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LOU DOBBS TONIGHT

White House-Senate Showdown Over Huge Spending Bill; Scathing Report Blasts Oil Industry for Deliberately Driving Gasoline Prices Higher; Mexican President Vicente Fox Withdraws Support From Drug Legalization Legislation; Clark Kent Ervin Interview

Aired May 4, 2006 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight, President Bush and the Senate are on a collision course of a massive spending bill for the wars in Iraq and Afghanistan. A bill that critics say is stuffed with billions of dollars in pork barrel spending.
ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Thursday, May 4th.

Live in New York, Lou Dobbs.

DOBBS: Good evening, everybody.

The White House and the Senate tonight headed for a showdown over a spending bill the president says is much too big. The Senate ignored the threat of President Bush's first veto and voted overwhelmingly to support the $109 billion bill. That money is intended to pay for the wars in Iraq and Afghanistan, and Hurricane Katrina relief. But senators added billions of dollars in additional spending to advance special interests.

Andrea Koppel reports from Capitol Hill on the senators' determination to push that legislation through despite opposition from both the House of Representatives and the White House.

Elaine Quijano reports from the White House on the president's other big concern today, the fate of his so-called immigration reforms.

We go to Andrea Koppel first -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Lou, almost two months after the House passed its version of the appropriations bill, the Senate cast their vote today, setting up what looks like could be a head-on collision between senators, President Bush, and the House.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): President Bush repeated his ultimatum yesterday.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Congress needs to hear me loud and clear. If they spend more than 92.2 plus pandemic flu emergency funds, I will veto the bill. KOPPEL: But by a vote of 78-20, the Republican-dominated Senate defied the president and voted to spend almost $109 billion, or over $14 billion more than what President Bush said he'd allow. Included in the Senate bill, much of what Mr. Bush wanted, almost $71 billion in emergency funding for the wars in Iraq and Afghanistan, as well as close to $30 billion for hurricane relief in the Gulf Coast and 11 billion for homeland security and border protection. But that's not what has critics up in arms.

SEN. JIM BUNNING (R), KENTUCKY: It has everything but the kitchen sink. And as I read through the programs that will provide $20 million for oyster fishermen in New England, and $4 million for erosion control projects in California and Michigan, I'm starting to believe the kitchen sink must be in there, too, somewhere.

KOPPEL: Critics say the bill is packed with expensive pet projects places like Hawaii, where $6 million is earmarked to help the islands' struggling sugar industry.

SEN. TOM COBURN (R), OKLAHOMA: Emergencies are supposed to be reserved for true emergencies. Unexpected costs facing the federal government. This bill is loaded with things that aren't unexpected.

KOPPEL: But Mississippi Senator Thad Cochran. who successfully pushed for $700 million to relocate his state's railroad line, said an emergency is in the eye of the beholder.

SEN. THAD COCHRAN (R), MISSISSIPPI: An emergency is, you know, whatever a majority of the Congress agrees is an emergency.

(END VIDEOTAPE)

KOPPEL: And there is another fight ahead. The House and the Senate need to agree on some kind of legislation. We heard today from the House majority leader, John Boehner, who basically put the Senate on notice saying the House will not take up an emergency supplemental spending bill that spends $1 more than what the president has asked for -- Lou.

DOBBS: Andrea, thank you.

Andrea Koppel from Capitol Hill.

That spending bill is intended, as Andrea reported, to fund emergencies. But it appears the senators have a much broader definition of emergency. The Senate version of this bill includes $4 billion of extra cash for farmers and ranchers and includes nearly $800 million in new spending on highways and mass transit systems. And the bill authorizes $700 million to relocate that freight line along the Mississippi coast that has already been built at taxpayer expense.

The White House today called upon the Congress to send the president a bill that contains no additional funding. Meanwhile, President Bush focused on his so-called immigration reforms. President Bush repeated his call for a guest worker program, a program that many call simply amnesty, amnesty for millions of illegal aliens in this country.

Elaine Quijano reports now from the White House.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice over): In the East Room of the White House, President Bush celebrated Cinco de Mayo a day early because of a scheduling issue.

BUSH: It's on the quatro de Mayo. It's such an important holiday, we thought we would start early.

QUIJANO: But with tempers flaring over illegal immigration, the president used the occasion to again walk a political tight rope. He reiterated support for a guest worker program.

BUSH: I think we need to create a secure and legal channel for people to come to this country to work.

QUIJANO: Yet he also described American citizenship as a privilege that, in his words, carries responsibilities.

BUSH: Those who come here to start new lives in our country have responsibility to understand what America is about and the responsibility to learn the English language.

QUIJANO: The responsibility message was intended not just for immigrants, but also aimed at quelling conservative anger within the GOP.

LESLIE SANCHEZ, FMR. BUSH ADVISER: A lot of people in the base are going to agree with that. He's going to galvanize the base, say, I get you, I understand where you're coming from. And he's also going to reach out to Hispanics, you know, with -- with the rest of his message.

(END VIDEOTAPE)

QUIJANO: But with lawmakers at an impasse over the issue, finding a compromise that pleases all sides remains elusive for President Bush on this eve of Cinco de Mayo -- Lou.

