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LOU DOBBS TONIGHT

Congress Sets up Panel on Iraq War; Dubai Ports World Gives up Battle to Buy U.S. Port Operations; Interview With Ambassador John Bolton; John Barrow Interview; Congressman Wants To Give Employers Of Guest Workers Tax Break

Aired March 15, 2006 - 18:00   ET

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


ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, March 15.
Live from Washington, D.C., Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

Tonight, new fears that Iraq could be on the verge of civil war. Hundreds more of our troops are now on their way to Iraq. Congress setting up a blue-ribbon panel to examine the conduct of this war.

We'll have complete coverage.

Also tonight, the United Nations defies the United States. The U.N. voting for a new human rights council that may, in fact, protect dictators who abuse human rights.

We'll have that report.

And the U.S. ambassador to the United Nations, John Bolton, says the new council will be no better know that the discredited organization it replaces. I'll be talking with Ambassador Bolton about this now council, Iran's nuclear defiance, how the United Nations should respond and a great deal more.

And Dubai Ports World today finally admits defeat in its attempt to take over parts of major U.S. port operations. DPW says it will sell all of its U.S. assets.

We'll have that special report.

All of that and a great deal more still ahead here.

We begin with rising frustration in Congress about President Bush's conduct of the war in Iraq. Congress today established a bipartisan group to examine American strategy in Iraq and ensure the war ends with success for the United States. The initiative reflects wide concern that sectarian violence in Iraq is escalating and that Iraq is escalating and that Iraq is on the verge of civil war.

Ed Henry is here now with a report on the new blue-ribbon panel on Iraq.

Dana Bash reporting on how the Bush administration is responding to the rising anxiety about the conduct of this war.

We turn first to Ed Henry -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Lou, you know, tonight leaders in both parties have no idea basically on Capitol Hill on how to get out of this war, how to win it successfully after three years. So they're turning to a familiar formula, which is to order up another study, a blue-ribbon panel to try to find a solution.

(BEGIN VIDEOTAPE)

HENRY (voice-over): A fierce firefight with American troops underscoring the strength of the insurgency in Iraq and underscoring the death of the dilemma for politicians back in Washington. And when Congress has a problem it can't solve, it's time to call in a blue- ribbon panel.

And so it is with the Iraq study group of 10 former Washington insiders, a taskforce created on the eve of the third anniversary of the war to figure out what's next.

JAMES BAKER, FMR. SECRETARY OF STATE: Our purpose is to undertake a bipartisan forward-looking assessment of the current and perspective situation on the ground in Iraq, its impact on the surrounding region, and its consequences for United States interests.

HENRY: No easy chore now that more than 2,300 U.S. troops have been killed.

LEE HAMILTON, FMR. 9/11 COMMISSIONER: We have no illusion at all as the difficulty of the task, but we know that the country needs help now in working through this and we want to add whatever we can by way of a constructive contribution.

HENRY: The partisan divide was on full display as Senate Democratic Leader Harry Reid slammed the president while appearing with two parents who lost their 20-year-old son in Iraq.

SEN. HARRY REID (D-NV), MINORITY LEADER: We're here today in honor of them and asking this administration to start making choices in Iraq that are as competent and as responsible as the soldiers that these policies affect.

HENRY: Elsewhere on Capitol Hill, a less dire assessment of the situation in Iraq from a top military general.

GEN. JOHN ABIZAID, COMMANDER, U.S. CENTRAL COMMAND: I believe that we are not on the verge of a civil war. I believe that the sectarian issues are controllable. And I believe that the government of national unity will emerge. And I believe that the Iraqi security forces will continue to improve.

HENRY: Leading senators said a fresh look at Iraq may be the only way to find common ground.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: I think we have a national interest which almost everybody here in Congress acknowledges to complete our mission to Iraq successfully. But there's so much partisan crossfire here every day that you miss that common purpose.

(END VIDEOTAPE)

HENRY: Now, Republican John McCain told me that if this blue- ribbon panel basically puts out a report, Congress will read it very closely because it's such a high-powered panel with people like James Baker. The former secretary of state involved. But Democrat Barbara Boxer told me there's another reason why Congress will pay attention, and that's because, in her words, lawmakers are paralyzed right now. They don't have any solution to figure out how to end the war successfully -- Lou.

DOBBS: Thank you very much.

Ed Henry.

HENRY: Thank you.

DOBBS: Insurgents have killed three more of our troops in Iraq. One soldier was killed in a mortar attack southwest of Baghdad. Two other soldiers were killed in Al Anbar province, west of Baghdad -- 2,312 of our troops have now been killed in Iraq since the war began.

The Army is deploying an additional armored battalion of about 700 troops to Iraq. Their deployment comes as Iraqis prepare for a major religious festival. The Army says these soldiers will remain in Iraq for several weeks, perhaps a month.

The White House today welcomed the new bipartisan panel on Iraq. President Bush has begun a new series of speeches. The purpose of those speeches, to try to convince Americans that he has a strategy for victory in Iraq, and to lift his sagging poll numbers. The president's approval rating is now at the lowest level of his presidency, just 33 percent, according to a new poll released by Pew Research.

