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LOU DOBBS TONIGHT

Counterattack: President Bush's Veto Threat; Showdown Over Iraq; Danger Zone?

Aired March 28, 2007 - 18:00   ET

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


LOU DOBBS, HOST: Tonight, President Bush's counterattack as Congress moves ahead with a deadline for bringing our troops home from Iraq.
A sudden surge of attacks in Baghdad's secure area. The so- called Green Zone looks now like a danger zone.

And dramatic developments in the standoff over Iran's capture of 15 British sailors and marines, including the first video of the captives.

We'll have those stories, all the day's news, much more, straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, March 28th.

Live from Washington, Lou Dobbs.

DOBBS: Good evening, everybody.

President Bush today launched a counteroffensive a day after the Senate voted to support a deadline for bringing our troops home from Iraq by next March. In a stinging speech, President Bush repeated his veto threat and ridiculed both houses of Congress for loading Iraq war spending bills with pork.

On Capitol Hill, Democratic leaders urged President Bush to calm down and accused him of being out of touch with reality.

Ed Henry tonight reports on the president's call for an end to congressional meddling in the military.

Dana Bash reports from Capitol Hill on the angry rhetoric coming right back at the president and the Democrats' next move.

Jamie McIntyre reporting from the Pentagon on the disturbing rise of attacks inside the one place in Iraq that is supposed to be safe and secure, the fortified Green Zone.

We begin tonight with Ed Henry at the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lou, this is an old threat from the president. He's just repeating what he has already said. What was new is that the language, the rhetoric was more strident. (BEGIN VIDEOTAPE)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Not a bad introduction by a cowboy.

HENRY (voice-over): As the president addressed the National Cattlemen's Beef Association, a bit of the Bush swagger was back.

BUSH: Now, some of them believe that by delaying funding for our troops they can force me to accept restrictions on our commanders that I believe would make withdrawal and defeat more likely. That's not going to happen.

If Congress fails to pass a bill to fund our troops on the front lines, the American people will know who to hold responsible.

HENRY: The president accused Democrats of meddling with military strategy and vowed again to veto any bill that sets a spring 2008 timetable for bringing U.S. troops home.

BUSH: It's unclear what the military significance of this date is. What is clear is that the consequences of imposing such a specific and random date for withdrawal would be disastrous.

HENRY: Mr. Bush also lampooned pork projects loaded up in the war funding bill.

BUSH: There's $3.5 million for visitors to tour the Capitol and see for themselves how Congress works. I'm not kidding you.

HENRY: And he used an unconventional example to claim progress on the ground.

BUSH: I want to share with you how two Iraqi bloggers -- they have bloggers in Baghdad just like we've got here -- describe it. Displaced families are returning home. Marketplaces are seeing more activity. Stores that were long shuttered are now reopening. We feel safer about moving in the city now.

(END VIDEO TAPE)

HENRY: Now, in the short term, the White House feels good about the fact that it's clear the Democrats do not have the votes to override a veto, but in the long term, the White House has to be very concerned that each time there's a vote on the Hill over a timetable, the vote tally keeps increasing and increasing, and, in fact, the number of lawmakers that are opposing and latching out at the president's policy also increasing -- Lou.

DOBBS: Ed, thank you very much.

Ed Henry from the White House.

On Capitol Hill today, Democrats struck right back at the president. They're giving no ground in their intention to bring our troops home next year. Dana Bash has our report.

(BEGIN VIDEO TAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Less than an hour after the president accused Democrats of meddling in his war strategy and endangering U.S. troops, the House speaker responded with two words -- calm down.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I would extend a hand of friendship to the president, just to say to him calm down with the threats. There's a new Congress in town. We respect your constitutional role. We want you to respect ours.

BASH: Senate Majority Leader Harry Reid was more blunt: "Why doesn't he get real with what's going on in the real world?," Reid said of the president. "His arrogance is getting real out of touch with what's going on with reality."

Emboldened by majority votes in the House and Senate to withdraw troops from Iraq, Democrats say the president is going to have to compromise in order to get money for the war.

PELOSI: This president is not getting any more blank checks from the Congress. This Congress will hold him accountable for the conduct of this war and we will have legislation that will give him every dollar he asks for our troops -- and more -- but with accountability in there.

BASH: But for all their tough talk, Democratic sources say they have not yet settled on a strategy for after the president makes good on his promise to veto any Iraq War funding bill with a deadline for withdrawal. Democrats will then be faced with the question of how far to take this political standoff while troops who need the funding are in combat.

(END VIDEO TAPE)

BASH: Democrats are also pushing back on the president's warning today that if he doesn't sign a war funding bill by mid-April, the Iraq mission and the troops there will be at risk. What Democrats say is that the military won't have real financial problems until mid-May. And Democrats also, Lou, are accusing the president of being the one to put the military in this weak position because they say that he has mismanaged the war -- Lou.

DOBBS: Dana, thank you very much.

Dana Bash from Capitol Hill.

Insurgents have killed another of our troops in Iraq. A Marine died in combat in Al Anbar Province.

