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LOU DOBBS TONIGHT

McCain Versus Obama; Military Budget; Cartoon Fury Continues; Pentagon Has singled Out China As Country With Greatest Potential To Challenge The U.S. Military In The future; Dwindling Numbers Of American Students Pursuing Computer Science; Senate Votes To End Debate On Asbestos Compensation Bill; Company Splits with Wal-Mart; Congress Held High-Profile Hearing Into Alarming Rise In Mexican Military Incursions

Aired February 7, 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: Good evening, everybody.
Tonight, a public showdown between two high-profile senators. We'll have a live report from Capitol Hill.

President Bush calls for an end to violent protest against the cartoons of the Prophet Mohammed in a Danish newspaper.

And splitting with Wal-Mart. My guest is one of the few businessmen in this country with the courage to say no to Wal-Mart.

And you're looking at live wildfires burning at this hour just south of Los Angeles. We'll have a live report on these dangerous fires threatening the L.A. suburbs.

We begin tonight with a very public disagreement between Senator John McCain and Senator Barack Obama. Senator McCain accused Senator Obama of backtracking on bipartisan proposals for lobbying reform. Senator Obama says he's puzzled by Senator McCain's comments.

Ed Henry reports from Capitol Hill.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice over): As Senate spats go, this got ugly.

SEN. JOHN MCCAIN (R), ARIZONA: I don't believe that there was any venom. I think it was straight talk about Mr. Obama. Senator Obama said that he would work with us and then decided not to.

HENRY: John McCain was furious that after privately agreeing they'd work on a bipartisan ethics proposal, Barack Obama went public with a letter suggesting McCain was slow-walking it. McCain, who has long pushed reform, didn't take kindly to the lecture from a freshman.

In a letter to Obama, he accused him of "self-interested partisan posturing, disingenuousness," and noted sarcastically, "I concluded your professed concern for the institution and the public interest was genuine and admirable. Thank you for disabusing me of such notions." Obama insisted he was puzzled by McCain's reaction. "The fact that you have now questioned my sincerity and my desire to put aside politics for the public interest is regrettable but does not in any way diminish my deep respect for you nor my willingness to find a bipartisan solution to this problem."

Political analysts say this is a twofer for McCain as he ponders another presidential run.

STU ROTHENBERG, POLITICAL ANALYST: He could reassert his ownership of the ethics issue, and at the same time score some points with Republicans by taking on Barack Obama, the golden boy of the Democratic Party.

HENRY: McCain denies 2008 played any role and recycled a line from the 2000 campaign to dismiss suggestions his temper got the better of him.

MCCAIN: It's just straight talk. People don't like straight talk. I understand that. That's why I'm not going to win miss congeniality again this year in the Senate.

HENRY (on camera): In the wake of the Abramoff scandal, bipartisan lobbying reform seemed like a slam dunk, but this spat illustrates that major reform could be bogged down by partisan disputes.

Ed Henry, CNN, Capitol Hill.

(END VIDEOTAPE)

PILGRIM: Now, Senator McCain and Senator Obama are not only from different parties, they also represent entirely different generations of politicians.

Senator McCain is 69 years old. Senator Obama is 44. Senator McCain has been a U.S. senator since 1987. Senator Obama since last year. And Senator McCain has already been a presidential candidate once and may be again, while Senator Obama could make a run for the White House as soon as 2008.

Turning now to the war in Iraq, insurgents have killed four U.S. Marines in two separate attacks. Three Marines died in a roadside bomb attack in the town of Hit. The fourth Marine was killed in another attack in Anbar province.

Insurgents have also launched new attacks against Iraqis. Two bombs exploded in a Baghdad market today, killing at least three people.

Defense Secretary Donald Rumsfeld today went to Capitol Hill to give testimony about the war in Iraq and the Pentagon's budget. Now, the Pentagon wants a budget increase of seven percent next year. But some senators wonder if the extra cash will be enough to relieve the stress on the Army.

Jamie McIntyre reports from the Pentagon.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice over): Rumsfeld and his top generals once again found themselves defending a controversial plan to reorganize the National Guard and Army Reserves, insisting the shift would result in more combat forces, not less.

GEN. PETER SCHOOMAKER, ARMY CHIEF OF STAFF: We are balancing the active component and reserve component. This notion that we are cutting the National Guard and Reserves is false.

MCINTYRE: Senators have been getting an earful from Guard commanders who fear a reduction right at the time the Guard is needed most.

SEN. SUSAN COLLINS (R), MAINE: Maine's adjutant general has recently said to the press that Maine is going to be out of the fight in another year. We're simply not going to have any more soldiers that are available.

MCINTYRE: The Army says the reliance on Guard and Reserve troops, which at one point made up 40 percent of the U.S. force in Iraq, was temporary to give the active duty Army a chance to catch its breath and reorganize into smaller, more deployable units. The Army says the percentage of Guard and reserve troops in Iraq will be down to 18 percent once the latest rotations are completed. And the Pentagon again insisted the Army is not close to being broken.

