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LOU DOBBS TONIGHT

Can Capitol Hill Overcome Corruption With John Boehner?; Scooter Libby's Trial Date; Tragedy in Red Sea; Republicans Not Enthusiastic About Some Bush Proposals; Grandmother In Iraq; Congressional Panel Holds Hearings On China; Giran Gets Bronze Star

Aired February 3, 2006 - 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: Tonight, disaster at sea. More than a thousand people feared dead after an Egyptian ferry sinks in the middle of the night. We'll have a live report on that.
Then a big bust on the border. Guns, pipe bombs and other explosives are found. And we'll tell you where they were headed.

And is John Boehner the right direction for the Republican Party? We'll take a closer look at the new GOP House leader.

Well, we begin tonight with a still unfolding disaster at sea, a disaster on the scale of the Titanic. Hundreds, possibly more than a thousand people dead. Egyptian rescue teams tonight searching for survivors after a passenger ship with more than 1,400 people aboard suddenly sank in the Red Sea.

Now, Ben Wedeman will join us shortly from Safaga, Egypt.

Tonight on Capitol Hill, new questions are being raised about whether Congressman John Boehner has the right stuff to lead the House GOP. Boehner was elected House majority leader yesterday in an upset vote. There are growing concerns now that Boehner carries the same political baggage as his predecessor.

Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice over): Republicans are eagerly presenting John Boehner as a fresh face who likes to loosen his collar.

AMY WALTER, COOK POLITICAL REPORT: I think the message that they're sending is we're going to roll up our sleeves and get this lobbying reform done.

HENRY: But that fresh face features a fabulous tan because Boehner has one of the lowest golf handicaps on Capitol Hill. A hobby that's helped forge close ties with lobbyists.

REP. JOHN BOEHNER (R), MAJORITY LEADER: I have good relationships with K Street and people who lobby us both paid and unpaid. And I can tell you that everything I've ever done is above board, ethical and every action I've taken... HENRY: But Democrats note Boehner is one of the top recipients of free travel from groups trying to influence government policy. Thirty-nine trips totaling $157,000 to golfing Meccas like Scottsdale, Arizona, and Pebble Beach, California.

His political action committee bulges with big money, $122,000 from student loan giant Sallie Mae, which is major business before the education panel he used to oversee. And tobacco companies like RJ Reynolds. Several years ago, Boehner raised eyebrows by using the House floor to distribute checks from tobacco PACs which he's apologized for.

As majority leader, Boehner is now pushing a go slow approach to reform efforts in the wake of the lobbying scandals.

BOEHNER: Clearly the rules are working because these members were in fact caught, and they're going to pay the punishment.

(END VIDEOTAPE)

HENRY: Republicans are now hoping John Boehner will turn the page on the ethics questions that dominated the Tom DeLay era. But now Boehner's own ties to lobbyists are getting heavy scrutiny -- Kitty.

PILGRIM: Thanks very much.

Ed Henry.

Thanks, Ed.

Well, a federal judge ruled today that the trial of Lewis "Scooter" Libby in the White House CIA leak case won't begin until after the midterm elections. The former chief of staff of the vice president will go on trial early next year for his alleged role in leaking the name of the CIA operative name Valerie Plame.

John King reports on why this case is take so long to get to trial.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: The January 8, 2007 trial date foreshadows months of contentious legal battles over witnesses and classified documents. That means that former top White House aide Lewis "Scooter" Libby won't stand trial until after the midterm congressional elections.

Now, that trial date was set at a morning hearing that, while polite, made clear there are major differences between prosecutors and the defense team over whether the government has turned over all relevant documents that might help Libby prepare for his defense.

Libby is of course the vice president's former chief of staff and a key architect of the administration's Iraq policy and is charged with lying to the FBI and then a federal grand jury about when and how he found out the wife of an Iraq war critic and former ambassador Joe Wilson worked at the CIA.

So why 11 months before the trial? For one, the Libby defense team plans to subpoena reporters and their notes and e-mails. And many news organizations, of course, are expected to fight that. That could take well into the summer or fall to resolve.

Then there's the issue of classified materials, including Libby's request for access to months of the president's daily brief, perhaps the government's most sensitive intelligence document. The Libby defense says it needs that to show that Libby was busy, consumed with national security matters like the Iraq war and the war on terrorism.

The defense plans to make the case that if Libby gave inaccurate statements to the grand jury or the FBI, he did so because of faulty memory and confusion, not out of any deliberate plot to mislead prosecutors.

Now, special counsel -- special prosecutor Patrick Fitzgerald told the court in a filing that he has a few references from the president's daily brief and will provide whatever he has to the defense team. If Libby wants more, it could set up a legal battle with his former bosses, the president and the vice president, over a document they previously fought to shield from Congress and from the commission that investigated the 9/11 attacks.

John King, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: We return now to our top story. It's a tragedy unfolding in the Red Sea, where more than 1,000 people are feared dead in a ferry accident.

Ben Wedeman is live from Safaga in Egypt -- Ben.

BEN WEDEMAN, CNN CAIRO BUREAU CHIEF: Yes, what we're hearing at this point is that, in fact, 343 people have survived so far, pulled from the sea following this tragedy in the Red Sea now just about 70 kilometers from where I am standing. This, according to Egyptian security officials.