Seventy-nine of our troops have been killed in Iraq so far this month. 3,244 of our troops have been killed since this war began. 24,314 of our troops wounded, 10,841 of them seriously. Among this week's war dead is an American soldier who was killed in a rocket attack in what is supposed to be the secure Green Zone in Baghdad. A government contractor was also killed in that attack. This is just the latest in an unusual surge of violence in the heavily fortified zone where U.S. operations are based.

Senior Pentagon Correspondent Jamie McIntyre has the report.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice over): In the now familiar video from a week ago, new U.N. Secretary-General Ban Ki-moon flinches as an insurgent rocket lands nearby during a press briefing. Rocket attacks like this one that left a cloud of smoke over central Baghdad this week are frequent enough to show that the secure Green Zone is not so secure after all, especially lately. A deadly attack Tuesday killed two Americans, a contractor and a soldier, and wounded five others, underscoring the danger.

The Green Zone, officially called the International Zone, is a heavily-guarded, walled-in section of Baghdad that is the site of the Iraqi government and parliament, as well as the sprawling U.S. Embassy. The plan is to shrink the secure area over the coming months as some streets are reopened and turned over to Iraqi control under the new Baghdad security plan.

But that plan has U.S. contractors and other private workers, including some members of the western news media, worried that a bad situation is about to get worse. Safety, after all, is often a matter of perception.

BRIG. GEN. JAMES "SPIDER" MARKS, U.S. ARMY (RET.): Is there routine intervention into the Green Zone by bad guys? Of course. Of course there is, both on the ground and through mortar fire, and through indirect fire. I mean, that stuff kind of happens.

MCINTYRE: Still, the U.S. military denies there are any plans to start moving nonessential workers out of the Green Zone because of any increased threat.

The last known American death in the Green Zone was in February, when a contractor was killed in a checkpoint shooting.

(END VIDEOTAPE)

MCINTYRE: The U.S. military doesn't have a good explanation for the recent uptick in so-called indirect fire attacks. One senior military official told CNN it could be due to the detention of several leaders of a radical cell of Muqtada al-Sadr's Mehdi army. Another military official said that Tuesday's deadly attack was simply a lucky shot -- Lou.

DOBBS: And is the U.S. military preparing any tactical response, looking at new ways in which to fortify and reinforce the so-called Green Zone? MCINTYRE: Well, in fact, they're looking at just the opposite. They're looking at ways to increase the turnover of parts of the Green Zone to the -- to the Iraqis because, after all, if they can't secure the government buildings in that area, how is the overall Baghdad security plan supposed to work? But for the moment they're not making any immediate changes.

DOBBS: Thank you very much.

Jamie McIntyre, from the Pentagon.

Iranian state television today aired video of some of the 15 British sailors and marines that were captured at sea last week. Tehran claims they were in Iranian territorial waters when they were captured. British officials deny that, and British officials say they have proof that the group was in Iraqi territory conducting a legitimate inspection of a cargo ship. Tonight, Iran's foreign minister says his country will look into releasing the only female captive as soon as possible.

Tomorrow, the investigation into the firings of eight U.S. attorneys takes another step forward. Kyle Sampson, the former chief of staff to Attorney General Gonzales, who resigned in the wake of this scandal, he will testify before the Senate Judiciary Committee tomorrow. But today, more documents relating to those firings were released.

Democrats now are again wondering whether the Bush administration is hiding something.

Kelli Arena is here with more -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Lou, these documents just keep coming, and the plot just thickens.

Today, in this document dump, there's a letter from a Justice official admitting that some statements made to Congress were contradicted by evidence in documents that were released later. First, officials said that the department wasn't aware that Karl Rove played any role in the decision to appoint his former associate, Tim Griffin, as U.S. attorney in Arkansas, but subsequent documents suggest that Justice staffers knew that it was very important to Rove that his buddy get a job.

Now, Senator Schumer jumped right on that, saying that it seems Justice rarely acts without the knowledge and approval of the White House. So hopefully tomorrow there's going to be more clarity here. That's when Kyle Sampson, the attorney general's former chief of staff, testifies before the Senate Judiciary Committee.

Now, senators are hoping to find out what led to those firings and why there were so many conflicting explanations coming out of the Justice Department. People close to Sampson say he remains very loyal to this attorney general, but say that he is going to explain that he was not acting in a vacuum and that other Justice officials were very aware of what was going on -- Lou. DOBBS: Well, it seems clear from the e-mails already, as you put it -- as the term of art here in Washington, "dumped," that there were contradictions, if not outright lies. Particularly on the part of the attorney general.

The idea that there were other Justice officials involved is straightforward. That meeting held that the attorney general apparently forgot about had to involve other Justice officials. What is difficult to understand here is why any -- any one of these officials would be taking the Fifth Amendment and why this should be an issue at all.

ARENA: Well, as we know, Monica Goodling, the only one so far, right, that's taking the Fifth. But Sampson is going voluntarily -- Lou.