DOBBS: On the eve of Cinco de Mayo, Elaine, is this the first time the president has actually put forward responsibilities of citizenship and the privilege of responsibility of citizenship when talking about his guest worker program?

QUIJANO: Well, it's interesting, because this is the first time, it seems, at least from what I've observed, that he has, in fact, used this particular language. We, of course, heard him earlier recently talking about the need for the national anthem to be sung in English and people who come here to the United States to learn English. But in coupling it with this idea of responsibility, the president clearly aiming that message at conservatives who have not been pleased with his calls for a guest worker program -- Lou.

DOBBS: Well, perhaps we might hope aiming that message at all who would intend to become American citizens.

Elaine Quijano from the White House.

Thank you very much, Elaine.

As President Bush continues his push for illegal alien amnesty, two of the country's staunchest amnesty supporters met to plot strategy today on Capitol Hill in their efforts to legalize millions of illegal aliens in the United States.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice over): It was the uniting of the West Coast and the East Coast. Los Angeles Mayor Antonio Villaraigosa and Senator Ted Kennedy, two of the staunchest advocates for amnesty.

MAYOR ANTONIO VILLARAIGOSA (D), LOS ANGELES: This is a generous country. This is a country that understands that we were built on the backs of immigrants.

SYLVESTER: Villaraigosa is in town lobbying for amnesty and citizenship for illegal aliens. His trip comes on the heels of a visit by Los Angeles Cardinal Roger Mahony last Friday.

JIM EDWARDS, NUMBERSUSA: It is a concerted effort to promote amnesty, and McCain-Kennedy version of amnesty in particular. There is a large coalition that includes what I refer to as big business, big labor, and big religion.

SYLVESTER: Pro-amnesty groups have failed to secure the 60 votes needed to move legislation through the Senate. Kennedy says he will take up legislation again mid-month. The senator's staff signaled that he's now willing to support a mandatory electronic employment verification system as part of a compromise to get an amnesty through.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Will you have an effective system? Yes. Will it be able to be enforced? Yes. Is that the way to go? Yes.

SYLVESTER: Amnesty critics point to recent polls that show most Americans favor the House's tough enforcement approach over the Senate's amnesty plan.

JACK MARTIN, FED. FOR AMERICAN IMMIGRATION REFORM: I think elected leaders need to pay attention to this. They can't just pay attention to the -- Antonio Villaraigosas and Bill Gateses and their political impact and their dollar impact, but they have to pay attention to the voters on this.

SYLVESTER: With the elections just six months away, lawmakers are more prone to tune in to the voters.

(END VIDEOTAPE) SYLVESTER: There is a concern by immigration reform groups opposed to amnesty that the Senate will pass a bill that will have enforcement provisions in it, but then never provide the funding for those measures. The worry, of course, is that the country will then end up with a similar situation to 1986, with amnesty and still a continuous flood of illegal aliens -- Lou.

DOBBS: It is, perhaps, likely -- this may be wishful thinking, Lisa, to believe that the Senate is aware that the American people are not going to be fooled by the games of comprehensive legislative action on immigration and border security simultaneously. They're going to insist on, it appears, border security being established and control of our immigration system before talking about reforming it.

Let me ask you. Ted Kennedy, Senator Kennedy saying that he would be so good as to go along with verification systems for employees and having the ability to tell whether or not one is a citizen of this country or not?

SYLVESTER: Ted Kennedy's office today said that he is willing to look at a compromise to have this work site enforcement. And the key here is a mandatory enforcement system, as well as taking a look and making sure that it is mandatory and that it's universal, that it applies to all illegal aliens.

Now, this is what his office is saying. But we're going to have to check and see if this is actually what happens in the weekdays and weeks ahead, Lou.

DOBBS: It seems that that would be a straightforward requirement for any attempt at immigration reform, but if that's considered a concession in the Senate, so be it.

Lisa, thank you very much.

SULLIVAN: Well, we'll be watching, Lou.

DOBBS: Absolutely. Thank you very much.

Lisa Sylvester from Washington.

Still ahead, oil companies say they're not responsible for the soaring gasoline prices. A new report says oil companies, however, are directly to blame. And there's a lot of money involved. We'll have that report for you.

Also tonight, the high cost of so-called free trade. This nation's trade agreements, free trade agreements, are destroying jobs at home and causing untold suffering overseas as well. We'll have that special report.

And tonight I talk with two congressmen who say it's finally time to crack down on the employers of illegal aliens in the workplace. And they've introduced the legislation to do just that.

All of that and more coming up here tonight. Stay with us. (COMMERCIAL BREAK)

DOBBS: A scathing report tonight blasting the oil industry for deliberately driving gasoline prices higher. The report details a decades-long effort by oil industry executives to boost their profit margins at the expense of hard-working American consumers.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice over): With Americans furious about the spike in gas prices and record oil profits, Congress is taking aim at price gouging at the pump. But a blistering new report says the problem is much deeper than that. It portrays the oil industry as devoid of true competition and uninterested in building new refineries.

