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War on the Middle Class; Do-Nothing Congress?; Angry Voters Return

Aired September 4, 2006 - 18:00   ET


KITTY PILGRIM, CNN ANCHOR: Good evening, everyone.
Tonight, on this Labor Day, a series of special reports on hard- working middle class families and the struggles they face. The growing burdens of energy, health care, education are a few examples of how the war on the middle class is escalating, and tonight we have reports on rising cost, falling wages, lost jobs, and what our government is doing to help Americans achieve what they truly deserve for their honest labor.

Also tonight, our democracy at risk. The very foundation of our nation. Are elections vulnerable to fraud? Our special reports on the integrity of electronic voting.

And the cost of illegal alien amnesty. A staggering report on just how much the Senate's amnesty bill will cost American taxpayers.

ANNOUNCER: This is a special holiday edition of LOU DOBBS TONIGHT, news, debate and opinion for Monday, September 4th.

Sitting in for Lou Dobbs, who is on vacation, Kitty Pilgrim.

PILGRIM: Congress is finally owning up to the war on middle class families all across this country. They're realizing the pressure on the middle class is worsening. Some members of Congress recently warned Federal Reserve Chairman Ben Bernanke that middle class workers are falling farther behind in this so-called healthy U.S. economy.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT: The gap between haves and the have-nots in the United States is widening. For the haves, profits are up. CEO pay is soaring. For the have-nots, most Americans, credit card debt is growing, gas prices spiking and paychecks shrinking.

SEN. DEBBIE STABENOW (D), MICHIGAN: The squeeze that middle class families are feeling on all sides right now, being hit by a slow down, in terms of wages, maybe losing a job, health care costs going up.

SYLVESTER: Factoring in inflation, hourly wages actually fell more than half a percentage point in the last year. A new survey found 82 percent of Americans are very worried about personal debt.

SEN. ROBERT MENENDEZ (D), NEW JERSEY: Who is this economy working for?

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I agree that inequality is potentially a concern for the U.S. economy. I think the really only long-term solution to this problem is to try to upgrade the skill levels of our workers.

SYLVESTER: But it's not just low skilled work that's vanishing. Higher skilled, higher paid jobs like software engineering are also being outsourced.

(on camera): Federal Reserve chairman Ben Bernanke did not have any quick fixes. He forecasted that wages will increase over time but acknowledged it's been slow in coming.

Lisa Sylvester, CNN, Washington.


PILGRIM: Americans are not only waiting for action on wages, but on energy prices, interest rates and health care. It is increasingly difficult for middle class families to make ends meet.

Christine Romans reports.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): You can't blame the American voter for feeling under siege. Gas prices have doubled over the past four years, from $1.42 then to $2.87 today. College tuition is rising more than double the rate of inflation. Last year, up almost 7.5 percent. Mortgage payments for millions of Americans headed higher. Half a trillion dollars in adjustable mortgages reset this year to higher interest rates. And real wages are falling, even as the overall economy comes along.

Harry Holzer was chief economist in Bill Clinton's Labor Department.

HARRY HOLZER, GEORGETOWN UNIVERSITY: Real wages, which are wages adjusting for inflation, have not been rising over the last few years, really over the last five to six years, while productivity has been booming.

ROMANS: That productivity boom helping corporate profitability, he says, not workers. Meanwhile, it's harder to file for bankruptcy, but the credit card offers keep coming. On these pocketbook issues, conservative scholar Norm Ornstein says incumbents are hard pressed to prove their constituents are better off today than when they took office.

NORMAN ORNSTEIN, AMERICAN ENTERPRISE INSTITUTE: There's one word to describe voters' moods right now and that's sour. People are unhappy about the state of the economy. They're uneasy about what might happen to their pension and health benefits. They don't like the price of gasoline. They're not real happy about Iraq or the state of the world.

ROMANS: Ornstein says that's bad news for incumbents in both parties.

(on camera): But most troubling, Ornstein says, for the party in control, whether that's Republicans in Congress or Democrats at the statehouse or in the governor's mansion.

Christine Romans, CNN, New York.


PILGRIM: The midterm elections are now just nine weeks away. And Congress is still on summer vacation. But before they left, Senate Republican leaders took the opportunity to tout their achievements.

Dana Bash reports.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT BASH (voice-over): Before heading home for a month-long recess to campaign, this, a clear sign Republicans are trying to shed a do-nothing label.

SEN. BILL FRIST (R-TN), MAJORITY LEADER: The stem cell bill, the alternative stem cell technology bill passed, the field farming prohibition passed, the Adam Walsh child safety bill passed.

BASH: Rapid-fire lists from GOP leader while senators up for re- election tick off measures that play to key voter concerns, like security.