DOBBS: It's going to be fascinating to watch. At the same time, the injection, again, of administration partisanship into policy, public policy -- in this case one of the most sacrosanct of all of the branches of the executive department, the Justice Department, is reason for all of us to be concerned, whether Republican, Democrat, or whatever.

Kelli, thank you very much.

Kelli Arena.

Coming up here next, my testimony today before Congress on the devastating impact that so-called free trade agreements have had on our working men and women in this country and families.

And there finally may be a move to force China's hand to end its currency manipulation that makes it impossible for American companies, they say, to compete fairly. There's more to it than that. But we'll have it.

And the battle to close the loophole that allows American companies to do business with countries that sponsor terrorism. Yes, do business with countries sponsoring terrorism.

In our special edition at 8:00 p.m. Eastern here on CNN, "The War Within". Thirty years after this nation declared a war on drugs, we'll take a look at why we as a nation and a people are still losing that war and too many of our youth are in the grip of drug and alcohol addiction.

Live at George Washington University tonight, 8:00 p.m.

We'll be right back. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Five and a half years after September 11th, Congress is taking steps to crack down on American companies doing business with state sponsors of terrorism, such as Iran. While it is illegal to do business with terrorist states, a loophole in the law allows companies to do business through foreign subsidiaries, and they take advantage of that loophole.

Bill Tucker has the report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice over): Halliburton moved senators Sherrod Brown and Byron Dorgan to action. Their legislation targets companies which do business with Iran through foreign subsidiaries or who reincorporate off shore.

SEN. BYRON DORGAN (D), NORTH DAKOTA: We have some companies that are very big contractors, defense contractors with our federal government who, on the other hand, have foreign subsidiaries with which they're doing business with Iran. Boy, I think that's horribly inconsistent in terms of public policy, and we can do something about that, and I think we should.

TUCKER: Halliburton even rated a special mention by name in the press release. "Halliburton, one of America's largest contractors, used this loophole to conduct extensive business with Iran, through a subsidiary in Dubai."

Halliburton responds that it is and will remain a proud American company, incorporated in the United States, and that all of its business has been allowed under U.S. law, which does nothing to dull the anger of the bill's co-sponsors, who vow not to let it simply disappear into a committee.

SEN. SHERROD BROWN (D), OHIO: We're not going to let it disappear. This is the kind of issue the public will get behind. This is the kind of issue, while it might be controversial in Washington, D.C., it's not controversial in Canton, Ohio, or Toledo, Ohio. And nor is it controversial anywhere else in the heartland.

TUCKER: Ten states can testify to that. All passed or are considering passing bills to order asset managers of state money to divest their holdings of companies doing business with terrorist states.

(END VIDEOTAPE)

TUCKER: Now, the Brown-Dorgan legislation would not outlaw companies from reincorporating offshore, Lou, but it would outlaw giving such companies government contracts.

Back to you.

DOBBS: Bill, thank you very much.

Halliburton's CEO recently -- the company announcing its CEO moving to Dubai, apparently to be closer to some of its clients.

Thank you very much.

Bill Tucker. The Senate Finance Committee wants tougher legislation on China. Senators Chuck Schumer and Lindsey Graham and other lawmakers say it is time for China to play fair when it comes to international trade.

Kitty Pilgrim now has more on new trade momentum and initiatives building in this Congress.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice over): Talk, talk, talk. And some in Congress say China has been dictating unfair trade terms for years.

SEN. CHUCK GRASSLEY (R), IOWA: The problem is, over a long period of time, going back to the Clinton years and continuing under the Bush years, we have really used kid gloves approach to China. I don't see it. I think that we need to be tougher.

PILGRIM: Senator Grassley, along with senators Charles Schumer, Lindsey Graham and Max Baucus, want new legislation to stop countries from manipulating their currency for a trade advantage. The biggest offender, China.

Lawmakers and manufacturers charge that Chinese currency is undervalued by 40 percent. That's the equivalent of a 40 percent discount on everything China sells in the United States.

That means China floods the United States market with unfairly cheap goods, leaving no way for American factories to compete against artificially low prices. The strategy has made China rich. China now dominates the U.S. market in manufactured goods, electronics, clothing, toys, auto parts, furniture, household products.

Unless there is some solution, the United States risks losing virtually all its manufacturing jobs to China. The House bill is being proposed to put tariffs on Chinese products.

REP. TIM RYAN (D), OHIO: I think the Democrats being in charge and having a push from small businesses and labor is really helping the matter out. And I think at the end of the day, that's -- that's the kind of coalition that we need to pass anything.

PILGRIM: The House bill is using World Trade Organization rules to argue for trade sanctions to be put on China. They say currency manipulation is an export subsidy which is not allowed under WTO rules.

(END VIDEOTAPE)

PILGRIM: Now, many in Congress blame the Bush administration for letting this trade war become a crisis. Senator Graham has said the goal is to get this administration off the sidelines, quit playing referee, and become an advocate for fairer trade with the Chinese -- Lou.

