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LOU DOBBS TONIGHT

Police and Civilians Killed in Wave of Violence in Iraq; Army Recalls 300 Soldiers to Iraq Who Just Arrived Home; President Bush Defends Global War on Terror; Nouhad Mahmoud Interview; Electronic Voting Machines Easy To Tamper With; Some In Congress Step Into Help Border Patrol Agents; John Dean Interview

Aired August 14, 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, new violence in the war in Iraq, a war that on average is killing two of our troops each and every day. One hundred Iraqis die each and every day. President Bush today strongly defended his conduct of this war.
We'll have reports for you tonight from the White House, Baghdad and the Pentagon.

Also tonight, Hezbollah claims victory in the war with Israel. Israel says the conflict will continue despite the cease-fire for the foreseeable future.

We'll be going live to Lebanon and Israel for the very latest. And the acting Lebanese ambassador to the United Nations joins us here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Monday, August 14th.

Live in New York, Lou Dobbs.

DOBBS: Good evening.

Insurgents and terrorists in Iraq today launched a deadly new wave of gun and bomb attacks. At least 10 people were killed in Baghdad and the city of Baquba, 40 miles north of the Iraqi capital. Those attacks in Baghdad coming despite the deployment of more than 3,000 U.S. reinforcements to the city.

President Bush today strongly defended his conduct of this war. President Bush said the wars in Iraq and Afghanistan and the conflict between Hezbollah and Israel are part of a broad struggle between freedom and terror.

Harris Whitbeck reports tonight from Baghdad on the escalating violence there.

Barbara Starr reports from the Pentagon on U.S. strategy to defeat the insurgents.

And Suzanne Malveaux reports from the White House on the president's strong defense of his national security advisers and policies. We turn first to Harris Whitbeck in Baghdad -- Harris.

HARRIS WHITBECK, CNN CORRESPONDENT: Lou, the violence in Baghdad has taken at least 57 lives in last two days in a series of explosions as the Iraqi government and U.S. military commanders on the ground disagree on the origins of some of those explosions. A series of car bombs this afternoon in Baghdad killed at least three people and wounded six more. The explosion on Sunday killed 57 people and wounded at least 148.

And the Iraqi government and the U.S. have completely different stories about what happened. Iraqi prime minister Nuri al-Maliki says a Katyusha rocket was fired from a nearby Sunni neighborhood and blamed terrorists for firing it and setting off car bombs that destroyed the building. But the U.S. military spokesman in Baghdad said today that U.S. explosives experts at the site say the explosion was not the result of an act of terrorism, but that it was caused by a gas leak in the building's first floor.

This is the second time in two days that Iraqi government officials and the U.S. military on the ground have publicly aired differences on the origins of events surrounding the violence. This, as more U.S. troops on the ground in Baghdad continue to fan out across the city, accompanying Iraqi forces in an effort to secure the city -- Lou.

DOBBS: Harris Whitbeck from Baghdad.

The military ordering hundreds of our soldiers who recently returned home from Iraq to head back to Baghdad. The soldiers are part of a Stryker brigade that had begun to rotate out of Iraq, but at the last minute the Pentagon has ordered the brigade to return to Baghdad.

President Bush today discussed the war with his top military advisers.

Barbara Starr has the report from the Pentagon.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice over): At the Pentagon, a series of national security briefings for President Bush, including updates on the war in Iraq.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One reason I feel so confident is because we've got a fantastic military.

STARR: But the security situation remains dire, especially in Baghdad, and more indications that Iran may be playing a behind-the- scenes role in the violence.

MAJ. GEN. WILLIAM CALDWELL, MULTINATIONAL FORCE, IRAQ: We, in fact, have found munitions manufactured in Iran that are of recent manufactured dates. That's not to say that the government of Iran condoned it or, you know, is associated with that, but it did come from Iran, the munitions and the weapons.

STARR: There are hopeful signs as U.S. troops turn over another area south of Baghdad to Iraqi counterparts.

COL. TODD EBEL, 101ST AIRBORNE DIVISION: Well, today they have new equipment. They have armored Humvee vehicles, they've been receiving weapons. But what really makes them special is they're soldiers.

STARR: The U.S. has been stepping up training for Iraqi police units long infiltrated by militias and death squads. Now the Iraqis are getting a new police uniform.

MAJ. GEN. JOSEPH PETERSON, CIVILIAN POLICE ASST. TRAINING TEAM: This uniform, as you can see, is very difficult to duplicate.

STARR: The hope is it will be harder for what the U.S. says are death squads and extremists to disguise themselves as police officers.

(END VIDEOTAPE)

STARR: But Lou, as you say, 300 U.S. troops now headed back into Baghdad to that very serious security situation. They had made it home to Alaska, but once their unit got ordered to stay in Iraq and go to Baghdad, they were ordered to go back to Iraq and join their fellow soldiers. They're going to be there 120 days -- Lou.

DOBBS: What is the urgency and the reason for the Pentagon, this nation, the world's only superpower, having to turn 300 soldiers back who have just served in Iraq and completed their tour?