Now, I've had a chance here right outside the port here in Safaga, with a lot of people around me, to speak to some of the people. One man told me that he made the trip from Saudi Arabia to here at Safaga a month ago, and he described a ship that was overloaded with trucks.

He said there were, like, eight very large lorries full of freight on that ship, and that the passengers were really crammed on to the ship. He believed that it was far beyond the capacity of the boat to carry.

He also described rescue life boats on that ship that were in very bad condition. Some of them had rust all around them on the clasps that kept them onboard. So there are questions about the condition of this ferry that went down around midnight, about 24 hours ago.

PILGRIM: Ben, how long would people last in the water at this time of year? What are the -- what are the conditions that we're facing here?

WEDEMAN: Well, the sea can be rough at times this time of year. It's very windy in the Red Sea. Now, I've seen reports saying that the water's about 60 degrees at this time of year, which is too cold for really people to stay very long. They'll obviously start to lose body heat.

Nonetheless, the Egyptian authorities say that they are going to have an around-the-clock search and rescue mission. Just a little while ago, I did hear a helicopter overhead. They've deployed, we're told, five large ships from the Egyptian navy in the area just off the coast here.

They say they're going to go around the clock. The sun goes up in about five hours from now, at which point they hope to further intensify this effort.

We're also told that senior Egyptian officials, including the prime minister and President Hosni Mubarak, are expected to come here, visit, meet with rescue officials sometime early tomorrow morning.

PILGRIM: Thanks very much.

Ben Wedeman.

Thanks, Ben.

Well, the passenger disaster we're talking about is destined to become one of the world's worst maritime disasters. It will rival the Titanic disaster in 1912, where more than 1,400 people lost their lives.

The Sultana steamboat disaster on the Mississippi River killed at least 1,700. That was in 1865.

The attack on the Lusitania, 1915, killed 1,200.

The worst peace time sea disaster occurred in 1987. And that's when a ferry collided with a tanker in the Philippines. It killed more than 4,300.

Now, Ben Wedeman will be following this developing story all night on CNN. We'll provide continued updates as this tragedy unfolds.

Let's turn now to Iraq.

The Pentagon today said a Marine has been killed in combat in western Iraq. Twenty-year-old Shawn Cardelli (ph) died on Wednesday during fighting in Falluja. Cardelli lived in suburban Chicago. And six U.S. troops have died in Iraq since Wednesday.

Sixty-seven U.S. troops have lost their lives since the beginning of the year in Iraq.

Democrats looking to win back Congress are being urged tonight to turn the war in Iraq into a major campaign issue. Democratic Senator Evan Bayh says the White House is now vulnerable on key national security interests like the Iraq war, and he says his party must begin challenging the White House on what he calls its "stunning incompetence" in Iraq.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): Republicans won the 2000 and 2004 elections on the security issue. Two weeks ago, Karl Rove sent a signal, we're going to do it again.

KARL ROVE, SR. WHITE HOUSE ADVISER: Republicans have a post-9/11 view of the world. And Democrats have a pre-9/11 view of the world.

SCHNEIDER: This week, a hitherto low-key Democrat picked up Rove's challenge.

SEN. EVAN BAYH (D), INDIANA: I say to Mr. Rove and his fellow partisan strategists, you have thrown down the gauntlet and we intend to pick it up.

SCHNEIDER: Democrats should have learned by now that they cannot concede the security issue to President Bush and try to win on domestic issues or corruption, or even discontent with Iraq.

BAYH: The American people will not trust us on any of these issues if they don't first trust us with their lives.

SCHNEIDER: Senator Evan Bayh of Indiana may run for president in 2008. Until now, he's been overshadowed by other prospective contenders. But how many Democrats have the guts to make this charge?

BAYH: We must begin by speaking loudly and clearly against the way this administration has undermined our nation's security and bungled the war against terror.

SCHNEIDER: Sure, Bush is tough, Bayh says.

BAYH: Tough is not enough. We need a foreign policy that is both tough and smart.

SCHNEIDER: Bayh talked about isolating Iran if it continues to pursue nuclear weapons and using force if necessary. He talked about forcing the contending parties in Iraq to find a political solution. And he talked about getting tough with China.

BAYH: Eighty percent of a critical component for our smart bombs is made in China. It's not smart to depend upon the Chinese for our military needs.

SCHNEIDER: Bayh's message to Rove? BAYH: To Mr. Rove, I say we are ready. Ready to have this debate any time, any place you would like to have it.

(END VIDEOTAPE)

SCHNEIDER: In other words, bring it on -- Kitty.

PILGRIM: Warming up his pitches for 2008, right, Bill?

SCHNEIDER: Absolutely.

PILGRIM: All right. Thanks very much.

Bill Schneider.

SCHNEIDER: Sure.

PILGRIM: Let's look at tonight's poll.

Do you believe House Republicans led by John Boehner can clean up the corruption on Capitol Hill? Cast your vote, LouDobbs.com. We'll bring you the results a little bit later in the broadcast.

And still ahead, a big bust on the border with Mexico. Guns, pipe bombs and other explosives discovered by federal agents. We'll have a live report.