DONALD RUMSFELD, SECRETARY OF DEFENSE: I would say that we have the most agile, most skilled, most expeditionary Army in history, and that any who use the word "broken" with respect to the Army are incorrect.

(END VIDEOTAPE)

PILGRIM: Jamie McIntyre reporting from the Pentagon.

Thirteen al Qaeda terrorists are still on the run in Yemen. That's five days after they escaped from a highly fortified jail. Defense Secretary Donald Rumsfeld today acknowledged that the escape is a major setback in the war on terror.

(BEGIN VIDEO CLIP)

RUMSFELD: It is a serious problem. They were individuals who were deeply involved in al Qaeda activities and directly connected to the attack on the USS Cole and the death of the sailors that were aboard that ship.

(END VIDEO CLIP)

PILGRIM: Seventeen American sailors were killed in the attack on the USS Cole in October of 2000.

President Bush has called Denmark's prime minister to show solidarity after violent protests against Danish cartoons of the Prophet Mohammed. Now, the Danish prime minister blamed radical Islamists for escalating the violence for their own purposes.

(BEGIN VIDEOTAPE)

PILGRIM (voice over): Six thousand people took to the streets in Peshawar, Pakistan. Demonstrators in Afghanistan aimed fire and grenades at a NATO base and the Norwegian peacekeepers there. British forces had to come in to help secure the base.

Denmark, where the cartoons were first printed, is telling its nationals to leave Indonesia, the country with the largest Muslim population.

ANDERS FOGH RASMUSSEN, DANISH PRIME MINISTER: Right now, radicals, extremists and fanatics are adding fuel to the flames in order to push forward their own agenda. For that purpose, they are portraying a picture of Denmark and European countries that is not true.

PILGRIM: A Danish journalist who is also a Muslim spoke out today against the violent response.

RUSHY RASHID, DANISH JOURNALIST: Moderate Muslims, we have formed a network now to speak out and say that Danish Muslim have a different standpoint to this issue.

PILGRIM: Some European newspapers have reprinted the cartoons, citing free expression. American news organizations, including CNN, have chosen not to print the cartoons, even in the context of telling the story.

The Danish embassy is in cinders in Iran. An Iranian newspaper mocked the free speech debate, holding a contest for Holocaust cartoons.

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: You can almost hear President Ahmadinejad's voice in the editor of this particular newspaper making this -- making this proposal.

PILGRIM: The free speech debate has raised other questions. One American commentator ask asks why Muslim leaders so vocal about the cartoon do not speak out against other cases of injustice and violence done in the name of Islam.

ANDREW SULLIVAN, "TIME" MAGAZINE COLUMNIST: They' have -- they've beheaded people. There's no protest about that, which is clearly, it seems to me, a blasphemy against Islam as a religion of peace.

(END VIDEOTAPE)

PILGRIM: President Bush called the prime minister of Denmark today to offer support and solidarity and talking about solving the problem through dialogue and tolerance, not violence. But the Danish prime minister at a press conference warned the situation has the potential to escalate beyond the control of government and other authorities.

A British judge has sentenced a radical Islamic cleric wanted in this country to seven years in jail. Now, the cleric, Abu Hamza al- Masri, was convicted of calling for the murder of non-Muslims and inciting racial hatred. U.S. prosecutors say Hamza tried to set up a terrorist training camp in Oregon.

Hamza's followers include the September 11 conspirator, Zacarias Moussaoui. And Moussaoui is facing a possible death sentence in this country.

Another Hamza follower is the so-called shoe bomber, Richard Reid. He was sentenced to life in prison for trying to blow up a transatlantic airliner.

The CIA has forced the head of the agency's counterterrorism center to step down. Robert Grenier held the job for about a year. The CIA gave no reason for Grenier's removal, but there are reports that top officials believe Grenier was not aggressive enough in the war against radical Islamist terrorists.

Still ahead, an alarming spike in violence in Nuevo Laredo, Mexico, just over the border from Laredo, Texas. We'll have a special report ahead.

And then, communist China lashes out at the Pentagon. China says it is unfairly being singled out as a growing military and economic threat to this nation.

And why U.S. students are deciding not to pursue careers in computer science. A once prestigious career choice, it's turning into a professional dead end, coming up.

(COMMERCIAL BREAK)

PILGRIM: Tonight, a new wave of drug violence is sweeping through Laredo, Mexico. That's just over the border from Laredo, Texas. Now, journalists who have aggressively reported on drug violence in Nuevo Laredo have themselves become targets of drug gangs.

Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice over): Masked gunmen burst into the offices of Nuevo Laredo, Mexico's daily newspaper, "El Manana," Monday night, spraying bullets, throwing a grenade, and critically injuring reporter Jaime Arasco (ph).