STARR: Well, here's the strategy behind that, Lou. The situation in Baghdad is simply dreadful in terms of security. We report these attacks every single day. They are adding, as we have reported, 3,500 troops, to try to get a handle on that situation.

And what the Pentagon says is they want the most experienced troops. And they feel that having these 300 young soldiers who did make it back home to their families in Alaska, turning them around, they're the most experienced, so they're going back.

DOBBS: Barbara, thank you very much.

Barbara Starr from the Pentagon.

President Bush today strongly defended his management of this war in Iraq and the war in Afghanistan as well, and his policies in the Middle East. President Bush said Iraq, Afghanistan and Lebanon are all fronts in the global war on terror.

Suzanne Malveaux reports from the White House -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, we saw President Bush, of course, meeting with his top advisers, national security advisers, as well as military, diplomatic advisers. But the bottom line here is that the president is very much in the same position we are all in. He is simply waiting to see if this cease- fire is going to hold, also waiting to see if the Lebanese government can actually ultimately disarm Hezbollah, and whether or not this bolstered international United Nations force is going to make any difference at all.

There are a lot of Middle Eastern experts who say that they believe at the end of this conflict, this cease-fire, that it's Hezbollah and Hamas that has really won over the Arab street, if you will, that they have gotten a lot of the sympathy, and that it's Israel and the United States that are the big losers in all of this, but President Bush, of course, disputed that.

(BEGIN VIDEO CLIP)

BUSH: When Hezbollah's rockets killed innocent Israelis, they celebrated. I think when people really take a look at the type of mentality that celebrates the loss of innocent life, they'll reject that type of mentality. And so, you know, Hezbollah, of course, has got a fantastic propaganda machine, and they're claiming victories. But how can you claim victory when at one time you were a state within a state, safe within southern Lebanon, and now you're going to be replaced?

(END VIDEO CLIP)

MALVEAUX: And Lou, of course, that is ultimately the goal, but it is far from certain whether or not that is going to be successful, that they are going to be replaced. A lot of those questions still very much up in the air, whether or not the Lebanese government and Siniora's regime is going to have the kind of power behind it to really ultimately disarm Hezbollah. And that -- that issue has not yet been resolved -- Lou.

DOBBS: Suzanne, thank you very much.

Suzanne Malveaux.

Well, that cease-fire that Suzanne just reported on in this conflict between Israel and Hezbollah so far in its first day appears to be largely holding. But Israeli troops killed at least four Hezbollah terrorists in separate incidents today.

The Israeli prime minister, Ehud Olmert, said the conflict is likely to continue for what he called the foreseeable future, despite the cease-fire. The Hezbollah leader, Hassan Nasrallah, declared Hezbollah to be the winner. He called this an historic victory.

In a moment, we'll have a live report from Jim Clancy in Beirut.

But first we go to Chris Lawrence in northern Israel for the latest -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Lou, right now Israeli officers here on the ground are calling this a fragile truce. This is one of the Israeli military vehicles that has crossed back over into Israel, but Israel is keeping thousands of its troops in southern Lebanon. And as you mentioned, earlier today, there were several skirmishes with Hezbollah guerrillas. Israeli soldiers say they threatened their soldiers and thus shot and killed several of those Hezbollah guerrillas.

Also on the ground, there are signs of life in other parts of Israel. The city of Haifa, for one, is coming back to life. People who evacuated coming back, reopening businesses, things of that nature.

Also, in other parts of Israel we're seeing families come back. We spoke with one family who came back to Kiryat Shmona. They evacuated a month ago. And since then, 242 rockets have fallen on their hometown.

We spoke with the family and they said that when they came back, they're still not completely sold on this cease-fire, they're still very worried that it will not hold. And when I asked the mother if she thinks that Hezbollah leader Hassan Nasrallah will be taken out of the picture, she said absolutely not. She feels that because this war dragged on so long, that Hassan Nasrallah will be -- his image will be improved in the eyes of the Islamic world, and she feels that he will be a problem for many years to come for the people who live here in northern Israel -- Lou.

DOBBS: Chris, thank you very much.

Chris Lawrence reporting from northern Israel, where obviously tanks and heavy equipment are on the move.

We thank you, Chris.

Chris Lawrence from northern Israel.

Tens of thousands of Lebanese refugees today began to return to their homes for the first time in more than a month. Nearly a million Lebanese, almost a quarter of the population, fled the fighting.

Jim Clancy reports now from Beirut -- Jim.

JIM CLANCY, CNN CORRESPONDENT: Lou, when you look at the situation tonight, we had celebrations, but there was also a painful assessment of what this war has cost Lebanon. Hezbollah organized fireworks displays, lit up the sky, while cars filled with Hezbollah supporters traveled the streets around Beirut, the city center, blaring horns, chanting, "Nasrallah, Nasrallah! Hezbollah, Hezbollah!"

They, of course, feel that the way that Hezbollah fought a bloody stalemate against the vastly superior forces of the Israeli army was something indeed to be proud of. That's what their leader told them.