Dana Bash is here tonight with the report.

Dana, what is the White House saying about this new panel? They have to consider this something of an intrusion.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, the word at the White House is the word you just used, "welcomed." A spokesman says that they welcome the valuable input from these seasoned veterans on this issue.

And the administration says they're actually, Lou, going to cooperate with the panel, saying that on a case-by-case basis, they'll facilitate travel, they'll have access to people, and even documents. The bottom line, Lou, is this White House is under pressure on a couple of fronts.

Obviously, big picture on the war, but also to be more inclusive of outside perspective from outside advisers. And so, given the fact that this panel is outside advisers, and it's about Iraq, saying that this is welcomed advice or would be welcomed advice was a no-brainer for them right now.

DOBBS: A no-brainer, but a late no-brainer. The calls for bipartisanship to involve the Democrats in the war strategy and to build a coalition at home before worrying about a coalition internationally is something this administration has not heeded.

Is the reason the sagging poll numbers? And today, we received these poll numbers showing what can only be described as disastrous results of polling. Is this moving them forward at a time when there is really no option?

BASH: Well, I think when you talk to people inside the White House they say that they're trying to learn lessons on a lot of fronts. And Iraq certainly is one of them.

And you mentioned Democrats. It's not just Democrats who have been very upset at this White House for not listening to outside voices. It's also been respected Republicans, eve those who have been close to the president, like Brent Scowcroft, the president's father's former national security adviser.

He publicly said he was upset that they just wouldn't listen to anybody except their inside -- inside voices about Iraq. And he said that basically hurt them. That's why they have no choice but to welcome this panel.

DOBBS: And it's important to know Brent Scowcroft, the national security adviser under the president's father's administration, before this war was counseling this president with caution.

BASH: Yes.

DOBBS: Dana, last night you reported that there were calls within the Republican Party for a shakeup at the -- at the White House and its staff. What are you hearing today?

BASH: Well, the calls were essentially to bring somebody else in, an experienced hand. And Lou, you probably won't be surprised that today there was a move to say, thanks but no thanks inside the White House.

A senior officials said, "First of all, we don't think it's necessary." But most importantly, they say they don't think the president thinks it's necessary at this point.

It was a lot of talk inside the White House briefing room today. Scott McClellan called it Washington pontification.

Let's listen.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: This is part of the inside Washington babble that goes on in this town. It's part of the parlor game.

We are focused on the priorities that the American people care most about and getting things done. We are focused on helping the president advance his agenda to make America safer and more prosperous.

(END VIDEO CLIP)

BASH: Now, they do acknowledge at the White House, Lou, that this is just not coming from outsiders, people who perhaps have been griping at the White House, but close friends of this White House, Bush allies. So that's why this is different. But again, they have their back up in a way, and they say, what we have been warned about yesterday, that once this became public, it was a lot less likely to happen.

DOBBS: That's an interesting sort of Washington insider...

BASH: Welcome to Washington.

DOBBS: ... response. But at the same time, as an outsider, if you will, with the NBC-"Wall Street Journal" poll putting the president's approval rating at 35 percent, the Pew poll, as we reported, putting his approval rating at 33 percent, the CNN- "USA- Today"-Gallup poll putting it at 36 percent, these are historical lows for this president. These are verging on Nixonian numbers.

That will offend many of the Republicans but, nonetheless, it is true.

What is the reaction within the staff there? And what -- what is the White House -- how is that White House reacting?

BASH: Well, to these poll numbers, they are not surprised. They understand that they are under a lot of pressure and that there have been a lot of missteps lately.

And as we've talked about, as you just talked about with Ed, the big thing that they do see still hovering over this White House, though, is Iraq. And even talking to some Republican pollsters who are really worried about this coming election year, they say, you know, it certainly would be helpful in some regards to bring in some new staff, perhaps to shake things up, but if the president doesn't want it, it won't do any good and it won't change...

DOBBS: What about the direct correlation between the policies being followed by this administration and these poll numbers?

BASH: That is a question that the White House and, more importantly, Republicans on Capitol Hill say will be for the voters. That's why they're very concerned about what's going on inside this White House -- Lou.

DOBBS: Dana, thank you.

Dana Bash. BASH: Thank you.

DOBBS: Another major concern for this White House is the anger over the Dubai ports deal and the absence of adequate port security in this country. After weeks of rising outrage, Dubai Ports World today finally publicly admitted defeat in its effort to buy port operations in this country. Dubai Ports World declared that it will sell its newly-acquired assets in more than 20 American ports.

Andrea Koppel with the report.

(BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN STATE DEPT. CORRESPONDENT (voice-over): In a press release, DP World said it intends to complete the sale within four to six months. Enough time to finish preparing the financial, corporate and legal information for the sale to go through.

The company said offers would be considered based on value, deliverability and the continuity of management, employees and customers. A leading Senate critic of the deal, Democratic Charles Schumer of New York, seems satisfied.

