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LOU DOBBS TONIGHT

Hastert Takes Responsibility for Foley Scandal, Refuses to Resign; Rice Visits Baghdad

Aired October 5, 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 HOST: Wolf, thank you. Tonight, House Speaker Dennis Hastert says he takes ultimate responsibility, as he put it, for the Foley scandal, but declares he will not resign. We will have live reports from Capitol Hill and the White House.
And what in the world is going on in Iraq? Secretary of State Condoleezza Rice visits Baghdad unexpectedly as American casualties are rising sharply. We'll examine U.S. strategy in Iraq and try to understand why the United States may be on the brink of failure.

All of that and a great deal more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT. News, debate and opinion for Thursday, October 05. Live in New York, Lou Dobbs.

Good evening, everybody. House Speaker Dennis Hastert today insisted he will not resign over the Foley scandal despite new questions about a possible cover-up. Earlier today, Congressman Hastert blamed the scandal on the Democratic Party, its supporters in the media and financier George Soros. Top Republicans and the White House today rallied around the speaker.

The White House said it's important that Americans focus on national and international issues rather than disgusting Internet messages in the upcoming elections. Dana Bash tonight reports from Capitol Hill on the Republican counterattack and whether it will succeed. Kathleen Koch reports tonight from the White House and the Bush administration's efforts to shift the political agenda away from the Foley scandal.

And Mary Snow reporting here in New York on the Republican Party's efforts to blame its political opponents for the Foley scandal. We turn first to Dana Bash. Dana?

DANA BASH, CNN CORRESPONDENT: Well, Lou, the speaker tried to take control of a political situation spiraling out of control by calling a press conference in his district just outside of Chicago. And making it clear that he is sorry for the situation and also saying that he takes responsibility for it as well. But he said the buck stops with him.

Now, the speaker also made clear he is not going anywhere. He has no plans to resign or step down from his post as speaker. But in terms of the details of what he knew and when he knew it, he said he stands by his statement and he only found out about Mark Foley's conduct towards pages last Friday.

Now, Foley's former chief of staff says he warned the speaker's office long ago about Foley's behavior. Here's what the speaker said about that.

(BEGIN VIDEO CLIP)

REP. DENNIS HASTERT, (R) SPEAKER: I don't know who knew what, when. We know that there are reports of people that knew it and kind of fed it out or leaked it to the press. That's why we've asked for investigation. So let me just say, that's why we've asked for an investigation, to find who that is. If it's members of my staff or they didn't do the job, we will act appropriately. If it's somebody else's staff, they ought to act appropriately as well.

(END VIDEO CLIP)

BASH: Now, the speaker's office had hoped to have a big announcement at that press conference. The plan was for him to announce that former FBI Director Louis Freeh would take over a process to review the page program. But that obviously didn't happen. In fact, we're told when the speaker called the Democratic leader Nancy Pelosi, she made it clear she didn't think that was necessary right now.

Now, meanwhile, while this was happening in Chicago, here in the Capitol, the House Ethics Committee was meeting. And they launched their formal investigation. They said they were going to issue four dozen subpoenas for documents and witnesses including lawmakers.

(BEGIN VIDEO CLIP)

REP. DOC HASTINGS, (R) ETHICS COMMITTEE CHAIRMAN: The American people and especially the parents of all current and former pages are entitled to know how this situation was handled. And we are determined to answer their questions. Congressman Berman and I will do so as quickly as possible. And we pledge to you that our investigation will go wherever the evidence leads us.

(END VIDEO CLIP)

BASH: And the big political question here in Washington tonight is whether the speaker is able to really stop the massive anxiety and anger among conservatives and really trepidation among Republican strategists that all of this is very much hurting them around the country and it will hurt them in a month at the polls. After earlier conversations, Lou, with some Republicans about the speaker's efforts today, at this point they don't think that it has worked in terms of what he's done so far that they're going to have to see some more in the next couple of days to turn this is around for Mr. Hastert.

DOBBS: Dana, thank you very much. Dana Bash.

The FBI wants to question a former congressional page who's been identified as one of the central figures in this scandal. The page is working on a political campaign in Oklahoma. Meanwhile, the FBI has already interviewed Foley's former chief of staff, Kirk Fordham. Fordham says he informed Republican leaders about Foley's behavior more than three years ago.

Speaker Dennis Hastert blasted the Democrats and their supporters for trying to drive the Foley scandal. He said investigators should examine reports that people who knew about Foley's behavior leaked the story to the national news media. Leaking, of course, is a political tactic that's frequently used -- occasionally at least, by both political parties. Mary Snow is here tonight with the report.

MARY SNOW, CNN CORRESPONDENT: Well, Lou, as he comes under pressure, House Speaker Dennis Hastert is blaming his political opponents for this growing scandal. Hastert suggests the news was deliberately timed to coincide with the November elections. He told the "Chicago Tribune" quote, "The people who want to see this thing blow up are ABC News and a lot of Democratic operatives. People funded by George Soros."