SEN. JON KYL (R), ARIZONA: The Republican leadership was able to build the consensus to get the Patriot Act re-authorized and to provide the tools to fight the terrorists.

BASH: Republicans only plan to be in session about 15 days this fall, and they're battling this...

SEN. HARRY REID (D-NV), MINORITY LEADER: Like the do-nothing Congress of 1948, it's very difficult to get anything out of this Republican Congress.

BASH: In 1948, the year Harry Truman ran against what he called a "do-nothing Congress," the Senate was in session 114 days. This year, according to Republicans, the Senate is scheduled to meet 122 days.

Congress has approved billions to fund disasters like Katrina and wars in Afghanistan and Iraq, despite deep discord over policy there. Yet, other GOP priorities have stalled in the Republican-run Congress.

One, the president's push to overhaul Social Security with private accounts. Another, the lobbying reforms promised in the wake of the Jake Abramoff scandal. And then there's immigration. House Republicans are standing firm against the Senate plan to create a guest worker program.

On that issue, they hope for plan B.

SEN. MITCH MCCONNELL (R), KENTUCKY: You are correct that there are differences among members of our party on immigration. One thing we don't have any difference on is securing the border.

BASH: Republicans blame Democrats for obstruction, but some GOP strategists fear Republicans have handed Democrats a potent theme.

SCOTT REED, REPUBLICAN STRATEGIST: By not concluding their business, they give the Democrats an opportunity to position themselves as agents of change.

BASH: Some major legislation has passed with bipartisan support, like a bill making it harder to declare bankruptcy, a boon for business, critics say, but a potential nightmare for consumers, even some middle class Americans who filed for bankruptcy to pay high medical costs. And healthcare is another major voter concern Congress did not deal with.

(on camera): But lawmakers up for re-election are banking all politics still being local. Whether it's helping to save a military base back home or building roads and bridges, will do what they've always done, play up the things that they've done to help voters back home.

Dana Bash, CNN, Capitol Hill.


PILGRIM: The frustration with congressional inaction could spark a new age of angry voters. According to recent polls, less than one- third of Americans approve of the job Congress is doing. The last time Americans were so dissatisfied with their elected representatives, they swept the ruling party out of office.

Bill Schneider reports.


WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice over): In the early '90s, a wave of voter anger swept the country. Pledges were not kept.


WILLIAM JEFFERSON CLINTON, PRESIDENT OF THE UNITED STATES: Before this Congress finishes its work next year, you will pass and I will sign legislation to guarantee the security to every citizen of this country.

SCHNEIDER: In 1992, women and liberals were angry over the treatment of Anita Hill. It was the year of the woman.

In 1994, conservatives were angry over gun laws and gays in the military. It was the year of the angry white men.

In 1992, only 26 percent of Americans said they were satisfied with the way things were going in the country. Things were just about as bad in 1994.

By comparison, the late '90s were happy times. The economy was booming. Voter satisfaction was at or near 60 percent. That's one reason why President Clinton survived impeachment.

So where do things stand in 2006?

In August, 28 percent of Americans said they were satisfied with the way things are going in the country. Uh-oh. That's about the same as the angry voters of the early '90s.

Then, it was pretty clear what voters were angry about. Now, international issues top the list, like the war in Iraq. But there's plenty of anger over gas prices and illegal immigration. And while the economy has been growing, working people have not seen many gains.

(on camera): In 1994, the Democrats controlled everything. Angry voters threw them out of power in Congress. Now the Republicans control everything. Polls show the Republican majority in Congress very much in peril.

Bill Schneider, CNN, Washington.


PILGRIM: A group called We are America Alliance has launched a nationwide drive to register large numbers of what they call immigrant voters before Election Day. This drive is raising concerns that illegal aliens will be registered to vote in the November elections.

Casey Wian reports from Los Angeles.


CASEY WIAN, CNN CORRESPONDENT: They call it the summer of democracy. A nationwide effort to transform 1 million immigrants into registered voters before the midterm elections this Fall.

EUN SOON LEE, WE ARE AMERICA ALLIANCE: We saw the millions that went up to march from March to May of this year for immigrant rights. What we're seeing is that people are realizing that we have to take that energy and the strength from the marches to the ballot box.

WIAN: The group says it's targeting the nine million immigrants are who are eligible to become U.S. citizens and another three million adult children of immigrants who are eligible to vote, but haven't registered.

MAYOR ANTONIO VILLARAIGOSA, LOS ANGELES: Nothing is more important than for people to become citizens to register and vote so the people will hear you.

