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Lou Dobbs This Week

Libby Slips Probation Too?; Microsoft Goes North for more Foreign Workers; How much Does Mexican Economy Drive Immigration?

Aired July 08, 2007 - 18:00   ET

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


KITTY PILGRIM, GUEST HOST: Tonight, rising anger over the president's decision to commute the prison sentence of former White House aide Scooter Libby. It turns out Libby may also avoid serving probation.
And new evidence of Microsoft's complete failure to defend the interests of middle class Americans. We'll have a special report.

All that and much more straight ahead tonight.

Good evening everybody. President Bush tonight faces news questions after commuting the prison sentence of former White House aide Scooter Libby. President Bush declared that Libby will serve probation in the CIA leak case. However, the judge who sentenced Libby to prison disagrees with the president's assertion on Libby's probation.

Ed Henry reports from the White House.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): To make the case Lewis "Scooter" Libby is not getting a slap on the wrist, the president claims he will serve two years of probation.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I felt the punishment was severe. So I made a decision that would commute his sentence, but leave in place a serious fine, and probation.

HENRY: But now the judge says Libby can't serve probation, because his sentence was commuted before he did any prison time. "Strictly construed," Judge Reggie Walton wrote this week, "the statute authorizing the imposition of supervised release indicates that such release should occur only after the defendant has already served a term of imprisonment."

White House spokesman Scott Stanzel acknowledged he hasn't read the July 3rd order, but nevertheless tried to insist that Libby's probation is not in dispute.

SCOTT STANZEL, WHITE HOUSE SPOKESMAN: We believe the attorneys and the judge and the probation office can work out those details.

HENRY: But a clemency expert sided with the judge's interpretation, and said the president may have erred by not first running the commutation by his own Justice Department. MARGARET LOVE, FORMER JUSTICE DEPARTMENT PARDON ATTORNEY: One would have thought he would have consulted with the Justice Department, the people who are the experts on federal sentencing.

HENRY: Their own argument under fire, the White House is lashing out at Bill Clinton's handling of pardons after the former president charged the law is a "minor obstacle to this administration."

STANZEL: The hypocrisy demonstrated by Democratic leaders on this issue is rather startling. When you think about the previous administration and the 11th hour fire sale pardons, it's really startling that they have the gall to criticize what we believe is a very considered, a very deliberate approach to a very unique case.

HENRY (on camera): Tony Snow went a step further, charging the Clintons should not be throwing stones over clemency, adding: "I don't know what Arkansan is for chutzpah, but this is a gigantic case of it" -- Kitty.

Ed Henry, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: Well, joining me now to discuss the political and legal impact of the president's decision to commute Libby's sentence are senior political analyst Bill Schneider and Jonathan Turley, law professor at George Washington University.

Gentleman, thanks for being with us. I guess I'll turn to you, Professor Turley, what -- can Libby serve probation? I mean, technically, where do we stand here?

JONATHAN TURLEY, LAW PROFESSOR, GEORGE WASHINGTON UNIV.: Well, I think it's hard to make out a case for probation. The interesting thing is the Department of Justice guidelines -- I'm sorry, the White House guidelines tend to require that someone serve time before they're considered for pardon.

I've handled pardon requests and I tell my clients all of the time, the rule of thumb is you have to serve some time before you apply. By the president violating that guideline he also seems to have moved Scooter Libby out of the realm of probation and so he's going get a double benefit.

PILGRIM: You know with apologies to Bill Schneider to ask you a double question, Libby has already paid the $250,000 fine. Now is it common to do that and leave in place other aspects such as, you know, a fine or probation or -- I mean, is this commonly done?

TURLEY: Well, nothing is common about this, particularly for this president. President Bush has given very few pardons or commutations in his history. He did the same as governor of Texas. This is not someone who tends to give this type of relief.

He also is rather notorious according to some in terms of fighting for excessive sentencing. He has been criticized around the world for what is viewed as excessive punishment in sentencing. For him to say, I think 30 months really shocks the conscience leaves a lot of people somewhat skeptical.