He went on television today from a hiding place and announced that this was a strategic victory for Hezbollah. He also said that Hezbollah promised to rebuild the homes of some 15,000 families who have seen their apartments or homes destroyed in all of this. There's about a $1 billion price tag on that, Lou. The money thought to be coming from Iran. The bill for the -- the bigger bill that is really going to be the infrastructure, the roads, the highways, the airports, all of that is being left to the government.

The refugees returned today, and they found that a real stumbling block. Roads all over the country south from Beirut leading into the war zone were completely jammed, Lou, as people tried to get back there, back to their homes to assess the damage.

Back to you.

DOBBS: Jim, surely the government of Lebanon would not be so clumsy in its administration of government there to permit Hezbollah to take care of the homes of the Lebanese people while it dealt with distant and often abstract infrastructure. That would be a peculiar, if you will, allocation of response to need, wouldn't it?

CLANCY: It would seem to be very peculiar, but what you have here is Hassan Nasrallah jumping the gun, if you will, announcing in his televised address today, saying the government, they're going to be busy, it would take too long.

Lou, I went to the southern suburbs today. I saw his teams out there with clipboards, taking notes from shop owners and homeowners, telling -- assessing the damage, telling them how much money that they were going to give them.

Hassan Nasrallah is taking care of his support base. These are mostly Shia Muslims that is his support base. That is one of the reasons why he is going to emerge from this conflict even stronger than he was before.

DOBBS: And Prime Minister Siniora, how visible is he among the Lebanese public of all denominations?

CLANCY: Well, he is not -- he's visible in terms of trying to arrange this cease-fire. He had a series of meetings today. There's a lot of details to be worked out.

Certainly, chief among them are concerns that Hezbollah will not actually disarm. Although Hezbollah has given assurances that it will be not -- not be carrying arms south of the Litani, there are deep- seated fears among the peacekeeping forces that might come here, and not the least among the Lebanese army, that's also going to be deployed down there, that the Lebanese army is the only Lebanese armed force in that area between the Litani River and Israel's border -- Lou.

DOBBS: Jim Clancy, thank you very much, reporting live tonight from Beirut.

More on the conflict between Israel and Hezbollah straight ahead. The acting Lebanese ambassador to the United Nations joins us.

Also tonight, police and intelligence agencies stepping up their hunt for terrorists after the London airliner plot. Will the United States introduce tough new anti-terrorism laws?

We'll have that special report.

Also, this nation's finances are a complete and utter mess. The federal government simply can't account for tens of billions of dollars of your money. We'll have that special report.

And we'll continue our exclusive reports on the Justice Department's decision to prosecute two U.S. Border Patrol agents while giving immunity to a Mexican drug smuggler.

Is our government trying to appease the government of Mexico? We'll have the exclusive report coming up next.

(COMMERCIAL BREAK)

DOBBS: The United States and Britain today lowered their terrorist alert levels for transatlantic flights. Their announcement comes four days after British police and security services broke up a terrorist plot to blow up airliners. But officials say the reduction in the alert level doesn't mean the terrorist threat has been eliminated.

Dan Rivers reports from London tonight on the widening global investigation into the radical Islamist terrorists.

And Jeanne Meserve reports from Washington on U.S. efforts to learn from British experience.

We turn first to Dan Rivers -- Dan.

DAN RIVERS, CNN CORRESPONDENT: Well, as you say, the threat level may have been dropped from critical to severe here, and from red to orange over in the United States, but the people I've been talking to today have painted a really bleak picture of the security situation in the United Kingdom, saying they're investigating dozens of other potential terrorist cells. All this as the police continue their forensic examination of this alleged terrorist conspiracy.

(BEGIN VIDEOTAPE)

RIVERS (voice over): British security sources have told CNN they are confident in finding bomb-making material, even as the detailed forensic investigation into the alleged terror plot focuses on this apartment in east London. These exclusive CNN photos taken by a neighbor with a camera phone show plastic containers being carried from the flat by police.

UNIDENTIFIED MALE: Most of it's been packaged up. There seems they're round drums, the chemical drums are sealed tight, lids and whatever. There's a few of them have come up.

RIVERS: The intensive police search is also continuing in woods near the town of High Wycombe. According to security sources, the police are looking for evidence of explosives testing. The British security sources confirm the evidence seen so far indicates the alleged plotters were planning to blow up aircraft at their maximum cruising altitude mid-Atlantic, positioning the explosives at the weakest part of the aircraft, intending for evidence to sink to the bottom of the ocean, potentially, the sources said, allowing similar, follow-up attacks.

(on camera): Security sources have told CNN that they expect that some of the suspects being held at this high security police station in central London may well be released without being charged.

(voice over): The British security sources have also cast doubt on multiple British and Pakistani media reports that the suspects have links to this man, Matiur Rehman, one of Pakistan's most wanted men for his alleged links to al Qaeda.

Security delays eased slightly at London's main airports after the threat levels on both sides of the Atlantic were reduced. But Britain's home secretary stresses the security service MI-5 is still hunting dozens of potential terror cells.

JOHN REID, BRITISH HOME SECRETARY: There are a number of other security service operations under way. There is still a very serious threat of an attack. The threat level is at severe, indicating the high likelihood of an attempted terrorist attack at some stage.