WIAN: But there's little to prevent millions of non-citizens and even illegal aliens from registering as well. Only two states, Arizona and New Hampshire, require registered voters to prove they're citizens. The issue of illegal aliens voting has been simmering in Washington since 1996 when Loretta Sanchez ousted Orange County California Congressman Bob Dornan. Illegally cast ballots were responsible for 80 percent of her narrow margin of victory.

In 2004, New Mexico uncovered more than 3,000 fraudulent voter registrations, many tied to immigrant rights groups. And this year unsuccessful Democratic Congressional candidate Francine Busby declared you don't need papers for voting.

PATRICK ROGERS, AMERICAN CENTER FOR VOTING RIGHTS: Many states are looking at photo I.D. They're looking at safeguards to make sure that citizens only are voting. One of the problems of low voter turnout is concerns and lack of confidence in the outcome. If you don't have safeguards going in, you certainly are not going to give the voter any confidence in what comes out.

WIAN: Illinois Congressman Henry Hyde has introduced a bill that would require all states to demand proof of citizenship for voter registration. And a photo I.D. to vote. Illegal alien advocates are mobilizing a letter writing campaign to fight those proposed requirements.

(on camera): They claim that demanding proof of citizenship would disenfranchise many poor and elderly voters. But polls show that more than 80 percent of the American voting public supports a proof of citizenship or photo I.D. requirement.

Casey Wian, CNN, Los Angeles.


PILGRIM: Still ahead, our democracy at risk. Why e-voting machines are allowed to fail far more often than you would think. It's a threat to our very democracy.

Also ahead, soaring energy prices and little action from Washington to stop it.

We'll have a special report.

And taxpayers could be asked to pay tens of billions of dollars so illegal aliens can have amnesty in this country. I'll talk with the powerful chairman of the House Judiciary Committee, Congressman James Sensenbrenner.


PILGRIM: Most Americans will be casting their ballots for the November on electronic voting machines, but there are concerns about the reliability and integrity of those machines. Voter activists worry that standards for e-voting machines are dangerously lax, and now federal officials say they're working on tighter standards, but those new standards may not be ready for years.


PILGRIM (voice over): The May primary election in Cuyahoga County, Ohio, using Diebold electronic voting machines was a debacle. The Election Science Institute, independent researchers commissioned by the county, found damning evidence that the electronic voting machines had major problems.

STEVE HERTZBERG, ELECTION SCIENCE INSTITUTE: We're missing data. We're missing critical components within the election. The board of elections cannot find it, and we believe that that is probably the greatest issue we're facing in this election. What are equivalent to what might be ballots in ballot boxes in the old days now turned into ones and zeroes.

PILGRIM: The report found the machine's four sources of vote totals, individual ballots, paper trail summary, election archives, and the memory cards, did not all match up. The totals were all different.

The report concludes, "These shortcomings merit urgent attention. Relying on the system in its present state should be viewed as a calculated risk."

But the secretary of state of Ohio, Kenneth Blackwell, is still in denial. His office saying today, "The machines work. There is nothing wrong with the machines."

That is not what the report concludes. "The current election system, if left unchanged, contains significant threats. One likely result is diminished public confidence in a close election."

Cuyahoga County has, at last count, more than 1.3 million people, the most populous county in Ohio, including the city of Cleveland. It represents a critical mass of voters. But the report says the situation may not be resolved by the November election this year or even the 2008 presidential election.

REP. STEPHANIE TUBBS JONES (D), OHIO: There's a lot of work to be done in Cuyahoga County. I hope that it can be accomplished. But we have to be very, very careful, because everybody expects that their vote's going to count.

PILGRIM: The secretary of state's office today blamed poll workers for not carrying out procedures properly. Diebold has said the same thing, blaming human error.

Electronic voting machines -- fast, easy, but what happens when they break down or fail? Federal guidelines permit one failure every 163 hours, which means one out of every 11 machines may break down on Election Day.

Critics say that's not acceptable.

JOHN WASHBURN, VOTETRUSTUSA: The reliability quotient for the hardware is too high. It allows too many machines to fail in any given Election Day and also be down for too long during that given day.

PILGRIM: Congressman Jerrold Nadler says voting machines have a higher failure rate than ATM machines and VCRs.

REP. JERROLD NADLER (D), NEW YORK: No machinery should be allowed to be purchased or used for voting that don't have a guaranteed mean time between failures of at least several thousand hours -- 70,000 would be good. That's what a VCR is.

An ATM machine will go thousands of hours. Do we care less about our voting machines than our -- than about an ATM machine?

PILGRIM: The election assistance commissioner defends the current standards.

PAUL DEGREGORIO, FMR. CHAIRMAN, ELECTION ASSISTANCE COMM.: We believe that it's very important that these guidelines and any kind of standards be improved all the time, and we're working and spending federal money to do that because we want voters to have trust and confidence in the voting process in America.