PILGRIM: Bill Schneider, the president has said he thought the sentence was excessive. What has been the reaction in Washington this week, excessive?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, I think there has been a very strong reaction certainly on the parts of Democrats, but not only Democrats, to the president's move to commute this sentence. I think there has been outrage on the part of Democrats, bewilderment on the part of some Republicans who are sort of running for cover because of the expectation which is beginning to be realized of a public backlash again this.

I think a lot of politicians are very nervous about this issue, Republicans as well as Democrats. And Democrats are just in a rage.

PILGRIM: Yes, the political fallout is considerable. Congressman John Conyers says he's going hold hearings on the matter. Would the hearings accomplish much? I'll ask you first, Bill Schneider.

SCHNEIDER: Well, the thing they would accomplish is to bring to light all of the circumstances of the -- not just the commutation but also the conviction and the crime itself. Remember that Mr. Libby was convicted of a crime when he was serving as a high-level White House official, chief of staff to the vice president of the United States. He was in the White House.

This crime was intimately connected with policy-making and with the selling of a policy. That is a very important consideration. The president pardoned him, it wasn't a simple criminal conviction, but it was a conviction connected to the White House directly.

PILGRIM: You know, Jonathan Turley, does Congress have the right to challenge the president on this?

TURLEY: Not really. The only way that Congress can effectively challenge is if a pardon is sold or there's an impeachable offense. Otherwise the Constitution gives the president the right and ability to grant a pardon or commutation for good reason or bad reason or no reason at all.

That doesn't mean you can't abuse the authority. The White House may be correct that President Clinton may have abused authority, you know, particularly in giving relief to his own family member, the brother, but that doesn't mean that you can challenge it, reversing it in some sense. This falls into the category of a presidential right and power and privilege.

PILGRIM: You know, Bill Schneider, President Clinton pardoned 140 people on his last day in office and this sort of sniping over these pardons has really been extreme in the press this week with even the Clintons on the campaign trail making remarks about the Libby sentence being commuted. What do you make of the political fallout on pardons? It seems like an unusual thing to be fighting in such a virulent manner over.

SCHNEIDER: Yes. Well, the White House is clearly trying to remind voters of their response to the Clinton pardons back in 2001 when he left office and there was a firestorm of reaction against that. They were very controversial.

A lot of Democrats said they didn't understand how Mr. Clinton could pardon some of those people that he pardoned, and there were a lot of them. But again, the differentiation has to be made that President Bush is commuting the sentence here of someone working in the White House, directly responsible for policy-making. And that seems to me to be very different from the pardons that President Clinton issued.

PILGRIM: Bill, is this a one-week discussion or do you think this moves forward?

SCHNEIDER: Well, I think it's yet another argument for those who are very down on President Bush, very critical of him. I think the public reaction is going to be there's already evidence that the reaction is very negative. And once again, Americans are becoming more and more fed up with this administration. The president's ratings are hitting a record. He hasn't had majority support since beginning of his second term in office.

PILGRIM: All right. Thanks very much. Jonathan Turley, Bill Schneider, thank you, gentlemen.

TURLEY: Thanks, Kitty.

PILGRIM: Still to come, new demands for a presidential pardon for imprisoned Border Patrol agents Ignacio Ramos and Jose Compean.

Also, rising poverty and corruption in Mexico has forced millions of Mexicans to become illegal aliens in this country.

And startling new evidence in the United States, it is the most welcoming country on the planet for immigrants. We'll have a special report.

(COMMERCIAL BREAK)

PILGRIM: A Mexican businessman may have supplanted Microsoft founder Bill Gates as the world's richest man. Carlos Slim is said to be worth more than $60 billion. And as Lisa Sylvester reports, it is a glaring example of the lopsided distribution of wealth in Mexico.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): There are two Mexicos, one of abject poverty. Twenty percent of the population lives below the poverty line, and nearly 10 percent lives on less than $1 a day, according to figures from the United Nations.