The attack came just two weeks after "El Manana" hosted a conference on the dangers of reporting on drug trafficking and just three days after a U.S. federal taskforce announced the seizure of a huge arsenal of IEDs, bombs, grenades and automatic weapons destined for the drug wars in Nuevo Laredo. U.S. officials are clearly worried about the violence spreading north of the border. CHIEF AUGUSTIN DOVALINA, LAREDO, TEXAS, POLICE DEPT.: It's important to note that the violence that's occurring is occurring in Nuevo Laredo. You know, Nuevo Laredo, Mexico, not in Laredo, Texas. We're doing the best that we possibly can to hopefully keep the violence from spilling over to our side.

WIAN: Last year alone, seven Mexican journalists were killed and another vanished. Many newspapers have curtailed coverage of Mexico's drug wars, including "El Manana."

JOEL SIMON, COMMITTEE TO PROTECT JOURNALISTS: They are not doing any investigative reporting on drug traffic and corruption precisely because they're afraid. So even a newspaper that's acknowledged that it's pulled back is still being threatened. So of course that's very alarming.

This is not really a problem solely for Nuevo Laredo, it's a problem for all of Mexico.

WIAN: In September, the Committee to Protect Journalists met with Mexican president Vicente Fox and asked him to appoint a special prosecutor to investigate crimes against reporters. They say he supported the idea, but five months later has taken no action.

The violence is already impacting reporters for U.S. news organizations that cover border issues. Some are now taking hostile environment survival courses like those designed for journalists going to Iraq.

(END VIDEOTAPE)

WIAN: "El Manana" reporter Jaime Arasco (ph) remains in grave condition in a Nuevo Laredo hospital, and the two gunmen remain at large -- Kitty.

PILGRIM: Casey, are they beefing up security on either side of this border?

WIAN: Well, U.S. Border Patrol is definitely beefing up security, as are Texas sheriffs. The Texas Sheriffs Border Coalition have moved more forces along the border.

On the Mexican side, of course, we saw a few months ago Mexican federal troops moving in and replacing police in Nuevo Laredo because there was so much corruption there. But we've also seen incursions by the Mexican military.

So the border is more secure in some places and less in others -- Kitty.

PILGRIM: And Casey, isn't this the place where they found the IEDs and other weapons last week?

WIAN: Exactly, Nuevo Laredo -- in Laredo, Texas, is where a taskforce headed by ICE and several federal law enforcement agencies, as well as local law enforcement, have been working on putting these taskforce along the border to help stem this violence. They found a large cache of weapons that they had seized in two or three different busts, and they said that they were intended for the drug gangs in Mexico.

PILGRIM: That's unbelievable. Thanks very much.

Casey Wian.

And later in this broadcast we'll bring you the very latest on Capitol Hill testimony on border emergencies and the rise of the Mexican military incursions into this country.

Well, immigration officials have announced an illegal alien smuggling bust in southern California. Immigration and Customs Enforcement agents swooped down on a drop house in Riverside County and arrested 38 illegal aliens and four alleged smugglers.

Now, most of the people involved were from Mexico. ICE says one suspect was American.

High-speed car chases seem to be as much as a fixture of life in Los Angeles as the smog and the traffic jams. But these chases may soon be a thing of the past.

According to the L.A. police chief, William Bratton, he has a plan for police cars to be equipped with tiny, high-tech darts that can be fired on suspects' cars. And once the dart hits a car, police can track it using a global positioning satellite. So no need for a high-speed car chase.

Now, this system could save lives. There were 600 high-speed pursuits in Los Angeles last year, 175 people were injured in the chases and three people were killed.

Still ahead, there's outrage after the Army charges a wounded soldier hundreds of dollars for body armor.

Plus, a massive effort to control California's latest wildfires just miles from Los Angeles.

And the Pentagon's new alarming report on China's military threat to this country. China insists there is no threat at all.

We'll have a special report ahead.

(COMMERCIAL BREAK)

PILGRIM: Firefighters in California are reporting progress against the Sierra fire outside of Los Angeles. Now, this fire is in the Cleveland National Forest. That's just east of the Orange County suburbs.

And Jen Rogers is live in Anaheim Hills, California, with the very latest -- Jen.

JEN ROGERS, CNN CORRESPONDENT: That's right, Kitty. We are about 40 miles southeast of Los Angeles.

Just to give you an idea of where this fire started, early Monday morning -- the Cleveland National Forest is behind these hills here. We are actually -- we've been watching a fire here on nature conservancy land for the last couple of hours. You can see it; it's still burning. We're seeing it start to come over this ridge here.

The good news is, though, that firefighters are optimistic right now that they are getting the upper hand.

What we are on is actually a highway here that has been closed since yesterday. This is Highway 241. This highway usually carries about 50,000 to 60,000 motorists, and right now it's empty except for the media and for fire personnel.

They're using this as a fire break. Homes are on the other side here about a mile away, 2,000 homes have been evacuated. But we did just get word that that evacuation order is going to be lifted at 4:00 p.m. Pacific Time. That is about 40 minutes away.