PILGRIM: DeGregorio says a federal advisory board is currently examining options for tighter reliability guidelines, but it's not clear if those standards could be implemented in time for the 2008 election.

Federal law says machines may not have more than one error for 500,000 votes, but critics say that tough standard doesn't mean much if the machines fail altogether.


PILGRIM: The failure rate of electronic voting machines is leaving some counties searching for alternatives. In Cuyahoga County, Ohio, officials are hoping to have as many people as possible vote by absentee ballot to cut down on confusion at the polls.

Well, coming up, the energy bill was supposed to prevent an energy crisis. We'll have a special report on why gas prices continue to skyrocket a year later.

And then, an American town with a solution for America's energy demand. The benefit? Good-paying jobs for the middle class. We'll have a report on Boomtown, USA.

And the Senate's amnesty bill could cost American taxpayers more than $100 billion over the next decade. The powerful chairman of the House Judiciary Committee, James Sensenbrenner, joins us.


PILGRIM: Summer unofficially comes to an end this weekend, and with it comes the end of the summer driving season. Consistently high gas prices placed an added burden on already stretched middle class families this summer, and lawmakers in Washington have done little to change it.

Lisa Sylvester reports.


SYLVESTER (voice over): President Bush in his State of the Union Address in January boldly declared...

BUSH: 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.

(on camera): 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.

Lisa Sylvester, CNN, Washington.


PILGRIM: Efforts to reduce U.S. dependence on foreign oil are driving an economic boom in parts of the American West. And that boom is creating good-paying jobs.

Bill Tucker reports from Pinedale, Wyoming.


BILL TUCKER, CNN CORRESPONDENT (voice-over): America's thirst for energy is driving a wave of domestic energy exploration. No place is that more visible than in the fields outside Pinedale, Wyoming, where workers are tapping into rich reserves of natural gas. The Pinedale Anticline Field in Sublette County is the third largest natural gas field in the United States.

J.R. JUSTICE, SHELL EXPLORATION AND PRODUCTION: This is a long life field. So it's going to provide a lot of natural gas to this country for many, many years. Easily 30 to 50 years.

TUCKER: It's not just any energy, it's energy coming from American land.

DENNIS STENGER, BUREAU OF LAND MANAGEMENT: There are public lands and public minerals, and they do belong to the people.

TUCKER: The drilling and development has been a boom for the small town of Pinedale, which at last census barely counted 1,400 residents, as oil companies have poured in, chasing a contemporary gold rush. Along with the boom in business and tax revenues have come some challenges.

MAYOR STEPHEN SMITH, PINEDALE, WYOMING: The people that are coming into the community, although they come into Pinedale and work here, shop here, they don't necessarily all live here. We're having a housing shortage.

TUCKER: Real estate is in tight demand. Workers often live in trailer parks.

(on camera): Perhaps nothing typifies the housing shortage better than this hotel. The locals have dubbed it the "Halliburton Hilton". That's because Halliburton has leased every room for the next five years to house its workers.

(voice-over): In addition to the housing shortage, there's a labor shortage. The local chamber of commerce estimates unemployment at 1.5 percent. Local businesses find it hard, if not impossible, to compete with the wages paid out on the rigs. But on the whole, Pinedale and Sublette County are coping.

BILL CRAMER, SUBLETTE COUNTY COMMISSIONER: It's a good problem to have. We're doing OK. We're holding our own.

TUCKER: And there's still no traffic light in town, yet.

Bill Tucker, CNN, Pinedale, Wyoming.


PILGRIM: Coming up, the cost of the Senate amnesty bill. A new report puts it at more than $100 billion in taxpayer expense.

We'll have that report.

And Congressman James Sensenbrenner, a fierce opponent of the Senate legislation, will be our guest.

And then, take this job and ship it. How corporate greed and brain-dead politics are selling out America. Senator Byron Dorgan will join us to discuss his important new book.

And the war on the middle class escalates as more and more families are losing their homes to foreclosure.

We'll have that report and more coming up.


ANNOUNCER: We continue with a holiday issue of LOU DOBBS TONIGHT.

Here now, Kitty Pilgrim.

PILGRIM: Congress returns from its summer vacation this week. One of the most contentious issues on the agenda is the Senate's Illegal Alien Amnesty Bill. Now, if that legislation becomes law, it will legalize millions of illegal aliens in this country, and, according to the Congressional Budget Office, it will cost taxpayers upwards of $100 billion.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The Senate immigration reform bill comes with a $126 billion price tag. That's a lot of money.

The kicker? Congress has no idea how to pay for it.

