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LOU DOBBS TONIGHT

Ohio Congressman Pleads Guilty to Federal Corruption Charges; Does New Port Security Bill Go Far Enough?; North Korean Nuclear Mystery Deepens

Aired October 13, 2006 - 18:00   ET

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


KITTY PILGRIM, CNN ANCHOR: Tonight: the culture of corruption on Capitol Hill. Republican congressman Bob Ney pleads guilty in a case that shocked the nation.
And Congress and corporate America ignored the polite of this country's middle class. Wall Street thrives, as working-class families suffer -- all that, and more, straight ahead.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate, and opinion, for Friday, October 13.

Kitty Pilgrim, sitting in for Lou Dobbs, who is on assignment tonight in Los Angeles.

PILGRIM: Good evening, everybody.

Congressman Bob Ney pleaded guilty to federal corruption charges in a huge influence-peddling scandal. But Congressman Ney refused to resign immediately, sparking outrage across the nation.

At the same time, new details of possible crimes in the scandal over disgraced lobbyist Jack Abramoff -- Senate investigators say five conservative nonprofit groups may have committed fraud. Bill Schneider reports on the rising number of congressmen facing ethics scandals. Lisa Sylvester reports on the latest revelations about -- about Jack Abramoff. And Dana Bash reports on new developments in the Mark Foley investigation.

We turn first to Bill Schneider, outside federal court in Washington -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Kitty, Representative Bob Ney showed up at this courthouse today to plead guilty to federal corruption charges, which makes him the latest member of Congress to get in trouble.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Guilty as charged, that's how Ohio Congressman Bob Ney pleaded in federal court on Friday.

ALICE FISHER, ASSISTANT ATTORNEY GENERAL: Congressman Ney, in the documents, admits that he accepted a stream of benefits from Jack Abramoff and other lobbyists. SCHNEIDER: Ney, a Republican, could face more than two years in prison and up to $60,000 in fines. He also faces pressure from his own party leaders.

REP. DEBORAH PRYCE (R), OHIO: He has betrayed the trust of his constituents and of his colleagues here in the House. And I do believe that he should resign.

SCHNEIDER: His lawyer says he will, but not yet. When he does, he will be the fourth member of this Congress to resign in scandal, all Republicans.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: They have one in jail, two in rehab, one under indictment. I mean, the list goes on.

SCHNEIDER: Randy "Duke" Cunningham is serving an eight-year prison term for taking $2.4 million in bribes from defense contractors. Former Majority Leader Tom DeLay was indicted in Texas for campaign finance violations. Mark Foley resigned after it was revealed that he exchanged sexually explicit messages with House pages.

REP. DENNIS HASTERT (R-IL), SPEAKER OF THE HOUSE: We have the Ethics Committee doing an investigation. We have the U.S. attorney general, or the -- and the FBI doing an investigation. And, on Foley, we have the state of Florida doing an investigation.

SCHNEIDER: Any Democrats in trouble?

Representative William Jefferson is under investigation for bribery. The FBI found $90,000 in his freezer, cold cash. Republicans argue that corruption is not a partisan issue.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: What Congressman Ney did is not a reflection of the Republican Party. It's a reflection of Congressman Ney. And he ought to step down.

SCHNEIDER: But it does seem to be hurting Republicans. Since December, the Democrats' lead on handling ethics in government has increased, mostly because more people say they don't trust either party.

(END VIDEOTAPE)

SCHNEIDER: Democrats are talking about what they call a culture of corruption in Washington, not just the scandals, but also the fact that this Congress has failed to enact major lobbying reform legislation, after House and Senate Republicans were unable to reach agreement -- Kitty.

PILGRIM: Thanks very much, Bill Schneider.

Well, tonight, one of the Democratic Party's leaders also faces some serious ethics questions. Minority Leader Harry Reid is still waiting to hear whether the Ethics Committee believes he acted improperly in a Las Vegas land deal. Now, that deal allowed Senator Reid to collect a windfall profit of $700,000. Senator Reid insists everything he did was transparent.

New evidence today of the huge and sometimes corrupt efforts to buy favors in Washington -- Senate investigators say disgraced lobbyist Jack Abramoff channeled money to five conservative nonprofit groups. In return, those groups wrote favorable newspaper columns or news releases.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Channel One Network provides news programming to schools across the country, including advertising to students, a controversial issue. To beat back criticism, the company hired lobbyist Jack Abramoff.

The Senate Finance Committee's minority staff contends, Abramoff paid at least five nonprofit groups to do bidding for Channel One and other special-interest clients.

FRED WERTHEIMER, PRESIDENT, DEMOCRACY 21: The bottom-line question is, did that mean the nonprofits violated their tax status? And here, there are serious charges that they did, and they have to be investigated and resolved by the IRS.

SYLVESTER: Nonprofit 501c3 organizations are granted tax exemptions, but are prohibited from lobbying. According to the Finance Committee report, American For Tax Reform, run by conservative strategist Grover Norquist, and other analysts were paid to pen op-eds and policy briefs supporting Channel One.

Another nonprofit, Citizens Against Government Waste, received a donation of $10,000 from another Abramoff client, the Magazine Publishers of America. The magazine group was fighting a proposed rate hike by the U.S. Postal Service. Citizens Against Government Waste wrote commentaries opposing the rate increase, and named the Postal Service as the "Porker of the Month."