The other Mexico is thriving. Pesos and dollars are abundant. The world of the elite class. Among them is Carlos Slim, a Mexican billionaire who, according to Reuters, has a bigger fortune than even Bill Gates, making him now the richest man in the world.

CAROL GRAHAM, BROOKINGS INSTITUTE: In Latin America, where inequality has been so deep and persistent, inequality signals to most people, at least according to my research, persistent advantage for the rich and persistent disadvantage for the poor. It's not a signal of equal opportunity.

SYLVESTER: Mexico's wealth gap has been closing in the last decade, but not fast enough. The North American Free Trade Agreement led to farmers leaving for factories in the north, only for those job opportunities to close off when jobs moved to lower wage countries like China.

The nation's poverty crisis is fueling illegal immigration to the United States. The group NumbersUSA calls it exporting poverty, a trend that cannot continue.

ROY BECK, NUMBERSUSA: What we saw in the Senate last month was the workers and the working neighborhoods in the United States rising up and saying, no more. We are not going to pay the cost of Mexico's mismanagement of their economy. You are not going to be able to offload forever.

SYLVESTER: Mexico's president Felipe Calderon has recently instituted new anti-poverty programs. But policy experts say until Mexico takes charge of its own future with structural changes, reforming its education system, and ending corruption, Mexico will continue to be a divided country.

(END VIDEOTAPE)

SYLVESTER: We see the images of poverty in Mexico, but the truth is Mexico has more billionaires than Switzerland, according to Forbes magazine. Policy analysts say with the natural resources and wealth in Mexico, its leaders can do a lot more to create opportunities within Mexico, ending the incentive for its citizens to come to the United States illegally -- Kitty.

PILGRIM: Thanks very much, Lisa Sylvester.

Well the United States is the most welcoming nation in the world, and that is proved by the large number of legal immigrants and foreign workers in this country. And the number of foreign born residents becoming American citizens is rising.

Now during this July 4th week, more than 15,000 immigrants became citizens.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): A swearing-in ceremony in Florida at Cinderella's Castle. For nearly 1,000 immigrants, America really is the Magic Kingdom.

AMELIO GONZALES, DIRECTOR USCIS: America is a land that really forgets about who you were. America is only interested in who you are, and what you can be.

PILGRIM: And in Baghdad.

UNIDENTIFIED MALE: Raise your right hands.

PILGRIM: Foreign born soldiers sworn in as U.S. citizens on Independence Day. Despite decades of hyphenated Americans, Indian- Americans, Irish-Americans, Polish-Americans, a big part of the deal is to truly become Americans.

GONZALES: ... I absolutely and entirely...

GROUP: ... I absolutely and entirely...

GONZALES: ... renounce and abjure...

GROUP: ... renounce and abjure...

GONZALES: ... all allegiance and fidelity...

GROUP: ... all allegiance and fidelity...

GONZALES: ... to any foreign prince...

GROUP: ... to any foreign prince...

GONZALES: ... potentate...

GROUP: ... potentate...

GONZALES: ... state, or sovereignty...

GROUP: ... state, or sovereignty...

GONZALES: ... of whom or which...

GROUP: ... of whom or which...

GONZALES: ... I have heretofore been...

GROUP: ... I have heretofore been...

GONZALES: ... a subject or citizen...

GROUP: ... a subject or citizen...

PILGRIM: The number of new citizens sworn in each year has been climbing steadily in recent years. Some say the national debate over illegal immigration, and the pending application fee increase, has spurred many legal immigrants who are eligible for citizenship, to make it official and become citizens.

But for many, it is the American dream that is still highly desired.

GARY GERSTLE, VANDERBILT UNIVERSITY: As we look at what happens to immigrants who become citizens, we see them becoming much more broadly involved in American politics. We see them becoming much more broadly involved in American life.