Now Soros, a billionaire liberal activist told CNN, "The charge that I had something to do with the Foley scandal is laughable. Dennis Hastert cannot divert attention from his responsibility by tying to drag my name into the affair."

Soros does admit donating $100,000 to the Citizens for Responsibility and Ethics in Washington, that's the advocacy group that turned over a Mark Foley e-mail exchange with a page to the FBI this past July. Now CREW, as it is known, says it's independent and that Soros didn't even know they were involved with the matter until recent days. It too called Hastert's claim laughable. Asked about his claims today, Hastert stuck to generalities.

(BEGIN VIDEO CLIP)

HASTERT: I only know what I've seen in the press and what I've heard. There's no ultimate real source of information but that's what I've read and that's what I've heard in the press.

(END VIDEO CLIP)

M. SNOW: And reacting to Hastert's claims, the Democratic National Committee Chairman Howard Dean told CNN, "This is a Republican lie. They are blaming everyone but themselves for what happened."

ABC News, meantime, which first broke the news of the Foley scandal says, "We are just reporting the story." Lou?

DOBBS: Mary, thank you very much. Mary Snow.

The White House today declared it fully supports Speaker Hastert's call for a thorough investigation of the Foley scandal. At the same time, the White House trying to move the political agenda away from this scandal. Kathleen Koch reports from the White House.

(BEGIN VIDEOTAPE) KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): It was a delicate dance. First step, distance the White House from the Foley scandal on the Hill.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: We're not getting into telling the House how to do its business.

KOCH: Step two, build in wiggle room in case an investigation shows more wrongdoing or a cover-up.

T. SNOW: We don't know what happened. You have to find out who knew what and all those sorts of details and I don't know them. That's one of the reasons there's an investigation.

KOCH: Step three, reiterate President Bush's insistence that Hastert not resign.

T. SNOW: In absence of full information, we're going to stick with what we've got.

KOCH: Punctuating the dance, sharp condemnations of Congressman Mark Foley's behavior.

T. SNOW: It's hideous, it's unacceptable. Period.

KOCH: A clear re-choreographing of Monday's characterizations.

T. SNOW: It's not always pretty up there in Capitol Hill and there have been other scandals, as you know, that have been more than simply naughty e-mails.

KOCH: But the White House couldn't dance around the fact that President Bush's message is being drowned out by the furor over the scandal.

T. SNOW: If you guys write about the Foley scandal morning, noon and night, it seems to me the president is talking about things that matter. Here we are. We've got news on North Korea and Iran and other places.

(END VIDEOTAPE)

KOCH (on camera): Now Snow says President Bush has not spoken to Hastert or any other Republican congressional leaders about the controversy. And that's not likely to change as the White House struggles to redirect attention to issues that it believes Republicans can win on in November. Homeland security and the economy. Lou?

DOBBS: Thank you very much. Kathleen Koch from the White House.

The Foley scandal has exposed sharp divisions among President Bush's conservative supporters. Some of those conservatives calling for Speaker Hastert's immediate resignation. Many Republicans fear this scandal could harm their party's chances of retaining control of the House and possibly the Senate. Bill Schneider has the report.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN CORRESPONDENT (voice-over): Republicans are afraid their base could abandon them just as it did in the Watergate midterm of 1974.

PAUL WEYRICH, FREE CONGRESS FOUNDATION: Reagan's pollster Dick Worthlin (ph) coined the term, the embarrassed Republican vote. And he mentioned that because the Democrats won this huge landslide in 1974, only the vote for them was the same as it was four years earlier in 1970. The difference being the extraordinary drop-off of Republicans.

SCHNEIDER: This year, conservatives are not just embarrassed. Many of them are angry.

ROBERT VIGUERIE, GOP POLITICAL CONSULTANTS: It certainly appears to be like the final nail in the coffin. For six years, the conservatives have gotten basically lip service from this administration. They have been used and abused.

SCHNEIDER: Republicans are totally dependent on the conservative vote. Here's why. CNN's poll shows liberals voting solidly Democratic. Republicans have lost the middle. Moderates favor Democrats by nearly two to one. More than 60 percent of conservatives still plan to vote Republican. But nearly a third of them say they'll support the Democrat.

And if conservatives are embarrassed by the congressional scandals, a lot of them could stay home, just as they did after Watergate. The White House hopes they'll put the scandal aside.

T. SNOW: Come Election Day, the question is whether people are going to be voting on the basis of disgusting IMs between a grown man and a young man or something that's probably more important to everybody, which is safety, security and prosperity.