Both groups, Citizens Against Government Waste and Americans For Tax Reform, say they did nothing wrong. Aside from possible tax fraud, the report raises ethical questions for nonprofits.

ALEX KNOTT, POLITICAL EDITOR, CENTER FOR PUBLIC INTEGRITY: You are not supposed to be an indentured person who is doing for-profit, mercenary work, basically making you a political operative of K Street and all these lobbying firms.

(END VIDEOTAPE)

SYLVESTER: Tax-exempt groups do not have to disclose their donor lists, which is one reason it makes it so hard to know the agenda of those financing these groups.

Nonprofits are increasingly being used as a back door for special-interest groups to get their message out -- Kitty.

PILGRIM: Thanks very much, Lisa Sylvester.

Well, new developments tonight in the scandal over former Congressman Mark Foley -- a lawmaker in charge of House pages today said he wished he had done more to protect those pages from Foley.

Dana Bash reports from Capitol Hill -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Kitty.

Well, that lawmaker is Republican John Shimkus. And not only does he head the page board; he also is the only known congressman to actually confront Mark Foley about his inappropriate behavior, one e- mail exchange in particular with a former page.

Now, he testified before the House Ethics Committee today for more than three hours. And, when he came out, he admitted, in retrospect, he would have handled the matter differently.

(BEGIN VIDEO CLIP)

REP. JOHN SHIMKUS (R), ILLINOIS: I think there's stuff that everybody would have done differently, had -- 20/20 hindsight's always perfect. So, having 20/20 hindsight, a lot of things would have been different -- done different.

QUESTION: But do you feel you let...

(END VIDEO CLIP)

BASH: Now, Congressman Shimkus is under fire about his conduct in the Foley scandal, because, last year, when he and the former House clerk found out about one e-mail between Foley and a former 16-year- old male page, they sat Foley down, and they confronted him, and said, don't talk to that former page anymore. And, in fact, don't talk to -- or -- or be careful with your conduct towards current and all former pages.

Now, what -- what the congressman didn't do, Kitty, is tell anybody else on the Page Board, not the Democrat or the Republican who sit on the page board. So, he's under fire for that.

Now, Shimkus today said that he was just following the orders or the wishes of that boy's parents. But he is one of several lawmakers and GOP aides who are going to go under oath before the Ethics Committee, because what they are trying to do is figure out what Republicans knew, and whether anybody actually did try to hide Foley's inappropriate conduct with pages.

Yesterday, we heard from one former GOP aide, Mark Foley's former chief of staff, who says, point blank, that he actually did try to warn senior Republicans about his former boss' conduct. That is something that differs from -- from what Republicans have said so far.

Next week, Kitty, what -- what they are going to hear on the committee is from other Republican lawmakers, including the majority leader. He is expected to testify, again, under oath next week in this politically nuclear story for Republicans -- Kitty.

PILGRIM: Thanks very much, Dana Bash.

The U.S. attorney in Arizona has begun a preliminary investigation into a camping trip 10 years ago that involves Congressman Jim Kolbe and two former congressional pages. One person who was on the trip told CNN that he felt Congressman Kolbe was overly friendly with one of the former pages. And that person said there was hugging.

Now, a spokeswoman for Congressman Kolbe said there is no truth to the allegations. She said the congressman is shocked and stunned.

Still to come: The federal government has failed to tackle our illegal immigration crisis, and now voters are demanding action.

Plus: President Bush signs a new port security law, but will it do anything to make this country safer?

And the American dream is slipping away for millions of working families, as the war on the middle class intensifies.

(COMMERCIAL BREAK)

PILGRIM: In tonight's "Broken Borders": President Bush has signed a $3.4 billion law to help secure our nation's ports. Now, critics say the law contains dangerous loopholes, and voters have the chance in this November to pass important new laws fighting illegal immigration.

Casey Wian reports on the tough anti-illegal alien ordinances on the November ballot.

And Bill Tucker reports on why our nation's ports are still vulnerable, even with the signing of today's port security bill.

We begin with Casey Wian in Los Angeles -- Casey.

CASEY WIAN, CNN CORRESPONDENT: Kitty, two years ago, Arizona voters overwhelmingly passed Proposition 200, an effort to stop illegal aliens from voting and from collecting some state welfare benefits. Now the state is planning to go even further.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Knock, knock.

WIAN (voice-over): Activists for illegal aliens are going door to door in Arizona to encourage residents to vote against four ballot measures that will further crack down on illegal aliens in the state.

HEATHER JENKINS, CAMPAIGN FOR COMMUNITY CHANGE: As a community, Arizona must restore humanity and dignity to the immigration debate. These propositions go way too far. They won't stop the people coming here.

WIAN: Proposition 300 would extend and expand an existing law preventing illegal aliens from receiving state welfare benefits; 103 would make English the official language of Arizona; 102 would stop illegal aliens from receiving punitive damages in civil lawsuits. And 100 would prevent illegal aliens accused of serious felonies from receiving bail.

ANDREW THOMAS, MARICOPA COUNTY, ARIZONA, ATTORNEY: Well, Arizona has a tremendous problem with illegal immigrants coming into the state, committing serious crimes, and then absconding, and not facing trial for their crimes, either because they jump bail after they are let out, or because, when they are let out on bail, the federal government deports them.