RIVERS: MI-5 officers who were following the movements of the suspects have already been redeployed to monitor dozens of other suspected terror cells around Britain. The security service estimating there are more than 1,200 individuals of concern across the U.K.

(END VIDEOTAPE)

DOBBS: The Justice Department is examining Britain's anti- terrorism laws, trying to determine whether the United States needs to modify its counterterrorism strategy. British police can hold a terror suspect up to 28 days without filing charges. Any effort to introduce a similar measure in this country has already provoked a storm of protests.

Jeanne Meserve reports.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice over): The British bust of the alleged plot to blast airliners out of the skies is spurring the U.S. government to do a side-by-side comparison of U.S. and British counter-terror tools, officials say. One senior Justice Department official says the attorney general "... is not ruling anything or ruling anything out."

One significant legal weapon available to the British, their ability to detain suspects for up to 28 days without charges.

ALBERTO GONZALES, U.S. ATTORNEY GENERAL: That may be something that we might want to look at, but, again, is it consistent with our Constitution? We have to look at that.

MESERVE: U.S. law enforcement must bring charges within 48 hours of detaining a suspect. A former FBI official says sometimes more time would be useful.

PAT D'AMURO, CNN SECURITY ANALYST: To be able to detain those individuals a little bit longer to conduct some interviews would be something that could be looked at in this country, something that would be helpful to law enforcement authorities.

MESERVE: But the idea of extending the amount of time suspects can be held without charges makes civil libertarians bristle.

LISA GRAVES, ACLU: Just a blanket authority to hold anyone, to round people up at will without any evidence that they've done anything wrong is a step in the wrong direction.

MESERVE: Few people inside our outside government believe the U.S. would or could following the British model.

The Patriot Act, passed in the aftermath of the 9/11 attacks, expanded U.S. law enforcement's powers, making it easier, for instance, to conduct wiretaps. But some say it is essential to adopt some of Britain's other terror tools.

DAVID RIVKIN, REAGAN JUSTICE DEPT.: More surveillance, particularly in areas that really do not implicate constitutionally- protected expectation of privacy, A. B, more data mining and ability to really combine information from different databases and disciplines. And C, and I know it's a dirty word in some circles, a more rational attitude towards profiling.

(END VIDEOTAPE)

MESERVE: Though Congress did expand law enforcement powers after 9/11, it is unclear how it would receive any request to do so now. This, after all, is an election year -- Lou.

DOBBS: Jeanne, thank you very much.

Jeanne Meserve reporting from Washington.

And taking a look now at our poll question tonight, the question is simply: Do you agree with the president that Lebanon is a new front in the global war on terrorism? Yes or no?

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

Still ahead, our special report on Washington's worsening financial mess. You won't believe how many government agencies have completely lost track of how they spend your money. And we are talking about billions upon billions of dollars.

Also tonight, alarming new evidence that this nation's very democracy is at risk with electronic voting. You also won't believe what's being put up for sale on eBay tonight. And you can bid if you'd like. We'll be telling you all about it.

And President Bush today said Israel has defeated Hezbollah. The Lebanese special envoy to the United Nations is our guest here.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: If you think your federal government doesn't know what it's doing, there is some very expensive evidence to support your view. By almost any measure, the federal government is not a very good steward of taxpayer money, to say the very least and to say it as kindly as possible. There's waste by our bureaucrats, fraud by contractors, and unchecked spending by government agencies. And we haven't even discussed the Congress and the president.

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): This nation's finances are a mess. Just last year, our government paid $38 billion to the wrong people. And $20 billion just disappeared.

The Government Accountability Office can't certify the books of the Pentagon, Department of Homeland Security, the Energy Department, and NASA. So much money is lost or misspent. For nine years now, the government has failed its annual audit.

DAVID WILLIAMS, CITIZENS AGAINST GOV. WASTE: If this happened in the private sector, we would call the government Enron. I mean, this is the same sort of accounting that Enron did.

ROMANS: The GAO says the Pentagon is the biggest culprit, losing track of billions. The Defense Department acknowledges its bookkeeping problems and says it is trying to fix them. But incredibly, waste is the smallest part of the problem.

Not only is the government failing to keep track of your money, it's borrowing huge sums to spend money it doesn't have. Last year, we paid $327 billion in interest. On track to spend more in interest than to run the country.

REP. JIM COOPER (D), TENNESSEE: Our biggest lender is Japan, but increasingly, China is our creditor. But the oil-rich countries, including some of our enemies, like Iran, are increasingly buying our debt. So we're putting ourselves in a very vulnerable situation as far as national security is concerned by having foreign lenders control so much of our economic future.

ROMANS: The credit rating agency Standard & Poor's so concerned about America's financial future it forecast America's debt is headed for junk status by the year 2025. DAVID WYSS, STANDARD & POOR'S: It's going to make it a lot more expensive for the U.S. government to borrow money. That's the bottom line. And, you know, this is just not sustainable.

ROMANS: Congress, he says, is making promises for Social Security and Medicare that it cannot possibly keep.