Then separate courts for some minority trials in Arizona. Is this the way to go? Or is it unfair race-based justice? We'll have a special report.

And why Fidel Castro and others are toasting Venezuelan President Hugo Chavez right at this hour. We're live in Havana coming up.

(COMMERCIAL BREAK)

PILGRIM: U.S. officials today announced a major roundup of weapons and explosives in the town of Laredo, Texas. Now, this town lies just across the border from Nuevo Laredo, Mexico, which is being torn apart by drug gangs. Officials call this bust an example, a new example of the seriousness of our nation's border emergency.

Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice over): Federal authorities have seized several massive arsenals of weapons in the border city of Laredo, Texas. They included two improvised explosive devices, the type killing and maiming so many of our troops in Iraq, and materials to make nearly three dozen more.

DONNIE CARTER, SPECIAL AGENT IN CHARGE, ATF: At this point, there's no connection with anything in Iraq. They're just bad guys that have explosive devices. WIAN: And grenades, assault rifles, thousands of rounds of ammunition, drugs, and money, all apparently headed to Nuevo Laredo, Mexico, in the out-of-control turf wars between two Mexican drug cartels.

The bust was the work of the multi-agency Border Enforcement Security Task Force led by ICE. Since July, federal and local task force agents have made 28 arrests.

JULIE MYERS, ICE ASST. SECRETARY: The criminal organizations operating in south Texas and northern Mexico are characterized by extreme violence, and they are motivated by greed. We are here today to say that ICE and our other partners on this task force, we are working day and night to dismantle these organizations and the to make our community safer.

WIAN: It was the highest profile appearance by new ICE head Julie Myers. She was appointed without confirmation during the congressional recess. Myers has close personal ties to the Bush administration but no previous immigration or border experience.

Listening to her struggle to pronounce Nuevo Laredo made that clear.

MYERS: Last year there were reportedly more than 150 murders in Nuevo Laredo. The drug cartels, they have taken increasingly ruthless measures as they fight to gain control of the smuggling plaza in the Nuevo Laredo area.

WIAN: For now, the cartels remain in control. On Thursday, unidentified gunmen in Nuevo Laredo opened fire on a Mexican federal police convoy in broad daylight.

(END VIDEOTAPE)

WIAN: The U.S. federal government is in the process of setting up more border security task forces in other states. Arizona is next, after the Department of Homeland Security conducts what it calls a threat assessment of the area -- Kitty.

PILGRIM: Thanks very much, Casey. It's unbelievable.

Well, tonight in Arizona, allegations that some courts for convicted drunk drivers violate equal protection rights in the U.S. Constitution. Now, critics say the program, which sets up separate courts for some minorities, hearkens back to the days of separate but equal justice.

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): These court proceedings are for convicted drunk drivers who speak Spanish. Presiding superior court judge Barbara Rodriguez Mundell... BARBARA RODRIGUEZ MUNDELL, JUDGE, MARICOPA COUNTY: And we're trying to teach them skills and give them tools to maintain their sobriety.

ROMANS: There is another separate court for Native Americans.

But the Maricopa County attorney says the courts amount to a separate but equal system of law and are unconstitutional.

ANDREW THOMAS, ATTORNEY, MARICOPA COUNTY: Anybody who is a defendant in a criminal proceeding who speaks Spanish has a right to an interpreter so that they understand the nature of the charges against them and the evidence and the testimony. But that's not what this is about. This is about establishing a separate court based on race and/or nationality.

ROMANS: The local NAACP also opposes race-based courts.

REV. OSCAR TILLMAN, MARICOPA COUNTY NAACP: Let's be fair. That's all we're ask for is fairness. The separate but equal I have a problem with.

ROMANS: The county attorney has threatened a legal challenge, citing a Supreme Court decision last year that struck down California's policy of segregating prisoners based on race. But Judge Mundell disagrees.

MUNDELL: The whole issue here, the bottom line is, public safety. It's not a race issue.

ROMANS: Maricopa County court statistics show about 88 percent of the Spanish speakers graduate from the Spanish DUI program after one year. Only 66 percent of English speakers graduate from their DUI court, and it takes them longer.

(END VIDEOTAPE)

ROMANS: Now, the Spanish court recently won an award from the National Association of Counties for innovation. But critics say there's nothing innovative about separating people based only on their race -- Kitty.

PILGRIM: Is this a little bit about language, Christine?

ROMANS: It's a little bit about language, but the Native American court, that's conducted in English. This is a way to pull people out and tailor their post-conviction court proceedings to culture and language and ethnicity, and the folks who are pushing say it's working. It is working. Other folks say, but it's unconstitutional.

PILGRIM: Really interesting. Thanks very much.

Christine Romans.

Well, still ahead, the very latest on the ferry tragedy in the Red Sea.

And then, rewarding Hugo Chavez, why the president of Venezuela is the toast of the town in Havana tonight. We'll have a live report.

And one woman who went above and beyond providing a grandmother's warmth to our troops in Iraq. Her story is next.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Today, Venezuelan president Hugo Chavez reunited with one of his closest political allies, Fidel Castro. Now, Chavez traveled to Cuba to receive an award from Castro.

