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LOU DOBBS THIS WEEK

At Least One Hundred Dead in Baghdad Bombings, Rumsfeld Proposed Iraq Strategy Change Before Getting Sacked, Midwest Reeling After First Winter Storm

Aired December 2, 2006 - 18:00   ET

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


CAROL LIN, CNN ANCHOR: I'm Carol Lin in Atlanta. Up next, LOU DOBBS THIS WEEK. But first the headlines.
We are talking about death and destruction gripping Baghdad today. At least 100 people killed and more than 100 others wounded in and around the city. Three car bombs went off in quick succession at a busy central market.

And two days before resigning, secretary of defense Donald Rumsfeld sent a memo to the White House on Iraq. According to the "New York Times" Rumsfeld says the strategy in Iraq was not working and proposed several changes, including U.S. troop reductions.

A blizzard force storm buried parts of the Midwest under snow and they're still digging out from under a foot or more of snow in some places. Hundred of people -- hundreds of thousands people actually without power right now. We're keeping an eye on this situation.

Now, coming up next, Lou Dobbs demands answers and fights for your rights seven days a week. Find out what Lou has to say about issues that could affect your life.

Then 7:00, Eastern CNN correspondents talk about the ongoing violence in Iraq. The Bush-al Maliki meeting and troop redeployments. Plus the war of words over whether Iraq is on the brink of a civil war. John Roberts hosts THIS WEEK AT WAR tonight at 7:00 Eastern.

I'm Carol Lin at the CNN headquarters in Atlanta. Another check of the headlines in an about hour. But LOU DOBBS THIS WEEK starts right now.

KITTY PILGRIM, CNN HOST: Welcome to LOU DOBBS THIS WEEK.

Tonight, Iraq is on the bring of all-out civil war. A bipartisan commission is likely to recommend a major withdrawal of U.S. troops.

Also, investing in terror. U.S. companies are investing in countries that support radical Islamist terrorism.

And the head of the Border Patrol says our borders are a gateway for terrorists. Is anyone in Washington listening? All of that and a great deal more, straight ahead.

ANNOUNCER: This is LOU DOBBS THIS WEEK, news, debate and opinion. Here now, Kitty Pilgrim. PILGRIM: Good evening. I'm Kitty Pilgrim, sitting in for Lou Dobbs. The violence in Iraq escalates and the Iraq Study Group is likely to propose a big change in U.S. strategy. The group is expected to call for a shift of U.S. troops away from combat operations to support roles. President Bush declared that talk of a graceful exit from Iraq is simply unrealistic. He said our troops must complete their job. Elaine Quijano reports from the White House. Elaine?

ELAINE QUIJANO, CNN CORRESPONDENT: And, Kitty, sources close to the bipartisan Iraq Study Group have confirmed to CNN that, when the panel presents its recommendations to President Bush, expected to take place on Wednesday, that those recommendations will include a call for a gradual U.S. troop reduction in Iraq but no explicit timetable.

Now, the Iraq Study Group began its work nearly nine months ago. The 10-member panel is being led by former Democratic Congressman Lee Hamilton as well as someone close to the Bush family, a Republican, former secretary of state, James Baker.

Now sources close to the panel tell CNN that the members sidestepped that thorny issue of setting a definite timetable for U.S. troop withdrawals. Instead the consensus view, according to a source close to deliberations, is to recommend a gradual, but meaningful, U.S. troop drawdown.

Now, the group is also expected to advise President Bush to urge Prime Minister Maliki, the prime minister of Iraq, to meet certain goals to reduce violence so that U.S. forces can eventually come home. And the panel wants to, as you noted, have the United States focus more on training Iraqi forces rather than carrying out combat operations.

Now, ahead of that report, President Bush, at a summit with Iraq's prime minister in Jordan, sought to dispel the notion that U.S. forces would be pulled out of Iraq prematurely, saying the U.S. would stay in Iraq to get the job done.

And the White House, for its part, has tried to downplay any findings by the so-called Baker-Hamilton commission, noting the administration itself is conducting its own internal reviews.

As for when, Kitty, the president might make decisions on his Iraq policy, his national security adviser, Stephen Hadley said that it would likely be within weeks, not months and it would happen when the president was comfortable.

Kitty?

PILGRIM: Elaine, the Jordanian summit is now behind the president. Going forward, what's the political landscape like with the various people in Iraq?

QUIJANO: It's certainly very complicated. And at that Jordanian summit we heard President Bush give the Iraqi prime minister, Nuri al Maliki a vote of confidence. The president essentially saying, look, this is right person to lead Iraq at this time. But of course this is a critical moment as well for both leaders, both President Bush and Prime Minister Maliki who are facing their own political pressures back home. President Bush to change course in Iraq. And Prime Minister Maliki for not wanting to be seen as too close to the United States.

Against the backdrop of continued violence, certainly a complicated situation there, there have been frustrations as well. But President Bush trying to reach out to both Shia and Sunni leaders. On Monday the president will be meeting with an Iraqi vice president, Abdul Aziz al Hakim whose political party, a powerful one, has close ties to Iran. He's a Shia leader.