MARK COOPER, CONSUMER FEDERATION OF AMERICA: It's a systematic strategy of consolidating the market, eliminating competition, and then underinvesting in capacity. The oil companies have made it clear they're not going to build enough refining capacity to put downward pressure on price.

VILES: The report from the Consumers Union argues the industry has reaped a $100 billion profit windfall -- that's $1,000 a year to the average American family -- by underinvesting in refining capacity to tighten supplies. The report quotes a 1995 Chevron memo that says, "If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery profits."

The oil lobby in Washington called the report nonsense, arguing the biggest cause of tight refining capacity is that the refining business underperformed for so long, it's failed to attract investment dollars.

ROBERT SLAUGHTER, NATIONAL PETROCHEMICAL & REFINERS: We think it would be very helpful if people would just generally stop scapegoating on this issue and realize that the real culprit here is economic growth, which is a good thing.

VILES: Oil executives called to Washington say they are doing what they can.

REX TILLERSON, EXXONMOBIL CEO: We're investing heavily $20 billion a year over the next five years to develop new supply.

VILES: But that $100 billion budget does not include a single new U.S. refinery. Tillerson told "The Wall Street Journal" this week that building a new refinery would be bad for business.

(END VIDEOTAPE)

VILES: Nothing bad for business about $3 a gallon gasoline, Lou. The industry last year racked up profits of $120 billion and is well ahead of that pace this year. And I said $3 a gallon, but if you can read over my shoulders, that would be a bargain in California -- $3.46 for the cheap stuff at this station -- Lou.

DOBBS: Thank you very much. Peter Viles.

The Consumers Union doing the work that Congress now wouldn't have to. They have straightforwardly laid it out. We'll se what Congress does with this new report.

Peter Viles, thank you very much.

New evidence tonight of how our so-called free trade policies promote virtual slavery in parts of this world. Communist China is using the U.S.-Jordan free trade agreement to flood the U.S. market with cheap clothing produced under inhuman conditions.

Kitty Pilgrim reports on free trade.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice over): In Jordan, factories like these make clothing for the American market. An investigation by the National Labor Committee, a privately-funded watchdog group, reports slave conditions where workers are starved, beaten and driven to work for days at a time and often not paid. The report says clothing like this is sold in major U.S. stores.

Former workers describe horrible conditions.

SAIFUL ISLAM, FMR. FACTORY WORKER (through translator): We started working 8:00 in the morning and we had to work until 2:00 that night.

PILGRIM: The labor group says Jordan turns a blind eye to the conditions in the factories, many of which are foreign-owned and operated.

CHARLES KERNAGHAN, NATIONAL LABOR COMMITTEE: The factories in Jordan which are exporting duty-free to the U.S., those factories are largely foreign-owned. And maybe the biggest investor would be China. And after China, Taiwan, United Arab Emirates, India, Pakistan. And the Jordanian investment is minor. And the big winner in all of this, which would surprise the American people, is China.

PILGRIM: Jordan signed a free trade agreement with the United States in 2001, and sells more than a billion dollars worth of clothing duty-free to the United States. Some in Congress are outraged about the abuses and the implication for American jobs.

SEN. BYRON DORGAN (D), NORTH DAKOTA: They do these agreements and then rush off to do the next agreement, and they forget what's in the past agreement. They never, ever monitor them, and that's part of the problem here. And it's unfair to American workers to ever have to compete against people who are worked 120 hours a week, people who are paid virtually nothing. That's not what the global economy should be about, and we shouldn't stand for it.

PILGRIM: Senator Dorgan is introducing legislation that would make it illegal to import products from sweatshops.

(END VIDEOTAPE)

PILGRIM: Those sweatshop products damage American jobs because they undercut workers here in the United States. Now, Jordan says the free trade agreement they signed honors international labor rules. They apparently are not enforcing those rules -- Lou.

DOBBS: Free trade, Jordan working, if you will, metaphorically as a duty-free shop, and China holding the mortgage. I mean, it's just -- how dumb can the U.S. trade representatives be? Agreement after agreement, they talk about this, they have no idea of what in the world they're doing.

PILGRIM: It's truly unbelievable.

DOBBS: And next year Congress gets to have the opportunity to return to its constitutional role and actually become involved in agreements, trade agreements, all agreements, rather than continue this fast-track authority which expires next year, by which we have seen this country run up 30 years of consecutive trade deficits under the name of free trade.

Thank you very much, Kitty Pilgrim.

Jordan is hardly the only country where cheap foreign labor is exploited under the banner of so-called free trade. The United States has so-called free trade agreements with nine countries that have been cited for inhuman working conditions.

They achieve remarkable global competitive advantages by doing so, of course. There are 30 million to 40 million garment workers in the world. Most work in developing countries where labor abuses are common.

Coming up next here, Defense Secretary Donald Rumsfeld on defense. A career CIA analyst takes him to task for his statements on Iraq.

And the Mexican president's drug withdrawal. Vicente Fox takes another look at that drug legislation that he thought was just really, really an advance for his society.

We'll also show an American team at the World Cup soccer tournament. Will you see the American flag there? We'll have that story for you coming right up.

Stay with us.