(END VIDEOTAPE)

ROMANS: Waste, promises and politics as usual have many concerned this country's on a collision course. As Congressman Jim Cooper says, in the near future it will be a better deal to be a creditor of this country than to be a taxpayer in this country -- Lou.

DOBBS: And this country, as you well know, and documented over the years, it appears we're a debtor nation in perpetuity, unless someone finds the leadership and the guts to deal with the issues that are staring us all in the face. Jim Cooper among them.

Thank you very much, Christine Romans.

Taking a look now at your thoughts, many of you writing in about the two Border Patrol agents who are facing 20 years in prison for enforcing border security, being prosecuted by the U.S. attorney, and the U.S. attorney giving immunity to a drug smuggler and illegal alien to prosecute them.

Vicky in Georgia had this to say: "Lou, Border Patrol agents may be going to prison for doing their job. How about Congress going to prison for not doing their job? That sounds like a better idea to me."

And Melodee in Wisconsin, "The only people who should be facing life in prison are the ones who are not enforcing border security. I guess that would be the end of government as we know it."

Certainly the end of this one.

And Melva in California: "Mr. Dobbs, relative to your poll question, I say not only no, but hell no. I'm sick and tired of this damn government that has its priorities all screwed up. Who is the enemy in this country, the American citizen?"

And Edward in Illinois: "Lou, would the Justice Department have granted immunity if the drug smuggler had been a terrorist and the marijuana had been explosives?"

Betty in Texas: "If we have dropped legal from our immigration requirements and justice from our Justice Department, we've also kissed our once great country good-bye."

Send us your thoughts at LouDobbs.com. More ahead here later in the broadcast.

Tonight, the average price of gasoline in the United States has hit a new record high, $3.03 a gallon nationwide. Chicago with the highest gasoline prices in the country, $3.29. The lowest price for a gallon of gasoline is in Charleston, South Carolina, where a gallon of self-serve goes for $2.82. As gasoline prices soar, Washington has done absolutely nothing to help the middle class cope with this worsening energy crisis. It's another example of Washington's all-out war on our middle class.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Another week, another gas price hike. Gasoline hit a new record high over the weekend. According to Department of Energy figures, prices have shot up 23 percent since January of this year. Remember, that's when President Bush, in his State of the Union address, boldly declared...

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: America is addicted to oil.

SYLVESTER: Fast forward eight months, and little has been done to curb consumption. Congress and the Bush administration have instead focused on the other side of the equation, increasing supply. The House and the Senate voted for the first time to open up a new large section of the Gulf of Mexico to oil and natural gas drilling.

RED CAVANEY, AMERICAN PETROLEUM INSTITUTE: Like any commodity, any time you add more supply than there is demand, you're going to be able to supply some downward pressure on pricing.

SYLVESTER: The House measure is more expansive than the Senate bill. It would relax the ban on drilling along U.S. coastal waters, including the Pacific Coast. Both plans have been ripped by environmental critics.

DAVID SANDALOW, BROOKINGS INSTITUTE: Putting oil rigs in path of hurricanes is not going to solve our nation's energy problems.

SYLVESTER: And consumer groups say gas prices won't tumble with the additional drilling because any new production will be dwarfed by increased consumption, but gas and oil companies will make out well.

TYSON SLOCUM, PUBLIC CITIZEN: There's not been very good priorities set by this Congress and this president when it comes to energy policy. The people who keep getting the benefits are the well- connected energy companies, while all the working families out there are getting left behind.

SYLVESTER: A bipartisan group of congressional lawmakers has offered legislation to drive down consumption that they argue will push down prices over the long term, helping middle class families. The bill promises to cut U.S. oil use by 10 million barrels of oil a day by 2013, increase the availability of alternative fuels and promote hybrid vehicles.

(END VIDEOTAPE) SYLVESTER: But proposals aimed at reducing the addiction to oil have hit a brick wall with the congressional leadership and the Bush administration, whose second-in-command Dick Cheney has said conservation does not work -- Lou.

DOBBS: That is an interesting position to take, and it's an interesting position that this country's in. With people talking about drilling in the Gulf, frankly, Lisa, the idea of putting drilling rigs in the path of hurricanes, we've done it for decades, with, frankly, good results, as you well know. But the idea that this nation can't find the creativity in its soul to deal with this intelligently and innovatively is troubling.

SYLVESTER: Indeed, that is correct. And Lou, a big part of it is that the oil companies and the auto companies for so long have essentially controlled policy on Capitol Hill, and so that very little has been done. If you look in the last year, we've seen these record high gas prices, but very little, if really anything, has been done to help those middle class families -- Lou.

DOBBS: Perhaps we can figure out a way to put the middle class or consumers -- and band them together for a committee on how to deal with this energy crisis, we can have far better luck -- well, actually, it's not a question, it's an answer. We definitely could. Lisa, thank you very much. Lisa Sylvester.

Coming up next, you won't believe what you can buy tonight on eBay. It's yet another example of this democracy at risk. It's also another sign of the times. We'll have that "Special Report."