And then, in January, we're told by a senior administration official, Bush will be sitting down with a Sunni vice president as well, Vice President Tariq al Hashimi. Kitty?

PILGRIM: Thanks very much, Elaine Quijano.

Well, as Elaine just noted, President Bush said Iraqi Prime Minister Nuri al Maliki is the right guy for Iraq but the Iraqi prime minister's facing a revolt in his own coalition. Radical Islamists loyal to the anti-American cleric Muqtada al Sadr are boycotting the government. Nic Robertson reports from Baghdad.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN CORRESPONDENT (voice-over): Arriving back in Baghdad from his meeting with President Bush, Prime Minister Nuri al- Maliki is walking into trouble. His government is faltering. His parliament divided. The situation is worse than when he left two days ago.

His meeting with President Bush and neighboring Jordan was supposed to bolster his power. It appears to have had the reverse effect.

In Maliki's absence, a parliamentary revolt led by firebrand Shia cleric Muqtada al-Sadr, who demands a date for U.S. troop withdrawal, is gathering momentum. Sunnis and others are joining what appears to be the first big Sunni-Shia political alliance, a striking development in Iraq's sectarian politics.

UNIDENTIFIED MALE: It would be quite a thing if parties inside the parliament, in order to make a bloc, to stand against many things, not only the withdrawal.

ROBERTSON: Motlak (ph) has often been the voice of dissent in the parliament. He says the deal has been in the works for months and includes parties inside and outside the government.

UNIDENTIFIED MALE: This role, we believe, is going to be the alternative for what is going on now.

ROBERTSON: Iraqis did watch Maliki's meeting with Bush. Expectations it could halt what many here fear is a civil war were low. It didn't stop people hoping. Sunnis and Shias were united in their disappointment.

"We don't see any solution from the Bush-Maliki meeting," Sunni Ali says. "Iraqis will reap nothing from such meetings."

"These are words without deeds," says Shiite Mohammed. "We want deeds. Bush and America have done nothing for us."

Maliki's first stop when he got back, a news conference. His first topic, America is changing tactics but still supports us. When questioned about the revolt, he called for Sadr to back down.

NURI AL-MALIKI, IRAQI PRIME MINISTER (through translator): They should be committed. We hope they reconsider.

ROBERTSON: In the six months he's been prime minister, Nuri al- Maliki has never looked so embattled. His ability to lead the country has been questioned in a White House memo, despite President Bush's assurances to the contrary. And now, he appears to be losing his grip over the very people he needs to help run the country.

(on camera): And if he does lose his grip, it not clear whether that would bring down the democratic government or whether it's a positive sign of democracy at work. Either way, it's a further signal, America is losing its influence over Iraq. Nic Robertson, CNN, Baghdad.

(END VIDEOTAPE)

PILGRIM: The Bush administration says Iraq is not in civil war. But a former member of that administration, Colin Powell, says he has no doubt there is a civil war in Iraq. As secretary of state, Powell went to the United Nations to make the case for an invasion, Powell said Saddam Hussein had weapons of mass destruction but that assertion later turned out to be incorrect.

The chief of military intelligence for Central Command says sectarian violence is aimed at permanently changing the ethnic face of Iraq. Brigadier General John Custer also said Iran is feeling the insurgency. Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN CORRESPONDENT (voice-over): As the Bush administration struggles to find a way out of Iraq, the top U.S. military intelligence officer for the region says sectarian violence between Sunni and Shia now runs so deep, it could take generations for the country to become peaceful.

BRIG. GEN. JOHN CUSTER, U.S. ARMY: We're in a self-sustaining cycle of violence is the way I put it. There are demographics within Baghdad that both sides are trying to change, Sunni, Shia. There are death squads on both sides.

STARR: Army Brigadier General John Custer is the senior intelligence officer for General John Abizaid at the U.S. Central Command. He gave CNN a rare interview, as Abizaid travels throughout the region. Custer says violence is at the core of what he calls a revenge society that now is Iraq.

CUSTER: The Shia are trying to move Sunnis out of mixed neighborhoods to turn some neighborhoods into more Shia-based neighborhoods. The Sunnis are resisting. The Sunnis are then coming back at the Shia.

STARR: U.S. military intelligence believes Iran is playing a significant, but perhaps not decisive role, in supporting Shia militias and death squads. Custer says the largest Shia militia, Muqtada al Sadr's Mahdi Army, now has an Iranian controlled element inside Iraq.

U.S. officials say members the Mahdi Army have trained both in Iran and Lebanon. Custer thinks Sadr's recent move to pull his crucial support from Prime Minister Nuri al Maliki may backfire.

CUSTER: He faces quite a strain there because the network of patronage that he acquires from that is a great of his power. So we question how long he can do that.

STAR: But it is the revenge society of Iraq that Custer is focused on. Iran, he says, is not the central issue.

CUSTER: If I could snap my fingers and move Iran out of the picture, it wouldn't change -- it wouldn't end the conflict, it wouldn't drastically change the conflict. It's not decisive.

STARR (on camera): But what is clear, General Custer believes, is that the Shia are now willing to spend years getting their revenge against the Sunnis. Barbara Starr, CNN, at U.S. Central Command's desert headquarters.