DOBBS: It also, it seems to me, would be helpful if this administration would become an advocate for the American people, working men and women, and the national interest when it comes to international trade. Something they have refused to do to this point.

Kitty Pilgrim, thank you for that excellent report.

Congressional hearings today on the effect, the impact of so- called free trade policies on our economy and on American workers and their families. I was one of a number of witnesses called to testify today.

And more than 100 illegal aliens from Haiti washing up on the shores of southern Florida. We will have a report on what happens to them next.

And we'll talk with a man who says this broadcast reports only one side of the issue of illegal immigration. And he and his organization have not directly, but certainly obliquely implied that I'm a racist because I oppose illegal immigration and advocate border security.

You won't want to miss that discussion, believe me.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The White House is calling upon this Congress to renew the president's Fast Track Authority to negotiate so-called free trade agreements. Critics maintain that 31 consecutive years of trade deficits can be blamed, in part, on the decision of previous Congresses, and certainly the one three decades ago to cede the constitutional power over trade to the executive branch. It looks as though that may change.

Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): On Capitol Hill, a grim assessment of trade, foreign policy and the American worker.

THEA LEE, AFL-CIO: U.S. trade policy has failed in almost every important dimension.

ROMANS: Unsustainable trade deficits, trade giveaways to China, and broken promises to American workers.

REP. MARCY KAPTUR (D), OHIO: In my district, Philips Lighting has lost 2,000 jobs to Mexico; Ford Motor 1,500; Dixon Ticonderoga, 300. Georgia Pacific Dixie Cups are gone, Spangler Candy, Conagra.

The list is endless.

ROMANS: All because, in the words of one witness, successive administrations have pushed for free trade at all costs. DOBBS: Free trade has been the most expensive trade policy this nation has ever pursued. There is absolutely nothing free about ever- larger trade deficits, mounting trade debts, and the loss of millions of good-paying American jobs.

ROMANS: More than three million manufacturing jobs lost nationwide, and record trade deficits in each of the last five years.

Former trade representative Carla Hills defended America's trade policies.

CARLA HILLS, FMR. U.S. TRADE REP.: If the average American family today is $40,000 -- that's the median income -- it would be $30,000 if we had not continued to open markets.

ROMANS: She hailed a 4.5 percent jobless rate and said open markets add $1 trillion a year to the American economy.

HILLS: Let's keep the markets open, gain the wealth that we get from the open markets, and use some of that wealth to deal with the concerns that have obviously been front and center on this hearing.

ROMANS: A hearing full of tough questions.

REP. BRAD SHERMAN (D), CALIFORNIA: The definition of insanity is to keep doing what you have been doing and expect a different result.

ROMANS: The result, an $857 billion current account deficit, criticism of which draws jeers from free traders.

DOBBS: I have been called a table-thumping protectionist, and the Bush administration has hurled at me its favorite public epithet, at least in terms of economic policy, calling me an economic isolationist. Nothing could be farther from the truth.

(END VIDEOTAPE)

ROMANS: A tough examination on the Hill and some agreement, indeed, in that hearing room that some workers are displaced by American trade policies, and that these huge deficits are not sustainable. At least Congress is beginning for take seriously its responsibility for trade.

This hearing today, Lou, might be an important first step there.

DOBBS: I think it is, and I can't compliment Congressman Brad Sherman, the chairman of the committee, his members of both political parties, taking a serious look at the impact of this so-called Fast Track Authority. The Congress, of course, has a constitutional responsibility which they have turned over to the executive.

I hope that this Congress -- and I am hopeful -- will reclaim it for the good of working men and women in this country, and all the rest of us who care about what faces our grandchildren.

Thank you very much. Christine Romans.

That brings us to the subject of tonight's poll.

Do you believe Congress should retain its constitutional power and prerogative in trade policy? Yes or no?

Please cast your vote at loudobbs.com. We'll have the results here later.

Coming up next in our "Broken Borders" report tonight, citizens of Arizona are fighting back. Two new initiatives would empower state and local authorities to enforce our immigration laws.

Also tonight, "The War Within," how this Minnesota high school is helping teenage students stay sober and drug-free.

We'll have that story.

And we'll dedicate a full hour tonight here on CNN to this country's battle with drug and alcohol addiction. A special edition of this broadcast tonight 8:00 p.m. Eastern, "The War Within," right here on CNN.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Among the more disturbing aspects of this country's battle with drug addiction and alcohol addiction is the crisis among our youth. Millions of teenagers are abusing drugs and alcohol at an alarming rate and in alarming numbers, but there is hope for those trying to recover. Lisa Sylvester tonight has more on one school that is helping teens sober up and rebuild their lives.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Gabriel Bliss has been in and out of five different high schools in the past five years. He is a recovering drug addict.

GABRIEL BLISS, SOBRIETY HIGH STUDENT: I got sucked into the drug world by marijuana mostly, but I got hooked on acid when I was 15 and used that for about four years.

SYLVESTER: Gabriel is now on a recovery path at the public charter school Sobriety High in Minnesota. The classes are smaller than you'll find in others schools. Gabriel has been here three months, taking a full course load, and participating in peer counseling where everything is on the table.