SEN. CHARLES SCHUMER (D), NEW YORK: OK, this is what we've asked for. It looks like the original deal now is scuttled and Americans can breathe a sigh of relief. Our ports will be safer.

UNIDENTIFIED FEMALE: Off aye or no for Mr. Jefferson?

KOPPEL: But over in the House, lawmakers weren't take anything chances, moving ahead with legislation to kill the deal no matter what, as well as with another bill calling for more money for port security. Democrats especially eager to continue hammering away at perceptions Republicans and the White House have gone soft on national security.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: But even though the Dubai port deal blew the lid off the myth of security on the part of initiatives on the part of this administration and the Republicans in Congress, the Republicans are still resisting change.

(END VIDEOTAPE)

KOPPEL: The only other unanswered question that remains is, who will buy DP World's North American operations at those six U.S. ports? When DP World took over P&O Ports North America last week, those operations were valued at about $680 million.

Now, according to an official at Deutsche Bank, which has been signed on by DP World to serve as a financial adviser for the sale, an estimated 15 to 20 parties have already expressed interest in the ports deal. In the meantime, until a sale is approved, DP World insists that its North American operations will be run separately from the rest of the company -- Lou.

DOBBS: Andrea, apparently they're finding that some American interests do have the capability of running port operations.

Thank you very much.

Andrea Koppel.

As Andrea just reported, Congress this week is expected to vote against the involvement of Dubai Ports World in any American port operations, despite assurances. Lawmakers are also concerned about the review process that allowed the Dubai ports deal to proceed, despite major national security concerns.

Later in this broadcast, among my guests will be Congressman John Barrow, who's introduced legislation to reform the secretive Committee on Foreign Investments in the United States.

Also ahead, the United Nations snubs the United States. Nothing new in that. John Bolton, America's ambassador to the U.N., tries to clean up the mess, and he will be our guest.

And then, does a higher minimum wage actually help business? Does it actually improve an economy? We'll have a special report on what may surprise you.

And Senior Political Analyst Bill Schneider travels alongside the Border Patrol on our porous southern border.

That's coming up next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The United Nations today defied the United States and voted in favor of a new human rights council that may be powerless to prevent many human rights abuses. The U.N. General Assembly voted to create the council after anti-American speeches by the Cuban and Venezuelan ambassadors. The United States says this new council will be no more effective than its discredited and corrupt predecessor.

The United States now faces another urgent challenge in the United Nations, and that is how to stop Iran's nuclear weapons ambitions. The United States and the other permanent members of the Security Council today failed it agree on a strategy to confront Iran.

Russia and Communist China trying to stop the Security Council from issuing a statement criticizing Iran, in fact. Both Russia and China have close ties, of course, with Iran, and both countries appear unlikely to support any U.N. action against Iran.

Joining me now from New York, the U.S. ambassador to the United Nations, John Bolton.

Mr. Ambassador, good to have you here.

JOHN BOLTON, U.S. AMBASSADOR TO U.N.: Glad to be here.

DOBBS: The -- first, let's deal with the Human Rights Council that was supposed to be a reform of its discredited predecessor. What happened?

BOLTON: Well, we don't think that the resolution the General Assembly adopted today really amounts to real reform. We wanted a substantial change from the bankrupt institution that exists now, and we don't think that we got it.

So, we're going to try and work cooperatively to continue to advance the cause of human rights in the United Nations because we feel strongly about it. But as an effort in reform, this is not a success.

DOBBS: And not an effort at successful reform, yet you signal very clearly that the United States will continue to finance and support this -- this council to which you object.

BOLTON: Well, the reason we voted against it was a matter of principle, and we're proud of the vote we cast today. This was not the sort of reform we think will be lasting.

But we do care about human rights, and even with flawed institutions, it's important that we continue to advance those standards. There are other things we're going to do, too. The democracy fund that was created at President Bush's suggestion -- a number of things like that, as well.

DOBBS: Right.

Kofi Annan, the secretary-general, had promised a council that would -- would bar those who abuse human rights and oppose higher standards of human conduct, if you will.

What happened to those guarantees?

BOLTON: Well, basically, the fundamental American point was we wanted a better quality representation on the Human Rights Council. We didn't think countries like Libya should be the chairman, we didn't think Cuba and Zimbabwe should be on it.

And unfortunately, the way this is now structured, there is no guarantee this is not going to look just like the existing commission but with a different name. That's why we voted against it. And I think it's now a matter of waiting to see what happens.

DOBBS: Turning to the subject of Iran, China, Russia, both making it very clear today that they're not going to be supportive of U.S. and European efforts to constrain Iran's nuclear ambitions.

What is the next step for the United States?

BOLTON: Well, this is a real test for the Security Council. The threat of terrorism, the threat of proliferation of weapons of mass destruction are the greatest threats we face in the 21st century. And if the Security Council can't deal with them effectively, it'll deal itself out of the problem.

This is the first big test with Iran, and it's going to be very important what happens. We're working hard, but we're not there yet.