(END VIDEOTAPE)

PILGRIM: Radical Islamists in Lebanon led a huge rally to overthrow the country's democratically elected government. Hundreds of thousands of people took part in the protests. Hezbollah and other pro-Syrian groups want the U.S.-backed government to resign immediately.

The Lebanese prime minister says he will not be forced out of office by a coup.

Still to come -- small communities across the country struggle to fight the powerful illegal alien movement.

Plus -- the federal government finally acknowledges that our borders are gateways for terrorists.

And are some U.S. companies bankrolling radical Islamist terrorism? We'll have a special report.

(COMMERCIAL BREAK) PILGRIM: The chief of the U.S. Border Patrol this week admitted that our porous boarders are a gateway for terrorists and communities fighting an influx of illegal aliens are now targeted by well- organized, well-funded open border groups.

Casey Wian reports on the remarks by the head of the Border Patrol. And Bill Tucker reports on cities with illegal immigration statutes that are facing legal challenges by well-funded activist groups. We begin with Casey Wian.

Casey?

CASEY WIAN, CNN CORRESPONDENT: Kitty, while politicians in Washington, D.C. debate the merits of a border fence and illegal alien amnesty, the head of the Border Patrol says they should instead be focusing on stopping terrorists from crossing our borders.

(BEGIN VIDEOTAPE)

WIAN (voice-over): Border Patrol chief David Aguilar told a Texas homeland security conference, it's critical to stop illegal aliens and drugs but more important to prevent another terrorist attack on U.S. soil.

DAVID AGUILAR, BORDER PATROL CHIEF: It is not just illegal immigration. It is not just narcotics. It is national security. We must not lose sight of the fact there are those that see our country borders as gateways, gateways to martyrdom. And a means to achieve their extremist goals and destroy our way of life.

WIAN: He emphasized the point with video of more than 100 illegal aliens.

AGUILAR: I would ask anybody to tell me where the narcotics trafficker is, where the person looking for a job is in there but more importantly where that person trying to hide amongst that group is that is trying come into the country to hurt the United States.

WIAN: Aguilar did not take a position on amnesty for the millions of illegal aliens already in the United States. And he downplayed the importance of 700 miles of new border fencing. He says the 12,000 agent Border Patrol is beginning to receive resources it needs. One key senator advocates doubling the number of Border Patrol agents.

SEN. JOHN CORNYN, (D) TX: We are a nation of immigrants and we are better for it. But we are also a nation of laws. And we can't look ourselves in the mirror today and lay claim to that heritage as a nation of laws with such rampant disregard for our laws, whether it's our immigration laws at the border or at the work site. And it has devastating consequences.

WIAN: Cornyn says it's time the Border Patrol received the same sophisticated technology used by the U.S. military.

(END VIDEOTAPE) WIAN (on camera): The Border Patrol says an eight percent decline in apprehensions of illegal aliens this years evidence its strategies are beginning to work. Because fewer people are trying to cross the border illegally. Kitty?

PILGRIM: Thanks very much, Casey Wian.

Well, there was a highly charged atmosphere in Mexico where Felipe Calderon was sworn in as the new president on Friday. Earlier, scuffles broke out in the Mexican Congress. Supporters of leftist candidate Andres Obrador refused to concede defeat, attempted to seal the entrances.

Now the scuffles continued through the entire inauguration ceremonies.

Cities and towns that have passed measures cracking down on illegal immigration are facing big challenged. Well-funded groups such as the American Civil Liberties Union are challenging those members in court and it has the effect of forcing small towns to find new ways to raise money for this legal battle. Bill Tucker reports.

BILL TUCKER, CNN CORRESPONDENT (voice-over): Officials from cities in Escondido, California, Farmers Branch, Texas, Riverside, New Jersey and Hazelton, Pennsylvania all say the costs of illegal immigration are overwhelming their budgets. But their efforts to crack down on illegal immigration are creating large legal problems. Richly endowed groups like the American Civil Liberties Union are taking the cities to court, challenging the ordinances that those cities and others like them are approving. It's become a fight of the Davids versus the Goliaths.

RICHARD SAMP, WASHINGTON LEGAL FOUNDATION: Unfortunately the cost of attorneys' fees can be very substantial, particularly if the case goes to trial. I think it's reasonable to assume a minimum of $100,000 and likely as much as $2 million or $3 million.

TUCKER: The three groups most active in challenging the cities' laws are the ACLU, the Puerto Rican Legal Defense and Education Fund, and the Mexican American Legal Defense and Education Fund. The combined assets of those groups, $270 million, with undisclosed pro bono legal help available from member law firms.

And while the towns have to answer to taxpayers those groups have to answer to donors who usually remain anonymous. And there is a financial incentive for groups to challenge the laws. Win or lose, their legal fees are usually included in the settlement.

MAYOR LOU BARLETTA, HAZELTON, PENNSYLVANIA: They threaten that a lawsuit involving the city of Hazelton that they would bankrupt us, thinking we would roll over and back off. And we really don't have a choice.

TUCKER: Hazelton has collected $50,000 through individual contributions to help defer its legal costs. Mostly in checks for $10 and $20. The largest single donor to date is the owner of Geno's Cheese Steaks in Philadelphia, he donated $10,000.