So, again, 2,000 homes, people will be able to return to those homes. And that has to do with how the firefighters have been doing today.

About 950 fire personnel on the ground here, supported by 5,000 helicopters. They still think they have this about seven percent contained. But again, the evacuation order is lifted, so that is some good news for people in this area -- Kitty.

PILGRIM: All right. Thanks very much.

Jen Rogers.

Thanks, Jen.

In Alabama, federal and local authorities are investigating another wave of suspected arson attacks against Baptist churches. Now, four more churches burned overnight in western Alabama. That's near the Mississippi border. Two of them were completely destroyed. Federal officials say all four churches had predominantly black congregations.

Now, just days ago, fires damaged five other Baptist churches southwest of Birmingham. One of them had a predominantly black congregation, while the other four were primarily attended by whites. Arson is suspected in all nine fires.

Time now to look at your thoughts. We love doing this.

Kathy in Pennsylvania, "I work in the IT field as a consultant and have been laid off several times in the last five years. I couldn't understand why the president seemed so determined to encourage foreigners to fill this country's working class and middle class jobs. And then I realized President Bush holds the only job in this country that is protected by the Constitution, since the president must be born in the United States. I guess he can't understand the fear of being replaced by cheap foreign labor."

Tom in South Carolina writes, "Are the Congress and president so removed from middle America that they don't understand that the social programs that the budget is cutting are, in fact, the ones that Americans need most? I challenge the Congress and the president this year to pass this year one piece of legislation that truly helps the middle class of America. Throw us a bone."

And Tony in Seattle writes, "You know you've been had when a State of the Union Address doesn't include the armed foreign military that came across your border three weeks before."

We love hearing from you. Send us your thoughts at loudobbs.com. And we'll share more of your e-mails a little bit later in this broadcast.

Still ahead, anger on Capitol Hill after the Army bills a soldier $700 for the body armor he was wearing when he was wounded. We'll go live to the Pentagon for an explanation, where the Army is trying to explain what happened.

And then, star wars, why John McCain is lashing out at Barack Obama over lobbying reform. We'll tell you all about that.

Plus, another high-paying U.S. profession being destroyed by outsourcing and foreign competition. We'll have a special report on the decline of U.S. computer sciences.

And why some Bush administration officials still question the seriousness of communist China's growing military threat. We'll have the latest on this growing Washington debate ahead.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Two high-profile senators tonight are engaged in a very public fight about lobbying reform. Senator John McCain and Senator Barack Obama are also using language not normally associated with U.S. senators.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): In 1804, Aaron Burr and Alexander Hamilton fought a duel to the death. These days, two feuding politicians, Republican Senator John McCain and Democratic Senator Barack Obama, are firing letters, not shots at each other.

McCain letter to Obama: "I have been around long enough to appreciate that in politics the public interest isn't always a priority for every one of us. Good luck to you, Senator."

Bang! Obama letter to McCain: "The fact that you have now questioned my sincerity and my desire to put aside politics for the public interest is regrettable."

Bang!

What's this feud about? Same as usual, insults.

McCain believed he got a commitment from Obama to support a bipartisan taskforce on ethics reform. Then Obama sent McCain a letter endorsing the approach favored by Senate Democrats who had designated Obama their point man on the issue.

SEN. BARACK OBAMA (D), ILLINOIS: Over the past few weeks, you've heard Democrats talk about cleaning up the corruption in Washington.

SCHNEIDER: McCain felt betrayed. He fired a letter back at Obama.

MCCAIN: Senator Obama said that he would work with us and then decided not to.

SCHNEIDER: It was the tone of McCain's letter that raised eyebrows. He accused Obama of "self-interested partisan posturing."

MCCAIN: Straight talk. People don't like straight talk.

SCHNEIDER: Who is this freshman pipsqueak to challenge McCain's years of work on his signature issue? Maybe Democrats don't like the idea of a bipartisan taskforce because they want to use the issue to bash Republicans.

Obama professed to be puzzled by McCain's response. He said he always believed the Democratic bill should be the basis for a bipartisan solution. In other words, put down your saber.

(END VIDEOTAPE)

SCHNEIDER: Marc Ambinder of "The Hotline," who has done behind- the-scenes reporting on this story, told me there's a reason why McCain's letter was so angry and sarcastic. McCain actually was angry. And when he gets angry, he responds with what he calls straight talk -- Kitty.

PILGRIM: You know, Bill, it's a bit of an uneven power match, isn't it?

SCHNEIDER: Oh, it is, indeed. You've got a freshman senator from Illinois, the Democrat, Barack Obama, who is a Democratic star, of course. And you have a Republican star, John McCain, of Arizona. You could call it star wars.

PILGRIM: Yes. Yes, I think we are. OK. Thanks very much, Bill.

SCHNEIDER: Sure. PILGRIM: Defense Secretary Donald Rumsfeld today went to Capitol Hill to give testimony about the Pentagon's budget. Now, one senator raised another issue. It's a pretty interesting one, why the Army charged a soldier for body armor he was wearing when he was wounded.