DOBBS: The relationship with the European Union, do you have, in your judgment, solid alliances on the issue of Iran and stopping its nuclear ambitions with the European Union?

BOLTON: Well, you know, two of the other permanent members of the Security Council are Britain and France. And we are very close to them on this.

We've been working closely together. We have the same assessment of what Iran is trying to do in seeking nuclear weapons. And we've got the same strategy in mind for how to deal with it in the Security Council.

So, in that sense, that's a big repair of some the problems trans-Atlantically that occurred in connection with Iraq, and we're pleased with that.

DOBBS: And if Iran, as it is indicating that it will do, goes ahead with its uranium enrichment, begins its process, what is the United States -- what is -- what are the options for the United States here and for Europe?

BOLTON: President Bush made it clear his priority is to try to solve this through peaceful and diplomatic means. That's why we're in the Security Council, to increase the pressure on Iran and get them to change their strategic policies.

But President Bush has also been very clear, it is unacceptable for Iran to have nuclear weapons. So that's why he's also been clear, no option is off the table. But right now, our emphasis is on trying through diplomatic measures in the Security Council to show Iran it has no support in the rest of the world for its pursuit of nuclear weapons.

DOBBS: Ambassador John Bolton, thank you for being here.

BOLTON: Glad to do it.

DOBBS: Still ahead, why one lawmaker wants to reward employers of guest workers paying higher wages for foreign workers instead of Americans.

And then, who says raising the minimum wage is a bad idea for business? We have a report tonight that will show you new figures demonstrating that a higher minimum wage can help both the economy and our working men and women in this country.

Imagine that.

And Communist China, its expanding its military influence in this hemisphere, and U.S. law is allowing it to happen.

We'll have that story and a great deal more still ahead.

Stay with us. (COMMERCIAL BREAK)

DOBBS: Big business groups in this country such as the U.S. Chamber of Commerce and, of course, the Business Roundtable, they've consistently argued against helping working men and women in this country by raising the minimum wage, they say it will harm the economy and lead to the loss of small business jobs in particular. New research suggests just the opposite.

Christine Romans has the report from New York.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Make the minimum wage of $5.15 an hour and you're making only $10,000 a year. Hardly enough to make ends meet. It's why all but three states are at least considering raising wages above the federal minimum, despite opposition from business groups.

Oregon now has the second highest minimum wage in the country and reports job growth doubled the rest of the nation.

DAN GARDNER, OREGON LABOR COMMISSIONER: They always predict the gloom and doom, but it really just hasn't borne out in the figures across Oregon. I think that increasing the minimum wage helps Oregon. It doesn't hurt it.

ROMANS: That trend is bearing out nationwide. According to new research from the Fiscal Policy Institute, since 1998, states with a higher minimum wage had better jobs growth than states paying only the minimum wage. In small retail businesses in those higher-wage states, jobs growth was double the rest of the country.

JAMES PARROTT, FISCAL POLICY INSTITUTE: You raise a worker's wage, they're more likely to stay on the job. And they bring more experience to that. So the productivity of the business may go up.

ROMANS: And, he says, recruitment and training costs go down. And workers spend those higher wages almost entirely in other local businesses, creating more jobs.

But business is united against raising the minimum wage.

ROBERT GREEN, NATIONAL RETAIL FEDERATION: It does create significant pressures on a small business, small retailer with profit margins of 2 percent, 3 percent. It becomes very challenging to try to maintain the number of workers that you're currently employing just because the costs change.

ROMANS: With health care and energy squeezing profits, higher wages, they say, are a burden, particularly for small companies.

(END VIDEOTAPE)

ROMANS: But this new research challenges that conventional wisdom. And more states are doing what the federal government won't. A bill raising the minimum wage in Michigan is heading to the governor's desk. Michigan, Lou, would be the 19th state now to raise the minimum wage.

DOBBS: Christine, thank you very much.

Christine Romans from New York.

Reminding us of what Henry Ford said when he began his business and that big long assembly line paying $5 an hour, far beyond the prevailing wage, saying he wanted his employees to be able to buy the products they make.

Interesting concept.

That brings us to our poll tonight. Are you surprised to find that paying Americans decent wages actually improves rather than hurts the economy?

Cast your vote at loudobbs.com. We'll have the results later here in the broadcast.

Now, some of your thoughts.

Glenn in Florida writing to say, "Lou, since I can't seem to win a copy of your book, can I buy one of those 'Lou Dobbs is a racist' bumper stickers?'"

You get the book. Relax.

Joe in Michigan: "Last night, you seemed to blame our huge trade deficit with China on American consumers' appetite for cheap imports. Maybe we should buy American if America actually produced anything."

And there is the neb of the problem.

And Don in Arizona, "Lou, with Secretary Snow's announcement of the need to raise the debt ceiling to $8.184 trillion, I would love to see a new slogan for the midterm election campaign. Rather than the old 'tax and spend liberals,' how about 'borrow and spend conservatives?'"

Send us your thoughts at loudobbs.com. We'll have more of your thoughts later here in the broadcast.