PETER SEPP, NATIONAL TAXPAYER UNION: One of the reasons why we're in this deficit mess is because Congress votes first and asks questions about how to pay for these bills later. This is the case with the immigration bill.

SYLVESTER: $48 billion of the $126 billion would be mandatory spending. Illegal aliens in the United States would become eligible for taxpayer funded entitlement programs. The cost over the next decade? $24.5 billion in tax refunds through the Earned Income and Child Tax Credit, $15.4 billion for Medicare and Medicaid, $5.2 billion in Social Security benefits and $3.7 billion in food stamps and nutrition programs.

These costs will only rise over time.

Representative Tom Tancredo says the only winners are the corporations. REP. TOM TANCREDO (R-CO), IMMIGRATION REFORM CAUCUS: These are all costs that we incur in order so that we can obtain cheap labor. It's not cheap. It's cheap only to the employer. Believe me, it's not cheap to the taxpayer.

SYLVESTER: Tancredo and other House Republicans favor a border security approach. The Congressional Budget Office estimates it will cost $800 million to hire 1,000 new border patrol agents, $1.8 billion in fencing and vehicle barriers and $1.6 billion for an employment verification system.

JACK MARTIN, FEDERATION FOR AMERICAN IMMIGRATION REFORM: What we have to remember when we're talking about gaining control over the border is a national security issue. That is going to cost money, in any case, whether it's the House version or the Senate version.

SYLVESTER: If border security is a costly proposition, the question for Congress -- can the nation also afford to spend $50 billion for a guest worker amnesty plan?

Lisa Sylvester, CNN, Washington.


PILGRIM: The Senate's so-called Comprehensive Immigration Reform Act would legalize millions of illegal aliens already in this country. According to the Heritage Foundation, 10 million illegal aliens would be granted amnesty under the Senate legislation.

Incredibly, the legislation would also allow an estimated 66 million people to immigrate legally over the next 20 years. And that would be significantly more than the 19 million who are allowed under current law.

The House and Senate take different approaches to fixing our broken border.

House members largely oppose broad amnesty for illegals and the Senate is more likely to support it.

The Congressional Budget Office recently said the leading Senate bill could cost taxpayers more than $120 billion over the next decade.

Congressman James Sensenbrenner chairs the House Judiciary Committee.

I asked him for his reaction to the CBO report.


REP. JAMES SENSENBRENNER (R-WI) JUDICIARY CHAIRMAN: It is a staggering number and a lot of this cost comes from the fact that illegal immigrants are currently ineligible for most welfare benefits. Giving them amnesty makes them eligible for welfare benefits and now we have seen the true cost of the Senate bill, giving amnesty to up to 12 million illegal immigrants in our country. PILGRIM: Well, you think it could be even more, don't you?

SENSENBRENNER: It will be more because the estimate that the CBO released covers a 10-year period. Once the people become citizens in the eleventh year, then they will be eligible for even more benefits, and the cost will keep on going up.

Amnesty is not free, but even I am surprised at how high the cost of amnesty will be if the Senate bill is passed into law.

PILGRIM: Do you have an estimate on what the House bill might cost?

SENSENBRENNER: CBO scored the House bill at $1.9 billion. That was in two areas. One is building the 700-mile fence along that part of the Southwest border where a fence can work. And the second is establishing the Social Security number verification system so that employers can see if people are using fake Social Security numbers in order to get a job.

Remember, illegal immigrants can't get Social Security numbers.

PILGRIM: Well, on a dollars and cents equation, it just doesn't make sense to move anything but the House bill.

One possible compromise which bridges the Senate and House comes from Congressman Mike Pence and Senator Kay Bailey Hutchison.

What do you think of that compromise?

SENSENBRENNER: That's amnesty lite because it gives almost unlimited immigration to people from Mexico-and Central America, while it keeps strict quotas on legal immigration from the other countries in the world.

I don't think that we should allow practically everybody who lives in Mexico-and Central America an access to come into the United States. The average wage in the U.S. is five times higher than in Mexico. The market does work and guess where everybody is going to come?

PILGRIM: I'd like to ask you a fairly specialized question, if you'll bear with me for a second.


PILGRIM: We've been reporting extensively on the case of Jose Compean and Ignacio Ramos, who face up to 20 years in prison for pursuing and shooting a Mexican drug smuggler who was given immunity.

What is Congress doing to protect our border security people, who put their lives on the line every day in trying to protect this country?

SENSENBRENNER: The Judiciary Committee will be conducting an investigation into this issue. And while we cannot overturn a jury verdict under the doctrine of separation of powers, we can change the laws and do oversight over the procedures that U.S. attorneys use in prosecuting cases of this nature. It seems to me, from what I know, is that the bad guy got immunity and the good guys who were trying to do their job appear to be going to jail. That shows up upended our criminal justice system is.