The city of Escondido, California has set up a similar program to solicit funds.

(END VIDEOTAPE)

TUCKER (on camera): And officials in the village of Ameraneck (ph), New York have been told by a judge to stop their efforts at cracking down on illegal aliens after a challenge by the Puerto Rican Legal Defense and Education Fund. It is not certain whether those officials will fight the decision, Kitty, and one of the primary factors going into weighing what they do next is cost.

PILGRIM: Who are the donors that are funding this legal challenge, Bill?

TUCKER: We really can't tell you with certainty. We know that it's a lot of different foundations and in the past, for example, like the Ford Foundation and the Hewlett Foundation have been big donors. But lists are anonymous. They don't have to -- they don't have to tell who you who is contributing money to them.

PILGRIM: So it's almost impossible to see exactly who is funding these groups?

TUCKER: Yes, it is.

PILGRIM: Thanks very much. Bill Tucker.

A new citizenship test is being introduced next year. The new test is aimed at making sure new citizens have a better understanding of how this country works. There will be no more multiple choice questions. Respondents will have to write the answers to questions like what is the supreme law of the land? The answer, of course, the Constitution. What determines each state's number of U.S. representatives? The answer, the state's population. The new test will be rolled out in ten cities across the country next year. Nationwide, 2008.

Coming up - the incoming chairman of the House Homeland Security committee telling a company not to weed out illegal alien workers. Congressman Bennie Thompson who will head that committee sits down with Lou.

American companies doing business in countries that support terrorism. Some familiar corporate names are on that list. And we will have those names for you.

And Congress has given itself nine pay raises since 1997. But it has not raised the federal minimum wage once during that period. Has the political climate changed enough for Congress to give someone else a raise? We'll find out. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Some American companies are doing business in countries that sponsor terrorism. The federal government is now investigating some of those deals. But incredibly, the deals may not be against the law. Lisa Sylvester has our report. (BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): A Ford authorized dealership opened in Syria this year. Ford's Land Rover subsidiary sells vehicles in Sudan through a U.K. distributor and Mazda Motor Corporation, which Ford has a 33 percent ownership interest in, has set up shop in Iran. The State Departmentally lists all three nations as official state sponsors of terrorism.

CLARK KENT ERVIN, CNN SECURITY ANALYST: Most Americans don't realize that its legally permissible to engage in trade with countries like this.

SYLVESTER: Under federal law, U.S. companies are not banned from doing business in Syria. Foreign subsidiaries of U.S. corporations can operate in Iran and Sudan as long as parent companies have no control over the foreign entities. It's not clear if Ford Motor Company's dealings are illegal. The Securities and Exchange Commission is seeking clarification from Ford. Legal issues aside, ethical questions have been raised.

SARAH STEELMAN, MISSOURI STATE TREASURER: Why would we want to be helping any of those countries through our investments because they spread terrorism? They buy the bullets that come back and shoot our soldiers.

SYLVESTER: Missouri's treasurer, Sarah Steelman, announced the state is dropping corporations from its worker pension fund that do any business in terror hubs. The list includes about a dozen American firms.

FRANK GAFFNEY, CENTER FOR SECURITY POLICY: So what we're interested in doing here is raising an alarm with the American people that their money, unbeknownst to them, of course, their money is being used by foreign companies to help make our enemies more dangerous.

SYLVESTER: Finding out which companies are doing business in these terror hot spots is difficult.

ROGER ROBINSON, CONFLICT SECURITIES ADVISORY GROUP: I think, regrettably, it pretty clear that publicly-traded companies that all of us found in our portfolios are providing vital life support to the governments of terrorist-sponsoring states.

SYLVESTER: The companies are not forthcoming with investments and the U.S. government does not disclose the information because it's protected by the Trade Secrets Act.

(on camera): A Ford spokeswoman told CNN the company's operations in these nations are extremely small and lawful, and the company, quote, "doesn't believe a reasonable investor would find it material from a quantitative standpoint," end quote. But reminiscent of South Africa and apartheid, there's now growing pressure to convince companies like Ford to pull out of the terror states altogether. Lisa Sylvester, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: Aside from Ford, other companies such as Halliburton and Conoco-Phillips have acknowledged having investments in terrorist- sponsoring countries. They will continue their existing operations there but they will not take on any new business deals.

Now, time for some of your thoughts. Jim from Dallas wrote us. "Investing in terror: Why go after companies like Ford? Every time we put gas in our cars we are supporting terror."

And Kevin in Maryland writes, "A nation's control of its border is essential to the identity to the nation. Once the borders are lost, the nation ceases to exist."

E-mail us at loudobbs.com. And each of you whose e-mail is read here will receive a copy of Lou's new book, "War on the Middle Class."

Coming up, the real value of the federal minimum wage hasn't changed in half a century. But that hasn't stopped Congress from giving itself generous pay raises. That may be addressed by the new Congress. We'll have a special report.

Plus -- the incoming chairman of the House Homeland Security Committee tells a company not to weed out illegal alien workers. Congressman Bennie Thompson answers some tough questions from Lou Dobbs. Lou also interviews the president of the American Iranian Council about Iran's role in stabilizing Iraq. Stay with us.