WIAN: Polls show the welfare measure is the closest call, and it's ahead by a 15-point margin. More than three-quarters of Arizona voters say they favor the no-bail measure. And about two-thirds support English as the state's official language and denying illegal aliens punitive damages.

Opponents argue, the measures are anti-immigrant, when, in fact, they only target illegal aliens.

RAMON GARCIA, CAMPAIGN FOR COMMUNITY CHANGE: Politicians and political consultants are fanning fear, distrust, resentment, and anger. The four anti-immigrant ballot measures in this November election are perfect examples of this.

WIAN: Two of the measures were previously passed by the Arizona State legislature, but later vetoed by Arizona Governor Janet Napolitano.

(END VIDEOTAPE)

WIAN: Now, so far, this year, more than 500 bills have been introduced in state legislatures nationwide to crack down on illegal immigration, yet another example of the federal government's failure to do that job -- Kitty.

PILGRIM: Thanks very much, Casey Wian.

The White House today staged a special signing ceremony for its so-called Safe Accountability For Every Port Act. President Bush says this act would go a long way to finally securing our nation's vulnerable ports. Critics say it doesn't go far enough to make our nation safer.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

(APPLAUSE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): The president signing into law the new port security legislation. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The Safe Port Act will make this nation more prepared, more prosperous, and more secure.

TUCKER: The Safe Port Act calls for incoming cargo at the 22 largest ports to be scanned with radiation-detection technology as they arrive, with a deadline of the end of next year. But that does not mean the containers will be actually inspected. And, currently, only 5 percent of all incoming cargo is ever inspected. And, under the terms of the Safe Port Act, the definition of inspected is very broad.

STEPHEN FLYNN, SENIOR FELLOW IN NATIONAL SECURITY STUDIES, COUNCIL ON FOREIGN RELATIONS: An inspection, under the definition of this bill, is basically -- amounts to almost anything. It means including looking at data and basic cargo manifest information. That is a list of what's in the container. And that can qualify as an inspection.

TUCKER: Another key weakness rests in one of the bill's biggest selling points, the radiation-detection equipment is meant to protect our ports from nuclear devices being smuggled in.

FLYNN: One of the things that I'm afraid is being oversold in the legislation is that we're deploying radiation monitors in 22 seaports to examine potentially 100 percent of everything that passes through the ports into U.S. cities. These radiation monitors have very limited abilities to -- they cannot detect a nuclear weapon.

TUCKER: The biggest threat may be simple complacency, with Congress believing they have done enough, and they don't have to move to strengthen the bill or follow up on its goals.

(END VIDEOTAPE)

TUCKER: For example, it's been over five years since 9/11, and there's still no plan on how to get our ports up and running, should one suffer a shutdown due to attack.

This Safe Port Act does call for such a plan to be delivered, but, Kitty, the question at this point should be, what's taken so long up until now? Why don't we have a plan already in place?

PILGRIM: That's a good question.

Thanks very much, Bill Tucker.

Well, that does bring us to the subject of tonight's poll: Do you believe the Bush administration and Congress are doing all that they can to secure our ports and borders, yes or no? Cast your vote at LouDobbs.com. We will bring you the results a little bit later in the broadcast.

Still ahead: The Dow Jones industrials rallied to yet another record high today. This nation's middle class has no reason to celebrate. We will have a special report. And was it a nuclear blast or wasn't it? The North Korean nuclear test mystery is deepening.

And a horrible murder mystery in Florida -- four bodies have been found dumped on the side of a turnpike. We will have a live report from the scene.

(COMMERCIAL BREAK)

PILGRIM: Insurgents in Iraq have killed another one of our troops. The soldier was killed by a roadside bomb in northern Iraq. Forty of our troops have been killed in Iraq so far this month; 2,754 of our troops have been killed since the war began.

Well, Britain's top army general today declared that British troops should leave Iraq -- quote -- "soon." The general said British troops actually make the security situation in Iraq worse. Now, Britain has more than 7,000 troops in southern Iraq. U.S. officials declined to comment on the general's remarks. They said it was a matter for the British.

Almost a week after North Korea said it conducted a nuclear test, there is still no firm evidence of a nuclear explosion. It remains unclear whether the North Korean test was a success or a failure.

Jamie McIntyre reports from the Pentagon.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): CNN has learned that air samples collected by a U.S. military sniffer plane flying off the coast of North Korea, October 10, one day after the test was announced, came up blank, no evidence of radioactivity.

But U.S. officials say the negative findings shed little light on the mystery of whether North Korea's relatively small underground blast was or was not nuclear.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: The jury is out on what exactly happened. We know that there was an event. There was a seismic event. Something happened in that -- in that particular spot in North Korea.

MCINTYRE: Government experts say the air samples collected by the aircraft dubbed Constant Phoenix were just one data point at one location at one time. A number of things could explain why no radiation was detected in the initial test of the atmosphere.

The wind direction could have been wrong. The blast may have been so small, the radioactivity was contained. And it's entirely possible it was a detonation of high explosives, not a nuclear device.