SCHNEIDER: Don't know yet. But experts say a lot of new races could be in play that were not in play a week ago.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: And I think the biggest question is, could there be a whole set of seats that we haven't been looking at? That, because the focus is on Republicans and missteps and misdeeds, suddenly come into play in the next few weeks. I think it's likely that there are races that right now we can't even identify.

(END VIDEOTAPE)

SCHNEIDER (on camera): The political landscape for this midterm election is changing even as we speak. Lou?

DOBBS: Bill, thank you very much. Bill Schneider.

More on the Foley scandal. Ahead, two of the country's top political journalists join us to assess the impact of the scandal and talk about their new book on who will win not only this year but in 2008.

Also tonight, democracy at risk. Local election officials across the country are starting to take action against e-voting machines. We'll have that report.

Also is Houston, Texas a sanctuary city for illegal aliens? Houston police chief Harold Hurtt has lost one of his officers as a result of illegal immigration. He will be with us.

And free speech under assault. Illegal alien supporters attacking the founder of the Minutemen Project Jim Gilchrist in a bastion of free speech and independent thinking, Columbia University. We'll have that story as well and a great deal more. Still ahead here tonight. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Casey Wian tonight reports on a face-off in Escondido, California between illegal alien amnesty supporters and community residents who are fed up with paying the high cost of illegal immigration.

Bill Tucker tonight reports on the sanctuary city movement across the country and what is happening to those sanctuary cities. We begin with Casey Wian. Casey?

CASEY WIAN, CNN CORRESPONDENT: Lou, Escondido, California has become the latest American city to try to do the job the federal government will not do.

(BEGIN VIDEOTAPE)

WIAN (voice-over): Escondido, California is a mostly well to do city of 150,000 people in northern San Diego county. It's also home to an estimated 35,000 illegal aliens. They make up more than 3/4 of the residents of some neighborhoods and official they say live in overcrowded, unsanitary conditions. So, three city council members proposed an ordinance that would penalize property owners who rent to illegal aliens. Wednesday night, supporters and opponents of the measure demonstrated outside City Hall.

JEFF SCHWILK, SAN DIEGO MINUTEMEN: You have the Americans who are trying to stand up and deal with problems in the communities and you have the other side which wants to keep the borders open and keep people here illegally, no deportation, no problems.

WIAN: Scores of riot police from at least half a dozen law enforcement agencies separated the two sides.

UNIDENTIFIED MALE: We throw the race card because it sticks.

UNIDENTIFIED CROWD: USA! USA! USA!

WIAN: At one point, both sides cheered in unison. The chambers filled quickly so many watched the debate on TVs outside.

MARIE WALDRON, ESCONDIDO CITY COUNCIL: This ordinance is not about race, it's about enforcing the law.

LORI PFEILER, MAYOR, ESCONDIDO, CALIFORNIA: What does an illegal alien look like? How are we going to know? And that's where it -- when you implement it here in this community at the local level, you implement it at a very -- it becomes very discriminatory and that's what divides the community.

SAM ABED, ESCONDIDO CITY COUNCIL: This community was not divided by this ordinance, ladies and gentlemen. This entire nation was divided after the April demonstrations where citizenship and benefits were demanded as a right, not as a privilege.

WIAN: The ordinance passed three to two. The ACLU and others plan lawsuits to block the law. But Escondido's city attorney says it is carefully crafted to withstand legal challenges and it's based on federal law prohibiting the harboring of illegal aliens.

(END VIDEOTAPE)

WIAN (on camera): There are questions, however, about how the law will be enforced because it's unclear how much cooperation the city will receive from the federal government in identifying illegal aliens, Lou.

DOBBS: Well, there is a great question about what this federal government is doing on the entire issue of our illegal immigration crisis, of course. And the enforcement of any immigration law which brings us to exactly where the folks in Escondido have found themselves and indeed much of the nation. Thank you very much, Casey Wian.

In New York City last night, illegal alien amnesty supporters in an unusual setting attacked Jim Gilchrist, the founder of the Minutemen Project. Gilchrist had just taken the stage at New York's Columbia University. That's right Columbia University. Columbia Television News was videotaping the event. As you see, suddenly, Columbia students stormed the stage forcing Gilchrist to run for his safety.

Students waving banners claiming, quote, "No one is ever illegal." Those chanted slogans of the illegal alien amnesty movement. Thankfully no one was hurt but Columbia's reputation as a university is in question tonight as Columbia University Republicans who sponsored the events says this demonstration proves there is no free speech on their campus. And they have the evidence to prove their point.

Minutemen, whether you like them or not, have been the target of violent protests and demonstrations by illegal aliens and their supporters all this year. Protests across the country, calling the Minutemen racist, all because of their nonviolent efforts to protect borders and keep out illegal aliens.

And for the record, not one single incident on the part of the Minutemen throughout its efforts to patrol the borders is a volunteer group -- Columbia University, you ought to be ashamed. And I'll tell you, much of this nation who cares about such things as free speech is ashamed of you.