(COMMERCIAL BREAK)

UNIDENTIFIED MALE: this is LOU DOBBS. This week news, debate and opinion. Again, Kitty Pilgrim.

PILGRIM: Congress has raised its pay nine times since 1997. And in that same period, the federal minimum wage of $5.15 an hour has not gone up one cent. America's working families are suffering badly from wage erosion. Some business owners argue that raising the minimum wage is a job killer. But is it?

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): A year working this job keeps a family of three below the poverty line. The minimum wage has now fallen to the lowest value in real terms in 50 years. There is overwhelming popular support for raising workers' pay. Pew Research Center found 83 percent in favor.

A majority of states have already done so themselves. And Democrats are promising federal action quickly.

SEN. EDWARD KENNEDY, (D) MASSACHUSETTS: That anyone that works 40 hours a week, 52 weeks in a year, in the richest country of the world should not live in poverty.

ROMANS: But raising the federal minimum wage is unpopular with restaurant and retail trade groups.

ROB GREEN, NATIONAL RETAIL FEDERATION: What they're proposing up in Congress is $2.10 increase, which is a 40 percent increase in the entry-level wage. And that can have a dramatic impact on a small business.

ROMANS: He's calling higher wages a job killer that could mean higher prices for consumers.

GREEN: Restaurants might raise menu prices, impacting the bottom line for consumers. Retailers might employ fewer salespeople.

ROMANS: But a growing number of economists have rejected the job killer theory. A study by the Fiscal Policy Institute found small businesses actually added jobs in states that raised the minimum wage.

JAMES PARROTT, FISCAL POLICY INSTITUTE: Turnover goes down. If you increase a worker's wage, their morale improves. They become more productive, more likely to stay on the job. That has productivity advantages and cost savings for employers.

ROMANS: Separate studies in Oregon and New Mexico found similar results.

(on camera): Now, the six states with a higher minimum wage on the ballot this fall, they want to step further. The voters there index their minimum wages to inflation. Just in case, Kitty, Congress fails to act in the future, they're putting in a mechanism to make sure the minimum wage keeps rising in those states.

PILGRIM: That seems like a sensible approach.

Thanks very much, Christine Romans.

Another strain on this country's middle class are immigration and border security crises. Cintas is the nation's largest uniform supplier. It decided to proactively check mismatched Social Security numbers. The company told its employees that if their Social Security numbers were not valid, those employees would be given time to clear up any discrepancy or be put on indefinite leave.

Now Congressman Bennie Thompson, the incoming chairman of Homeland Security Committee, took issue with Cintas's action. And earlier this week, Thompson sat down with Lou Dobbs. And Lou asked him why he objects to what Cintas wanted to do.

(BEGIN VIDEOTAPE)

REP. BENNIE. THOMPSON, (D) MISSOURI: Well, I think the point is the Department of Homeland Security has put out a proposed rule addressing that very issue. They have been soliciting thousands of responses all over the country so that we can come up with one plan to address that particular issue. The department has not come forward with that particular rule.

So what we could conceivably have is every company interpreting its own rule, rather than the department putting forth a rule. That's why we more or less put this company on notice that DHS is about to do this and it's not in your best interest to put these employees on notice on a rule that may or may not exist.

LOU DOBBS, CNN ANCHOR: Well, let me ask you something, congressman. The fact is that if every employer in this country followed the mismatched policy used by Cintas and lots of other corporations and employers in this country, we wouldn't have nearly the problem we've got with illegal immigration, do you think?

THOMPSON: There's no question about it. The problem we've found is that we don't have a specific rule. The mismatch rule does not give a time limit in terms of when an employer has to get this information back.

So what we want to do with this DH rule, Lou, is to have one rule that all employers abide by. One of the problems we found out is that sometimes it's a name change, sometimes it's a marriage license document that's invalid. Sometimes the employer makes a mistake on a Social Security number.

DOBBS: Sure.

THOMPSON: So we need to give some time for that to happen. Right now, we don't have rules that set specifics on that. Once we get DHS to come forward with the specific rule now that they've put out, received comments from businesses all over the country, I'm prepared to go forward with whatever they come with.

It was just premature on Cintas's part to move in this direction. And that's why, as a ranking Democrat, incoming chairman on homeland security, I wanted to let them know that I had been contacted. It's an issue and they shouldn't move forward.

DOBBS: Congressman, why, then, did you say in your letter to them on November 2nd, you were concerned about discrimination rather than homeland security and rather than any reference to any of those rule changes that you mentioned or interpretation. You say very clearly that you're extremely concerned about any potential discriminatory actions targeting this community, referring to...

THOMPSON: That's right.

DOBBS: I'm sorry?

THOMPSON: Well, my letter speaks to the employees of the company that were being -- received these notices. And clearly, if you check with the company, they'll verify that many of these employees who received these notices were immigrants.

DOBBS: Yes. They're immigrants -- you said immigrants, not illegal immigrants?

THOMPSON: That's right.