(COMMERCIAL BREAK)

A retired CIA officer today refused to back down when he challenged Defense Secretary Donald Rumsfeld on prewar intelligence on Iraq and the defense secretary's statements leading up to the war. The former CIA analyst, Ray McGovern, accused Rumsfeld of lying. Rumsfeld was repeatedly heckled during his speech in Atlanta. Jamie McIntyre has the report tonight from the Pentagon -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Lou, it's a symbol of how Rumsfeld has become a lightning rod for criticism about the Iraq war. Protesters at his speech in Atlanta interrupted him several times, one holding a banner saying "guilty of war crimes."

And as you said, that retired CIA analyst, Ray McGovern, challenged Rumsfeld directly, accusing him of misrepresenting, of lying about the prewar intelligence. Here's a little of the exchange.

(BEGIN VIDEOTAPE)

DONALD RUMSFELD, SECRETARY OF DEFENSE: The president spent weeks and weeks with the Central Intelligence people, and he went to the American people and made a presentation.

I'm not in the intelligence business. They gave the world their honest opinion. It appears that there were not weapons of mass destruction there.

UNIDENTIFIED MALE: You said you knew where they were.

RUMSFELD: I did not. I said I knew where suspect sites were, and we were...

UNIDENTIFIED MALE: You said you knew where they were, near Tikrit, near Baghdad, and north, east, south and west of there. Those are your words.

RUMSFELD: My words -- my words were that...

No, no, no. Wait a minute. Wait a minute. Let him stay one second. Just a second.

UNIDENTIFIED MALE: This is America, huh?

(APPLAUSE)

RUMSFELD: You're getting plenty of play, sir.

UNIDENTIFIED MALE: I'd just like an honest answer.

RUMSFELD: I'm giving it to you.

UNIDENTIFIED MALE: We're talking about lies and your allegation that there was bulletproof evidence of ties between al Qaeda and Iraq. Was that a lie or were you misled?

RUMSFELD: Zarqawi was in Baghdad during the prewar period. That is a fact.

UNIDENTIFIED MALE: Zarqawi? He was in the north of Iraq in a place where Saddam Hussein had no rule.

RUMSFELD: He was also. UNIDENTIFIED MALE: That's where he was.

RUMSFELD: He was also in Baghdad.

UNIDENTIFIED MALE: Yes, when he needed to go to the hospital. Come on. These people aren't idiots. They know the story.

(END VIDEOTAPE)

MCINTYRE: All right. Well Rumsfeld there, usually very careful not to say anything that could come back to haunt him, but Ray McGovern, the CIA agent, was right when he referred to that quote which was a direct quote that Rumsfeld made on the ABC weekend show "This Week," in which an answer to a question about why they hadn't discovered weapons of mass destruction yet back in March of 2003, Rumsfeld said, "We know where they are. They're in the area around Tikrit and Baghdad, and east, west, south and north somewhat."

He also said that, it's one of the sites where the U.S. had gone. They'd seen trucks coming in and out and said some of the WMDs were probably moved. Although, he quickly again qualified it and said, "I don't know that. We'll have to see."

But one thing about Rumsfeld is he is loathe to admit that he was wrong about anything. And this is another case where he was not only going to insist that he didn't lie, but he wouldn't even admit that the quote he gave at the time turned out to be incorrect -- Lou.

DOBBS: So, Ray McDonald (sic), in point of fact, pointed him out, pointed -- I'm sorry, Ray McGovern...

MCINTYRE: McGovern, right.

DOBBS: ... pointed out successfully to the defense secretary that he did, in fact, lie.

MCINTYRE: Well, lying means intentionally deceiving. You can certainly say something that turns out later to be inaccurate, and it may not have been an intentional lie. But the interesting thing about Rumsfeld he rarely even concedes that anything he said has turned out to be incorrect.

DOBBS: Well, let me ask you if he intentionally meant to say this or not, because I noticed as the defense secretary was speaking today he said, "I am not in the intelligence business."

MCINTYRE: Well, he is technically a consumer of intelligence.

DOBBS: Technically a consumer? Jamie, he has the preponderance of the budget for intelligence in this country.

MCINTYRE: Well, there is a debate about the Pentagon's own intelligence shop and to the extent that they either analyze existing intelligence or went out looking for their own intelligence. But again, Rumsfeld a difficult guy to pin down today.

DOBBS: Well, I'm going to pin this down.

MCINTYRE: OK.

DOBBS: When the secretary of defense says he is not in the intelligence business, that's a -- that's absolutely wrong!

DOBBS: Well, technically, he's one of the consumers of intelligence. He's supposed to...

DOBBS: Excuse me. Is he in charge of the Defense Intelligence Agency?

MCINTYRE: He is. And that agency is supposed to serve him by providing him with the intelligence that he can act on it.

DOBBS: oh, OK. I think I understand the distinction, Jamie, but it's one that I don't think is much of a difference, if you will. I think the -- I think the defense secretary utterly misspoke because he has the preponderance of the intelligence budget of the United States government.

MCINTYRE: Well, it will be interesting to hear what he says tomorrow, because one of the things he said in that was that he didn't say he knew where the weapons were, only where the suspect sites were. And as we know, that's clearly not what he said.

DOBBS: Right.