Turning to cities across the nation who have passed tough new ordinances against illegal immigration, other cities are declaring themselves sanctuaries for illegal aliens under so-called sanctuary policies, local police are forbidden to ask the immigration status of people they come in contact with. They are forced to ignore the immigration status of criminals, even violent criminals. And by the way, those sanctuary laws are against federal law. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Countless cities have sanctuary policies. Ironically, they're not even supposed to exist.

KRIS KOBACH, UNIVERSITY OF MISSOURI-KANSAS CITY: Congress specifically prohibited these sanctuary cities in 1996. And the police departments that have sanctuary policies today are doing so in direct violation of federal statute. In other words, there are law enforcement agencies that are violating the law.

TUCKER: Congress outlawed them but did not create any enforcement provisions nor inscribe any penalties for breaking that law. As a result, many major U.S. cities are sanctuary cities.

Cambridge, New York, Chicago, Dallas, Austin, Houston, Denver, Los Angeles, San Diego are all examples of such cities. Cambridge, Massachusetts has taken it one step further making it clear, if you're an illegal alien, you're more than welcome in that city, which has drawn some protests from opponents of sanctuary. Besides being illegal, critics point to the insidious nature of sanctuary policies.

HEATHER MACDONALD, MANHATTAN INSTITUTE: It's basically carving out on area of lawlessness. And it's an odd thing for local officials to tell the federal government, we're not going to cooperate with you. And to have this kind of division where localities say basically, thumb their nose at the federal law, I think is very problematic.

TUCKER: Until this week, Houston, Texas had a policy of don't ask, don't tell. Even now, those in this country illegally will not be handed over to the authorities by the police in Houston unless there is an outstanding warrant for their arrest.

(END VIDEOTAPE)

TUCKER (on camera): Now, one interesting fact about cities with sanctuary policies, Lou, is that with very few exceptions, the cities that have them insist that they don't.

DOBBS: So, there is some sad ironic justice in all that in that the federal government is refusing to enforce our immigration laws and a number of cities are refusing to acknowledge there's such a thing as a federal law. The issue of whether we are a nation of immigrants or a nation of laws is certainly at hand here. Thank you very much, Bill Tucker. Later here, I'll be talking with Houston's police chief. Harold Hurtt. His city remains in the eyes of critics and its citizens a sanctuary city for illegal aliens. We'll find out about what the police chief has to say about that and the loss of one of his officers.

Still ahead here tonight, outrage over e-voting becoming more widespread even down to the local level. We'll have details.

Congress won't raise the minimum wage, but they'll certainly raise their own wages. Maybe voters in a number of states will take care of that for them. That report is coming up. And as controversy swirls in Congress in advance of the midterm elections, we'll be talking with the authors of a new book called "The Way to Win." It'll scare you. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A growing number of communities all across the country are now saying they simply want nothing to do with electronic voting machines. They've decided not to spend a dime of their taxpayers' money on those machines until they can guarantee that the votes of their citizens will count on Election Day and that those votes can actually be recounted with confidence. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Beset with problems of electronic voting machines, some election officials are reconsidering paying election equipment manufacturers, demanding higher performance.

In Cook County, Illinois, local officials dropped a bombshell Wednesday saying it usually takes three or four elections to get new election equipment right. The March primary was a mess. Results were delayed up to 10 days so Cook County only paid 13 of the $28 million contract to Sequoia and is withholding the rest until after the election.

PETER SILVESTRI, COOK COUNTY COMMISSIONER: We got quicker election results quicker from the Iraqi elections than the Cook County elections. I witnessed some of the problems the voters were having and it really did tick me off because, again, this is the United States of America. We shouldn't be experiencing these types of problems.

PILGRIM: In Boone County, Missouri, the county clerk says the more than million dollar elections equipment contract for ES&S is under review. The county paid $400,000 already but is saying the next payment, $800,000 depends on the voting equipment company helping the county comply with testing standards.

WENDY NOREN, BOONE COUNTY CLERK: We're having trouble making sure that the equipment I got matched exactly what the state certified. And so we're waiting for more information from the state before I pay the bills on this. PILGRIM: In Arkansas, the May election was also plagued with late delivery of equipment and machines that didn't work. The state withheld payment and even demanded the company, ES&S, compensate the state for money spent on paper ballots and programming during the chaotic election.

(END VIDEOTAPE)

PILGRIM (on camera): Now, there's no time, really left before the election, a little more than a month. Some election officials are now only now taking a very critical look at the equipment they'll be using and those who ignore performance criteria will leave themselves open in November to flawed elections. Lou?

DOBBS: Flawed elections? We're talking about a disaster here. Kitty, as you've been reporting relentlessly, it begs the question, why is any election officer in this country taking a risk with these machines when they could easily move to ballots -- paper ballots so that they could have an audit trail? This is playing with nitroglycerin.