Jamie McIntyre joins me from the Pentagon.

Jamie, what in the world was the Army thinking doing that?

MCINTYRE: Sounds pretty outrageous, doesn't it?

PILGRIM: Yes.

MCINTYRE: First Lieutenant William Reebrook (ph), wounded in the arm, ended up being charged for the body armor he lost in combat. But the Army, scrambling to provide answers this evening, first of all, they issued a statement saying that equipment like body-damaged -- battle-damaged body armor is written off as a combat loss, soldiers are not expected to pay for reimbursement of that.

But looking further into this case, it may be the fact -- it may be the case that he simply didn't fill out a form that would have started an investigation to confirm that his missing equipment had been lost in combat. He apparently told some folks in the Army that he wanted to just go ahead and pay the bill to go ahead and clear his name and get out of the Army as he was being discharged.

This was months after the incident, after he had been treated and returned to his unit. But the Army is still conducting an investigation. They say he shouldn't have to pay for his armor. It was a case of not filling out a form. I think they're going to get that form filled out and the money sent back to him.

PILGRIM: Sounds like a clear case of insult added to injury. Is it really just bureaucracy out of control? I mean, after all, if a soldier is wounded, he's hardly going to worry about the paperwork?

MCINTYRE: Well, you know, like any of these cases, once you look into these things a little more carefully, there's a lot more to it. Apparently, his commander called him and said, look, are you OK with paying for this? We can fix this. And he said, no, I'm just ready to get out of here and just pay the bill. At least, that's the way it looks at this point.

But again, the Army is going to nail down all the facts, figure out what happened, and they're pretty sure they're going to give him his money back.

PILGRIM: Well, we certainly hope it will get straightened out. Thanks very much, Jamie McIntyre. Thanks, Jamie.

Now, the Pentagon has singled out China as the country with the greatest potential to challenge the U.S. military in the future. China, not surprisingly, disagrees. Beijing is strongly protesting the Pentagon report. Christine Romans has the story.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): China says the United States is unfairly playing up its military threat. China, blasting the U.S., saying it interferes in China's internal affairs, and that could mislead public opinion. At issue, the Pentagon's quadrennial defense review, published last week, which outlined China's steady and secret military buildup.

That Pentagon report found China has the greatest potential to compete militarily with the U.S., a conclusion slammed by China's Foreign Ministry spokesman. He made an even more incredible claim, quote, "China has never threatened any country in the past and at present, and will never do so in the future."

That, says author Gordon Chang, is a perfect example of China's alternate reality.

GORDON CHANG, AUTHOR, "NUCLEAR SHOWDOWN": They claim all of the sea between itself and Japan. This is a country that's used force in the past to enforce these claims. It's probable that they'll use force in the future.

ROMANS: A growing number of scholars and defense experts says a confrontation over Taiwan is eminent, and what China claims is a defensive military program is anything but.

RICHARD FISHER, INTL. ASSESSMENT & STRATEGY CENTER: Any rational review of China's military modernization and buildup would lead to the conclusion that it is preparing for a real bloody war against the democracy on Taiwan.

ROMANS: Defense experts say China has perhaps 20 intercontinental ballistic missiles, capable of reaching U.S. shores, and highly effective land- and sea-based cruise missiles, to say nothing of the new class of torpedoes designed to attack U.S. aircraft carriers.

(END VIDEOTAPE)

ROMANS: What China spins as defensive military positioning, Richard Fisher says is classic Chinese diplomatic propaganda. Make no mistake, the experts say, this is a nation bent on projecting its military power well outside its own neighborhood -- Kitty.

PILGRIM: Thanks very much, Christine Romans.

Well, that does bring us to our poll tonight. Do you believe communist China's military buildup is truly defensive, as it claims, or do you believe it is offensive? Cast your votes at loudobbs.com. We'll bring you the results later in the broadcast.

Tonight, General Motors is slashing the salaries of its top executives. It's part of a major cost savings plan that includes a dividend cut and reduced retirement benefits for non-union employees. GM's Chairman and CEO Rick Wagoner will take a 50 percent pay cut. Other executives will take cuts of between 10 and 30 percent. GM cut its quarterly dividend from 25 cents to 50 cents (sic), and the company also announced plans to essentially end its pension plan for salaried employees and retirees. GM said it will announce details of that plan next month.

Turning now to a growing crisis in America's schools. It's the dwindling number of American students pursuing careers in computer science. The Computer Science Teachers Association has urged an urgent warning about this dangerous trend. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Nobody doubts the importance of math and science, or our need to compete. Not the president, who mentioned it in his State of the Union, not the Department of Education.

TOM LUCE, DEPARTMENT OF EDUCATION: What we're telling you about is the success of our next generation. We face the fundamental fact that we won. We won the Cold War. Capitalism prevailed. And today, we have 3 billion new competitors. So, we have to run faster to stay ahead.