BLISS: If somebody has a problem they should come directly to you. I mean, come on. She's talked to me about the way I act.

SYLVESTER: Sobriety High opened 15 years ago to help students who left a treatment program. Instead of returning to their old school, old friends and old habits, they find support among peers who share the same goal.

JUDI HANSEN, DIRECTOR, SOBRIETY HIGH: They are allowed to learn and regain some of the skills that they lost because this is a safe place that they don't have to worry about being asked to use drugs.

BLISS: We're working it, learning how to live life, and that's what this school is here to teach us. It's here to help.

SYLVESTER: Studies show 90 percent of teenagers who leave a treatment program but return to their old high school end up using again within a year. Eight out of 10 students at Sobriety High never touch drugs again.

(END VIDEOTAPE)

SYLVESTER: There are more than a dozen of these recovery public high schools around the country, and they truly are able to turn around these kids' lives. Many of the school's graduates will return and share their success stories and how they were able to kick their drug addictions and then they go on, Lou, to do wonderful things.

DOBBS: This is a terrific, terrific strategy and approach. Who is funding this? Are these public schools? And are we going to see more of them, because obviously they are working.

SYLVESTER: They do definitely work. They are public schools. They are public charter schools. Money is always a factor, and they always - you have a waiting list. There are so many more parents and kids who want to participate in a program like this, but they don't have enough of these schools, Lou.

DOBBS: Eighty percent avoiding relapse and recovering successfully. I mean, that's a remarkable achievement.

SYLVESTER: It really is, Lou.

DOBBS: Lisa, thank you very much. It's always great to have good news on this broadcast. Thank you. Lisa Sylvester.

We'll have much more on this country's battle with drug and alcohol addiction tonight in our special edition of this broadcast coming to you at 8:00 p.m. Eastern here on CNN. We'll be taking a closer look at what is nothing less than a national crisis and hopefully we'll have some solutions as well that will work.

THE WAR WITHIN, live tonight from George Washington University, 8:00 p.m. Eastern here on CNN. We hope you'll be with us for that.

And more than 100 Haitians today are in Southern Florida tonight after a deadly three-week boat trip. The illegal aliens were packed into a dilapidated sailboat. They had little food or water. At least one person died, while many others were treated for dehydration. Susan Candiotti has the story.

(BEGIN VIDEOTAPE) SUSAN CANDIOTTI, CNN CORRESPONDENT (voice-over): Dehydrated after surviving three weeks at sea on a sailboat built for 15 passengers, more than 100 Haitians held on for dear life on deck and below.

Rocky seas rammed their wooden boat on to a sand bar just off shore. Some struggled to the beach. One man died. Three others are in critical condition.

Homeland Security officials say a smuggler managed to slip under radar and avoided sea patrols before sun-up.

JAMES JUDGE, U.S. COAST GUARD: You can't put a fence up around the United States, but what we do try to do is, you know, stop as many as possible.

CANDIOTTI: The Haitians were given food and blankets, bussed away by border patrol, and face what Homeland Security calls an expedited deportation. In South Florida where migrants regularly wash ashore, one city official who watched the rescue questioned U.S. policy.

VICE MAYOR WILLIAM JULIAN, HALLANDALE BEACH, FL: We have an immigration policy for one race of people and the rest of the world, and this needs to be changed. They call it the wet foot-dry foot policy. I call it the black foot-white foot policy.

CANDIOTTI (on camera): Under current U.S. policy Cubans who make it to shore are automatically paroled into the U.S., have a virtual lock on staying. Haitian advocates say just like Hondurans, Salvadorans and Nicaraguans an answer to stemming migration is granting temporary protected status for Haitians living and working in the U.S. sending money back to their families who then have an incentive to stay put.

(voice-over): Haitians are estimated to send $1 billion back home annually.

MARLENE BASTIEN, ACTIVIST: If we are -- if we continue to send people to Haiti, 40 a week to Haiti, we are contributing to the destabilization, you know, of Haiti and we are actually encouraging people to come here.

CANDIOTTI: In Haiti, political violence is rampant. The U.S. State Department says 60 Americans were kidnapped there last year. The economy struggles. All a recipe for more attempts to enter the U.S. illegally.

(END VIDEOTAPE)

CANDIOTTI (on camera): And rallies protesting U.S. immigration policy are scheduled in Miami tomorrow. Haitian advocates are also urging Haiti's President Rene Preval to urge President Bush to urge a moratorium on deporting Haitians, but, Lou, that seems unlikely.

DOBBS: And just another unfortunate and in this case even tragic demonstration of much of the problems we have with this country's immigration laws and its enforcement. Thank you very much, Susan Candiotti.

A group of Arizona citizens is taking this illegal immigration crisis into their own hands. They're fed up with the federal government's failure to secure our borders. This group is promoting two public initiatives that would empower state and local authorities. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CHRIS SIMCOX, MINUTEMAN CIVIL DEFENSE CORPS: Friends, the solution is so simple and pragmatic. The first steps, secure our borders and enforce our laws.