The U.S. intelligence community continues to operate on the assumption that North Korea's Kim Jong Il did test a nuclear device, and it just didn't work very well, producing a yield of as little as a quarter-of-a-kiloton. And the White House said the consequences are going to be the same, nuke or no nuke.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: In the past, the North Koreans may have gotten the impression that they will be rewarded for bad behavior. There should be no question that those days are over.

(END VIDEOTAPE)

MCINTYRE: The United Nations is scheduled to vote tomorrow on broad sanctions, even though the U.S. still can't say, nearly a week later, whether North Korea's boast of detonating a nuclear device was true or not -- Kitty.

PILGRIM: Thanks very much, Jamie McIntyre.

Well, as Jamie just mentioned, the U.N. Security Council is expected to vote to induce sanctions against North Korea. And, today, the U.N. General Assembly appointed a South Korean as the U.N.'s next secretary-general.

Richard Roth reports from the United Nations.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT (voice-over): South Korean Foreign Minister Ban Ki-moon could be forgiven for being distracted during his confirmation vote by the 192 countries of the U.N. At every major diplomatic step on his road to becoming the next secretary-general, North Korea has either announced or tested a potential nuclear device.

BAN KI-MOON, INCOMING UNITED NATIONS SECRETARY-GENERAL: That made me resolve my commitment to work for much more safer world to denuclearize the Korean Peninsula.

ROTH: Once in office, on January 1, the career diplomat says he wants to go to North Korea to help ease tensions. But the Security Council isn't going to wait. The 15 countries are set to adopt a resolution imposing sanctions on North Korea to punish Pyongyang for whatever it tested, nonmilitary sanctions designed to block material or technology that could be used for producing weapons of mass destruction -- also banned, luxury goods.

JOHN BOLTON, UNITED STATES AMBASSADOR TO UNITED NATIONS: I think, you know, the North Korean population has been losing average height and weight over the years, and maybe this will be a little diet for Kim Jong Il.

ROTH: Writing the resolution involved the usual hard bargaining between the U.S. and China. To get Beijing's support, more restrictive sanctions were removed. China wants to soften any measure that requires countries to stop and search goods for North Korea.

WANG GUANGYA, CHINESE AMBASSADOR TO THE UNITED NATIONS: It will lead to different escalation of provocations.

ROTH: U.S. Secretary of State Rice heads to Asia next week for talks in the region. Outgoing Secretary-General Kofi Annan told his South Korean successor he will need a sense of humor in the job. Based on where he comes from, he will need it.

(END VIDEOTAPE)

ROTH: And the South Korean foreign minister, now the secretary- general-designate, says he hopes the Security Council passes a clear and strong resolution aimed at North Korea -- Kitty.

PILGRIM: Richard, quick point: Russia, at one point, suggested a delay. And China appeared to agree with it. And, yet, Ambassador Bolton said no more meeting after meeting after meeting. Do you think that they will come to a resolution tomorrow?

ROTH: Just moments ago, I personally asked the Chinese ambassador at a press stakeout. And he gave no guarantee there will be a vote in the morning, following consultations. He still has concerns about the stop-and-search measures in this resolution, at one point saying, who knows. There could be a naval war in two weeks -- China very worried about use of force in any U.N. document.

PILGRIM: Let me follow up on the China point, Richard.

China has said that the -- the punishment is not the purpose of sanctions. And, yet, they seem to support punitive measures. It seems a little bit ambiguous.

ROTH: Well, they want it both ways.

They said they want to punish North Korea, but they also say it has to be appropriate and prudent. They are still bargaining as we speak. And we have been used to this from China before. They say they want a strong message at their Asian neighbors, and then they are very worried about how strong the language should be -- Condoleezza Rice going to the region next week.

PILGRIM: Thanks very much, Richard Roth.

Time now for some of your thoughts.

And James in Idaho wrote to us: "The middle class is a purposeful construct, a buffer keeping the poor from the throats of the rich. The continued destruction of the middle class will result in class warfare, social strife, social revolution in our country, if the trend is not reversed."

And Dennis in Ohio writes: "What happened to politicians doing the job they were hired to do and represent our vote? We the people are supposed to be heard. It's time to take America back and give it to the legal citizens."

Do e-mail us at LouDobbs.com. We will have more of your thoughts a little bit later in the broadcast. And each of you whose e-mail is read here will receive a copy of Lou's new book, "War on the Middle Class." And join us next Wednesday, October 18, for a LOU DOBBS TONIGHT special report, "War on the Middle Class." And Lou will be reporting live from Kansas City, Missouri. That's next Wednesday, 7:00 p.m. Eastern, here on CNN.

Coming up: People at the top may think the economy looks good, but the middle-class Americans are suffering. And we will have a special report.

And we will ask our panel of top political analysts how much impact the economy will have on voters in the midterm elections.

Also ahead: a gruesome discovery just off the Florida Turnpike -- four people gunned down, and left to die.

We will have that. Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: Here again, Kitty Pilgrim, sitting in for Lou Dobbs, on assignment tonight in Los Angeles.

PILGRIM: Four bodies, two of them children, were found shot dead today, and dumped along a Florida turnpike.

Susan Candiotti is in Fort Pierce with the latest on this very gruesome story -- Susan.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hello, Kitty. In what appears to be an execution-style murder, police nearly 10 hours after the bodies were discovered are still withholding the names of the man, woman, little boy and little girl who were found at about 8:00 this morning on the Florida turnpike, just south of Ft. Pierce, Florida.