This pair of leaders have been verbally aggressive to Washington for years, and Chavez calls the United States the world's greatest menace, and has accused President Bush of trying to overthrow his government.

Defense Secretary Donald Rumsfeld shot back yesterday, comparing Chavez to Adolph Hitler.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: We've got Chavez in Venezuela with a lot of oil money. He's a person who was elected legally, just as Adolph Hitler was elected legally, and then consolidated power, and now is, of course, working closely with Fidel Castro and Mr. Morales and others.

(END VIDEO CLIP)

PILGRIM: Now, Lucia Newman is in Havana with more on the Castro- Chavez alliance -- Lucia.

LUCIA NEWMAN, CNN HAVANA BUREAU CHIEF: Hello, Kitty.

Well, at this moment, President Hugo Chavez and President Fidel Castro are preparing to get together. This is Hugo Chavez' 15th trip to Havana. He arrived last night, and in just a short while he will be receiving an award, a UNESCO award at Cuba's Plaza of the Revolution. He will get it from President Castro himself.

Now, all this is happening, just as you've mentioned, as relations between Venezuela and the United States deteriorate almost by the minute. It started with Secretary Rumsfeld's comment about Chavez being similar to Hitler. But now this war of the words has deteriorated even further. It's become more serious.

Yesterday, President Chavez announced the expulsion of a U.S. Navy attache at the U.S. embassy in Caracas. And this morning, Washington responded in kind by expelling a Venezuelan diplomat in D.C.

Now, President Chavez is certain to be conferring with his closest friend and ally, President Fidel Castro, about these matters, a man who has more than 47 years of experience, Kitty, at being at odds, to say the least, with Washington.

PILGRIM: Lucia, how much of a real threat is the Chavez-Castro connection? Or is it symbolic?

NEWMAN: It depends on your point of view. Obviously from the point of view of the White House, it is a threat.

More and more countries and governments in Latin America are turning towards the left and are listening to this anti-U.S. rhetoric, if you like, that's coming from not only from Havana now, but also from Caracas. Certainly the new president of Bolivia has joined this twosome, now a threesome, he says, of anti-imperialists. And of course they're referring to at least an ideological war against the United States -- Kitty.

PILGRIM: All right. Thanks very much.

Lucia Newman.

Thanks, Lucia.

Now, Venezuelan President Hugo Chavez may soon be playing host to Hamas. Leaders of the Islamic militant group say they will tour South America, including Venezuela.

Hamas has called for the destruction of Israel. Hugo Chavez, meanwhile, has called Israel, along with the United States, chief enemies of Latin America. Hamas last week won the Palestinian election in a landslide victory.

Still ahead, the very latest on the ferry tragedy in the Red Sea.

And then, is the president on the right track with his agenda for the country? I'll be talking with David Gergen, former adviser to four presidents.

And then the very real nuclear threat in Iran. Can we count on the United Nations to take action before it's too late?

I'll be talking with Ed Rollins, John Fund and Michael Goodwin of the "New York Daily News."

And some of the brightest minds in the country come together to reveal the impact of the U.S. trade and economic relationship with communist China.

We'll have that story.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Updating our top story, a horrific disaster is unfolding on the Red Sea, where more than 1,000 people are feared dead after a ferry accident. Egyptian authorities tonight are searching for survivors after a ferry boat filled with more than 1,400 people sank overnight.

Three hundred and forty-three people have been pulled to safety so far. But more than 1,000 people are still unaccounted for.

It's still not known what caused the ship to sink, but this refitted vessel is thought to be about 35 years old. It was weighed down with as many as 200 cars. That's as well as the passengers, and there were also high winds in the area when the ship went down.

Now, Ben Wedeman is in Safaga, Egypt. He'll be providing live updates through the night right here on CNN.

President Bush wrapped up a busy week of campaign-style appearances today with a visit to New Mexico and Texas. The president visited an Intel chip plant. He spoke to students about the importance of math and science, and he pushed his almost $6 billion American competitiveness program that he believes will address Americans deep-seeded unease over the economy.

Elaine Quijano reports.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice over): On day three of his post-State of the Union tour, President Bush in New Mexico touted new job numbers as sign of an improving economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And we've overcome a lot. The small business sector is strong. I do happen to think good tax policy helped. I think keeping taxes low is an important way to make sure this economy continues to grow.

QUIJANO: New government figures show 193,000 jobs created in January, reducing unemployment to 4.7 percent, the lowest level since July of 2001. Yet, Republican strategists say the economy continues to be a major worry for the public, especially in the face of competition from India and China.

The president acknowledged those concerns at the New Mexico headquarters of computer chip maker Intel, but said Americans should not fear the future, because he said Americans can shape it. He also criticized lawmakers' wariness of free trade.

BUSH: It's hard to get trade agreements through Congress, and I'm worried that that is an indication that we're losing our confidence.

QUIJANO: Some analysts say they'd like to hear more from the president about ensuring U.S. intellectual property isn't stolen in an open market.

PROF. MICHAEL PORTER, HARVARD SCHOOL OF BUSINESS: This has got to be a major focus of U.S. policy, in addition to just opening markets. We have got to make sure that these countries are playing the game in a way that's fair for us.