Also Congress finally paying attention to what's being called a massive miscarriage of justice in the state of Texas. Two U.S. Border Patrol agents facing 20 years in prison because the U.S. attorney has chosen to prosecute them rather than a Mexican drug smuggler. We'll have that "Special Report."

And we'll have much more on the cease-fire between Israel and Hezbollah. And the Lebanese special envoy to the United Nations joins us here. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The cease-fire between Israel and Hezbollah appears to be holding on this, the first day. Hezbollah's leader says his organization won a, quote, "strategic historic victory against Israel." Israel says it will continue to target Hezbollah terrorists in Lebanon.

Joining me tonight is Nouhad Mahmoud. He is the special Lebanese envoy to the United Nations. Good to have you with us.

The cease-fire holding through this part. Hassan Nasrallah saying that he has won an important victory. What do you think?

NOUHAD MAHMOUD, LEBANESE SPECIAL ENVOY TO U.N.: Well, we heard both sides proclaiming victory today, proclaiming they're the victor in Lebanon and Israel. So we hope that will give them incentive to hold to what they've got so far and hold to the cease-fire.

DOBBS: Has Lebanon won a victory in this?

MAHMOUD: Lebanon is the bigger victim in this situation because we lost our infrastructure, 1,000 dead, about 4,000 injured. And the whole infrastructure is destroyed.

DOBBS: You say the whole infrastructure -- our Jim Clancy, reporting from Beirut, said the damage that, as he toured in Beirut, for example, was not nearly so extensive as some reports had suggested. He said Hezbollah was out in the communities, particularly in Shia regions, promising houses, men with clipboards. It seems Hezbollah is better organized than the Lebanese government in this early stage.

MAHMOUD: Well, they have a history of social services for their community, and that give them a lot of popularity also within their own community. Now, we don't know so far how they are going to do it and how they are going to fulfill their promises. But the Lebanese government has also its agenda and has the support of the international community, and we hope that they will be the ones who take over.

DOBBS: The Lebanese government?

MAHMOUD: Yes.

DOBBS: One would hope. Because this is about -- government is about meeting the needs of its people. It seems a strange thing, indeed, for the Lebanese government to be permitting an organization like Hezbollah to take over those basic governmental functions.

MAHMOUD: Right. That happened when -- during the civil war in Lebanon in the '80s and since that time, they are offering their services.

DOBBS: Right. I understand. I just don't understand why the government of Lebanon would not take on that responsibility. The call now from the international community, the United Nations, to send a security force in with the full expectation that you will send your soldiers into southern Lebanon. Is that expectation going to be met?

MAHMOUD: Yes.

DOBBS: How soon?

MAHMOUD: Within this week, I suppose because everything is in preparation now politically and practically on the ground. Today they met the Israeli and the Lebanese with the UNIFIL to prepare on the ground how the operations will be implemented.

DOBBS: Is it your judgment that the government of Lebanon will be able to assure that Hezbollah will not be controlling southern Lebanon as it has permitted Hezbollah to do over the past six years?

MAHMOUD: Well, lately the Lebanese government got the commitment of Hezbollah, from within the government, to have just the Lebanese authority, the Lebanese army only force of Litani and between the Litani and the blue line. So we don't have reason to think that they will act definitively.

DOBBS: Now, this may then be a cease-fire that does work. One would, all of us would hope so. Ambassador Mahmoud, we thank you for being with us here tonight.

MAHMOUD: Thank you.

DOBBS: U.S. immigration agents have finally arrested all 11 Egyptian exchange students who had disappeared after they arrived in the United States last month. The last two Egyptian students were arrested in Richmond, Virginia last night. All of these students were on their way to Montana State University. Nine other of the students were arrested in Maryland, Minnesota, New Jersey, Illinois and Iowa.

They are not, we're told by the Homeland Security Department and other authorities, believed to be a security risk, but it certainly took customs officials more than two weeks to find them all. The Egyptian students have told authorities they planned to live and work in the United States. They were on short term exchange visas. One student had already found a job at a pizza restaurant.

There's new evidence tonight that electronic voting machines pose an extraordinary threat to our democracy. Computer experts say it's easy for hackers to tamper with the machines and to change voting results. It is also, as it turns out, possible for hackers to buy key parts of these machines over the Web. Kitty Pilgrim has the story.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Voter watchdog groups report that in recent months, components for electronic voting machines and even an entire machine are regularly up for sale, even on E-Bay. A quick check on E-Bay found this Diebold motherboard for sale, listed as brand new.

Voter activists at Vote Trust USA say they lost a bid last week for a Diebold motherboard, but they scour the Internet regularly now to find any voting machines to run their own independent tests.

WARREN STEWART, VOTETRUST USA: I checked for all the other vendors because we know a lot about Diebold now. We'd like to know more about DSS and Sequoia and Heart Inner Civic (ph) and the other vendors as well.

PILGRIM: A motherboard contains most of the core functioning of the voting machine. In essence, vital information on how the machine records votes. That can be valuable to activist groups who want to check the security of the system or hackers with an interest in tampering with the system.