They are describing the victims only as a 29-year-old man, a 25- year-old male, and two children who are all Hispanic. The children probably between the ages of six and eight. They say that this happened between 1:30 and 3:00 in the morning, that from a woman who lives nearby who heard some gunshots at around that time.

Authorities say they believe that a large vehicle, an SUV or a van, drove off the turnpike. They know that from the tire tracks, pulled off the road into the grass. Apparently made the victims get out. Shot them dead, and then proceeded on. Again, they saw tire tracks re-enter the turnpike. The sheriff says he believes the woman used her body to shield the children.

(BEGIN VIDEO CLIP)

SHERIFF KEN MASCARA, ST. LUCIE COUNTY: The woman, in a defensive posture, had both of the children surrounded underneath her arms, in an effort that we -- we can assume was to protect them from the gunfire.

(END VIDEO CLIP) CANDIOTTI: The sheriff says this woman was in a fetal position, facing down, and that the adult male was facing up. Investigators spent hours looking over that area that you might see over my shoulder, looking for bullets and bullet fragments. They have found some, and autopsies have already been conducted. But again, we are left to wonder at this hour -- who are the victims? Why were they killed? And who is the vicious killer or killers responsible? Kitty?

PILGRIM: Thanks very much, Susan Candiotti.

Hundreds of thousands of people are without power in the northeast tonight after an early blast of winter snow. The storm swept through the region overnight, dumped up to two feet of snow in western New York. Unnecessary driving was banned in Buffalo and several of the suburbs. Now, the wet snow brought down scores of tree limbs, many of them toppling power lines. And utility crews are doing their best to repair the damage tonight, but it is expected that many residents will not have power restored until early next week.

President Bush today signed legislation banning Internet gambling in this country. The new provision is designed to put teeth into laws that already forbid most online gambling. It bans the use of credit cards and checks and electronic transfers to offshore casinos. But, it exempts state sanctioned sites that allow betting on horse and dog racing.

Air America, the liberal news and talk radio network, has filed for chapter 11 bankruptcy protection. The radio network will stay on the air, however, with signature personalities like Al Franken and Randi Rhodes. The company spokesman says, the bankruptcy filing was necessary because negotiations with a creditor broke down.

Wall Street is nearing Dow 12,000. Corporate profits are robust, and the White House wants you to believe the U.S. economy is the picture of health. Now, members of this nation's middle class know the real truth about the nation's economy. Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): On Wall Street and at the White House, cheers for a record high in the stock market and a pat on the back for strong economic indicators.

BUSH: The pro-growth policies have worked.

ROMANS: But the view of the economy is quite different through the eyes of middle-class American workers.

JOHN IRONS, CENTER FOR AMERICAN PROGRESS: So you see that the economy's really only helping a few people at the top, whereas most of the people in the middle are just not seeing any significant improvement, as or at least not improvement as they would expect.

ROMANS: Forty-seven million Americans are uninsured and more children than ever are without their health insurance, their parents employers slashing benefits. We're told that education and retraining are the answer, yet tuition prices are rising twice the rate of inflation. At the same time, $1 trillion in adjustable mortgages reset this year. It will mean hundreds of dollars more a month in mortgages payments for millions of homeworkers. Americans will have to dig deep to pay those higher bills. According to the Census Bureau, real median hourly earnings for both men and women are falling. But supporters of the president's economic policy say he deserves economic bragging rights.

BRIAN WESTBURY, ECONOMIST, FIRST TRUST ADVISORS: We've had the stock market collapse, we've had 9/11, we had deflation fears in our economy, we've had massive hurricanes that wiped out large cities in America. We've gone to war twice. There have been incredible headwinds and don't forget to throw in $70 a barrel oil.

ROMANS: He says pessimists are just looking for something to worry about, and the president's policies are working.

(END VIDEOTAPE)

ROMANS: Yet, surveys show that Americans don't feel very optimistic about their condition. Their wages are stagnant, their housing costs are rising, and they are told this is a vibrant economy in the midst of a productivity boom. Kitty, that's cold comfort for many Americans who are trying to pay rent and bills.

PILGRIM: That's right, thanks very much, Christine Romans.

Well, Wal-Mart workers won a major victory in Pennsylvania court today. A state jury ordered Wal-Mart to pay at least $78 million to more than 180,000 current and former employees. Wal-Mart was found guilty of forcing employees to work off the clock, and through their rest breaks. Wal-Mart says many of these employees decided on their own to work this extra time, without getting paid. Wal-Mart says it is planning to appeal this class action verdict.

Join us next Wednesday, October 18th, for a LOU DOBBS TONIGHT special report, "War on the Middle Class." And Lou will be reporting live from Kansas City, Missouri. That's next Wednesday, 7:00 p.m. Eastern, here on CNN. And Lou's new book "War on the Middle Class" is now available.

Coming up, our panel of political experts look at the Foley fallout, and its effect on midterm elections, and also what's ahead for politics in America.