Coming up next, the broken borders' triple threat: legal, political and ecological. We'll have that special report from our southern frontier.

Also tonight, I'm joined by a lawmaker sponsoring the Protect America First Act. Maybe you thought the government was already doing that.

And Latin American, it used to be called America's back yard. Now China is moving in.

We'll have that special report and a great deal more still ahead. (COMMERCIAL BREAK)

DOBBS: Frustration is rising on Capitol Hill tonight over the Senate's failure to finish work a comprehensive border reform bill. The Senate Judiciary Committee was supposed to complete work on that bill by tomorrow, but many now expect the committee to miss the deadline because of the contentious debate over this bill's immigration reform proposals.

Tonight, Judiciary Committee Chairman Senator Arlen Specter is asking Majority Leader Senator Bill Frist for more time in which to complete the markup of the bill, if need. But Senator Frist is threatening to introduce legislation of his own that would ensure a full Senate debate only on border security later this month if there is no complete judiciary bill to debate.

Under the Frist bill, debate in the full Senate over the president's so-called temporary guest-worker program or any effort to grant amnesty at all to illegal aliens would be delayed. Senator Specter says this move by Senator Frist would be a serious mistake.

As Washington lawmakers continue their endless debate over border security and immigration reform, our nation's border emergency deepens. Violence on the U.S. Mexican border is rising. It's doubled over the past year. And border officials are still waiting for any help from Washington.

Bill Schneider is here now with the story -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Lou, there certainly is a crisis on the U.S. border, and nowhere more than in Arizona, where I traveled with the U.S. Border Patrol last week.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): This is the Nogales Processing Center near the U.S. Mexican border in Arizona. The numbers of illegal aliens processed here are staggering.

GUSTAVO SOTO, U.S. BORDER PATROL: It's anywhere between 1,500 to 2,000 per day that are actually processed.

SCHNEIDER: Those are just the ones caught. The border patrol says beginning in the 1990s, its operations effectively shut down parts of the border in California, Texas and New Mexico.

SOTO: The smugglers have run out of places to go.

SCHNEIDER: You can see the aliens trying to scale the walls and fences at anytime of the day or night.

(on-camera): I'm in Nogales, Mexico at the border. This fence is the border with the United States. And this opening is literally a broken border. It's been broken for years. To get into the United States, all you would have to do is step across the line. And here I am in Nogales, Arizona. (voice-over): The problems caused are immense, security.

UNIDENTIFIED FEMALE: We don't know who those people are.

SCHNEIDER: And pressure on public services. Pull 50 yards off the highway, and you can see piles of discarded clothing, food containers, plastic water bottles and backpacks. The U.S. Fish & Wildlife Service has put out this flyer, warning visitors of the dangers.

The issue is causing bitter division. On one side, the minutemen, volunteer citizen patrols who monitor border areas and report sightings of illegal aliens. The border patrol says...

SOTO: We just don't want anyone who is not trained to handle these incidents to be out there.

SCHNEIDER: On the other side, the Samaritans.

JOHN FIFE, RETIRED PRESBYTERIAN MINISTER: In the last two summers, we've put camps out in the critical areas in the desert where people are dying with volunteers from around the country to try and provide food and water and medical care.

SCHNEIDER: Problem there, too.

FIFE: We had three federal felony convictions for harboring and transporting illegal aliens.

SCHNEIDER: The broken border is a source of division among Americans.

(END VIDEOTAPE)

SCHNEIDER: What we saw was an endless cat-and-mouse game. Congress prohibits the border patrol from setting up permanent checkpoints along the highways in the Tucson sector. They have to be moved every seven days.

So what happens? Smugglers wait for the checkpoints to shut down and then they move their human cargo unimpeded -- Lou.

DOBBS: Underlining the urgency behind the Specter bill that is expected or the Senator Frist legislation, if he judges it necessary.

Bill Schneider, that's a first, reporting for us not only from Washington tonight but from Arizona and Mexico as well.

SCHNEIDER: That's right.

DOBBS: Yeoman's work, thank you, sir.

SCHNEIDER: Sure.

DOBBS: Many Americans are literally incensed at the Bush administration's failure to protect this nation's borders and its ports. As the president's poll numbers plunge, pressure is rising in Washington for a White House shakeup. The White House today completely dismissed those calls.

Three of the country's most respected political minds join me now. "Washington Times" editorial page editor Tony Blankley, "New York Daily News" Washington bureau chief Tom DeFrank and former White House Chief of Staff Ken Duberstein.

Good to have you with us, gentlemen.

If I may, Tom, you say that intramural rebellion against this White House over the Dubai Ports deal has been percolating for some time. What do you mean?

TOM DEFRANK, "NEW YORK DAILY NEWS": Well, this happened early on. I mean, there's been a lot of pressure building in Congress, a lot of resentment building because members -- especially Republicans in the House and the Senate feel like this White House's treated them poorly. The White House says that's not true of course.