PILGRIM: In fact, after the ceremony at Disney World, newly minted citizens lined up to register to vote.

(END VIDEOTAPE)

PILGRIM: As USCIS puts it, when a person becomes a legal American, they study this country's history, vote, serve on juries, and fully participate in the fabric of this country.

Coming up, more news of dangerous products from communist China. We will have a report.

And Microsoft is unhappy with visa restrictions on temporary workers. And now it is trying to avoid those limitations at the expense of middle class Americans. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The label "made in China" is a warning sign to a rising number of Americans. Communist China lags years behind the United States when it comes to product safety standards. And that has led to massive recalls of defective and often dangerous products.

John Vause has our report.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT (voice-over): So, could you eat pork from pigs force-fed waste water? Drink milk from cows given so many antibiotics it's impossible to make yogurt from their milk? How about a serving of lard made from sewage? Because all of that, and much more, has been on China's menu in recent months.

Zhou Qin is a dissident writer who has researched this country's appalling food standards.

"The threat is so much more serious than people could ever imagine," he told me. He says many farmers and producers are continually finding new and dangerous ways to cut costs.

ZHOU QIN, CHINESE DISSIDENT (through translator): China has low labor costs, but you can work out how low the price should be. Businessmen should know something is wrong if the product is cheaper than it should be.

VAUSE: Last week, the U.S. banned four types of fish and shrimp from China because inspectors found traces of cancer-causing chemicals and antibiotics, including malachite green, which helps fish survive in polluted, overcrowded fisheries.

It is still being used despite being banned here five years ago, while in the U.S., it was banned 24 years ago. SALLY GREENBERG, CONSUMERS UNION: We have no real sense of the regulatory infrastructure in China, which, probably, is about 100 years behind where we are in the United States.

VAUSE: And the World Health Organization says time has run out for China to act.

DR ROGER SKINNER, WORLD HEALTH ORGANIZATION: China is at a crossroads. I feel, you know, they have to make a decision as to what they are going to do. And this decision which cannot be put off.

VAUSE: It is not just food. Consumer alerts have been issued for products from toxic toothpaste to lead-painted toys. So far this year, 60 percent of all recalled consumer products in the U.S. have come from China.

The government here blames media hype.

"Consumers shouldn't be scared of Chinese products," he says, "they should have a reputation of being good quality, cheap, and safe."

(on camera): Well, one out of three isn't bad. No one ever said Chinese goods weren't cheap.

John Vause, CNN, Beijing.

(END VIDEOTAPE)

PILGRIM: Late this week, the Consumer Product Safety Commission announced another recall of products made in Communist China, two children's products: Mag Stix magnetic building sets, and Essential Jewelry for kids jewelry sets. They are both being recalled. The small magnets in the building sets are believed to be choking hazards, and the jewelry sets contain high levels of lead.

Now, the recalls come after investigations found nearly a fifth of products sold in communist China are substandard or contaminated. And the items include food and children's products.

Coming up, stunning new evidence that Microsoft is putting its business interests ahead of the interests of the middle class Americans.

Also, rising anger at the federal government's failure to verify the employment status of all of its workers. Congressman Steve King will join us.

Also, a blunt new warning about the rising threat to this country from radical Islamist terrorists. Former Undersecretary of Defense Jed Babbin is my guest.

(COMMERCIAL BREAK)

PILGRIM: The president's show of mercy for Scooter Libby has sparked renewed calls for presidential action in the case of former Border Patrol agents Ignacio Ramos and Jose Compean.

Now, those agents were given harsh prison sentences for shooting and wounding an illegal alien drug smuggler. Supporters of the agents are demanding a full presidential pardon.

Christine Romans reports.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The president decided this White House aide, sentenced to 30 months in prison for perjury and obstruction of justice, had suffered enough.

BUSH: I felt the punishment was severe.