The group Open Voting Foundation recently demonstrated that the Diebold TS machine could be tampered with only a screwdriver. It is one of the most popular voting machines. Tens of thousands used statewide in Maryland and Georgia, and in scattered counties across the country. The group says hackers could easily figure out the system and Open Voting bought the system on E-Bay.

ALAN DECHERT, OPEN VOTING FOUNDATION: Their programmers can figure out any number of ways to rig the vote with one of these machines. There are no tamper seals on the box at all. You can just use a screwdriver, open up the case. You can take it apart, put it back together and there's no trace.

PILGRIM: Voter watchdog group Blackbox Voting say they recently bought a Diebold optical scan voting machine, complete with memory card, from a bankruptcy sale. They're now testing those machines for vulnerabilities.

(END VIDEOTAPE)

PILGRIM: Now we called Diebold to ask them about people selling these products online, they've not responded as of this broadcast. E- Bay returned our calls and says if a product is legally and commercially available, they don't stop the sale on E-Bay. But they do have a policy of monitoring any products that could be used for illegal activity. So, after we drew their attention to the sale of the e-voting machines, they said they'd check into their policy on that.

DOBBS: Well, I suppose if one has legal title to it, the idea that you can just sell these machines, you know, you've been reporting, as have our colleagues, for months now on what is going on with these things. I mean it is mind boggling. You can see these county registrars in small and city registrars in small communities all across the country trying to deal with this. The federal government endorsing it. And it just looks like a complete nightmare.

PILGRIM: It's a bit of a mess. It's a lot of a mess. And it really seems a bit out of control at this point.

DOBBS: Should we get into the bidding for those voting machines on E-Bay?

PILGRIM: I think we could quite easily. We were quite tempted today, I have to tell you.

DOBBS: Well, I might quite easily, we'll have to check the budget on that. Thanks very much, Kitty Pilgrim.

We're awaiting sentencing of two U.S. border patrol agents. They face up to 20 years in prison. The Mexican drug smuggler they shot received immunity. Now some in Congress are incensed and they've stepped into the issue. We'll have the latest for you.

John Dean warning that authoritarian figures at the top of Republican party threaten both conservatism and our democracy. he'll be our guest here tonight. Stay with us.

(COMMERCIAL BREAK) DOBBS: Congress is now paying attention to the case of two Texas border patrol agents who face 20 years in prison for shooting a Mexican drug smuggler as he tried to escape into Mexico. The broadcast has reported extensively on how federal prosecutors allowed the smuggler to walk free, giving him immunity in return for his testimony against two U.S. border patrol agents. Lawmakers agree the case is nothing less than a massive miscarriage of justice. Casey Wian has the report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): The plight of Texas border patrol agents Ignacio Ramos and Jose Compean has angered lawmakers nationwide. The agents were prosecuted and convicted for a variety of offenses linked to their role in attempting to apprehend a Mexican drug smuggler. They could go to jail for at least 20 years while the drug smuggler received immunity from prosecution for bringing nearly 800 pounds of Marijuana across the border.

Texas Congressman Ted Poe spent 22 years as a felony court judge. He says it's unusual for the government to offer criminals immunity to prosecute federal law enforcement agents who were doing their jobs.

REP. TED POE (R), TEXAS: That's exactly what the overzealous prosecutor did in this case. No question about it. In my opinion, the government was on the wrong side. We ought to be more concerned about our border agents who were put in harm's way, who are shot at by these drug dealers than we are about the civil rights of the drug smugglers.

WIAN: Though the lead prosecutor in the case was El Paso assistant U.S. attorney Debra Kanof. Judge Poe believes the case was initiated by people much higher in the Justice Department as an appeasement to the government of Mexico.

Even non-border state lawmakers are accusing the Justice Department of putting drug smugglers ahead of Homeland Security. North Carolina Congressman Walter Jones wrote U.S. Attorney General Alberto Gonzales saying the justice department's outrageous prosecution does nothing but tie the hands of our border patrol and prevent them from securing America against a flood of illegal immigrants, drugs, counterfeit goods and quite possibly, terrorists. This situation cries out for oversight.

While lawmakers consider legislation to protect border patrol agents from criminal prosecution for merely trying to do their jobs, support for agents Compean and Ramos is pouring in.

ANDY RAMIREZ, FRIENDS OF THE BORDER PATROL: One of the things is just seeing so many, really tens of thousands of responses, whether it's on blogs, e-mails that so many of us are receiving. The national outpouring has just been extraordinary.

WIAN: Friends of The Border Patrol has set up a legal defense fund for the agents who both have families, are in financial ruin and have received death threats from Mexican drug smugglers. (END VIDEOTAPE)

WIAN: The cases of agents Ramos and Compean will be discussed at a congressional hearing this Thursday in El Paso. Also their sentencing has been delayed until next month -- Lou.

DOBBS: The delay in that sentencing, why the delay?

WIAN: The delay because one of the attorneys who represents one of the agents is involved in another high profile case in El Paso. So they've been requesting a delay. And today it was just granted by the judge -- Lou.

DOBBS: Casey, thank you very much. Casey Wian reporting from Los Angeles tonight.