PILGRIM: It certainly seems so.

There have been quite a few field hearings all through the summer on immigration throughout the country.

What can we expect after Labor Day, sir?

SENSENBRENNER: After Labor Day, the House will look at the results of all of the field hearings, which I think have shown that the Senate bill is more than putting the nose of the camel under the tent. We not only have the whole camel under the tent, but probably a herd of camels there, as well.

Border security has to come first. Enforcing employer sanctions has to come next. And unless we do those two things, any type of immigration reform isn't going to work because it's always cheaper to hire an illegal immigrant than to hire a citizen or a legal immigrant with work authorization.

PILGRIM: All right, we look forward to the fall and some movement, possibly, on this issue.

And thanks for being with us this evening.


Thank you.

PILGRIM: Congressman James Sensenbrenner.


PILGRIM: Coming up next, war on the middle class -- rising interest rates mean rising foreclosure rates for more middle class families losing their homes. A special report next.

And living in a box, literally. Americans find a use for the Chinese shipping containers that are not returning to China full of American goods.


PILGRIM: There is shocking new evidence tonight that our nation's temporary worker visa program is woefully mismanaged. In fact, this new information shows that the government has little, if any, idea how many H1-B visas are being issued each year.

Bill Tucker reports.

(BEGIN VIDEO TAPE) BILL TUCKER, CNN CORRESPONDENT (voice over): Attorney John Miano had a simple request. He wanted to know how many H1-B visas were issued in the years 2004,2005. The government would not tell him.


JOHN MIANO, CO-FOUNDER, PROGRAMMERS GUILD: I filed a Freedom of Information Act request to get copies -- electronic copies of the records and applications for H1-B guest worker visas.

TUCKER: H1-B visas are temporary guest worker visas which allow foreign workers with specialized skills to work in the United States. Miano's reasons for wanting to know the information are basic.

MIANO: We do not know how many of H1-B visas are being issued each year. The second big question we would know is who is getting these visas?

TUCKER: So, what was the government's response to Miano's request?

"We have completed our search for records responsive to your request but did not locate any."

In other words, they've lost the records.

The response came from the person in charge of handling Freedom of Information Act requests. We asked the USCIS for a clarification, and a spokesman told us, "The response was a mistake, the letter was sent in error."

The mistake came to their attention after LOU DOBBS TONIGHT brought it to their attention. The agency tells us that the information Miano is looking for would be available for an additional fee of roughly $4,500 to $5,000.

The former director of the Office of Internal Affairs at USCIS is stunned.

MICHAEL MAXWELL, FORMER DIRECTOR OF INTERNAL AFFAIRS, USCIS: I have never heard of a taxpayer being asked to flip the bill for publicly available information. In fact, USCIS is required to provide these H1-B statistics annually to both the Senate and the House Judiciary Committees and they have not done that.

TUCKER: That the USCIS does not have an immediate database as to who holds these visas or where these people are raises national security implications.

(on camera): Problems with the program are well known. there have been a number of government reviews critical of its management. Yet the Senate, instead of fixing the problem, stands ready to double the size of the H1-B program and it its so-called immigration reform bill, it will add additional guest worker programs for USCIS to administer.

Bill Tucker, CNN, New York.


PILGRIM: Senator Byron Dorgan says the exporting of American jobs is mortgage our country's fortune, our principles and our way of life.

Senator Dorgan has written a critically important new book, "Take This Job and Ship It: How Corporate Greed and Brain Dead Politics Are Selling Out America."

Lou Dobbs recently sat down with Senator Dorgan to discuss what "brain dead politicians" are doing to the American people.


SEN. BYRON DORGAN (D), NORTH DAKOTA, AUTHOR, "TAKE THIS JOB & SHIP IT: A $700 billion a year trade deficit, $2 billion a day. That's the amount that we import over that which we export. We're selling part of our country every single day.

Attendant to that is the shipping of American jobs overseas, which will shrink the middle class, stripping away health insurance and pensions and reducing salaries.

We're moving in the wrong direction, in my judgment.

LOU DOBBS, HOST: Well, the title of your book is "Take This Job and Ship It."

You take it far beyond that, explaining in detail some history of what has happened to the country and what you think will happen. But here's what you said: "But because their main offices" -- referring to the corporations -- "remain in the United States, they know they would receive American protection if a rogue interest were to try to expropriate their assets overseas. I personally think that if they run-into trouble, they should call the Bermuda Navy."

How likely is that?