MCINTYRE: So, it will be interesting to see if he admits at least that much tomorrow.

DOBBS: You got it. And fascinating. And you know what? It's great to be in America, where folks can challenge our officials and do so successfully.

MCINTYRE: Well, give Rumsfeld credit, because they were about to remove this guy from the hall, and Rumsfeld did say, as you said, this is America and not do that that.

DOBBS: Yes, absolutely. And I think that, at least is -- leaves us reason, room to be buoyant.

Thank you very much.

Jamie McIntyre from the Pentagon.

Taking a look now at some of your thoughts, Marco in Texas said, "As an American of Mexican heritage, I'm here to tell you that this small and narrow-minded vocal advocates of illegal rights do not speak nor do they represent the vast majority of Hispanic Americans. The majority of Hispanics in the United States do not favor amnesty and want, not demand, strong internal enforcement of our immigration laws."

Tom and Connie in Texas wrote in to say, "Dear Lou, we would like to suggest we get a real secretary of Homeland Security, not the puppet we have now. We need a man like Sheriff Joe Arpaio of Arizona. That's the only way we'll have real border security and port security."

Angela in California, "It is not ironic that big business won't use the same law of supply and demand on the impact of illegal immigration on wage levels as it does on gasoline prices. It is ethically bankrupt, immoral and dishonest. We used to shoot slimy varmints like these."

Send us your thoughts at LouDobbs.com. We'll have more of your thoughts coming up here later.

Next, Mexican President Vicente Fox has gained some -- is it common sense or just a phone call from Washington in the debate over the decriminalizing drugs in Mexico? He was for it just two days. He's against it now. A special report coming up.

Also, two leading congressmen say it's finally time to punish those who employ illegal aliens. They are our guests here tonight.

And former Homeland Security official Clark Kent Ervin will be my guest. He has written an important book, "Open Target," showing that this country remains shockingly vulnerable to terrorism.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, Mexican President Vicente Fox is withdrawing his support for legislation to decriminalize drugs, legislation that he had vowed to sign only three days ago.

President Fox has apparently realized that decriminalizing small amounts of marijuana, meth, cocaine and heroin just might not be in the best interest of the Mexican society, nor a clever way to fight the drug war raging on the Mexican-U.S. border.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Mexican President Vicente Fox this week was on the verge of approving a law that would have allowed consumers of small quantities of a wide range of illegal drugs to be exempt from prosecution. Fox's spokesman called the idea progress. The Bush administration complained, and a day later, Fox changed his mind, saying he won't sign the bill.

MAYOR ROBERT WALKUP, TUCSON, ARIZONA: I think that he got worldwide pressure that this sets a standard that few of us think is the right thing to do.

WIAN: His spokesman now denies Fox is responding to U.S. pressure. The idea was to divert more resources to fighting the violent drug kingpins controlling much of Mexico's northern border. College students had visions of Mexico becoming a new Amsterdam, where drug use is openly tolerated. Border law enforcement officials had nightmares of spring breakers returning either stoned with a stash. JERRY SANDERS, SAN DIEGO MAYOR: I appreciate the fact that they were willing to step back, rethink it and the president took a leadership role in that. I think that's good for both sides of the border.

WIAN: Mexico apparently wanted to avoid angering U.S. lawmakers considering amnesty for millions of Mexicans living illegally in the United States.

STEPHEN JOHNSON, HERITAGE FOUNDATION: A change in the sanctions against drug use in Mexico has an impact here at a time when our own lawmakers are considering changes to immigration law. That had to have been in back of President Fox's mind.

WIAN: Mexico has made little progress fighting drug trafficking. Ninety percent of the cocaine in the United States comes through Mexico, and 80 percent of the methamphetamine is now produced there.

Mexico remains the nation's number one marijuana supplier with 22 million pounds of annual production capacity, and it produces nearly 18,000 pounds of pure heroin yearly, making it the number two U.S. supplier.

Still, the Mexican government is no hurry to rework the bill that would have effectively legalized drug use.

(END VIDEOTAPE)

WIAN: Vicente Fox's office said in a statement it will present its objections to the proposed bill to the Mexican Congress in due time and in the proper manner. Mexico's Congress is out of session until after national elections in July, Lou.

DOBBS: At which time Vicente Fox obviously will be a lame duck, and speaking of lame, this is about as lame as -- as we have watched the government of Mexico absolutely fail its people, to continue this ridiculous encouragement of illegal immigration, to come up with this legislation, Vicente Fox is leaving quite a legacy, isn't he?

WIAN: He sure it is and the impact on the United States side of the border was going to be tremendous as well. Border sheriffs have had their fill of Mexico's actions and they were really worried about this and very happy that they decided to change course.

DOBBS: As the principal supplier of heroin, cocaine, meth, marijuana to this country, what idiot -- what idiot could possibly say we should not secure these borders for any number of reasons, not the least of which, of course, is national security. It is mind-boggling to say the least.

WIAN: Sure is.

DOBBS: Thank you, sir. Casey Wian, appreciate it.

In Washington D.C. tonight, two Congressmen have introduced important legislation that would finally crack down on employers in this country of illegal aliens.