ROMANS: He commuted his sentence, and would not rule out a full pardon.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: As a felony conviction, a $250,000 fine, two years probation, and basically has lost the way he has built a living his entire life. That is a pretty significant punishment.

GROUP: Free our border agents.

ROMANS: Supporters of former Border Patrol agents Ignacio Ramos and Jose Compean are asking for the same compassion. Ramos and Compean are also convicted felons, their careers also over.

They are serving sentences of 11 and 12 years for not following protocol and shooting a fleeing illegal alien drug smuggler in the buttocks.

REP. DUNCAN HUNTER, (R-CA), PRESIDENTIAL CANDIDATE: Clearly, if Scooter Libby deserves a commutation, I would hope that the White House on this July 4th, tomorrow, would fully pardon Compean and Ramos.

Ramos has already been beaten up in prison by some of the inmates who recognized him as a Border Patrol agent. I think they have been punished enough.

ROMANS: While the president has declared the 30-month sentence of a former aide excessive, he has let stand long prison sentences for the agents. The pardon is an exclusive power of the executive branch, and scores of lawmakers have demanded Bush add the convicted agents to the list.

Bush has pardoned at least 10 convicted drug offenders, in addition to counterfeiters, embezzlers, tax evaders and moonshiners. President Clinton pardoned 396 criminals, most famously fugitive financier Marc Rich, and his own brother.

This president's father was judicious with pardons, only 74. But Reagan pardoned 393. Among the 382 Ford pardons, one was for his predecessor, Richard Nixon. (on-camera): President Bush is being assailed by Democrats for commutation of Libby's sentence just as Clinton was criticized by conservatives for his pardon of Marc Rich. And as only befits the Beltway, Scooter Libby was once a lawyer for Marc Rich.

Christine Romans, CNN, New York.

(END VIDEOTAPE)

PILGRIM: A new challenge to the nation's immigration policy tonight from Microsoft. The company's efforts to expand the H-1B visa program in the United States have been unsuccessful, so Microsoft is opening a new software development center in Canada, where there are fewer restrictions on hiring foreign workers.

Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Now that Bill Gates has lost his title as world's richest man to a Mexican billionaire, his company is seeking to expand its fortunes across the border, the northern border.

Microsoft plans to open a software development center in Vancouver. The company's press release freely admits the move is an effort to recruit and retain highly skilled people affected by immigration issues in the U.S.

In other words, to get around U.S. restrictions on H-1B visas for high tech workers from India, China and elsewhere, Microsoft is expanding in Canada, which has no such limits.

BILL GATES, CHAIRMAN, MICROSOFT: We have to welcome the great minds in this world, not shut them out of our country. Unfortunately, our immigration policies are driving away the world's best and brightest precisely when we need them the most.

WIAN: For months, Gates has been trying to persuade the federal government to allow more foreign high tech workers into the United States. One analyst says Microsoft's Canadian venture may be a form of blackmail.

RON HIRA, ROCHESTER INSTITUTE OF TECHNOLOGY: Unfortunately, they've chosen to advocate for unlimited H-1Bs when it's clear that the H-1B program has been corrupted both by outsourcing firms as well as by cheap labor.

WIAN: The United States grants about 85,000 H-1B visas for skilled foreign workers each year. Most of them go to companies that either outsource jobs overseas or choose not to hire Americans.

Microsoft declined to be interviewed on camera, but released a statement saying: "Microsoft is a global company, and our greatest asset is smart, talented, highly skilled people. Our goal as a company is to attract a next generation of leading software developers from all parts of the world. And this center will be a beacon for some of that talent."

(on-camera): Microsoft plans to hire about 200 new employees in Vancouver this fall. Canadian reports say that could be expanded eventually to 1,000 people.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

PILGRIM: It's not only the private sector that is costing American workers their jobs. One of the largest -- perhaps the largest employer of illegal workers is the federal government. Congressman Steve King is demanding action from President Bush and House Speaker Nancy Pelosi.

Congressman King told me why he believes the federal government hires illegal workers.