PILGRIM: What we're finding is the people who question it are actually the ones under attack and have to have real spine to stand up to this system that everyone has accepted as ...

DOBBS: Cook County saying it usually takes three or four elections to get it right. You are just writing off three or four elections?

PILGRIM: It's a joke.

DOBBS: That's an insane statement. Hopefully there are more people like those folks in Boone County, Missouri who have got the guts to say this is the way it's going to be. For the sake of the citizens in those jurisdictions. Kitty, thank you very much. Kitty Pilgrim.

Time now to take a look at your thoughts.

Ron in Arkansas, "Lou, I think it's ironic the very Republican wedge issue like gay marriage is the very issue that is going to bring down the Republican Party."

Vicki in Illinois. "I realize it's the political season and that this situation with Mark Foley is very serious. However, I am surely hoping the government and political parties and media are not so all- consumed with this they take their eyes of Iraq, Iran, North Korea and illegal immigration. I sometimes don't think these people are capable of walking and chewing gum at the same time."

Well, you have a lot of evidence to support you in your view.

And Polly in Colorado. "I sure am glad that this administration promised all of us an upswing in morality in this country in order to get elected. It makes me feel better already."

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

Now the subject of tonight's poll. The question, do you believe the fallout from the Mark Foley scandal will significant influence which party does win control of the House? Yes or no? Cast your vote at loudobbs.com. Those results coming up here later.

And next, Houston police have their hands tied when it comes to illegal immigration. The chief of the Houston Police Department joins us here. And dozens more states may do what the federal government won't do. We'll have details in states trying to raise the minimum wage. Congress likes to raise its own, but for ten years, doesn't think the minimum wage should be raised. We'll see what the people say.

And a scandal just weeks before the election, not the way to win. I'll be joined by two political journalists. We'll take a look at not only the upcoming midterms, but 2008 as well. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Grieving Amish families held funerals today for four of the five girls murdered in this week's schoolhouse shootings. A procession of buggies and carriages carried mourners to the burial site in Lancaster County, Pennsylvania. The funeral for a fifth girl is set for tomorrow. And there are reports that one of the five survivors is about to be removed from life support tonight.

Every school, public and private, was shut down in one Virginia school district today because of a bomb threat. Police were out on watch, but thousands of Culpepper County students, teachers and staff were simply told to remain at home. Officials said they canceled classes as a precaution, following three recent deadly school attacks.

NASA engineers have found a hole in the Space Shuttle Atlantis two weeks after its return to earth. The hole is in a cargo bay door. It is believed to have been caused by space debris or a micro- meteorite. NASA says such strikes are not unusual, but this one, about a tenth of an inch wide, is fairly large in terms of space shuttle history. In fact, it may be the largest. NASA believes the damage was limited to the cargo bay door.

To U.S. pilots deny they turned off a transponder that would have signalled their location before colliding with a Brazilian airliner. Brazilian authorities say that this could have caused the mid-air collision that sent the airliner crashing into the Amazon, killing all aboard. Prosecutors say they could charge the American pilots with involuntarily manslaughter if they did indeed turn off that transponder.

The Mexican government is once again trying to dictate terms of U.S. immigration policy, which they've done rather successfully, as you've probably noted, over the years. Responding to President Bush's signature of the border fence bill, the spokesman for Mexican President Vicente Fox said, quote, there is no money to build it, so it won't be built, end quote. He said the fence would not serve the interests of Mexico or the United States and that only a more comprehensive immigration bill will solve the U.S.' border problems, adopting the same language as that of President Bush.

A projected cut in world oil supplies could soon drive falling oil prices higher. OPEC announcing plans to cut market supply by a million barrels a day. U.S. officials were dismayed, saying that OPEC ministers need to pump all the oil they can and then reports later confusing the matter, suggesting that OPEC in fact had not officially cut production.

Voters in six states will decide next month whether to raise their state's minimum wage. Congress has continually refused to raise the federal minimum wage in this country, even as it continues to raise the wages of Congress. It's another example of Washington's widening war on this nation's middle class. Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Angel Bridgwater is a minimum wage earner. The single mother of three says it's difficult covering basic expenses.

ANGEL BRIDGWATER, MINIMUM WAGE EARNER: Trying to pay rent, lights, gas, water, telephone and things like clothes they need for the school year is very hard.

SYLVESTER: In Missouri, where Angel lives, the minimum wage is $5.15 an hour. That translates to only $10,712 a year, well below the poverty line. Congress has not raised the federal wage for low income workers in ten years, even though lawmakers have voted to give themselves nine pay raises during that time.

JULIE SMITH, ACORN VOLUNTEER: We, the people, decided that if our elected representatives in Congress and our state legislators won't do what we want and need them to do, we will do it ourselves.