CASEY WIAN, CNN CORRESPONDENT (voice-over): Two years ago Chris Simcox and the Minuteman Project launched civilian patrols of the Arizona border, their goal, pressuring the federal government to take border security seriously. Now Simcox is expanding that effort to the ballot box, urging Arizona voters to sign petitions endorsing two proposed laws that would crack down on illegal immigration.

SIMCOX: If elected officials will not lead, then it's up to the citizens of this great state and this nation to lead.

WIAN: One measure would require law enforcement to follow the lead of Maricopa County Sheriff Joe Arpaio and check the immigration status of any person arrested for a violation of state or local law regardless of race or ethnicity. If they're determined to be an illegal alien, they would be turned over to the federal government for deportation.

RUSSELL PEARCE, (R) AZ STATE HOUSE: It simply says that no longer will we tolerate law enforcement standing on the sidelines and being a spectator to the destruction of this country.

WIAN: The second law would penalize employers who knowingly hire illegal aliens by permanently revoking their business license.

DON GOLDWATER, FORMER ARIZONA GUBERNATORIAL CANDIDATE: These two initiatives don't just affect the State of Arizona. They affect the entire United States of America. We are the gateway to the United States when it comes to having illegals come through our borders.

WIAN: The ballot measures are a preemptive strike against Arizona Governor Janet Napolitano who is expected to veto similar legislation being considered by state lawmakers. Her fellow Democrats in the legislature criticize the proposed laws saying they prefer Washington address the issue with so-called comprehensive immigration reform.

Supporters of the petition drive need 200,000 signatures to qualify for the 2008 ballot.

(END VIDEOTAPE) WIAN (on camera): Anti-illegal immigration petitions have a record of success in Arizona. Most notably, 2004's Proposition 200, which requires voters provide proof of citizenship and denies some state welfare benefits to illegal aliens. Nearly half of the state's Latino voters supported that measure, Lou.

DOBBS: Absolutely. And Casey, I think last year another four initiatives succeed on the issue of illegal immigration. Arizona setting the standard for the country. Thank you very much, Casey Wian.

WIAN: OK.

DOBBS: Up next, a new amnesty bill that would grant U.S. citizenship to millions of illegal aliens. One of the co-sponsors of the bill, one of its strongest opponents join me here.

And later, the director of publications for the Southern Poverty Law Center says this show doesn't tell the whole truth when it comes to the issue of illegal immigration. He'll be joining me here. It should be an interesting discussion, and probably an outright argument and debate. It will be, however, I assure you, pretty civil. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A new bipartisan bill aimed at granting amnesty to almost 20 million or at least as many as 20 million illegal aliens in the view of some was introduced in the House of Representatives last week.

The issue is extremely divisive in this country of course (ph) and not just along partisan party lines.

The Strive Act of 2007 is co-sponsored by Republican Congressman Jeff Flake of Arizona. He is one of the bill's -- he is one of the bill's, obviously, strongest supporters. One of the bill's strongest opponents is another Republican, Congressman Brian Bilbray from California, the chairman of the Immigration Reform Caucus.

Gentlemen, thank you both for being here.

Let me start with you, if I may, Congressman Flake. This legislation very similar to what the McCain Kennedy legislation. Why in the world do we need this?

REP. JEFF FLAKE, (R) AZ: There are some similarities. We need it because we have a huge problem with illegal immigration, and we need to end it. And that's what this bill strives to do.

DOBBS: Let me ask you a simple question. If we've got a problem with illegal immigration, why don't you folks just secure the borders and take control of it?

FLAKE: Well, interesting. This bill has a trigger that says we can't move forward with the other elements of the bill until the secure border initiative is moving through. We add another 15,000 border agents with this bill. We have several items that actually strengthen the border.

DOBBS: Congressman Bilbray, why do you oppose it?

REP. BRIAN BILBRAY, (R) CA: Well, first thing you don't want to do is tell the whole world you're going to reward people if they come here illegally, and this bill creates special status for them and it does not guarantee we'll finally stop the number one source of illegal immigration and that is illegal employment.

Give a simple systems so we can crack down on the people who create the illegal immigration problem, and that is those who are paying people to come here illegally, the employers.

DOBBS: You have what's called a touchback provision.

FLAKE: Right.

DOBBS: Which requires leaving the country for 24 hours and then the illegal can then re-enter the United States and reside and work in the country.

FLAKE: It's just one provision of many. If you're here illegally now - I take issue with the amnesty charge ...

DOBBS: Sure.

FLAKE: Amnesty is what we did in 1986. We said if you can prove you've been here for a certain period of time, you get a shortcut to a green card. We do the opposite her. We say if you are here illegally and you wish to stay, you pay a fine, go through a background check, you go to the back of the line, not the front of the line, and then you also have to go out of the country and make a legal entry into the country.