TUCKER: But we are not running faster when it comes to computer science. Kids looking at careers don't see a future in computer science, which involves engineering, programming and technical design.

ROBB CUTLER, COMPUTER SCIENCE TEACHERS ASSOCIATION: So there's a disconnect here. On the one hand, we want to increase the amount of computing sciences we're doing, but we're not providing opportunities to train the students to go into these computer science disciplines, and take these jobs that we're providing.

TUCKER: In simple terms, students aren't dumb. They're behaving rationally. They see programming and engineering jobs can be outsourced to another country. The students know that the companies will import cheap foreign labor in the form of H1B visa workers, who earn, on average, $13,000 less than an American worker doing the same work. The students don't see the problem as a lack of interest. They see it as a lack of opportunity.

RON HIRA, ROCHESTER INSTITUTE OF TECHNOLOGY: If there's not good opportunities, why would you choose a profession, a career that's fraught with risk, where your job could be offshored, where you could be replaced, you could become obsolete? And they're voting with their feet. They've decided that this profession is not as attractive as it once was.

(END VIDEOTAPE)

TUCKER: So, we're becoming a nation of computer users, lacking in the hard core disciplines necessary to be computer innovators. However, enrollment is on the rise, Kitty, in accounting and civil engineering.

PILGRIM: All right. Thanks very much, Bill Tucker.

Well, coming up next, Mexican military incursions across the border. A House subcommittee is demanding answers, and the chairman of that subcommittee joins us next.

And the man who decided to end his company's relationship with Wal-Mart. It's a controversial decision that is earning Jim Wier lots of attention. He's our guest ahead. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Congress held a high-profile hearing today into the alarming rise in Mexican military incursions in this country. Lawmakers say these incursions are a serious violation of the nation's sovereignty. And all this as the Mexican government continues to play down these serious incursions.

Louise Schiavone reports from Washington -- Louise.

LOUISE SCHIAVONE, CNN CORRESPONDENT: Kitty, the government of Mexico has assured the U.S. that a recent incident involving guns and drugs was executed by criminals dressed as Mexican soldiers, not by Mexican soldiers themselves.

Despite a lack of evidence, Mexico's explanation appeared to satisfy the Department of Homeland Security. The Border Patrol...

(BEGIN VIDEO CLIP)

DAVID AGUILAR, U.S. BORDER PATROL: I do not want in any way to minimize the seriousness of each and every one of these incursion incidents, but I also do not want to leave the impression that our borders are under siege by government of Mexico entities.

(END VIDEO CLIP)

SCHIAVONE: The Border Patrol chief, however, did share a video of U.S. border officers under siege, attacked and injured by rock throwers in speeding cars, a scene repeated dozens, if not hundreds, of times. Lawmakers expressed grave concerns.

(BEGIN VIDEO CLIP)

REP. MICHAEL MCCAUL (R), TEXAS: It will not take much for one of these standoffs to turn violent and to turn deadly.

(END VIDEO CLIP)

SCHIAVONE: Kitty, in the most recent episode, which occurred near El Paso, Texas, heavily-armed drug runners wearing Mexican military uniforms engaged local sheriffs in a standoff before retreating south of the border. The president of the National Border Patrol Council says it's not the first time it's happened along the Mexican border.

(BEGIN VIDEO CLIP) T.J. BONNER, NATIONAL BORDER PATROL COUNCIL: When you have people who are dressed in military uniforms, driving military Humvees, carrying military weapons, I would say that in all likelihood, these are people who are in the military. Mexico has not been candid with us and forthright in their assessment of some of these incidents. So, it falls upon us to protect our sovereignty.

(END VIDEO CLIP)

SCHIAVONE: U.S. Customs and Border Protection says that over the past decade there have been as many as 231 border incursions by Mexicans. Lawmakers say they're worried that terrorists will also adopt the same tactic to launch another attack on the U.S. Kitty?

PILGRIM: Thanks very much, Louise Schiavone. Thanks, Louise. Well joining me tonight from Washington D.C. is Texas Congressman Michael McCaul, who chaired today's hearings. And thanks very much for being with us, Sir.

MCCAUL: Thanks, Kitty.

PILGRIM: What do you think you accomplished today? I mean, this is a fairly confusing issue with people claiming that they are impostors or perhaps military. How do you sort this out? What do you think they are?

MCCAUL: Well as a former prosecutor, it's hard to get all the evidence, and that's what we're trying to do with these hearings, is find out what really happened. We've had over 200 incursions across our border.

We do know one thing, that the rate of violence has increased by 100 percent since last year. We had pictures and videotapes of Mexicans shooting across the border, throwing rocks lit on fire. It's a very violent situation down there. We had five deputy sheriffs testify that what they saw looked like military-style Humvees and military-style uniforms.

Now what we don't know is whether this was, in fact, the Mexican military or maybe cartel members buying off military or cartel members just wearing military-style uniforms. And those are all questions that we have on the committee and that we asked today.