Our weekly tribute to America's heroes serving our country overseas. Tonight, a marine, who chose to lead by example. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The culture of corruption is spreading on Capitol Hill. Republican Congressman Bob Ney has pleaded guilty to corruption charges and Congress continues its closed-door hearings on the Foley scandal and now even a top Senate Democrat is under fire for possible ethics violations. Joining me tonight in this political climate are three of the nation's most distinguished political commentators. Former Reagan White House political director Ed Rollins. Errol Louis of the "New York Daily News" and Democratic strategist Robert Zimmerman. And thank you gentlemen for being here.

You know, I would like to get into the politics, but I'm afraid we'll go at length. So let's start with North Korea to begin with, and we are hoping for action on a resolution tomorrow, but there's been some concern that Russia and China may not actually come along.

Let's listen to what Ambassador John Bolton had to say today, and then we'll discuss.

(BEGIN VIDEO CLIP)

JOHN BOLTON, US AMBASSADOR TO UN: I think it's important that the council provide a swift and strong response. We're very satisfied with the draft that was tentatively agreed upon last night and hope that other five members and other council members will be as well.

(END VIDEO CLIP)

PILGRIM: Now, as just discussed with Richard Roth, we had some comments from China saying that the punishment is not the purpose of sanctions, and yet they support punitive measures. It just looks like things are slipping a bit. What's your assessment, Robert?

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: My assessment is diplomacy and the type of diplomacy we have to pursue here takes a very long -- it's a long and deliberative process, and we have to have the resilience as, for that matter, Secretary Baker we did during the Persian Gulf war, and Secretary Warren Christopher did Secretary Kissinger did. This crisis is perhaps a week old formally, but there are two things that have to be done.

George Bush cannot keep drawing lines in the dirt and then letting North Korea walk over them with no qualification. George Bush has got to have very strict standards and hold North Korea to it.

And the second point is he's got to stop blaming everyone else around him and start taking responsibility for his politics for the past six years. You know, Secretary of State Colin Powell gave Bill Clinton a great deal of credit for freezing the production of plutonium, therefore freezing the development of nuclear weapons. So it's difficult, but we can, in fact, work effectively to try to hold in North Korea.

PILGRIM: Now, we hear today that there's uncertainty over whether it actually was a nuclear blast. Does that make a difference whether we should have sanctions or not?

ED ROLLINS, FMR. WHITE HOUSE POLITICAL DIR.: I don't think it makes a difference. I think they attempted to set off and they certainly will set off one. I think the critical thing here though is I'm very worried that we're driving this engine, as I think we should, but I'm very worried about China and Russia, and particularly China.

I think China has really had the brakes on all week and certainly if they are not going to be fully engaged partners in this and they are just going along in a very token way, it's not going to work.

ERROL LOUIS, "NEW YORK DAILY NEWS": Well, that's right. I mean, the theory was supposed to be that the United States did not want to go it alone, and get into a unilateral or a bilateral exchange with North Korea, but in effect that's what we are doing. I mean, we are driving the diplomacy and we have got partners in the world community who are supposed to be coming along who are dragging their heels every step of the way.

ZIMMERMAN: You know, the irony of it all is that George bush pursued a foreign policy by going it alone, and made quite a mission of doing that. And the result is, when he declared his axis of evil, he chose the one country to invade that didn't have weapons or an army and consequently Iran has become empowered because of our Iraq policies and now North Korea has become incredibly aggressive as a result of our being -- as a result of our being weighed down in Iraq.

PILGRIM: Not an easy situation all around. But let's move on to politics. And Mark Warner, former governor of Virginia, announced yesterday he would not seek the Democratic Party nomination for president in 2008. How significant is this? How significant is this?

ZIMMERMAN: Well, you know, all the conventional wisdom that's coming out of Washington ultimately is irrelevant to the process. The Democratic nominee is not chosen from the top down, it's from the grassroots primary up. That's our history. So how a candidate runs in the early caucuses in Iowa, in Nevada and then in New Hampshire, that will determine our nominee.

Ultimately, his dropping out of the race does empower Edwards to some degree, does empower an individual like Evan Bayh or Tom Vilsack and even John Kerry. So, in fact, it changes the dynamics a bit, but it's much too early to give anyone any boost from this.

PILGRIM: Well, we haven't had midterm elections yet, but we're still discussing this.

ZIMMERMAN: Exactly.

ROLLINS: I don't think he was going to be the nominee. I think what he did add value to, though, is he was a southerner who had won, and I think the reality is that unless we're going to run over the same boilerplate, probably the third election, and unless Democrats find a way of getting another state, either Indiana or Virginia or somewhere else in the south, they are not going to get the 270 electoral votes.

And so I think a Warner still needs to be in the play for a vice presidential candidacy and running and doing well is a better opportunity to choose him as a vice presidential candidate.

LOUIS: The elephant in the room, so to speak, of course, is Hillary Clinton. I mean, the $35 million elephant in the room. She actually came and met with our editorial board this weekend.

PILGRIM: Oh really?

LOUIS: I mean, I've got to tell you, she is still every bit the rock star, I mean, trying to get out of the building, all of the security guards and the various support staff taking pictures on cell phones. She was signing the back of somebody's shirt, which is one thing I hadn't seen a politician do for quite awhile.

(CROSSTALK)

PILGRIM: That's impressive.

LOUIS: But the reality is that as long as the Democrats are going to try to break this old mold, you know, from Johnson to Carter to Clinton, it has to be some sort of a southern candidate to pull the Democrats over, there -- they just lost one. They just lost. So that conversation really is over at this point, I think.