And so it's only one of many things, and there are many provisions with regard to strengthening the border and Congressman Bilbray was exactly right in terms of enforcement, we've got to enforce at the employer level. Nearly half of those here illegally didn't sneak across the border in the first place. They came legally and have overstayed.

DOBBS: You know, I always have to ask this question. How in the world would you know that? We've got 600,000 criminal illegal aliens free in this country and ICE, no one, any law enforcement agency has any idea where they are. We have no real number for the estimates range from half a million to three million people entering the country illegally every year, and I hear things like that, and I just wonder how do you know that?

FLAKE: You know that because if they were issued a legal visa, there is an exit point that they're supposed to go home. They haven't. So we know how many are staying beyond their visa.

DOBBS: But you've still got to know how many of the rest, don't you?

FLAKE: Oh, yes. And that's exactly what this bill is about. It's about bringing people out of the shadows.

BILBRAY: Twelve years we haven't initiated the exit visa, but the real key here is that you create a special status and a special program for people who are illegally here, and the concept of not even everyone has to go step out within six years, but if you show up at the border and say I have been illegally in the country, I violated the law, and here I am, you have to then let that person in, but if somebody shows up and says I haven't broken your laws, I haven't violated your sovereignty, they don't get in. And that's the big problem we have.

FLAKE: That's completely wrong. And under this legislation if you are here illegally and you wish to adjust your status and get a green card, you can't adjust your status until everyone who is in the backlog, who is in the queue ready goes through the system and so you are not rewarding. In fact, they could get -- if their goal is citizenship, they would be better off going out of the country and entering through a guest worker program later.

BILBRAY: It's a special program for the illegals and that's the issue. You do put them ahead of the rest of the world.

DOBBS: Your view is -- well, let me just ask you this. If we could put up a slide here, because this is something most people don't talk about, gentlemen, I would just like to hear your view.

We bring in 2 million people a year into this country legally, and I would like if we could have that information up on the screen so our audience at home could see it.

BILBRAY: More than the rest of the world combined.

DOBBS: It's pretty remarkable. Two million people legally admitted to the United States each year. Four hundred thousand H1 visas each year. Nine hundred thousand other employment visas each year. Six hundred thousand student visas issued each year. Four hundred fifty-five thousand temporary employment transfers granted.

In addition, over 700,000 legal citizens. In addition, a million permanent residents. My gosh, what in the world are you folks talking about?

FLAKE: I say thank goodness we do.

DOBBS: You and me both -- let me say when you say thank goodness we, do, partner, I am just as excited about legal immigration. I'm more excited, I think, probably because it puts the lie to the nonsense of the president of the United States is saying that we cannot operate in this country without a guest worker program. We have tons of guest worker programs. What in the world are we doing?

FLAKE: Well, when you have nearly five percent of the current work force here is illegal and our economy is doing well with that five percent working, what are we going to do? Are you going to deport five percent of the work force? If you are -- but if you can see we need them, then we need more legal immigration. BILBRAY: Lou, stop paying them to be here. You don't need to deport them. We didn't ship them in. It took 30 years of encouraging people to pay people to be here illegally. Stop paying them. Quit giving them benefits for being here illegally.

DOBBS: Do you think your legislation is going to succeed?

FLAKE: I do. I do. I think it's finally time. We - in Arizona, let me tell you, we need it desperately in Arizona.

DOBBS: Well, it's always good to have a forecast. We'll see how the rain falls.

All right. Thank you very much, Congressman Flake for being here. Good to talk to you.

Congressman Bilbray, good to talk with you.

BILBRAY: You keep up the good work.

DOBBS: You too. Thank you.

And up next at the top of the hour, THE SITUATION ROOM and Wolf Blitzer. Wolf.

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

Coming up on my exclusive one-on-one interview with Democratic presidential candidate Barack Obama. He has a very frank assessment of the war in Iraq and what he would do differently.

Also, a global warming battle heating up as a skeptical U.S. senator goes head-to-head again with former Vice President Al Gore. We're going to have details of the concert at the center of this late skirmish.

And a controversial claim about the remains of a revolutionary hero. Who is really buried in Che Guevara's tomb? All that, Lou, coming up right here on THE SITUATION ROOM.

DOBBS: The congressman and I are resuming our conversation, if you will. A reminder to vote in tonight's poll. Do you believe Congress should retain its constitutional power and prerogative in trade policy? Yes or no. Please cast your vote at loudobbs.com. We'll have the results here in just a few moments. We'll be right back.

Just ahead, he says I'm covering a fictitious movement and that my reporting here on illegal immigration is, quote, "exaggerated." Mark Potok from the Southern Poverty Law Center is going to come in here and try to whip me. It ought to be a spirited debate. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest has taken issue with some of our reporting here on the illegal immigration crisis in this country.

My guest is Mark Potok. He is from the Southern Poverty Law Center joining us tonight from Montgomery, Alabama. Mark, good to have you here.

MARK POTOK, SOUTHERN POVERTY LAW CENTER: Well, thanks for having me, Lou. I appreciate it.

