to other airmen getting ready to deploy. No longer a desk clerk, but a decorated hero.

Bill Tucker, CNN.

(END VIDEOTAPE)

DOBBS: Sergeant Libby's volunteered for a second tour of duty in Iraq. He expects to be there later this year.

Coming up at the top of the hour, "THE SITUATION ROOM" with Wolf Blitzer. Wolf, what are you working on?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou.

If you have a cell phone, as almost all of our viewers do, this is a story you won't want to miss coming up here in "THE SITUATION ROOM." Spying on your cell phone records -- find out how anyone could pay $100 to see exactly who you're talking to and why cell phone companies have no clue how to stop it.

Also, our Zain Verjee has had an exclusive interview with the first lady, Laura Bush. Find out which Republican Mrs. Bush would like to see run for president in 2008.

And get this, a student brings a gun to a school in Florida. Shots are fired. An eighth grader is hit. Turns out though it wasn't the kind of gun police first thought it was. We're on the scene. John Zarrella is there with the latest details. Lou, right back to you.

DOBBS: Looking forward to it. Thank you, Wolf.

Congressman Curt Weldon's courageous fight to learn the truth about Able Danger -- I'll be talking with him next about his push for hearings on pre-9/11 intelligence. Stay with us.

(COMMERCIAL BREAK)

DOBBS: It's been an eventful couple of months for Congressman Curt Weldon. He's been fighting nonstop to open Able Danger hearings on Capitol Hill. Exactly a month ago, the Pentagon gave its OK for hearings to go forward with the participation of Able Danger intelligence officials who had been prevented from doing so earlier by the DOD.

These officials say they were prevented from sharing top secret information about 9/11 and 9/11 terrorists that they claim they could have prevented the terrorist attacks. Weldon's new challenge is to make sure these hearings begin soon so Americans can finally learn the truth about this controversy.

Congressman Weldon joins me tonight from Wilmington, Delaware. Congressman when do the hearings begin?

REP. CURT WELDON (R) HOMELAND SECURITY CMTE.: Probably as soon as we get back into session, which is in a couple of weeks. We've been methodically relaying the groundwork. There are actually four separate investigations and inquiries under way right now: you've got the IG investigation of DIA's handling of Tony Schaeffer; you've got committee hearings involved both Appropriations and Intelligence; you've got inquiries being done by Armed Services and Homeland Security.

So there's a lot of activity under way, both in the House and separate inquiries over in the Senate. So we're moving along, and I expect that sometime in February we'll begin the formal open hearings.

DOBBS: Right now, you're no longer frustrated, even though it is a slow-as-molasses approach -- you're not longer frustrated by the recalcitrance of the DOD?

WELDON: Well, we've gotten the commitment. Gordon England has really been a fantastic support as the deputy secretary, and we're moving along and I'm confident we're going to finally let the American people see what we knew, when we knew it a year or two before 9/11.

DOBBS: And when you say problems for Colonel Schaeffer, specifically what are you referring to? Share that with our audience.

WELDON: Well, there was a gross attempt to try to -- not just ruin him, but destroy him, an attempt to take away his benefits for his kids, his salary for himself, and ruin his career. With the help of Gordon England and the incoming director of DIA, we got that put on hold until the inspector general completes the investigation. That investigation is underway.

Colonel Schaeffer is currently still being paid. He's still willing to do work and wants to help the country and really wants to help us generate the next capability of this data mining process, a process called Able Providence. And we're working on that as an improvement to allow us to deal with the terrorists in the future.

DOBBS: And you and journalist Peter Lance have both focused on Dieter Snell, who was the counsel for the 9/11 Commission. What do you -- are you going have him come forward, or to what degree are you still interested in him?

WELDON: Well, Peter Lance has done a tremendous amount of investigative work, as a former broadcast journalist, on Dieter Snell and his involvement. I've not focused as much on that. But I think at some point in time, he should willingly come before the Congress and answer some questions why the 9/11 Commission chose the date they did to begin their investigation.

Why did they pick 1996? There had to be a reason. And the reason by he decided not brief the 9/11 commissioners after he debriefed Scott Philpot. Those and many more questions need to be answered so that we can set the record straight and finally give the American people what they've asked for. That is a clear understanding of what happened before 9/11, so it never happens again.

DOBBS: Congressman Curt Weldon, thanks for being here.

Still ahead, the results of our poll tonight and those who made this week's honor roll. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Results of our poll overwhelming: 95 percent of you saying Senator Max Baucus should limit his pandering to his constituents in Montana, instead of the citizens of India.

Each week on this broadcast, we salute the individuals and organizations making positive contributions to this country. Those earning our admiration and respect this week: among them, Governor Tim Pawlenty of Minnesota. He's fighting to give local police officers new powers to enforce immigration laws, the governor fighting to roll back sanctuary laws that most people believe are illegal to begin with. We support him in those efforts.

Also on the honor roll this week, the Securities and Exchange Commission for its new proposals to help small investors and create greater transparency. The SEC is set to pass rules forcing companies to release new details on how they doll out pay to top executives and board members.

Finally, Democratic Senator Joe Biden. He had the honesty, this week, to calling the Senate Supreme Court nomination hearings pointless. He says nominees never reveal how they stand on major issues anymore, and says it would save a lot of time and effort if the hearing was scrapped.

You can read a lot more about those who made our honor roll on the Web site, loudobbs.com.

Thanks for being here tonight, and please join us again next week.

A new study, projecting the war in Iraq could cost an astounding $2 trillion. Economist -- Nobel winning economist -- Joseph Stiglitz and Linda Belmas (ph) of Harvard join us to talking about their forecast of the cost.

And the Stardust Space Capsule returns to earth after seven years, carrying tiny pieces of a comet. Astrophysicist Charles Liu will be my guest.

For all of us here, we wish you a very pleasant weekend. Good night from New York. THE SITUATION ROOM with Wolf Blitzer begins right now -- Wolf.

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