PILGRIM: You know, in either case, this is a violation of U.S. sovereignty, no matter who these people are. You met with the Mexican ambassador to the United States today. What did he have to say about it?

MCCAUL: I did. I met with him before the hearing. He assured me that these were not Mexican military, that the Mexican government would offer any and all cooperation requested by the United States, including -- apparently they've identified four of the individuals in this videotape we've showed at the hearing today.

And I said if you capture them, we would want access to them. He assured me that the United States would have access to these individuals, because after all, they are the best evidence here in this case.

PILGRIM: Two hundred incidents. This is not a light thing. Do you think that by shining the spotlight on it, you'll actually get some action?

MCCAUL: I think so. I mean, it's an assault, not only on U.S. law enforcement, but our sovereignty. You know, they say they don't get but two to three miles to our border. We have pictures of them in the river in the Rio Grande.

So, I think it has raised the awareness of the issue. I think the Mexican government gets a bit -- you know what, Kitty? They've got to be cooperative and they've got to help us secure this border. And I think this sends a pretty strong message. This is kind of the camel that broke -- the straw that broke the camel's back, I should say -- an escalation of this kind of violence down on the border.

PILGRIM: Yes, that's totally unacceptable. And thank you for explaining it to us today and holding these hearings. Congressman Michael McCaul, thank you, Sir.

MCCAUL: Thanks, Kitty.

PILGRIM: Still ahead, more of your thoughts on our broken borders and saying thanks, but no thanks to Wal-Mart. Why one American businessman said no to the world's largest retailer and said it wasn't in his company's best interest to work with them. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The Senate tonight has just voted to end debate on a controversial bill that would set up a compensation fund for victims of asbestos-related diseases. Andrea Koppel joins us now from Washington with more. Andrea?

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Kitty, they haven't gaveled the final results just yet, but it does appear that the Senate now has removed an important hurdle paving the way for now an up-or-down vote on the Senate floor which could actually be drawn out over the next couple of weeks.

But this -- as it stands right now, the measure would create a $140- billion privately funded trust fund with the money basically coming from businesses and from insurance companies. And what would happen is the money would then go to, depending upon what the claims were, various asbestos victims, people suffering from asbestos-related diseases. This has been going on for years, Kitty, and there has been a lot of contentious exchanges on the floor of the Senate.

In fact, just yesterday, the chairman of the Judiciary Committee Arlen Specter accused Harry Reid, the ranking Democrat, the minority leader, of basically being out of order on the Senate floor, because Reid had insinuated that lobbyists, that money coming from lobbyists, we're talking about $144.5 million paid out to 13 different lobbying companies, that that was why this legislation had finally made it to the floor of the Senate. But there is more to come, Kitty, over the next couple of weeks.

PILGRIM: All right, but at least it moved along a little bit. Thanks so much, Andrea Koppel -- thanks Andrea.

We've been telling you about a program on Maryland's groundbreaking healthcare laws, which target Wal-Mart. Tonight, those laws are facing a new court challenge. Now a retail trade group today filed federal lawsuits against these new laws.

These laws force Wal-Mart to boost spending on employee healthcare by at least eight percent. Now the Retail Industry Leaders Associations says these laws improperly single out the retailing industry and will be harmful to retail job creation and growth.

Now Maryland's laws are the first of their kind in the nation. Wal-Mart dominates the U.S. retailing industry, there's no question about that. But there are still some manufacturers who have decided not to sell their products at Wal-Mart. And Jim Wier is the former CEO of Simplicity Manufacturing. He made the decision to pull his company's products from Wal-Mart shelves. And Jim Wier joins us now. Thanks for being with us, Sir.

Good evening, Kitty.

PILGRIM: You know, you decided not to go with Wal-Mart. You were already in and you decided it just wasn't working. Why?

JIM WIER, FORMER CEO, SIMPLICITY MANUFACTURING: Well, Kitty, I think you have to understand, in the outdoor power equipment business, there really are two distribution channels. One distribution channel would be what I call the big-box stores, which are the Wal-Marts, the Home Depots, the Loews and Sears.

And the second distribution channel are the independent dealers, which are about 10,000 family-owned businesses, often second and third-generation people built pretty much on their sweat equity. And that's a distribution channel that really needs a high-quality differentiated product in order for them to continue to exist.

And there have been businessmen, just businessmen that have been loyal to us for a long time, and so, we decided that first reason to pull it out of Wal-Mart was to repay that loyalty. The second reason, probably just as important, is the Wal-Mart promise, if you will, or their vision was just pretty much at odds with ours.

Their vision is low price always and our vision really is a high- quality, differentiated product. Our brand promise is easy. It's just that easy. And it's an easy product to use, but probably more importantly, it's a product that we want easy to buy. We want it easy for the consumer to know what -- to know the right product to buy. The dealer will explain how to set it up.