Coming up at the top of the hour here on CNN, from Jerusalem, "THE SITUATION ROOM" with Wolf Blitzer -- Wolf?

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

The cease-fire between Israel and Hezbollah appears to be holding for now, but will it last? We're live from both sides of the Israeli/Lebanese border tonight.

And how closely is Iran involved in Lebanon? Helping Hezbollah. CNN's Aneesh Raman has a report from inside Iran that you will see only here on CNN.

Also CNN's day-long look at America's security continues right here in "THE SITUATION ROOM." How much would you be willing to reveal at the airport in order to clear the security checkpoints?

And terror and politics. Is terrorism a better issue for the Republicans or for the Democrats this fall? All that, Lou, coming up right here in "THE SITUATION ROOM." We're live in Jerusalem -- Lou?

DOBBS: Thank you very much, Wolf.

Coming up here, former White House counsel John Dean sounds a warning in his newest book. John Dean will be our guest here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Former White House counsel John Dean's newest book will surprise many of you. The book is called "Conservatives Without Conscience," and in the book, Dean makes the case that traditional conservative restraint has become something of a radical and dangerous force. Dean believes that authoritarian conservatives at the top of the Republican party threaten American democracy.

John Dean, good to have you here.

JOHN DEAN, FMR. WHITE HOUSE COUNSEL: Thank you, Lou.

DOBBS: When you talk about authoritarianism in this government and in this political party, what do you mean?

DEAN: Well, I ran into a body of research I didn't even know existed when I went looking to answer questions about why, for example, conservatism has sort of a nasty streak, why the religious right is as dominant as it is. And where I found it is in research that had been done really starting after World War II about authoritarianism. In other words, could this country ever fall into the trap that Italy and Germany did after World War II? And the simple answer is yes, based on lots of -- 40 years or 50 years of empirical research.

DOBBS: Now, you know, lots of people would say that authoritarian mean streak in conservatism began with Richard Nixon. But that isn't your premise at all.

DEAN: No, what I did -- clearly I recognize it now that I was there, and I didn't have the right label for it then, until I discovered this body of science where people who either are followers or leaders and they take 40 years of testing. And the higher they are as conservatives -- excuse me, as authoritarians, the more likely they are conservative. And I -- suddenly, I found answers to questions in their behavior, their attitudes, that I never knew about conservatism.

DOBBS: But interestingly, two of the three prominent authoritarians, as you put it in your book, are Democrats in history.

DEAN: Like?

DOBBS: Like Wilson, like Johnson.

DEAN: No, I wouldn't -- I would put them as, yes, not as examples of purely authoritarian, but I was saying strong leaders with authoritarian tendencies. No question that Wilson probably was authoritarian. But this is -- you know, it's relative where you look at right/left. When I mentioned this to your producer, we were asking examples of something really unrelated directly to authoritarianism, a type of personality that has been evident.

DOBBS: Well, I can see -- and reason I bring it up..

DEAN: Yes.

DOBBS: ... is because I can see in both of those -- in both examples, when you look at the great society and the way that program was rolled out, that was central government at its finest. And a lot of great things occurred, but not facetiously, either. But Wilson was an authoritarian with -- I think you could make a great case, and it has been argued -- an authoritarian streak that not only transcended this country but, in point in fact, the world.

So the idea that we're watching neoconservatives dominate within this administration and, frankly, lead us into a war under absolutely -- absolutely the wrong circumstances, about which they lied, that's something beyond authoritarianism, isn't it?

DEAN: Well, it's not inconsistent with the authoritarian personality. First of all, let's take Wilson. Today he'd probably be considered a conservative. In fact, neoconservatives have embraced him for his foreign policy. A lot of neoconservatives, however, do not have necessarily authoritarian personalities. The other thing is, Lyndon Johnson today would probably be a conservative Republican by most of the definitions of what falls in there.

DOBBS: You know, my problem, John, as I go through -- and it's a terrific book -- the idea, though, that one can define a conservative today in anything similar terms -- anything like 30 years ago or 50 years ago -- seems to me to be impossible.

DEAN: Well, you can't. In fact, I spent a whole chapter of the book showing the evolution of conservatism, to where it started and where it is today. I -- along the way, for example, show that the Goldwater conservatism is really RIP. It's gone. But when you pick up and look at the testing, Lou, that science shows about these people, the higher they are authoritarian, the more likely they are conservative. And I can certainly answer a lot of questions today without information I could never answer.

DOBBS: My problem is I come to it with a very simple view. Whether liberal or conservative, Republican or Democrat, I'm not too happy with it.

John Dean, thanks for being here.

DEAN: Thank you.

DOBBS: The book is "Conservatives Without Conscience." And you're, what right now on the best-seller list?

DEAN: Well, it's been as high as two and one, depending on the list, and I think it's around six right now.

DOBBS: And ready to bounce. All right, John Dean, thank you very much. Good to see you.

The results of tonight's poll, 77 percent of you do not agree with President Bush that Lebanon is a new front in the global war on terrorism.

That's it for tonight. Please join us here tomorrow.

Good night from New York. "THE SITUATION ROOM" with Wolf Blitzer begins right now -- Wolf.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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