SYLVESTER: This November, there are ballot initiatives in Arizona, Ohio, Colorado, Missouri, Nevada and Montana, where voters will get to decide whether to increase the state minimum wage to as much as $6.85 an hour. Twenty two states and the District of Columbia have already raised the threshold. Business groups have resisted the measures, arguing a minimum wage hike will hurt small companies. But the AFL-CIO says evidence has shown raising wages increases productivity and lowers employee turnover rates.

THEA LEE, AFL-CIO: There's very little evidence that increasing the minimum wage does hurt small businesses and the last time we increased the federal minimum wage, in 1996 and '97, in fact, there was very little negative measured impact on small businesses or on businesses at all.

SYLVESTER: Angel Bridgwater hopes the minimum wage is raised. In the meantime, to break the poverty cycle, she's taking classes to be a medical assistant.

(END VIDEOTAPE)

SYLVESTER: According to the PEW Research Study, 83 percent of Americans favor raising the minimum wage. Despite this overwhelming support, Congress failed to act on this issue before leaving town. The Republican leadership attached a proposal to repeal the estate tax to the minimum wage bill. Democrats found that unacceptable and the measure was defeated, Lou.

DOBBS: As have efforts to raise the federal minimum wage, as you know, for the past decade. Lisa, thank you very much. Lisa Sylvester from Washington.

Houston, Texas suffered a terrible loss two weeks ago when one of its veteran police officers was murdered in cold blood by an illegal alien. Officer Rodney Johnson, a 12-year veteran of the Houston Police force, was shot to death in his patrol car. He was 40-years- old, leaving behind a wife and five children. The illegal alien charged in his death is Juan Leonardo Quintero. He's been deported-- he was deported from the United States seven years ago, after being found guilty of sexually abusing a young girl.

He never served time for that charge but was deported. But then, of course, he returned to the United States. Since Officer Johnson's death, the Houston Police Department has announced it will work more closely with federal officials to identify criminal illegal aliens. But Houston police officers are still prohibited from asking the immigration status of non-criminal suspects, as it is put. Houston is still considered a sanctuary city for illegal aliens. However, the mayor and the police chief of Houston say that's not the case.

Joining me tonight is the chief of the Houston police department Harold Hurtt. Chief, good to have you with us.

CHIEF HAROLD HURTT, HOUSTON POLICE: Thank you Lou, good to be here.

DOBBS: A terrible thing to happen. Officer Johnson shot, this time the murder was carried out by an illegal alien, focusing great attention on your city, a city which has been considered by just about everyone to be a sanctuary city. Yet you and the mayor say it is not. Why so?

HURTT: That's true. Because we focus on public safety, that is anyone committing a crime, whether they're a citizen or not, they're going to be arrested by the members of the Houston police department. Are we going to be stopping citizens on the street, are we going to be stopping individuals on the streets and say, well, where were you born, are you a citizen of this country? We cannot afford to do that. We don't have the resources to do that.

DOBBS: Yes, and certainly without cause, one can't imagine why you would. But the fact is, this is the comment I'd like us, if we could, just show everyone, when we were talking about commenting on a lack of border security and how it allows criminals to return to the country, we'd just like to share with the audience what you had to say earlier.

(BEGIN VIDEO CLIP) HURTT: I can only concentrate on what's happening here in the city limits of Houston and do the very best we possible can here. Those issues that are based upon national efforts and international efforts, those are, as someone said, above my pay grade.

(END VIDEO CLIP)

DOBBS: Well I think just about every police officers in the country certainly can commiserate and identify with your remarks. But the fact is, we have literally somewhere in between 12-and-20 million illegal aliens in this country. Is what you're saying that citizenship status will be no part of an investigative process?

HURTT: No, that's not what I'm saying. Anybody that we come across that is going to be booked into our jail or either the county jail, Harris County Jail and they've been arrested by the Houston police department, we're going to be asking them, were you born in the U.S. and are you a U.S. citizen?

Depending on their response, we'll put that into the booking blotter and now ICE, that is Immigration Custom Enforcement have full access to the Houston police department, county jail, city jail, and they'll be able to go in, look at those booking slips and take whatever action they deem necessary with those individuals.

DOBBS: Chief, the man who murdered Officer Johnson is, as you know a convicted felon. It is tragic that he would never serve time for sexual molestation of a young girl, was deported and then came back across our borders again.

Do you believe -- and the stories, you're familiar with them as is anyone in this country. The fact is deportation means absolutely nothing in this illegal immigration crisis of ours. How is it possible that your organizations, all of the national chief organizations, law enforcement organizations, are not demanding border security for the protection, for the public safety of everyone in this nation?

HURTT: We have been demanding that for several years now. I had conversation with then Secretary Ridge what he was in charge of homeland security. When I was police chief in Phoenix, Arizona, told him the challenges that we face due to the immigration issues.