But for the last five years, you hear this all of the time. They say they treat with us arrogance with condescension. Their idea of consultation is to call us and say here's what we're going to do. We expect you to support us.

And I think the ports deal was a perfect storm, if you will, for Republicans who wanted to break with the president and wanted also to send a message. It was payback time to a certain extent there, Lou.

DOBBS: Ken, do you think that this White House has acted with unusual arrogance? A second-term presidents and their staff's often bring arrogance to their work. But I heard just as Tom articulated from a number of those in the House and the Senate that they've had a bellyful of the patronizing, condescending, we'll educate you poor folks over in the House and the Senate, just be patient with us.

KEN DUBERSTEIN, FMR. REAGAN CHIEF OF STAFF: You know, every second-term president, certainly since World War II, has been accused of hubris, of arrogance, of overreaching, as you began a second term. I remember, you know, with my example, President Reagan plummeted to 37 percent in the polls, about where Bush is today.

DOBBS: With Iran contra.

DUBERSTEIN: With Iran contra with the scandal of it, but he did a number of things and wound up at 68 percent. Part of it was a staff shakeup. It was getting rid of Don Regan and some of those folks and bringing in Howard Baker and little known General Colin Powell at the time, Me, Frank Carlucci.

But we changed the momentum of the Reagan presidency led by Ronald Reagan. What you're hearing now are calls for a momentum changer, whether it is policy or personnel. I don't know what George W. Bush is going to do. I suspect all the rumors you're hearing in Washington today are from people who truly don't know. DOBBS: And that does happen in Washington. I guess, Tony, the question that seems to me fundamental to this whole matter, is whether it's staffing, whether it's momentum, whether it's a tired group of advisers. Isn't there sort of an obvious correlation between policies that aren't working and an approach that isn't connecting with the American people, and these horrible poll numbers?

I mean we are talking 33 percent in the Pew, 35 percent in the NBC "Wall Street Journal" report, 36 percent in our CNN poll.

TONY BLANKLEY, "WASHINGTON TIMES": Look, there are plenty of valid complaints about the staff. I think president's tend to get the staff that they want and the kind of function they want. So his relations with Congress reflect his approach to governance somewhat like Thatcher's was, sort of asserting her views.

But policy is the heart of his problem, not staff. I would think the smartest thing he could do right now would be to embrace Senator Frist's proposal. The sanctions-only border legislation, which would marry up nicely with the House bill's sanctions-only enforcement-only provision.

Pass something that Republicans and country that would like to see done. Reverse the sense of softness regarding the ports. That's a policy decision that the president has to make. It's not a question of staff. He's got advisers who can tell him seven sides of any sides of issue. That's a policy decision that only the president has to make.

I think the other piece he's got to do is he's got to start talking very frankly and shortly about Iraq and what he's planning to do, if things get worse, as they look like they're getting.

DUBERSTEIN: But, Tony, you don't see any indication from this White House they're rethinking any of the policy...

BLANKLEY: No.

DUBERSTEIN: ...or the staff. So we have to be clear about that.

BLANKLEY: No, you're asking -- I think a staff shakeup, if the president has the same set of policy views and approaches to governance, isn't going to make any difference. He has some good people in the building and there's some not so good, as in every White House. The problem is policy and attitude and that comes from the top.

DOBBS: Dana Bash reported here tonight that the White House is embracing the blue-ribbon commission mandated by Congress on Iraq. Do you believe that is genuine? Do you believe it's -- the beginning of a solution for this administration and its Iraq policies?

DEFRANK: No, I don' think it is any solution for the Iraq policy, but I do agree with Dana that they are embracing. After all, Jim Baker is one of the great movers and shakers of the Republican Party, and I think the White House welcomes Jim Baker there. They are probably hoping that he will protect their interests there. But I don't think this blue-ribbon commission is going to change Iraq policy, while this president is in office, Lou.

DOBBS: Iraq -- the White House is trying to put forward the reason for these numbers is the challenge of Iraq, which is to put it in some terms, very mildly and gently. But we also have illegal immigration. We have border security. We have port security.

Is there anything this administration really needs? What is its strength here? And just how concerned should all of us be as citizens, because when a president gets down to these Nixonian levels in the poll numbers, there's something very profound going on. Do you not agree?

DUBERSTEIN: Well, I do agree. But you also have to give some balance to it. And let me suggest that, as bad as Bush is doing right now and the poll numbers reflecting it, when you think of Nancy Pelosi and Howard Dean and Russ Feingold, they're the gifts that keep giving. They are the people who, in fact, are sustaining a lot of the Republicans right now because there isn't any alternative.

I think Bush is going it try to right this ship and he's going to try to right it any number of ways. I'm not sure that you're going to have an immediate staff shift. I don't think you're going to see people entering at some level. But I do think Bush is going to have to address this need for a momentum changer sooner rather than later.

DOBBS: Well, Democratic strategist Hank Sheinkopf, whom I suspect you know pretty well, last night said to me, you know, as Democrats we can just sit here and watch this administration screw up.

BLANKLEY: Well ...