And joining me tonight, Congressman David Dreier of California, Congressman Silvestre Reyes of Texas. Their legislation would give employers new tools to verify employment status of their workforces and greatly raise the penalties for employers who still knowingly employ illegal aliens. Gentlemen, thanks for being here.

Always good to be with you, Lou.

REP. SILVESTRE REYES (D), TEXAS: Glad to be here.

DOBBS: The legislation you entered would, for the first time, put substantial penalties on employers. Now there are -- I've been talking with a lot of illegal alien amnesty advocates, open borders advocates and they say you really can't stop this. Do you believe that this would be successful, Congressman Reyes?

REYES: Absolutely. What we do with HR-98 is that we provide a counterfeit -- as much as you can, a counterfeit Social Security card that also provides a network, where the employers can check and verify an individual, and the status of the individual, so we think it's a major step forward for the pull factor that draws people into this country.

DOBBS: And the fines, Congressman Dreier, $50,000, five years in jail, under what circumstances?

REP. DAVID DREIER (R), CALIFORNIA: What we do, Lou, is -- and I've actually got a facsimile of our counterfeit-proof Social Security card that Silvestre Reyes and I have introduced. We introduced this really about a year-and-a-half ago and it's something that I'm hoping very much we'll have included in any legislation that moves forward.

Why? Because virtually everything that we've done here to fore focuses on the supply side, strategic fencing, increasing the size of the border patrol where Silver used to work and all. What we need to do is focus on demand.

As you and I have discussed in the past, it is jobs, the magnet that draws people across the border illegally and what we do here is, is there would be this opportunity for the potential employer to swipe this card and then it would go into a central bank. This is not a national I.D. card, but anyone looking for a new job would get this.

What we'd do is as we increase from $10,000 to $50,000, a 400 percent increase in the fine and five years in prison for hiring. But you know, Lou, you regularly talk about this, the issue of enforcement.

We also include hiring 10,000 enforcement agents and that, I believe, will play a big role with a few high profile finings and imprisonments. It'll be like the IRS. I know you pay your taxes, Lou, simply because you're a very patriotic American.

Some people out there pay their taxes because the IRS might be on them. If we were to see a few arrests like the ones that we've seen in the past, I think we'll see a great reduction in the number of people who are out there hiring illegals.

DOBBS: Silvestre, as Congressman Dreier suggested, you spent, as I recall, 26 years -- is that right -- in the Border Patrol?

REYES: Twenty-six-and-a-half years.

DOBBS: Twenty -- I missed it by a half.

REYES: Just a half. Close enough.

DOBBS: Twenty-six years in the Border Patrol, 10,000 over the next five years called forth in the legislation of 2005, 10,000 would be added under your proposal. We have just about 7,000 miles of border in this country. How many do you believe we need and -- how many border patrolmen, and why in the world don't we have them?

REYES: Well, we've got right now on duty about 11,300 or so. In the next five years we want to add another 10,000. The 10,000 that we're adding with HR-98 actually would be work site compliance law enforcement officers, so in total, it would be about 30,000.

Since I've been in Congress -- and I've been in Congress now, this is my 10th year -- I've been advocating that we add 1,500 to 2,000 Border Patrol agents a year until we get to 20,000 and then reevaluate and see what kind of a job they've been able to do at that point.

So I hope we continue to hire the Border Patrol agents that we've said we're going to in the next five years, and I hope we pass this legislation, because it will give us the one-two punch that we need.

DOBBS: Right. Supply and demand.

REYES: Absolutely.

DOBBS: Supply and demand, and it is remarkable that the same corporate executives and leaders of corporate America that are hiring illegal aliens defend higher gas prices by spouting off supply and demand, but will not suggest that the impact of 12 million illegal immigrants in this country would have an influence on our wage levels.

(CROSSTALK)

DOBBS: I'm sorry.

DREIER: I believe that this card will go a long way toward something ...

(CROSSTALK)

DOBBS: All right, but let me get to the next question. You said that they call this a day without an immigrant, if we could see the Congressman's quotes, "a day without an immigrant. I'm honestly insulted," you said. "We are all products of immigration. It'd be great if we could have a day, a week, a year without illegal immigration." Are we going to see this Congress take seriously -- through the Sensenbrenner legislation, whatever may or may not transpire in the Senate, are we going to see an insistence that this country have secure borders so that it can control immigration ...

DREIER: Absolutely.

DOBBS: ... before taking up the issue of immigration reform?

DREIER: Lou, you know that the No. 1 priority is border security. You just mentioned it in the lead-in here. If for no other reason, our national security. As we just saw Zacarias Moussaoui get his sentencing, clearly any kind of terrorist threat coming through our porous borders is a threat to all of us. What we need to do is, I think we've got a great chance to make happen by focusing on this.

DOBBS: Congressmen Reyes, Congressman Dreier, we thank you both.

DREIER: Always good to be with you, Lou.

REYES: Thanks, nice to be with you.

DREIER: Thanks for your support of this effort, too.