It's a federal responsibility. What he told me, it would take billions of dollars for them to secure the border and now people are asking us in the cities across American to do enforcement of immigration. What do they think it's going to cost us? And now they're getting ready to pass legislation to mandate that, another federal mandate that's not funded. And we're facing significant challenges in a lot of the cities across the country, would increase in violent crime. We have to concentrate on that because the majority of the crime committed in America is committed by citizens of this country.

DOBBS: A majority, but just about a third -- if we look at it proportionately, I think you would probably like to do that -- just about a third of the prison population in this country is estimated to be illegal aliens.

HURTT: Well, that goes to show you that municipal, county and state law enforcement are doing their job. When people commit offenses in this country, we're apprehending them, making sure they are prosecuted and sent to jail. And if they're felonies, we're also making sure the federal government do their job, deport those individuals and when they come back to this country after being deported, as a previously convicted felon, that's a criminal offense and of course we're going to enforce that law.

DOBBS: You talked about an unfunded mandate. The federal government refusing homeland security, if I may say, chief, is nothing but a joke. You don't have to express an opinion on that. I can say it straight out. When we have borders that are unprotected, when criminal illegal aliens are sent across the border, deported and are returning and murdering police officers.

You're talking about an unfunded mandate. At that unfunded mandate is laying straight forwardly on the taxpayers' back in this country, U.S. citizens who are paying for it all, the high cost of medical care, social services, crime prevention and prosecution, of course as well.

It's a problem that obviously we're not dealing with and unfortunately too many people are paying the price, in the case of one of your officers, the highest price possible. We regret that. We extend to you our condolences.

HURTT: Thank you.

DOBBS: And we thank you for being here. Chief Hurtt, thank you.

Still ahead, how the widening Foley scandal could affect midterm elections, if it could. Our conversation with the authors of an important new book, "The Way to Win," just ahead.

And American casualties in Iraq are rising and rising sharply. Is U.S. military strategy on the brink of outright failure? General David Grange joins us here. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: The nation's midterm elections just 32 days away, which party will win? Republicans or Democrats? I said Republicans or Democrats unless there was some confusion about which party. Will the Foley scandal have any effect at all? Will it determine the outcome?

I'm joined by two of the country's very best political journalist. Mark Halperin, he's the political director of ABC News. And John Harris, the national political editor of the "Washington Post." Gentlemen, thanks for being here.

You've written a terrific new book on the nation's political process. The book is terrific, the process, as you make clear, is not. The title is "The Way to Win: Taking the White House in 2008." Let me say to both of you, you scare the dickens out of me by laying it out very clearly, Mark. All the strategist has to do is pick up the book and you're a winner.

MARK HALPERIN, ABC NEWS: It's a rough process we have now in this country. We call it the freak show, extreme voices are really important in this process. The whole system where there was some sort of decorum, some sort of refereeing, it's gone by the wayside. We look at the winners in that process -- we're not endorsing the process, but Bill Clinton and Karl Rove in particular understand how to win in this situation. People who follow their advice in 2006 will do well. People who follow their advice in 2008 will take the White House.

DOBBS: John, that's why I said it's scary to me. The fact is, I'm leery of a Republican or a Democrat at all in this country no matter who the candidate is because neither party seems to stand for much that is distinctive, one from the other. Why is that?

JOHN HARRIS, THE WASHINGTON POST: Well, to echo Mark, we are describing not politics as it should be but politics as it is. There are incentives. The reason politics works the way it is there are incentives built into the process that politicians, political strategists and frankly a lot of people in the media respond to.

And those incentives are not toward legislating. They're not toward finding a sensible center around which people can rally. They are sort of taking the extreme position and using it and exploiting it for political advantage.

DOBBS: The extreme position, how important will wedge issues be, because all of us, when we read your book gentlemen, we're going to be well informed. We won't be part of the freak show anymore. We'll be able to push away those wedge issues and focus on reality.

HALPERIN: Well, we hope so. We think that America would be better if people did that. But look, the Bush model, what's worked for George W. Bush and Karl Rove is to use microtargeting consumer data, the kind of data that in the past was not used in politics. Cable television, the Internet, to reach conservative voters, and turn them out. They've rejiggered the landscape and a lot of liberals are saying now, we need the same thing. We need our Rush Limbaugh, we need our Matt Drudge, we need our FOX News Channel to fight back. That's pulling people apart, not consensus.

DOBBS: Well those folks over at FOX say that that's the rest of the media, the rest of the national media and John Harris is liberal and the leading part of the left side of the freak show.

HARRIS: Well I think what you're seeing is increasingly people who are ideologically charged, look for media outlets which they feel can echo their own preconceptions and essentially feed that. And so that system allows the extreme voices that Mark's describing to take over the process. We sat down with Bill Clinton. He thinks this is -- in his home in Chappaqua, we spent a god couple of hours with him. And he said this change is really the most important thing that he has seen in his 30 years in politics. He thinks Democrats have not thrived in this new environment, but Republicans have.