QUIJANO: The president raised the free trade issue while promoting his American competitiveness initiative, outlined in his State of the Union address. Among its goals, more teachers for advanced placement math and science courses, which the president highlighted on his visit to a school in Dallas, Texas. And it calls for making tax breaks for research and development permanent.

(END VIDEOTAPE)

QUIJANO: On Tuesday, President Bush heads to New Hampshire to talk up another part of his competitiveness initiative, ensuring that Congress moves forward on a fiscally responsible budget. President Bush is scheduled to send his budget to Congress next week -- Kitty.

PILGRIM: Thanks very much, Elaine Quijano. Thanks, Elaine.

Now, joining me tonight to discuss the president's hard sell and the less than enthusiastic response his agenda is getting from some within his own ranks, is former presidential adviser David Gergen. Nice to see you, David.

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: Thank you, Kitty.

PILGRIM: You know, he seems to be stumping some pretty safe bets: Education, science, math. No one's going argue with this.

GERGEN: Well, no one is going to argue with it, but the question is, can you wake the country up? I personally was pleased to see him out there on a platform with Craig Barrett from Intel today. You know, Craig Barrett has been arguing, as have others in Silicon Valley, that this is really serious stuff about whether we're going to be competitive.

You know, a lot of companies in Silicon Valley are moving their -- not just their manufacturing, but their R&D operations, they're moving their knowledge jobs to Asia. And if we're going to compete for those jobs, they're the high-paying jobs, we've got to pull up our socks.

So I think the president is on the right track. The question is, is he doing enough and can he really awaken the country? I'm not sure he has so far.

PILGRIM: You know, this is of course a subject that's very near and dear to the heart of this program, as you know, David.

GERGEN: Right.

PILGRIM: Do you think that this is in response to criticism about the erosion of jobs overseas, or do you think that he needs to just find something that no one can argue with? That if you talk about science and math, no one's going to really complain?

GERGEN: Well, to tell you the truth, Kitty, there was a National Academy of Science report out a few months ago that didn't seem to get a lot attention at the White House that was entitled "The Gathering Storm." And that's exactly what we face with our international competition.

The Democrats are starting to pick up the issue. They developed it in the House of Representatives. They were starting to come up with their package, and the president was in real danger the Democrats were going to steal the issue from him, that they were going to run off with it, because nobody was addressing it. And it's serious.

We're not only facing downward pressure on wages today, it's one of the reasons the middle class, as you and Lou have been stressing on this program now, are feeling such a squeeze is because there's so much downward pressure on wages. And if we don't do something soon, the pressure is going to be intense, and you're going to see a serious erosion in the wage base of this country.

So to have -- I think the president was responding to what's been a growing pressure coming from the technology industry, from universities and others, and from the middle class now, saying, we've got to compete more effectively than we are. So I think he's a little late to the game, but better late than never.

Now, I will tell you, though, I think what he's proposing is too little. And I think one of the reasons it's not exciting people, you've got to not only -- you know, as CEOs trying to do, create a burning deck so you get change within your company, and he's got to create it within the country. But you've got to come forward with a bold program, and what he's done so far is not bold enough.

You know, you've got -- we can no longer wait for evolution in public education. We need a revolution in K-12, especially in our high schools. And that's what Craig Barrett will tell you. You've got to do far more than the country's done so far.

PILGRIM: David, one of the big comments after the State of the Union speech was the president spent so much of the time on foreign policy and Iraq, and that the domestic agenda seemed a bit shortchanged. Do you think that this is an attempt to make up for lost ground after that speech?

GERGEN: I think it has been. The White House has been planning to do the domestic policy all this week. I do think the speeches so far have not -- have been rather flat. I don't think that -- I don't think -- the rollout has not been a success for the White House, and the speech Tuesday night, as you say, has met with a fairly tepid response. But that doesn't mean the president is not right to help -- to try to point us down this road.

What I do think, Kitty, is that after he gets through this road trip, he's going to come home, and Iran and Iraq are going to be really at the top of his agenda, because both of those are going to require an awful lot of his time this year.

PILGRIM: Certainly things that cannot be ignored.

GERGEN: Exactly. PILGRIM: Thanks very much, David Gergen. Thanks, David.

GERGEN: Thank you, Kitty.

PILGRIM: All right. Tonight, the story of a brave and courageous woman who recently returned from serving in Iraq, and that's for troops stationed in Baghdad shopping at the post. Well, this post exchange brings a touch of home to them, but it also brings the comfort of a grandmother's warmth through this woman. Christine Romans reports.

(BEGIN VIDEOTAPE)

LENA MADDIX, AAFES VOLUNTEER: You all have a good day.

ROMANS (voice-over): Lena Maddix is back at her usual post.

MADDIX: Do you have a return, honey?

ROMANS: Greeting some 15,000 troops at the Fort Sill post exchange in Oklahoma.

But for the past six months, this 73-year-old great-grandmother was based in Baghdad, stationed through the Army and Air Force exchange service. Maddix served at Camp Liberty, Iraq, helping the troops find everything from snacks and toiletries to bicycles.