DOBBS: Right. And the fact is that they gave over 60 days for anyone to take care of this problem. As you yourself acknowledge, that if every employer in the country was following the same diligent, rigorous policy in terms of those it employed, we wouldn't have a problem. So why in terms of solving a problem, should we get hung up on what the Department of Homeland Security, which, as you know, is basically just a joke anyway, is doing with a rule?

THOMPSON: Well, after January, you'll see a big difference. What you'll see is a department that gives timetables for employers to come forth with the employees. It would be fair to the employees who get this information. If they don't get the information back, Lou, then obviously they're in violation, and they should suffer the consequences. I have no problems with it. But right now, we don't have any rules that address this. Hopefully, we'll have them.

DOBBS: Congressman, you know, we look forward to you taking over the Homeland Security Committee and delivering on that statement, that it's going to be a lot better.

Will you recommend that all employers follow a rational policy and make certain that they are matching those Social Security numbers? Will you also tell this government, this executive branch, this Bush administration that they're to remove the executive order prohibiting a comparison of Internal Revenue Service numbers with Social Security numbers and end this absurd ignorance of our laws?

THOMPSON: Well, you have my word, Lou, that we will have a rule that addresses the no mismatch requirement that all employers will be able to follow. Employees will know how long they have to get the information. And if they don't provide the information to the employer, then they will not retain their employment, and the proper agencies will be notified of such.

DOBBS: Congressman, we thank you for being here. Appreciate it.

THOMPSON: Thank you.

(END VIDEOTAPE)

PILGRIM: As many as 30,000 people have been granted U.S. citizenship, even though the federal government lost their background files. A GAO report says the Citizenship and Immigration Service lost more than 100,000 immigration files. The GAO investigation was requested by Senators Charles Grassley of Iowa and Susan Collins of Maine. The senators acted after citizenship was granted to a radical Islamist whose primary file had been lost. And that lost file indicated the man had ties to the radical Islamist group Hezbollah.

Still to come, Iran blames the United States for the violence in Iraq. But does Iran truly want U.S. troops out of Iraq? The president of the American Iranian Council is our guest.

And President Bush trying to rub elbows rubs a sore spot instead, igniting a hostile exchange with a Vietnam veteran and senator-elect over Iraq.

(COMMERCIAL BREAK)

PILGRIM: The Iraq Study Group report is due to be released on Wednesday. And it's likely to recommend the United States talks with Syria and Iran to help restore order in Iraq. Lou Dobbs spoke with Hooshang Amirahmadi this week. He's a Rutgers University professor and the founder and president of the American Iranian Council. And Lou asked what he thought would come of the meeting between Iran's Supreme Leader Ayatollah Khomeini and the Iraqi President Jalal Talabani.

(BEGIN VIDEOTAPE)

HOOSHANG AMIRAHMADI, RUTGERS UNIVERSITY: Very little. I think that stability in Iraq, in the last analysis, is in the hands of the United States of America. I think if we leave that place, that place will descend into chaos, a chaos that they haven't yet seen.

DOBBS: Yet Khomeini says, with his great munificent visage and tone, that the Americans...

AMIRAHMADI: He's speaking -- he's speaking for the Arab states. He's not speaking his heart. The honest view is that Iran does not want the United States to leave Iraq.

DOBBS: Let's be blunt. What does Iran want?

AMIRAHMADI: Iran wants U.S. stay in Iraq and bleed...

DOBBS: And bleed?

AMIRAHMADI: ... and bleed, so that it can get concessions, and it can actually make sure that it will not be the next target. Iran has serious problems with the United States, you know, over the enrichment of uranium, over the terrorism issue, the Arab-Israeli peace, the human rights and so on. So the best outcome for Iran would be for the U.S. to stay and bleed, as opposed to leave, because the moment the U.S. leaves Iraq, Iraq is going to descend into tremendous chaos, into civil war and disintegration. And that will not serve Iran's interests.

DOBBS: We've got people talking, and presumably the Baker- Hamilton commission, the Iraq Study Group, talking about moving forward with Syria and Iran, both state sponsors of terrorism and enemies of the United States.

AMIRAHMADI: Yes. Well, let's say that both -- Iran and Syria have different objectives...

DOBBS: Right.

AMIRAHMADI: ... in Iraq. And they pursue different aims, I'd have to say. For Syria also wants -- Syria also wants the U.S. to stay in Iraq and bleed. What they wanted to get out of this is a start on that process that is putting together the international tribunal against them for the Hariri case, and the Golan Heights.

DOBBS: Professor, let me ask you this: if that is what they want us to do, why shouldn't we do the opposite?

AMIRAHMADI: Well, the unfortunate fact at the moment is that we have cornered ourselves in that part of the world. But I think we should speak tough. I think I do -- I have spent twenty years of my life...

DOBBS: Aren't you just about sick and tired of bloviating braggadocio on the part of U.S. leaders and, at the same time, not accomplishing anything?

AMIRAHMADI: Well, the problem is -- what I mean by talking tough, I don't mean really just talking tough, I mean taking actions toughly.

I tell you what will work. Let's say the U.S. and Iran -- U.S. and Iran have serious problems. One of the problems just recently come out would be the Iraq issue. But there are other problems that have been there for 20 some years.