DORGAN: Well, my point is if they want to, what they call, do an inversion, renounce their American citizenship so they can not pay taxes, become Bermudan countries, let them call the Bermudan Navy. They now -- I should mention to you, in the book I have a picture. This picture is of a five story building, a white building on Church Street...

DOBBS: If we could see this. This is fascinating.

DORGAN: ... in the Cayman Islands.


This picture is a picture of the Ugland House, five stories. It is -- Dave Evans, an enterprising reporter for "Bloomberg," did the research. It is home to 12,748 corporations. Now, they're not all there. That's just their address. And they use that address to avoid paying U.S. taxes.

They ship jobs overseas, run-the income through the Cayman Islands, sell the product in America.

I mean, I'm just saying this doesn't work for our country's long- term economic growth.

DOBBS: And, we might point out, too, the Cayman Islands doesn't have a navy either.

DORGAN: That's true.

DOBBS: This is a remarkable story, as you point out, the fact that corporate America just doesn't care.

I mean is there anything that you can do, your colleagues in Congress, Washington can do, to change our direction?

DORGAN: Well, I use the term "brain dead" in the title and I mean that, brain dead. You know, we actually, Lou, say, if you fire your American workers, close your American manufacturing plant, move the jobs to China, I tell you what? We'll give you a tax cut. We'll give you a tax break.

That pernicious tax cut, I've tried to abolish that four times in the Senate. You can't get it done.

I mean the fact is these big corporations that benefit from all of this have a lot of friends and the American people know, however, that what's going on is wrong. It's going to injure this country. It's going to shrink the middle class. It's going to hurt our future.

And so, I mean I decided to write a book about it because it's -- it's something this country has to sink its teeth into and deal with.

I'm not suggesting building walls around America. I'm just saying that as this global economy moves forward, there has to be some rules. You know, you have to have thoughtful rules on how to protect the standard of living that we've created in the last century.

DOBBS: And to be clear, this important book will make clear, as you read it -- and I urge you to do so -- Senator Byron Dorgan is no protectionist. In point of fact, he is calling for expanded markets for U.S. exports.

It is also a critical examination of what this country is doing to itself and what we are permitting our political establishment and our business establishment to do to us.

DORGAN: I've tried to tell the truth here in this book. Jim Hightower said tell the truth then ride a fast horse. Well, I don't have a fast horse, but I've tried to tell it like it is. And I think what is happening in this country is wrong and is going to hurt this country's economic future.

DOBBS: And the fact that you don't have a fast horse, that you stand firm and tall in Washington and everybody knows where to find you, is even a greater testament to your courage and to the importance of this book.

We thank you for writing it.

Appreciate it.

Good to be with you, sir.

DORGAN: Lou, thanks very much.


PILGRIM: Senator Byron Dorgan, author of the new book, "Take This Job and Ship It: How Corporate Greed and Brain Dead Politics Are Selling Out America."

Still ahead tonight, this country is facing the first housing slump in years. We'll tell you why middle class Americans are suffering the most.

And some Americans are using creative means to escape the housing crunch. They're taking advantage of the glut of shipping containers choking our nation's ports. That's coming up.


PILGRIM: Middle class Americans hurt by soaring energy costs are also being hit by rising mortgage payments. New data proves the housing market is slumping, as interest rates rise. It's a one-two punch for the nation's struggling middle class.

Christine Romans reports.


CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): In much of the country, home prices are falling. It's taking longer to sell a house. As to the hot markets of the past few years, it's feeling downright chilly.

LAWRENCE YUN, NATIONAL ASSOCIATION OF REALTORS: Certainly the pace of the activity that occurred in 2005, the U.S. frenzy, unsustainable. So surely it had to come down. And now we are getting a reality check.

ROMANS: Reality check for most, and for the millions of families with adjustable rate mortgages, rate shock. Half a trillion dollars in adjustable rate mortgages adjust to higher interest rates this year. Another $700 billion in mortgages readjust next year. And those Americans who have been tapping the equity in their home may be tapped out.

DEAN BAKER, ECONOMIC POLICY INSTITUTE: Well, the American middle class is being hit really hard by this. People had not seen rises in wages, really, since the 2001-2002 recession. And they've been making up for that, to a very large extent, by borrowing against their home.

Now that home prices have stopped rising, the ability to borrow is going away rapidly. And on top of that, they're still not seeing rising wages, and they're seeing this big hit in gas prices. So people are really squeezed right now.

ROMANS: Truly squeezed, the millions with so-called exotic mortgages, no money down, interest only. There are even loans out there where the monthly payment doesn't even cover the interest. If prices fall, it could be catastrophic for these homeowners.

(on camera): Those mortgages make up a record 40 percent of new loans for homes. In a buyers' market, that could mean a real wake up call for the millions of Americans who are house rich but cash poor.