MADDIX: I had to be at work at 7:30 every morning. I would work 12, 13, sometimes 14 hours a day. I'd open the stores in the morning, and I got the registers ready to go.

ROMANS: Baghdad wasn't her only tour of duty. Maddix spent the first half of last year in Kuwait.

MADDIX: I want to be with the soldiers. I want to see what was going on and what I could do for them, and do my part. I didn't get to go in the service. I had children. So I just kind of got a late start, and then I still wanted to do my part.

ROMANS: What did the soldiers make of this 73-year-old in khakis and combat boots?

MADDIX: They didn't look at me as being old. Except they called me mom. I got hugs every day. It was just really rewarding to see them, see their faces.

ROMANS: And what did her five children, eight grandchildren and three great-grandchildren think?

MADDIX: My family didn't -- they didn't like it, but I didn't tell them until I had orders, and I had all my shots, my orders ready. I told them two weeks before I left.

ROMANS: And even though mortar fire sent her to the bunkers at times, Maddix says she'd go back in a minute.

MADDIX: I enjoyed what I did. I would -- if I had it to do over, I'd go again.

UNIDENTIFIED MALE: It's good to have you back.

MADDIX: Thank you. It's good to have you back, too!

UNIDENTIFIED MALE: Thanks.

ROMANS: Christine Romans, CNN.

(END VIDEOTAPE)

PILGRIM: What a wonderful woman.

Well, each week on this broadcast, we salute the individuals and organizations making positive contributions to this country. And those earning our admiration and respect this week, we have former Colorado Governor Richard Lamm, who is working to ease the growing illegal alien crisis in his state. Lamm is fighting for a new initiative that would cut off illegal aliens from all state benefits, except for education and emergency medical services, mandated by federal law.

And we also salute the Texas Education Agency for its commitment to rewarding Texas teachers for a job well done. This organization is announcing new $10 million incentive pay plan for teachers, and under this plan, teachers would be awarded bonuses of up to $10,000 if they help their students perform better in school.

Still ahead, a closer look at the real impact of our relationship with communist China. We'll have a special report.

And a court date set way down the road for former Cheney chief of staff, Scooter Libby. Now, is there a political motive behind this decision? We'll take a closer look, coming up.

(COMMERCIAL BREAK)

PILGRIM: A Congressional panel held hearings to discuss China and its economic and security threat to this country. While human rights abuses were among the leading topics, China's Internet controls were also high on the list of concerns. Lisa Sylvester has more.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): China is preparing to host the 2008 Summer Olympics. It wants the world to see it as a global player, a sophisticated, well-run government. But it is still a communist country, a government that represses its citizens.

ANNE THURSTON, CHINA SPECIALIST: People don't have the right to legal redress. They don't have the right to free expression. They don't have the right to their own property, and these are big, big problems.

SYLVESTER: A U.S. Congressional panel held hearings on China's state security system. The communist country has adapted new strategies since the crackdown in Tiananmen Square in 1989. There's an increased use of contract police officers, or thugs, to suppress dissent.

Informants and intimidation are used to quash activists. Silencing the voice of workers and farmers has kept annual wages down. In China's cities, the annual salary is $1,033. In rural areas, it's $319, a point echoed in the Congressional hearings.

PATRICK MULLOY, USCC: The world companies rush to China to set up factories to avoid environmental, pensions, healthcare costs, unionized labor. They are dragging communities worldwide on a downward race to the bottom.

SYLVESTER: And Communist China has also been successful pressuring Internet companies Google, Yahoo!, and Microsoft to censor information. Human rights groups say U.S. businesses have been putting profits before principles.

ARVIND GANESAN, HUMAN RIGHTS WATCH: What's happening is a trade- off between a lucrative market and political openness, and the companies right now seem to be sliding towards the market at the expense of openness.

(END VIDEOTAPE)

SYLVESTER: When Congress debated whether to grant permanent, normal trade relations with China in the 1990s, it was argued that economic openness would lead to political openness. But so far that hasn't happen. Critics say in the case of the Internet companies, they are not opening up China, China is getting the companies to become more closed off -- Kitty.

PILGRIM: Well, at least in this country we can discuss it. Thanks very much.

SYLVESTER: That's true.

PILGRIM: Lisa Sylvester.

Well, China was also high on the agenda at the Pentagon today. The Pentagon is outlining its new strategic blueprint for dealing with the growing, worldwide threats to America. Barbara Starr has the report now from the Pentagon -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kitty, today in fact the Pentagon did unveil its new four-year strategy that's been in the work four years that looks ahead 20 years, actually, to new threats and what the U.S. military is going to do about them. And China played a large role in the rollout of this report.

The U.S. military saying China will be a key determining factor in the 21st century security. The report took a very tough tone on China, saying in part the following: Quote, "China has the greatest potential to compete militarily with the United States, and field disruptive military technologies that could over time offset traditional U.S. military advantages absent U.S. counterstrategies."

Now, the report notes that China continues to heavily invest in its military, especially in its strategic arsenal and its ability, its military ability, to project power beyond its own borders into the Pacific region.

That is something the U.S. military is extremely concerned about. So this report calls on China to be more transparent about its military investments and to take a more peaceful tone for the future, Kitty.