DOBBS: The World Cup Soccer Tournament begins in Germany next month. During this tournament, soccer teams from all over the world will be riding in team buses with their nation's flags proudly displayed on their buses and everywhere else. All soccer teams except, it turns out, the U.S. team. According to "Sports Illustrated," German and U.S. security officials decided have that U.S. players will ride in an unmarked bus without the American flag painted on it for security reasons.

That brings us to the subject of our poll tonight. Do you believe the U.S. soccer team should display the American flag on its bus when representing this country at the World Cup in Germany? Yes or no, cast your vote at LouDobbs.com. We'll have those results coming up here later.

Next, I'll be talking with the former homeland security inspector general, Clark Kent Ervin. His new book "Open Target" slams the administration and reveals the degree of vulnerability this nation remains under. And General David Grange will be here to discuss calls to raise the size of the army and the Marine Corps. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Clark Kent Ervin served as inspector general of the Homeland Security Department. Also before that, the inspector general of the State Department. He says the Bush administration, the homeland security department, do not take port security and the threat of terrorism seriously.

His new book is "Open Target: Where America is Vulnerable to Attack." An important new book and certainly worth your time if you're concerned about this country's national security. Good to have you with us.

CLARK KENT ERVIN, AUTHOR: Thanks very much for having me, Lou.

DOBBS: This is remarkable. You have worked for and known President Bush for years. Inspector general of the State Department, called upon to become so at the new, at that time, Department of Homeland Security. And you have the patience, you have the dignity that is very rare in this country to put up with what was utter, utter nonsense. You were assailed. You were not supported by Republican colleagues. You were assailed by Joe Lieberman, Senator Lieberman. Why?

ERVIN: It's really hard to understand, Lou. It would have seemed to me that everybody in our government, Democratic, Republican, liberal and conservative alike, would move heaven and earth to correct these vulnerabilities before we're attacked again. But it's as if we think all it takes to secure the homeland is a Department of Homeland Security. Creating the department was the beginning of the job, not the end of it.

DOBBS: This department now, as you know, has more than $40 billion as its budget. Yet the primary work is done by agencies outside of it, the first responders, much of that money going to them but not enough in the judgment of many. What in the world are we going to do to get control of this thing?

ERVIN: Well there really are three reasons why the department's been a failure and unless these three things are addressed, it will continue to be.

First of all, I'm a conservative Republican and I don't say this lightly, but the department has been underfunded from the beginning. The department needs more money. You can't do homeland security on the cheap. The department hasn't helped itself because the money it's gotten it has misspent.

Secondly, we have inexpert leadership from the beginning of the department. That was manifest for everybody to see in Katrina. But it was true not just at FEMA. It's true throughout the department.

And third, there's this culture in the department, rather than recognizing shortcomings, the department attacks critics. What we need to do is to correct these problems.

DOBBS: When you said, in your opening remarks as you point out in the book, to the Senate reviewing your -- and before your confirmation, you said you're going to be independent, apolitical. Bells must have gone off all over Washington. Is that what you think happened exactly within the Bush administration?

ERVIN: Well I think that there were people who objected to somebody who was independent and apolitical. If there's one issue in this country, I think there should be more, but if there's one, that should rise above politics it should be homeland security.

DOBBS: You severely criticize former homeland security secretary Tom Ridge and recount the story of him calling you in to ask -- in effect, are you his inspector general or the people's? You made it clear you were the people's and things didn't get any better from there, did it?

ERVIN: That's exactly right. Rather than confronting the terrorists, all too often, Secretary Ridge and his team confronted me. And until we begin to recognize just how vulnerable we are, we're going to continue to be in mortal danger. The terrorists know everything that's contained in that book. It's the American people who don't.

DOBBS: And one of the reasons you've got to read "Open Target," because it is an examination of much that we cover on this broadcast. But it is stunning to think that we're four and a half years behind September 11th and still have to have this discussion.

You talk about border security, port security, the House Rules Committee, Congressman Dreier was just here. Voted 7-3 against an amendment that would require radiation examination inspection for 100 percent of the cargo.

ERVIN: It's just inconceivable. Right now as we speak, in the world's busiest port, the port of Hong Kong, there's 100 percent inspection of cargo for radiation. If the port of Hong Kong can do it, we can do it here. We just lack the political will.

DOBBS: Well, you have to be frustrated out of your mind, because you are, as you say, a loyal conservative Republican. You've known President Bush forever, you've served in the administration, worked with two secretaries -- well, three secretaries in point of fact -- one at state and two at homeland security. Just how mad are you and disappointed and discouraged?

ERVIN: Well I'm very discouraged. The question is, will it take another attack before America takes the step that we can't take right now that would make us significantly safer? The hope, of course, is that we don't have to do that, but experience may suggest the contrary.

DOBBS: Clark Kent Ervin, the book is "Open Target." Please read it. It is stunning. We appreciate it.

ERVIN: Thanks so much, Lou.

DOBBS: All the best, good to see you. Coming up at the top of the hour here on CNN, "THE SITUATION ROOM" with Wolf Blitzer. Wolf?

WOLF BLITZER, CNN ANCHOR: Thanks, Lou. We're following a developing story here in Washington on Capitol Hill. Congressman Patrick Kennedy in a car accident early this morning. There are now questions of whether alcohol was involved.