ROLLINS: Well, she lived in the south longer than anybody else who is going to be running.

ROLLINS: The other part of it is that she begins this candidacy as the closest thing to an incumbent as anybody. There is no vice presidential candidate and for the first time in a long, long time there is no automatic heir apparent on either party, and so I think she really does begin as the almost incumbent with the $35 million.

ZIMMERMAN: I would just caution you that the one place you don't want to be when you're approaching the early primaries is the frontrunner, because Iowa and New Hampshire, they like telling you who the frontrunner is going to be.

And I think Senator Clinton, if she does pursue a presidential candidacy understands that, but I would not underestimate the independents of these states and for that matter the strength of the Democratic field.

PILGRIM: You know, I'm just going to throw this out there to get your comments on it. In Lou Dobbs's new book, "War on the Middle Class," he proposes that people stop voting along party lines and he suggests that people register as independent and vote for whatever candidate, both their conscience and vote for whatever candidate supports their position the best. What do you think of this idea? We've been Democrat/Republican, Democrat/Republican to this conversation.

ROLLINS: And more and more people are actually becoming independents and literally a third of the populace today sees themselves as independents, but when you're dealing in a primary process, I think it's very important for the parties to have the ability to choose who it is that they want. What Robert did not mention, though, is that the new state, Nevada, now, plays a very, very critical role.

ZIMMERMAN: Absolutely. PILGRIM: And you're going to see, instead of traipsing through the snows of New Hampshire and Iowa, you're going to see all of these Democrats traipsing through the casinos of Las Vegas to basically be out there trying to get those early caucus states.

ZIMMERMAN: The hospitality union is becoming much more enticing as we approach the presidential race.

PILGRIM: You know, we've had our share of ills for the Republicans this week.

ROLLINS: I hadn't noticed.

PILGRIM: Yes, well, I think we've been through the entire litany. Will Republicans pay the price for this in November?

ROLLINS: They are going to pay the price. It's been -- I've been as optimistic as anyone. There's an erosion that's taking place as I talk to pollsters and talk to strategists. We are -- the sands are slipping away from us and it's slipping away from us in our own base.

And the reality in off-year elections, it's always about your team, your base, are they going to turn out and we're finding a real erosion among our voters. They still have three more weeks to push that back, but it's looking gloomier and gloomier for us.

PILGRIM: Yes.

LOUIS: The fundamentals were always there. You know, the question of not just corruption, but Katrina and casualties, you know, and the larger question of competence. You know, is this -- are we going in the right direction? So we've got some mixed indicators.

You know, I mean, the stock market hits a record high. You've got some good economic indicators, but as CNN has reported, you know, people are feeling the pinch, people aren't feeling so good about it.

And then, the fact that you just got scandal after scandal just breaking one after another, it's an extraordinary run of bad luck that is going to make what was already going to probably be a tough season for the Republicans even worse.

PILGRIM: We had President Bush appearing with House Speaker Dennis Hastert and responding to demands that Hastert resign. Let's listen to what he had to say.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to say this to you. I am proud to be standing with the current speaker of the House, who is going to be the future speaker of the House.

(END VIDEO CLIP)

PILGRIM: Will it work? ZIMMERMAN: I'm delighted by that appearance. I think the two of them should appear around the country on a regular basis. The bottom line is Denny Hastert symbolizes the institutional corruption of the Republican leadership in this Congress.

It's not just the behavior of the individual members of Congress, it's how the leadership responded that is at issue. It wasn't just that Tom DeLay was corrupt, but when the Ethics Committee reprimanded him, Denny Hastert, as speaker, fired two members of the Ethics Committee and changed the rules.

When the Jack Abramoff scandal broke and many members of Congress were caught up in that, they announced they were going to introduce great lobbying reform. Of course, the Republicans in the Senate and the House never passed one word of it. So it's that institutional response to corruption that's the issue.

PILGRIM: Let's talk the economy for a second, and as you have pointed out, it's a great theme of this show to point out the war on the middle class. Gas prices have fallen, the Dow is at record high. We're seeing some light points but will this work with middle class voters who are really still under stress?

ROLLINS: The interesting thing is, as I was saying earlier, I've gone back and looked at polling numbers, and I've never -- you almost have to almost go back to 1982 to look at an election in which the Republicans have the potential of losing these kind of seats and we had 11 percent unemployment.

We have a very strong economy today, but a lot of people don't feel that we have a strong economy, and I think that's one of the issues. It may be the war, it may be the corruption, it may be a whole variety of things, but today people do not believe -- at least the middle-class does not believe -- that things are good in America.

LOUIS: And they have every reason to feel that way. I mean, I found some gas at $2.13 a gallon -- I thought it was great -- out in Long Island.

PILGRIM: Tell me where.

LOUIS: Oh, no, no. That's valuable information. I might have to pay for that. But at the same time, you know, everybody is worrying about those adjustable-rate mortgages, when $1 trillion gets sort of repriced, there are a lot of people who have been paying interest-only mortgages.

PILGRIM: They tell me we're out time. We've got to end it here. Thanks very much, gentlemen. Sorted out a lot for us. Ed Rollins, Robert Zimmerman, Errol Louis, thank you.