DOBBS: Well, it is though inspiring to all of us to know that at least in 2004, as you focus on 2008 here, Mark, in 2004, the nation was offered a great, great choice. Both men of privilege, Democrat and Republican, both men graduating from Yale, both men members of Skull and Bones.

HALPERIN: I can't help this level of sarcasm in my answer, Lou, so ease up a little bit. Look, the system favors the wealthy and the famous. There's not question about it, but Bill Clinton won without being famous or wealthy when he started out. So, it is possible in the current system. We do have these two dynasties, though. Look, Bush, Clinton, Bush, maybe another Clinton. It seems like anybody with a different last name need not apply, not because of their rich, but because they've learned how to win in American politics.

DOBBS: Well, do you suppose then, John Harris, we can find -- since Mark doesn't want to top my sarcasm, can we find somebody besides a Bush or a Clinton in 2008?

HARRIS: Look, Hillary Clinton has got the overwhelming advantage on the Democratic side. It's not an accident. She studied both Bill Clinton's political secrets and Karl Rove's these past six years. There's a reason why she is so well positioned.

DOBBS: John Harris, we thank you very much. Mark Halperin, thank you. Terrific book, an important book. There it is in large color, "The Way to Win." And it's also a good way to scare yourselves. It's also a terrific education on the political process. I recommend it highly. gentlemen, thank you very much.

Coming up next, reports that some Iraqi police and security forces are falling down on the job. General David Grange talks with us next. Are we failing in Iraq? Stay with us.

(COMMERCIAL BREAK)

DOBBS: At the top of the hour, "THE SITUATION ROOM" with Wolf Blitzer. Wolf?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou. Hastert under fire, the speaker of the House comes out swinging to try to save his job. Find out why he's laying the blame on Democrats and the news media.

Also the family of a former congressional page who traded Internet messages with ex-Congressman Foley now comes forward with a public statement. We'll share what they're saying.

Plus, politics and violence, Condoleezza Rice's surprise visit to Baghdad. We're going to take you to Iraq and our Michael Ware.

And Foley follies. It's a serious Washington scandal, very serious but comedians are having a field day. Jeanne Moos is on the story. All that, Lou, coming up right here in THE SITUATION ROOM.

DOBBS: Looking forward to it. Thank you very much Wolf Blitzer.

American casualties in Iraq are rising sharply. Two of our marines have been killed just in the past day; 2,735 of our troops have been killed so far in this war. U.S. military strategy in Iraq tonight, in fact, appears to be on the brink of failure.

Joining me now General David Grange. General, let me ask you just straight forwardly, without a clear articulation by this administration of a strategy for victory in Iraq, without a clear, clear direction by our military leadership toward victory and in the face of mounting casualties, why in the world should we remain in Iraq?

GEN. DAVID GRANGE, CNN MILITARY ANALYST: Lou, I think that's required at this time. I think that the will of the American people is waning. You can understand why, obviously. I think it's time for the leadership to explain in detail how the strategy will change to adapt to the conditions on the ground. And quickly, there's two reasons. One, you have the insurgents against the United States of America and the west and you also have the other war, a Muslim on Muslim reference economical, political and religious reasons. They're inter-twined, conditions have changed, a new strategy has to take place to win.

DOBBS: Do you believe the Pentagon is beginning to concur with your view?

GRANGE: Well, I think in many of the Pentagon, it is their view. I had the opportunity to talk to some great leaders in the military last Friday, and that is their view.

DOBBS: And when will we see that view clear, obvious and manifest in the successes against the insurgency in Iraq?

GRANGE: Well, I think the key thing is, whether successes or setbacks, is to explain a new strategy clearly, to include how we deal with Iran.

DOBBS: I would say to you, general, success or setback, I don't believe -- I'll just speak for myself. I don't believe that this military leadership, these generals, this general staff should be tolerated if they can't deliver success, because they certainly have the troops to win any victory.

General, thanks for being here. We appreciate it.

GRANGE: My pleasure Lou.

DOBBS: General David Grange.

Still ahead, the results of our poll, more of your thoughts. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight, 72 percent of you say the fallout from the Mark Foley scandal will, in your opinion, significantly influence which party wins control of Congress in November. Quickly, one e-mail to leave you with. Norma in Florida said, "Dear Lou, the middle class deserves what it's getting, because it doesn't have the guts to stand up and form it's own party. The only time Republicans and Democrats talk about the middle class is just before election time and that talk is quickly forgotten after the votes are counted." Hope you're wrong.

We thank you for sending in your thoughts. Please be with us here tomorrow. For all of us, thanks for watching, good night from New York. "THE SITUATION ROOM" begins now with Wolf Blitzer, Wolf.

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

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