Plus, raging against Rumsfeld. Anti-war protesters throw some tough questions at the defense secretary today and it's all caught on videotape. And a new book about to hit bookstores takes a very hard look at the New Orleans Mayor Ray Nagin in the days right after Hurricane Katrina. It is a coincidence the book is coming out right before Nagin's reelection race for mayor? All that, Lou, coming up right at the top of the hour.

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

A reminder now to vote in our poll. Do you believe the U.S. soccer team should be displaying the American flag on its bus, as do all the other teams at the World Cup when representing this country in Germany? Yes or no? Please cast your vote at LouDobbs.com. We'll have the results for you coming up.

Still ahead here, an important show of support today on Capitol Hill for our troops overseas, and General David Grange will be with us to talk about that and more. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Insurgents today killed two more of our soldiers in Iraq. The soldiers were killed when a roadside bomb exploded near their vehicle in Baghdad. 2,408 of our troops have now been killed in this war since it began three years ago.

Members of Congress are becoming increasingly frustrated with the Pentagon's refusal to increase the size of the Army and the Marine Corps. The House Armed Services Committee has approved a bill that demands an increase of 30,000 active-duty soldiers and 5,000 Marines.

General David Grange joins us now. General, what do you think, do we need those troops? Should they be pressing ahead? And why in the world would the Pentagon be resistant?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, they absolutely need those new troops, new Marines, especially for sustained combat, for commitments around the world, if not now, into the future.

The problem is, it costs money, and I believe that Congress has to provide the money.

The other is that there is a lack of propensity to serve, so even if you get the money, you get the authorization, it will be tough to fill the ranks.

DOBBS: You're saying that it's tough to recruit young men and women now to serve in this nation's military?

GRANGE: I am saying that. Many times, some of the motivations in the past were education, something to do for a while to bridge the gap before you go into the private sector. Now, people realize that, you know, you could get hurt, you could get killed, and the propensity to serve is down.

DOBBS: Let me show you what may be contributing to that, and that is despite the fact that these roadside bombs are claiming the greatest number of lives, 67 so far this year, let's take a look at what the deputy director of the Joint IED Defeat Organization had to say about this. The deputy director, Army Brigadier General Dan Allyn, said: "There's no single solution, no silver bullet that will guarantee protection of our forces."

Well, I don't know that anybody is looking for a single solution or a silver bullet, but we sure don't seem to be seeing enough of a response in protection for our troops riding in humvees and on the roads of Iraq.

GRANGE: Well, there is no silver bullet, there is no 100 percent solution. I know Dan Allyn well, Ranger Allyn -- I trained him. The problem that there's more to it than just the vehicles. It's situational awareness, it's understanding what is going on in the street, and it's just passing techniques and procedures from one group of soldiers to another, and it's constantly being worked. I know it's improving from what I've been told, and it will continue to have first priority.

DOBBS: General David Grange, as always, good to have you here.

GRANGE: Thank you.

DOBBS: Still ahead, we'll have the results of our poll tonight, and more of your thoughts. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of tonight's poll: 94 percent of you say the U.S. soccer team should display the American flag on its bus when representing this country at the World Cup in Germany, and as we reported right now, they are not planning to do so.

Taking a look now at your thoughts. Curtis in Oregon -- "Of course, Lou, the oil companies have always followed the policy of supply and demand, but with a twist -- saying, we supply so we can demand."

Leon in North Carolina -- "Lou, not only do I find it ironic but simply self-serving to apply the supply and demand game to gasoline but not jobs. There is a demand for decent jobs, but corporate America doesn't want to supply them."

Patrick in Texas -- "do I find it ironic? Yes. Do I find it surprising? No. It's business as usual, as our business and government leaders continue toward their goal -- the destruction of the American middle class."

Susan in Florida -- "Do I find it ironic that corporate America cites the law of supply and demand to suit its purposes? Sure, if ironic now means criminal."

And Mike in Florida -- "As a high school student, the future of this nation will affect me a lot more than most of those senators currently drafting their selfish immigration bill. No doubt immigration is the most pressing issue facing this nation. Don't worry, Lou, one day when my generation is in control, we will solve our immigration problems."

And Jack in California -- "Lou, so the law of supply and demand trumps our law of immigration, our border security, and leaves our middle class behind."

Brian in California -- "Lou, at least this administration is consistent. They're running energy policy as effectively as immigration policy."

And Sue in Indiana -- "Lou, border security should not be debated in Congress or the Senate. It should be an automatic given. I think it's time for the silent majority to speak up in the only way we can -- in November."

And Bill in Ontario -- "Relax, Lou. It's a service upgrade. Just think of illegal immigration as outsourcing with free delivery."

Send us your thoughts at LouDobbs.com. Each of you whose email is read here receives a copy of my book, "Exporting America," and our copy of the Constitution and Declaration of Independence to go with it.

Thanks for being with us tonight. Please join us here tomorrow. Among our guests will be "Newsweek" senior editor Jonathan Alter, the author of a provocative new book on presidential politics, and specifically FDR. Please join us. For all of us here, thanks for watching. Good night from New York. "THE SITUATION ROOM" begins right now with Wolf Blitzer -- Wolf.

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