DOBBS: We've got just less than a minute.

AMIRAHMADI: Yes.

What I think the U.S. should do, it should give a country like Iran a big deal on the positive side, and also a huge deal on the negative side and let Iran decide, basically say, here is the huge carrot, and then here is, under the table, a huge stick. You have to take -- we cannot...

(CROSSTALK)

DOBBS: ... OK, I understand. Carrots and sticks. I got that.

AMIRAHMADI: But big ones, huge. You haven't gotten it yet.

DOBBS: We've got $469 billion appropriated for the war in Iraq. We are bleeding, as you know.

AMIRAHMADI: Yes.

DOBBS: And the truth is, bleeding for what? In the convenience or the interest of Iran? I'm not interested in that, and I don't think most Americans are.

AMIRAHMADI: I think, I mean, the U.S. has long-term interests in that part of the world. This is...

DOBBS: If we get rid of the oil, how long-term?

AMIRAHMADI: It's not just only the oil.

DOBBS: If we get rid of the oil, how long-term are our interests? About five minutes? AMIRAHMADI: No, I think we have tremendous problems in the region that we have to deal with. DOBBS: No, the region does have tremendous problems. I just don't know whether they're ours if we pull oil out of the equation.

AMIRAHMADI: I think we have Israel there. We have other allies in the region.

DOBBS: Professor Amirahmadi, I have to break here.

We're out of time.

Great to have you.

AMIRAHMADI: All right. Thank you for having me.

(END VIDEOTAPE)

PILGRIM: Coming up next, we'll tell you why Senator-elect Jim Webb's visit to the White House ended in a heated exchange with the president.

Then three of America's brightest political minds tell us U.S. strategy in Iraq is at a turning point.

(COMMERCIAL BREAK)

PILGRIM: A tense moment at the White House between President Bush and the newly elected senator from Virginia, Jim Webb, this week. Now Webb is a highly decorated Vietnam veteran and his son is serving in Iraq with the Marine Corps. The president and Webb met at a White House reception.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN CORRESPONDENT (voice-over): Jim Webb became a Democrat and ran for the Senate for one big reason: Iraq.

JIM WEBB, (D-VA) SENATOR-ELECT: I was an early voice warning against the implications of invading and occupying Iraq.

SCHNEIDER: Webb has special credibility on Iraq. He was a military officer who served in Vietnam, a former secretary of the Navy under President Reagan and he has a son serving in Iraq. He wore his son's old combat boots during the campaign.

WEBB: I have tremendous admiration for my son and for everyone else who is serving there. But they need to be led properly.

SCHNEIDER: Webb took on President Bush directly.

WEBB: But the key word is "leadership," which has been a scarce commodity among this administration and its followers. SCHNEIDER: President Bush saw Webb at a White House reception for new members of Congress this month. The freshman senator had this exchange with the president, which he confirmed to the "Washington Post.

"How's your boy?" Bush asked.

"I'd like to get them out of Iraq, Mr. President," Webb replied.

"That's not what I asked you," Bush said. "How's your boy?"

"That's between me and my boy, Mr. President," Webb said.

The White House incident is causing a lot of tut-tutting in Washington. A Democratic Senate staffer told the "Post," I think Webb is going to be a total pain. He's going to do things his own way.

Shock, horror.

Webb reassures his colleagues.

WEBB: I've spent four years as committee counsel in the Congress. I know how the process works.

SCHNEIDER: Webb's confrontation is a striking contrast to pictures of Democrats meeting with President Bush and pledging cooperation and bipartisanship.

It's also not the way things usually get done in Washington, but it is what a lot of people voted for.

(on camera): Webb did not run as a typical politician. And it doesn't look like he's about to change now that he's gotten elected.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: Joining me now, three of the best political minds in the country. Democratic strategist Hank Sheinkopf, syndicated columnist Miguel Perez, and the columnist for the "Washington Times" Diana West.

And thank you all for being here.

Let's start with the Jim Webb exchange. Is this an isolated incident, or is this sort of a litmus test for a deeper ideological split with the Democrats and President Bush?

Miguel?

MIGUEL PEREZ, SYNDICATED COLUMNIST: It's very surprising to me that someone would go to the president's house and act this way. If you don't want to be photographed with the president, don't go to his house. It's as simple as that. So why make a fuss? And why -- you know, I don't think it's very courteous of the guy to go -- the senator-elect, to go to the president's house and then not want to be photographed with him, and then, you know, have this exchange. I would love to know how his son feels about the war.

PILGRIM: That's interesting. Yes.

HANK SHEINKOPF, DEMOCRATIC STRATEGY: It tells you something very simple. Politicians are not machines. He has a son who is in combat on a daily basis. He's got angst about it. He ran his campaign on the war. He's a guy who served this nation as a hero. And he's angry. And so are, by the way, hundreds of thousands of Americans, and they showed that anger on election day.

PILGRIM: It was a temper flare, Diana?

DIANA WEST, "THE WASHINGTON TIMES": Well, they showed their anger on election day by voting in a very courteous manner. I would agree with Miguel. I would also say it sounded it a bit like a line out of a spaghetti western more than anything else. And I was surprised at that, because I think that Mr. Webb's writing is usually better than that.