PILGRIM: Barbara, will this result in repositioning of the U.S. strategic forces if in any way?

STARR: Not clear at this point. This report is a little more of a global picture, a little more of an outlook to the future. What it does talk about is China's capabilities. There's a lot of concern that China is investing very heavily, of course, in cyber- technologies, in information warfare, in a lot of high-tech weapons and a lot of concern that the U.S. be positioned to deal with that.

Right now, not clear that the U.S. will do anything militarily in terms of positioning its own forces, but tremendous pressure on China to be more transparent, to open up to the west what it is doing with its military, where it's investing and what its intentions are, Kitty.

PILGRIM: Thanks, very much, Barbara Starr. Thanks, Barbara.

Well, tonight a visit to the International Space Station took a fairly unusual twist. A Russian astronaut tossed out an old spacesuit into orbit. That was complete with helmet and gloves.

Now, this old suit is equipped with a radio transmitter which will send pre-recorded messages back to earth. The location of the spacesuit can be tracked on NASA's Web site. Now, eventually this suit will be pulled back into the earth's atmosphere and incinerated.

And coming up at the top of the hour here on CNN, THE SITUATION ROOM with Wolf Blitzer. Wolf, what's coming up?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Kitty. We'll be live in Egypt where rescuers are trying to save hundreds of people after a passenger ship suddenly sinks. I'll speak with Egypt's transportation minister. He's on the scene of those rescue efforts.

Plus, super surveillance. There will be cameras almost everywhere In Detroit this weekend, but not all trained on the football players. We'll have a live "CNN Security Watch" report.

Plus, why wait for the Super Bowl to see all of those new commercials? See them right here in THE SITUATION ROOM. All that, Kitty, coming up right at the top of the hour.

PILGRIM: We look forward to it, Wolf. Thanks a lot.

Now, a reminder to vote in tonight's poll. And the question is, do you believe House Republicans, led by John Boehner, can clean up corruption on Capitol Hill? Cast your vote, LouDobbs.com. We'll bring you the results a little bit later in the broadcast.

Coming up, the GOP's next move. Republicans have a new majority leader, but what are the chances for a new direction in Washington? Our distinguished panel joins us next.

And then he risked his life in Iraq to save another. The heroic actions of Adam Giran. Just ahead in our weekly tribute to the men and women who serve this country.

(COMMERCIAL BREAK)

PILGRIM: It's been a busy week in Washington. Now, the country has a new Supreme Court justice and House Republicans chose their new majority leader.

Joining me to discuss those issues and a lot more are three of the nation's leading political minds. We have Ed Rollins, who served as President Reagan's political director; John Fund, from the "Wall Street Journal"; and Michael Goodwin of the "New York Daily News."

Let's start with you, Ed. What are your thoughts about the Boehner issue, and the victory, surprise victory over Roy Blunt, who two weeks ago said he had it in the bag, basically.

ED ROLLINS, FMR. REAGAN POLITICAL DIRECTOR: Well, I've watched many walk in thinking they have it and not have it. Boehner is a very effective leader. He was a leader in the early Gingrich days and I think he's a good face. I think he's articulate. I think he'll basically make a good difference.

PILGRIM: John, will we be able to get distance on the Abramoff scandal and the lobbying issue with him or is he still involved in this?

JOHN FUND, "WALL STREET JOURNAL": Well, any Congressional leader is going to have lobbyist friends. That's -- a lot of the Democratic leaders have those connections, too. The conservative movement had become disgusted with the high-spending pork barrel practices of Congress under Tom DeLay.

They basically turned out en masse and said to Roy Blunt, we don't like you. We think you're too tied to the past. I think that was critical difference in making John Boehner majority leader. He has the support of the reformers even if he's not a complete reformer.

PILGRIM: And so two good positive reviews. What about you, Michael?

MICHAEL GOODWIN, "NEW YORK DAILY NEWS": Well, I think the good news for Republicans is that the Democrats are in disarray, too. I think that the Democrats don't really know what to do. They're against everything the president is for, but beyond that, I think it's not really working. There's a recent poll that shows that Bush is much more -- is held in much higher regard than Congressional Democrats. So I think that the Republicans may have a little time to get their act together.

FUND: The key in this election will be can you turn out your base? And the Republican base has been dispirited and I think off message. John Boehner never voted for the highway bill and he never got an earmark, a pork barrel project, for his district. That speaks to his ability I think to have a new, fresh message.

PILGRIM: One of the things we look at is immigration. And he does seem to be a little bit at odds with his party on the immigration issue in that he voted against some key measures. Do you think that that will be deciding -- this may turn out to be a very big issue.

ROLLINS: Well, it will be a big issue. But I have to tell you, there's not going to be a majority of Republicans voting for the president's immigration bill.

I mean, the president can get homeland security issues and he can get the security issues they passed last time, but if he thinks he's going to get anything that can be interpreted as allowing illegals into the country or amnesty, he's going to split this party right down the middle.

PILGRIM: Let's go the budget, and at the risk of making everyone yawn, we should focus on the fact that some of the middle class supports are being drastically cut -- $40 billion worth, Medicaid, some of the education funding. How do you assess this?