DOBBS: Is that really an approach?

BLANKLEY: Actually, technically, they can't just sit there because they're not able to just sit there. So you saw the censure motion put in, which pulled the rug out from under the strategy of just sitting there and watching the White House make mistakes. It's very hard to do nothing.

DOBBS: One of Ken's gifts is that your judgment on that?

BLANKLEY: So, you know, I mean, I'm hardly complacent at all. I don't think a million incompetent opposition assures a good election in the fall. If things are bad enough, the public will sweep with the broom. But I agree, obviously, the Democratic Party's probably the most incompetent and disorganized opposition party that I have seen in many a decade.

DOBBS: You get the last word.

DEFRANK: At the end the day, the president is blessed having the Democrats as his opposition, but the problems are not the staff. The problems are not the opposition. The problem is he has no traction and nothing is on the horizon that looks -- that's going to give him any.

DOBBS: We will leave the analysis with all of this political posturing means for those of us who just happen to be citizens for another broadcast. Ken, thank you very much. Tom, thank you very much. Tony, thank you.

A reminder now to vote in our poll. Are you surprised to find that paying working Americans decent wages actually improves rather than hurts the economy as we reported earlier this evening? Cast your vote at loudobbs.com. We'll have the results coming up in just a few moments.

Up next, Congressman John Barrow joins me. His new legislation is called the Protect America First Act. I'll bet you thought we were already doing that. Congressman Barrow joins me here next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The Dubai ports deal exposed dangerous shortcomings in how our government reviews foreign purchases of critical American infrastructure assets. A defense contractor in Congressman John Barrow's district is about to be sold to a Dubai government-owned company. He learned about it in a newspaper report. That led him to sponsor the Protect America First Act.

Congressman John Barrow joins me here Washington now. Good to have you with us, Congressman.

REP. JOHN BARROW (D), GEORGIA: Thank you, Lou.

DOBBS: The company is Doncasters. They manufacturer critical elements for defense. It's -- and you found out about it in a newspaper report?

BARROW: Well, I found out about it the way we all found about it, reading about it in the paper. The thing that's most significant about both these Dubai deals is that they're not isolated incidents.

The only thing that's isolated about these episodes is our finding out about them, because as we now know, we've had some 1,500 deals that have been submitting for approval for foreign purchasers to buy assets that have national security implication ever since the responsibility of overseeing this was given to the CFIUS, the Committee on Investment of -- for Foreign Investment in the United States, way back in 1988.

And this is the first time we've ever heard about any of these, except the one instance when one deal was blocked way back in 1990. So this shines a light on a problem. We're not really aware what's going on.

DOBBS: It's -- there's great frustration I know in Congress because of this. There are great calls for first improving port security, national security, imagine that, because until recently, this Congress has been looking at -- just as the administration has, I think it's fair to say, it's almost every day like a business deal. There's suddenly in an awakening because of Dubai Ports World to, hey, this is a sovereign nation that does have some responsibilities, right?

BARROW: I'll say. You know, we've almost got mentality here like in that old musical "Li'l Abner." What is good for General Bullmoose is good for the USA. It's almost gotten to the point where some folks think that what is good for the UAE is good for the USA, but I think what is good for the USA is what's good for the USA.

And, you know, the number one responsibility for the national sovereignty is to make sure that you can defend yourself. That's the birthright of every free people.

DOBBS: Let's talk about Protect America First legislation that you've introduced. What will it accomplish?

BARROW: Well, it will do two things, basically. First what it's going to do, is it's going to provide some much-needed Congressional oversight. It's going to put Congress on the spot by making sure that the appropriate members of Congress know what's going on when it's going on.

The most amazing thing about this is out of 1,500 deals that have been submitted from approval, Congress has only been notified about the one deal that was blocked back in 1990. That's a very flawed process when you don't know how many deals are being approved and how many are not being approved. Congress will be in the loop on this one because the appropriate members are required to be notified when the applications are submitted for review.

DOBBS: Moving CFIUS from, as it is now chaired by the secretary of the Department of Treasury, John Snow -- moving it over to Homeland Security, you're pretty confident that that's a good idea?

BARROW: Well, that's second major thrust of my bill, is to move it out the department that's not suited for it into a department that has the primary responsibility for protecting our national security.

I know that Homeland Security's got problems. We all know that. But you don't fix what's broke with Homeland Security by leaving a process that's totally broken in the hands of folks who don't have that as their number one responsibility.

DOBBS: Are you confident that, through your legislation, other bills that have been introduced that we're going to see a real improvement in national security, specifically port security, border security, as a result of what hopefully we've all learned from the Dubai Ports World deal?

BARROW: Well, I hope so. You know, our national defense shouldn't be outsourced. Eisenhower warned us a long time ago about beware the military industrial complex. If he were alive today, he'd say beware the process of gradually outsourcing your military industrial complex. We can't afford not to look into this and be aware of what's going on. DOBBS: Congressman John Barrow, thanks for being here.

BARROW: Thank you, Lou.

DOBBS: Appreciate it.