ZIMMERMAN: Thanks.

LOUIS: Thank you.

PILGRIM: Coming up, our weekly tribute to America's "Heroes," our servicemen and women around the world. And, tonight, the story of one marine who felt strongly about duty and honor. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Coming up shortly here on CNN, it's "THE SITUATION ROOM" with Wolf Blitzer -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks very much, Kitty. A British military commander says the war in Iraq is making the situation worse. And Tony Blair is not disagreeing.

And a new felon in Congress, about to do some hard time in prison. Another election-time scandal for the GOP.

Evangelicals and the Republican alliance, did the White House snub them behind their back while trying to win their votes?

And get this -- an elephant border stunt. A congressional candidate, a mariachi band and a few massive pachyderms march right into the country and no one stops them. All that coming up right at the top of the hour in "THE SITUATION ROOM" -- Kitty.

PILGRIM: Thanks, Wolf.

And now, "Heroes," which is our weekly tribute to the men and women in uniform serving our country overseas. Tonight, Marine Staff Sergeant Anthony Goodwin. Goodwin felt strongly about the need to lead by example, and for him, one tour of duty in Iraq was not enough. Alex Quaid has his story.

(BEGIN VIDEOTAPE)

STAFF SGT ANTHONY GOODWIN, U.S. MARINE CORPS: Let's go, (inaudible)! Let's get a fire started. Let's go! Give me some suppression.

ALEX QUAID, CNN CORRESPONDENT (voice-over): Live fire drills, Al Anbar province, Iraq, near the Syrian border. Staff Sergeant Anthony Goodwin shows his new Marines how it's done. He makes sure they are ready to face insurgents, just as he has before.

GOODWIN: You're out of ammo? Here.

QUAID: Goodwin is a Marine others look to for leadership.

GOODWIN: There are mine possibilities out here, but you are not going to see them until you hit them.

QUAID: We first met him three years ago during the push for Nasiriyah.

GOODWIN: We expected some type of resistance, but minimal. It turned into a long day.

QUAID: Eighteen Marines died that day.

GOODWIN: You know, I think continuously of the people that we lost.

QUAID: For his bravery then, Goodwin received two medals and a Purple Heart. Now, his mother is receiving his Bronze Star posthumously for more bravery.

CWO2 VINCENT DIANTONIO, U.S. MARINE CORPS: As a tribute to his honest and faithful service and his courageous actions that day, which saved the lives of other Marines.

QUAID: That day was an insurgent ambush during Operation Matador.

UNIDENTIFIED MALE: Some Marines got caught in the crossfire, and two of the Marines went down, and Anthony put together a fire team to provide suppressive cover. He moved forward and was able to retrieve the Marines.

QUAID: But in saving their lives, Staff Sergeant Anthony Goodwin was shot and killed.

BRENDA CHENEY, GOODWIN'S MOTHER: He wasn't about ribbons and medals. He was about doing his job, being a Marine, serving his country.

QUAID: It was Goodwin's third tour in Iraq. Doing what he loved. When we saw him last, here's what he said.

GOODWIN: People back home truly need to appreciate the fact that if they've lost a loved one -- and whether it's Nasiriyah or somewhere else -- it's for a just cause.

QUAID: Staff Sergeant Anthony Goodwin, leader.

GOODWIN: Fix that problem for me.

QUAID: And war hero, without regret.

GOODWIN: The only thing I've got to say to the families for the most part would be to support your troops. You know? Stand behind them. That's all we want.

QUAID: Alex Quaid, CNN.

(END VIDEOTAPE)

PILGRIM: Sergeant Goodwin's 6-year-old son told us he wants to follow in his father's footsteps and become a Marine when he grows up.

Still ahead, the results of tonight's poll, and more of your thoughts.

(COMMERCIAL BREAK)

PILGRIM: Now, the results of tonight's poll: 98 percent of you say the Bush administration and Congress are not doing all they can to secure our ports and borders. Well, time for more of your thoughts.

Ron in Arizona emailed us: "It seems like President Bush is completely out of touch with people living in the Southwest. We have local Native Americans as coyote runners out here every day. Mr. Chavez is just down the road from us. Maybe he's been sending some folks up this way."

And Herb in California writes: "I think the concerns about the middle class and wage pressure are right on. Five Nobel Prize winning economists have concluded that the current minimum wage is not adequate. Why doesn't Washington agree with the best and brightest economists in our country?"

And Mary in Louisiana: "The two parties in power really don't represent me any longer and haven't for quite some time. I write letters to my representatives almost daily, and only occasionally do I get a reply. It's obvious that I don't matter to these people. It's definitely time for a voter revolution in this country."

We love hearing from you. Send us your thoughts at loudobbs.com, and each of you whose email is read here will receive a copy of Lou's new book, "War on the Middle Class."

Join us next Wednesday, October 18th for a "LOU DOBBS TONIGHT" special report: "War on the Middle Class." And Lou will be reporting live from Kansas City, Missouri. That's next Wednesday, 7:00 p.m. Eastern here on CNN.

Thanks for being with us tonight. Please join us on Monday. North Korea experts Frank Gaffney and Gordon Chang will join us to discuss North Korea's nuclear weapons program. Have a great weekend. For all of us here, good night from New York, and "THE SITUATION ROOM" starts right 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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