ROLLINS: I think the president's into a lot of rhetoric here. I think they expect a lot of these things to be restored. I think it would be a big mistake to restore them all. But the critical thing here is the president has got to put some discipline, and he's got to veto something.

What would go further for this president, help Republicans in this election, is to basically have a very tough fiscal policy and veto a bunch of bills that exceed that.

PILGRIM: John?

FUND: Kitty, I just have to tell you. Federal spending went up eight percent this year. There are no budget cuts. There are only reductions in the rate of increase.

PILGRIM: Thank you for ...

(CROSSTALK)

FUND: Forty billion dollars, represents three-tenths of one percent of the total federal spending. It's a minuscule drop. It's basically reforming the program to cut out the waste and fraud including a lot of people who try to hide their assets, and then get into the nursing homes and have a taxpayer pick up the dime. These are justifiable reforms. PILGRIM: What do you think, Michael?

GOODWIN: Well, I think it's not a lot of money, and I think that the Democrats will make very good use of it in the midterm elections with anything that Republicans vote against in this way, voting for any reductions in the increase even, I think the Democrats will use it against them.

So I think it's a very tricky area for the Republicans to kind of go out on a limb for what's not a lot of money, but they're going to pay a heavy price for it I think.

PILGRIM: On the topic of political wrangling, let's talk about Scooter Libby and the pushing out of this whole issue. How do you assess this?

ROLLINS: Well, the absurdity of this is to have this guy hung out for a year. I saw today where his legal defense is going to cost $6 million. You know, this guy deserve as speedy trial and if they've got the evidence, let's bring it forth, let's have the trial.

PILGRIM: Right, rather than just let it hang -- John.

FUND: There's a possibility that this case never goes to trial, that things will turn up or witnesses will turn up that basically just make the government's case go away.

PILGRIM: Yes. but at the same time, that it hangs over. It can be ...

GOODWIN: But I don't think the Republicans can be unhappy that this is not going to happen before the midterm elections. I think the last thing you want is a verdict in late October that says, he's guilty of something. And I think that just rebounds badly to the whole party. So I think that putting it off is probably in the best interests of the party.

ROLLINS: It is in the best interests of the party, not in the best interests of Mr. Libby. But I think there's going to be plenty of things coming forth that we may be very uncomfortable with before the elections.

GOODWIN: Right.

PILGRIM: It will be interesting. Thanks very much for helping us wrap the week. We have Ed Rollins, John Fund and Michael Goodwin. Thank you. Thank you.

ROLLINS: Thank you.

PILGRIM: Still ahead he was awarded a bronze star for his exceptional bravery in Iraq. Our salute to this week's hero, coming up next.

(COMMERCIAL BREAK) PILGRIM: Now "Heroes." It's our weekly tribute to our nation's men and women in uniform. And tonight the story of airman Adam Giran. He risked his life to save a fellow American during his tour of duty in Iraq, and for his efforts, he was awarded the Bronze Star for bravery.

Philippa Holland has his story.

(BEGIN VIDEOTAPE)

PHILIPPA HOLLAND, CNN CORRESPONDENT (voice-over): In late 2004, the Army needed help running convoys of supplies in Iraq and asked the Air Force for additional manpower and security. 21-year-old airman Adam Giran sent from Elmendorf Air Force Base in Alaska, to Camp Bullis in Texas for training. There he learned how to operate a .50 caliber machine gun.

AIRMAN 1ST CLASS ADAM GIRAN, U.S. AIR FORCE: It's a rush because you know you're the one on the truck, that you got the rest of your soldiers backs.

HOLLAND: In March 2005, he deployed to Iraq.

GIRAN: This is the first time anybody from the base is really going to be doing this job.

HOLLAND: On March 31st, Giran was in a 30-truck convoy that including military personnel and contractors working in Iraq. One of the contractor's vehicles hit by an improvised explosive device.

There was a lot of smoke and whatnot.

HOLLAND: A call came over the radio for a CLS. CLS stands for Combat Life Saving. The other aspect of the training, airman Giran received in Texas. His lieutenant took over the gunner position and Giran ran to the truck.

GIRAN: I got up to the side of the vehicle, looked inside, seen the injury. There was a lot of blood on the floor board. I pulled out a pocket knife and cut away the pants.

After I noticed the front wound, I rolled his leg over and noticed mainly the back part of his lower leg was pretty well removed from the shrapnel. Went on apply a tourniquet to stop the bleeding, and apply pressure bandages to stabilize the victim.

HOLLAND: He administered two IVs in the field, and the wounded man was transported to safety. The contractor survived and the airman Giran was awarded the Bronze Star for his exceptional, meritorious achievements. He now back at Elmendorf and plans to continue his career in the Air Force.

GIRAN: You're supporting your country and so it seems like everybody says it, but it's true. That's how I feel. I'm doing my part to serve.

HOLLAND: Philippa Holland, CNN.

PILGRIM: Airman Giran expects to be redeployed to the Middle East within the next two months. He has not seen the contractor whose life he saved.

Here's the results of tonight's poll. Just about all of you think House Republicans led by John Boehner cannot clean up the corruption on Capitol Hill. But we do remind you, this is not a scientific poll. Thanks for being with us tonight, have a great weekend. "THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.

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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