Just ahead, we're going to be taking a look at more of your thoughts on these issues and a great deal more.

And a proposal to use your money to bring -- well, you remember those guest worker proposals? Well, taxpayer money provide incentives to those who hire the guest workers on top of everything else. Stay with us. It just gets better and better.

(COMMERCIAL BREAK)

DOBBS: "THE SITUATION ROOM" with Wolf Blitzer coming up at the top of the hour right here on CNN. Here's Wolf to tell us about it -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks have been much, Lou.

Pressure on the White House to shake things up. Will the president bring in any new blood? Tonight, there are brand new poll numbers out. We're going to tell you how bad things are getting for the president.

Plus, bird flu flying to America. The secretary of Health and Human Services recommends buying tuna fish and powdered milk, but is he sending the wrong message to the public? Mike Leavitt standing by in THE SITUATION ROOM.

Also, the inside story of miscalculations during the Iraq war. Military commanders offer dire warnings, but was the Bush administration listening? Lou, all of that coming up right at the top of the hour.

DOBBS: Looking forward to it Wolf, thank you.

Well, this broadcast's has reported extensively on a number of VISA programs that allow employers in this country to hire foreign guest workers, workers that they often pay far less than they would pay American workers.

Now, one congressman wants to give those employers of those guest workers, in addition to everything else, a tax break. That's right. He wants to give them your money as an incentive to hire more of them.

Lisa Sylvester has the story.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Farm groups gathered on Capitol Hill to protest tougher border enforcement legislation. They say hundreds of foreign farm hands need to be imported to keep grocery bills in check. That argument is also being made by Congressman Bart Gordon of Tennessee who goes a step further. He's proposing U.S. taxpayer dollars go to employers who hire not American farm workers, but unskilled foreign workers through what's call the H2A Program. Opponents say it sends the message, don't hire at home.

STEVEN CAMAROTA, CENTER FOR IMMIGRATION STUDIES: Obviously, the idea of a subsidy itself for hiring foreigners seems particularly outrageous.

ANA AVENDANO, AFL-CIO: Employers who will be importing and exploiting the guest workers are clearly the ones that will benefit. Those who will be hurt are all workers within our borders, whether they're U.S.-born or foreign-born.

SYLVESTER: Representative Gordon was not available for an interview, but his office says the tax credit would help farmers who play by the rules compete against those who hire illegal workers. But immigration reform groups say giving incentives to bring in even more cheap labor is not the answer. Instead, crackdown on those employers who are breaking the law. And...

CAMAROTA: If companies have trouble hiring people then there's a simple solution in a market economy. It's called pay your workers better. You offer them benefits. You treat them better. And lo and behold, you'll have enough workers.

SYLVESTER: Underlying this debate is broader immigration reform that is being considered by the Senate, whether Congress will approve a new guest-worker program that could legalize at least 11 million workers.

(END VIDEOTAPE)

SYLVESTER: And this is an issue that's not only divided Republicans, it has also labor unions split. The AFL-CIO does not back a guest-worker program, saying it drives down wages. But two other union groups, the Service Employers International Union and Unite Here, which represents hotel and restaurant workers, favor the plan. Although it's their membership of low-skill workers who will be hurt the most by this guest worker program -- Lou.

DOBBS: Yes, it's remarkable the collision of politics, and it's always an experience for me when we're in Washington to see so many people cross the penumbra of the absurd when it comes to public policy. We said it as straightly as you can, and that is, pay people. You will attract them, and they will work. Pay them decent wages.

SYLVESTER: That's exactly what it is. If you want to attract people, give them the wages that they deserve, not go outside the country, looking to hire other workers.

DOBBS: From your lips to Congress's ears.

Thank you very much, Lisa Sylvester.

Still ahead here, we'll have the results of our poll. And we'll take a look at your emails. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll tonight. Ninety-one percent of you responding that you are not surprised to find that paying American working men and women decent wages actually improves rather than hurts the economy. Now we'll see who's watching and listening.

More of your thoughts now. Bob in Florida saying, "Lou, I am terrified of what is happening in this country when the so called checks and balances, set up by the Constitution, are crumbling before our eyes. It appears the Democrats are just as afraid as the Republicans of the fall elections."

That may not be a bad thing.

Ronald in Wisconsin, "I am so disgusted with both political parties, I don't know who to vote for. Is there any way we can get none of the above' on the ballot in November?"

We should check it out.

And many of you wrote in about the government's plan to prepare for a possible bird flu pandemic by urging Americans to store cans of tuna and powdered milk under their beds.

Tom in Colorado is writing to say, "Canned tuna under my bed. Brilliant. That may satisfy my cat's appetite, but what about my dog?"

And Nancy in Michigan, "I don't have much room left under my bed for the tuna and powdered milk because it is full of mangoes."

Send us your thoughts at loudobbs.com. We thank you for being with us tonight. For all of us here, thanks for watching. Good night from Washington.

"THE SITUATION ROOM" with Wolf Blitzer begins now -- Wolf.

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