PILGRIM: OK. Let's move on. Since we weren't there, we can't really define exactly the spirit of the whole thing. Interesting exchange.

Let's go on to a substantive issue. The Iraq Study Group reportedly will recommend something of a pullback of U.S. troops. We'll find out more details later. But they are -- the thinking is that it will be, maybe, a phased withdrawal.

Let's listen to what President Bush said Thursday about a timetable for a withdrawal in Iraq.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: All timetables mean is that it -- it is a timetable for withdrawal. You keep asking me those questions. All that does is -- hold on a second -- all that does is set people up for unrealistic expectations.

(END VIDEO CLIP)

PILGRIM: All right. Now, even the Democrats have stopped talking for a quick, speedy exit after the election furor has died down. Where do we stand here? Is this cut and walk? Is this more of same? Where do you see it?

PEREZ: Well, the president, unfortunately, appears to be the stubborn guy in this whole situation, when, in fact, he's right. We cannot have an immediate pullout. When the Democrats gave the impression during the campaign that we could walk out of there immediately, I think that was misguided, because, in fact, realistically if we all -- and I think more and more Americans are realizing that we have to get out of there. But it cannot be done overnight. And so a gradual pullout is the answer.

PILGRIM: And yet, many campaigned on this whole thing. Is that a disservice to the American people?

SHEINKOPF: I think there's something else going on here, Kitty. In diplomatic think, it's probably "cut and let's play". And what I mean by that is "let's get a little bit out and then let's get the parties in the region to do business with us. And do whatever we have to do to make sure we don't have to go back there."

It's a different set of circumstances. I think both Mr. Baker and others involved in the process have alluded to that.

PILGRIM: Diana?

WEST: Well, one question I have not had answered is who elected the Iraq Survey Group? It seems like it's coming down on us as though James Baker had gone up the mountain and come down a la Moses with the tablets to give to the American people. And so I'm very dubious about the whole thing.

PILGRIM: OK. Let's take a quick break. We'll get back to some other very pressing issues in just a moment. But first, we'll take this quick break. We'll be right back.

(COMMERCIAL BREAK)

PILGRIM: I'm joined again by our panel. We were caught discussing Iraq. U.S. Secretary General Kofi Annan had a lot to say on the fact that Syria and Iran could work with the international community for a solution. Let's hear what he had to say.

(BEGIN VIDEO CLIP)

KOFI ANNAN, U.N. SECRETARY GENERAL: I have been quite clear that the two countries have a role to play and we should make them part or they should become part of the solution. And we should bring them in and get them to work with us in resolving the issue and let them assume some of the responsibility. So I stand by that recommendation.

(END VIDEO CLIP)

PILGRIM: You know, some say it legitimizes rogue regimes, however, to bring them into this process. Miguel?

WEST: Absolutely.

PEREZ: It does. Absolutely it does. And I'm not a fan of Mr. Kofi Annan and don't take his word very seriously.

PILGRIM: Hank?

SHEINKOPF: I wouldn't listen to anything Kofi Annan had to say about anything. But bringing them to the table, it does legitimize rogue regimes. It reduces the power of the United States to determine what moral use of force is and what morality is in international politics. And that is not a good precedent.

PILGRIM: Diana? WEST: Well, this is something that supposedly is going to be coming out of the Baker report. I think the president is resistant to it. But one other point that is coming out of the report supposedly has to do with a shift on our policy toward Israel, which I this is truly criminal because it is -- it proposes to tie our situation in Iraq and the unsettledness and chaos, violence there to pressuring Israel into further concessions to its terrorist neighbors. And I think it's a terrible precedent, both morally and politically, for the United States.

PILGRIM: Let's talk about Iran for a second. It has been six months since the U.S. and European allies gave the ultimatum to Iran. And that ultimatum, Secretary Rice said, it will be a matter of weeks, not months, before sanctions are agreed to. Six months, still nothing done. Why?

PEREZ: Because we don't know what to do. It's very obvious that we have our hands crossed here. And we're trying to figure out what to do. And we still don't know. We don't have a policy on Iran. I think this -- you know, taking it to the U.N. and making Russia vote with us on sanctions is a good idea. If Russia decides not go along, we may be able to pressure Russia, at least, to abstain at this point, because Russia's in trouble because of the spy situation and everything else that's going on.

PILGRIM: It seems that the discussion has been diverted to Iran in the Iraq context versus Iran in the nuclear context.

SHEINKOPF: This is a bad, bad set of circumstances for this country. Before you announce a policy, you better be able to enforce it. We now look to that part of the world, to gangster regimes like we have no clout to do anything and that they can do what they want at will.

PILGRIM: Disturbing. Diana, last word.

WEST: It's very scary. And there's -- it just shows the tremendous disarray that the administration and the Congress are in because there is no policy on these important regimes.

PILGRIM: All right.

Thanks very much for being with us. Miguel Perez, Diana West and Hank Sheinkopf...

WEST: Thank you.

PILGRIM: ... thank you.

And thank you for joining us. For all of us here, good night from New York.

THIS WEEK AT WAR starts now, here with John Roberts.

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