DOBBS: I would like to just say that, you know, I think and you I have decidedly different view on a number of things, but I would like to take up, first of all, the facts clearly showing in my judgment that illegal immigration is squeeze this nation's middle class, that it is not beneficial.

Here's what your summer 2006 Southern Poverty Law Center intelligence report said. That I quote, me, if we can put this up for everybody to read, I "repeatedly and angrily rejected the idea that racism animates the anti-illegal immigration movement or its leaders."

Wow. What are you saying about me? Are you calling me a racist? Are you calling me a liar? What are you doing there? It's a little nuanced for me.

POTOK: No. It's unrelated to -- I don't think you're a racist at all, and we've not argued that. You know what, we are really saying, Lou, is that your show, which is an important show which plays in an hour seven days a week, that is, you know, commonly seen by the nation as a leading news hour, your show, I think, covers a movement that, in effect, is not real.

In other words, you simply do not cover the unsavory aspects of this movement. Whether one agrees or disagrees with the goals of the anti-illegal immigration movement. So in my opinion, there are numerous instances in which the Dobbs show, in which your show, has simply not covered major developments in this case.

DOBBS: Like what?

POTOK: I think, for instance, a very good example is the way the show treated the Proposition 200 battle in 2004 in Arizona. As I imagine people will remember, this was essentially proposition which would limit very severely any kind of benefits given to undocumented immigrants.

DOBBS: And that bill won passage by the people of Arizona.

POTOK: Absolutely.

DOBBS: In point of fact.

POTOK: Absolutely. But the point is that just a couple of weeks before that bill, in fact, went to the polls, before that proposition went to the polls, a woman named Virginia Abernethy was appointed to head their national advisory board. This became immediately a scandal really Arizona-wide. Virtually every paper and newscast in Arizona covered the fact that she was, in fact, a member of the white supremacist group. Or in her own words, a self-described white separatist. This really affected what was said in Arizona. It was on all the debates, on all the front pages.

DOBBS: Right.

POTOK: And yet, the show, your show, never touched that fact at all. And you know, that is the essence of the criticism is that time and time and time again that has happened.

DOBBS: Time and time again ...

POTOK: I would like to offer another brief example.

DOBBS: This isn't brief, Mark. You've been talking now for two minutes, so if I may.

POTOK: Go ahead.

DOBBS: You have taken issue on the coverage of illegal immigration, but you have also taken issue with some of the facts on this program. By the way, in terms of Proposition 200, I didn't consider her involvement one way or the other material. She was never a guest on this broadcast, and played whatever role she did in support of that legislation. She was hardly, in my opinion material, but that may be a difference of opinion between and you me.

POTOK: Well, it's a question of journalism and reporting on what this movement really looks like.

DOBBS: What we are trying to do is get the facts.

POTOK: As opposed simply having a polemic about the merits of immigration.

DOBBS: You know, I am most impressed with the polemics of illegal immigration because in this country and I hope you heard Congressman Flake and Congressman Bilbray. The facts of illegal immigration in this country are there for all to look at.

But there is a concerted movement in this country, which you don't talk about, of open borders and pro-amnesty for illegal aliens to the aversion to the discussion of the impact. Four industries, for example -- construction, leisure, hospitality, landscaping, meatpacking.

The list goes on. In which it is empirically demonstrated that wages are going down because of illegal immigration. And to suggest, as you have, that there is a racial tone within being anti-illegal immigration, I am not aligned with any, any whatsoever, zero, any, any ...

POTOK: But Lou, the criticism isn't that you are a racist or anything like that. The criticism is that in the actual movement, the movement that is out there existing on the ground, there are many people who are animated by very ugly ideas, and sometimes just plain wacky. The fellow you just had on your air a couple of segments ago, Chris Simcox, is a man who has told people, who said publicly, that he has spotted the Chinese army maneuvering on the Mexican border. You know, have you had him on your air at least 17 times, probably a great deal many more times, and that has never come up. Our point ...

DOBBS: First of all, I didn't know that. But it's fascinating. That sounds like the real story here. Mark, I've got to apologize. We are out of time. We've used up, what is it, six minutes here.

Mark, I'm glad you don't think I'm a racist. I think that you have to take a real view. And the empirical view here, the factual view of illegal immigration, I think, is critically important. I know the Southern Poverty Law Center does some good things, but I don't believe it's appropriate or fair or responsible of you to focus on, if you will, the immaterial and I would accuse you of the same thing you did me, leaving out some of the facts, and the facts are what are driving us here.

POTOK: Our job is to study racism and the radical right.

DOBBS: Good. And our job is to get to the reality. And we appreciate it, and we will have on you, I hope, soon, and you joined us, and we'll have more of your thoughts. OK?

POTOK: OK. Thanks for having me.

DOBBS: Mark Potok. Still ahead, we will have the result of our poll tonight, and we'll take a look at some of your e-mails. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll, 94 percent of you say Congress should retain its constitutional power and prerogative in trade policy.

Thanks for being with us tonight. THE SITUATION ROOM starts right now with Wolf Blitzer. Join us at 8:00. Wolf, to you.

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

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