PILGRIM: A service-oriented marketing approach, you're telling us about. Let me ask you a quick one. How did it affect your business to turn your back on Wal-Mart? WIER: Well, it wasn't that easy. We had about 20 percent of our business with Wal-Mart. We met as a group, the management team and the board and we decided we thought we could make that up with the independent dealer, and we did. We got back the 20 percent that we had given up at Wal-Mart and we got about another 25 percent. It worked out pretty well.

PILGRIM: All right. We're delighted you're so successful in your business. Thanks so much for coming on the program to explain your big decision. Jim Wier, we wish you the best.

Coming up at the top of the hour on CNN, "THE SITUATION ROOM" with Wolf Blitzer.

WOLF BLITZER, CNN ANCHOR: Thanks, Kitty. The service honoring Coretta Scott King has just ended. We have a live picture of the hearse carrying Mrs. King casket from the funeral to her final resting place at the Martin Luther King, Jr., Center.

We'll also have some of those, candid remarks from four American presidents on the civil rights leader, some unexpected remarks from president Clinton to his predecessor.

And the cartoon clash over the Prophet Mohammed reaching new heights tonight. We have dramatic images of protesters in Iran overrunning the Danish embassy. And you'll also here first-hand from the man who was the first to publish that controversial cartoon. All that, Kitty, coming up right at the top of the hour.

PILGRIM: Thanks, Wolf.

A reminder now to vote in tonight's poll. Do you believe communist China's military buildup is truly defensive, as it claims, or do you believe it is offensive? Cast your votes at loudobbs.com. We'll bring you the results later in this broadcast.

Still ahead, more of your thoughts, the results of our poll. Plus, a very special tribute to the late Coretta Scott King. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll. Eighty-nine percent of you believe communist China's military build up is offensive rather than defensive as they claimed.

Let's take a look at some of your thoughts. Arthur from Vermont writes, "If the border patrol is unable to recruit enough employees, why don't they hire a few illegal aliens to fill the positions? The Bush administration feels it's OK for everyone else to do it, so why can't they?"

Lisa from Kentucky writes, "I am so fed up with all the illegal aliens in this country. However, I am more fed up with our government. They fall all over themselves to give the illegals everything under the sun at the taxpayer's expense. Why would anyone want to be a legal citizen when that only means you have to help pay the bill?"

And Rick from Colorado writes, "The middle class should be put on the endangered species list with protections from the profit at any cost corporations. As corrupt, apathetic politicians, we might have a chance to get back on our feet. Our numbers shrink every year and our continued existence is in question."

Each of you whose e-mail is read on this broadcast will receive a copy of Lou's book "Exporting America." And also if you'd like to receive our email newsletter, sign up at our Web site at loudobbs.com.

In Georgia today, thousands of people gathered for an emotional tribute to the late Coretta Scott King. Her funeral mass was attended by civil rights leaders, admirers and four American presidents. Here now, just some of the many tributes to her today.

Coretta Scott King was a woman, a beautiful woman, a gentle woman. She would not live a life dominated by fear.

(BEGIN VIDEO CLIP)

STEVIE WONDER, SINGER: (SINGING).

DR. DOROTHY HEIGHT, NATIONAL COUNCIL OF NEGRO WOMEN: Coretta Scott King was a woman, a beautiful woman, a gentle woman. She would not live her life dominated by fear.

REV. JOSEPH E. LOWERY, CO-FOUNDER & PRES. EMERITUS, SCLC: She embraced the wonders of the human family from shore to shore. She extended Martin's message against poverty, racism and woe.

MAYOR SHIRLEY FRANKLIN, (D) ATLANTA: She has gathered us here today from all walks of life and all persuasions to lift our voices in songs of freedom, equality, social and economic justice.

UNIDENTIFIED WOMAN: (SINGING).

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Coretta Scott King showed that a person of conviction and strength could also be a beautiful soul. This kind and gentle woman became one of the most admired Americans of our time.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: We can follow in her steps. We can honor Dr. King's sacrifice. We can keep -- help his children fulfill their legacy.

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Together with her husband, their unyielding moral force changed the course of history

MICHAEL BOLTON: (singing) The courage in your eyes the wisdom in your smile...

JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: We will miss you, but our sorrow is alleviated by the knowledge that you and your husband are united in glory. UNIDENTIFIED WOMAN: Thank you, mother, for your incredible example of Christ-like love and obedience. We're going to miss you.

UNIDENTIFIED WOMAN: I open my mouth to the lord and I won't turn back, no.

(END VIDEO CLIP)

PILGRIM: The funeral has just ended. The body of Coretta Scott King will now be laid to rest at the King Center in Atlanta.

Thanks for being with us tonight. Please join us tomorrow. The Democratic party loves to blast the GOP, but do Democrats really have the answers for our nation. We'll talk to three leading Democrats.

And broken borders. Arizona lawmakers take on their governor for asking for federal money to help secure the borders. We'll talk to a Democrat and a Republican on the same side of this issue.

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