Christine Romans, CNN, New York.


PILGRIM: Those rising interest rates are leading to a staggering increase in the number of home foreclosures across the country.

Lisa Sylvester reports.


UNIDENTIFIED MALE: Any other bids?

SYLVESTER (voice over): Investors crowd into an office in downtown Chicago...

UNIDENTIFIED MALE: $195,000 once. $195,000 twice.

SYLVESTER: ... bidding on foreclosed properties. There are many to choose from. Housing foreclosures in the Chicago area are up 60 percent, according to analysis by the firm

ALEXIS MCGHEE, FORECLOSURES.COM: A 60 percent increase first quarter after second quarter is a very big number. I think we're on an up tick. I think we're starting to see an increase in numbers and we're going to continue to see this increase.

SYLVESTER: During the housing boom, many middle class families financed their homes with adjustable rate mortgages. When interest rates began climbing, they suddenly found themselves unable to afford the higher monthly mortgage payments.

BRUCE GOTTSCHALL, NEIGHBORHOOD HOUSING SERVICES, CHICAGO: We anticipate there's going to be more and more people and the adjusting ARMs are getting greater and greater. We've heard that over the next 18 months or so, up to a trillion dollars of, you know, ARMs will be resetting. Interest rates are going up.

SYLVESTER: It's not just in Illinois. Foreclosure activity in Michigan is up 42 percent in the last year; California, up more than 41 percent; and Colorado 36 percent. Neighborhood Housing Services of Chicago helped Catherine Powell keep her home. After a divorce, she was $20,000 behind in her payments and her lender was on the verge of foreclosing.

CATHERINE POWELL, HOMEOWNER: Whenever you have a situation that can set you back a month or two, it can be really hard to get caught up when you've had two incomes versus one.

SYLVESTER: She was fortunate that she had enough equity in her home to refinance. But others are not and are learning a hard lesson -- an ARM can quickly turn into a fist when interest rates are on the way up.

(on camera): Consumer groups say people at risk of foreclosure need to stay on top of it, talk to their lender, find a credit or housing counselor to work on the problem. There are options, including refinancing. But it's important to get help and to get it early.

Lisa Sylvester, CNN, Washington.


PILGRIM: Still ahead, this country's ports are overflowing with empty Chinese shipping containers. We'll tell you how Americans are making use of those containers. That's next.


PILGRIM: There is a powerful new symbol tonight of the exploding trade deficit with communist China. Shipping containers, thousands of them, coming from China carrying cheap Chinese goods into the United States do not go back to China carrying American products. Those containers stay right here and, in some cases, they're being used as housing for Americans.

Casey Wian reports.


CASEY WIAN, CNN CORRESPONDENT (voice-over): Welcome home. No, not here. Back there. These stacks of shipping containers near the Port of Los Angeles may soon be used to build your next house.

PETER DEMARIA, ARCHITECT: This custom home is just over 3,000 square feet.

WIAN: Architect Peter DeMaria is designing homes out of shipping containers. They are pre-insulated and already have hardwood floors. They're strong, resistant to mold, termites and fire. And, above all, they are plentiful.

DEMARIA: The cost of steel and the cost of concrete has gone through the roof recently. That forced us to explore some alternative materials. WIAN: China's voracious appetite for building materials has driven up costs of traditional construction, and the nation's massive trade deficit with China and others has left hundreds of thousands of empty shipping containers piling up in storage yards all over the country.

So a growing number of architects and builders are using the container glut to save their clients hundreds of thousands of dollars. Custom home construction in Southern California can easily cost $250 a square foot. This house is being built for about half that.

But the mountains of containers are a big problem for others. Last year, seven million containers arrived here full of imported goods, but only 2.5 million left carrying American exports. Many of the rest are now polluting residential areas near the ports.

JANICE MANN, L.A. CITY COUNCIL: This is the unintended consequence, really, of the whole international trade industry, but particularly because of this gap that we have between imports and exports. But it is a blight that, really, no other community, I think, in America suffers.

DEMARIA: You can see I've got a slab floor here.

WIAN: Architect DeMaria says recycling the containers for home construction will help improve the environment. He's also working with the City of Los Angeles to use shipping containers in low-income housing.

(on camera): The City of Los Angeles recently passed a law prohibiting the operation of new shipping container storage yards in residential neighborhoods because in some places, shipping containers mean the sun-sets an hour earlier.

Casey Wian, CNN, Wilmington, California.


PILGRIM: Thanks for being with us tonight for this special Labor Day edition of LOU DOBBS TONIGHT.

Please join us tomorrow.

From all of us here, good night from New York.

"THE SITUATION ROOM" starts right now.


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