(BEGIN VIDEOTAPE)

REP. STEVE KING (R), IOWA: Well, I think it's obvious that the federal government has just decided that they're not going to police their own forces, that they'll hire indiscriminately without using the basic pilot program which we have been asking employers to use across this country for more than 10 years.

And I think it shows also, the attitude that comes from the White House that we're going to be pretty lax about this and maybe if the problem gets big enough then we can advance the amnesty.

Well, now the shoe is on the other foot. The broader immigration reform policy is dead. Now we all need to focus on the enforcement of the existing laws we have. And this is the most egregious that I know of.

PILGRIM: Well, certainly enforcement should never have been abandoned. And, you know, it really is interesting, you talk about the pilot program. And this is a program where an employer can cross- check a Social Security number. The Department of Homeland Security and Social Security Administration have the tools to actually do this cross-checking. Why aren't they doing it?

KING: I have no idea why. And we have raised this issue now for a few days. Of course, a letter will then hit the president's desk pretty soon and as soon as we turn this around after the Fourth of July.

And I think not only should he issue a directive to all of his offices and every department to go in and use the basic pilot and clean up the illegal employees that they have. And the most likely number that we can see out of this sample is perhaps 11,000 workers working for the government who are not authorized to do so in the United States.

But I think he should issue an executive order directing every one of his department heads to use all of the resources at their disposal to enforce the law and to see to it that those people who have violated the law working for the United States are punished according to the law and not just simply given a pass.

PILGRIM: You know, the -- let's take a look at some numbers. The report shows that between 2001 and 2003, over 49,000 non-citizens with non-work Social Security cards were working for government agencies, several federal agencies, seven state agencies and three local agencies.

You know, the magnitude of this is astonishing. Do you believe that non-citizens working for the federal government or any government organization is a security risk?

KING: I absolutely believe it's a security risk. And this doesn't show us how many are working for the Department of Defense, for example. There's another report that would indicate you might be able to conclude about 2,000 could be working for the Department of Defense.

We have over 1,177,000 -- excuse me, 1,777,000 that are civilians working for the federal government somewhere along the way. And in there also are many from Iran, many from the People's Republic of China, as well as those big numbers that come through our 15 members of the intelligence community.

We don't know how many of them could be working for the CIA, the FBI, defense, intelligence. The Department of Defense I gave some numbers to. But this list goes on.

I want to have a clean look at all of this. I want to see how many of these non-work Social Security numbers are there and how many of them are not authorized and how many of them are in sensitive positions.

But the federal government and all government has a responsibility to abide by the laws. And they are not doing that. They need to be held accountable. That needs to start on the 5th of July, not the Fourth of July.

PILGRIM: You're suggesting that we don't even know the magnitude of this problem despite the study...

(CROSSTALK)

PILGRIM: ... is that right?

KING: I have tried to -- I have looked at these numbers and rolled them around over and over again trying to put some linkages together where I could say to the American people, we have X number of government employees, which are around 21 million.

And yet this report has what government often has, deniable links in there so that you can't link it and say we can extrapolate out a certain number or a certain percentage of all employees. It's only a certain percentage of a sample. So we can't know and we can't get access at these numbers. The federal government has the data, though, between the Social Security Administration and the Department of Homeland Security. They just need to run those databases against each other.

And, by the way, the IRS needs to come into this picture. That's the other entity out there that has data that needs to be linked together. I want all three of them working together to enforce our immigration laws. And they need to clean up their standards before they're going to impose a policy on America and say that it can be done in a far greater magnitude than the employees of government in the United States today.

PILGRIM: Well, we certainly commend you on your vigilance. And thank you very much for coming on the program tonight to discuss it.

Representative Steve King, thank you, sir.

(END VIDEOTAPE)

PILGRIM: Just ahead, the battle for election cash escalates. We'll tell you how the presidential candidates are faring. Three of the country's best political minds will join me.

And the author of a powerful new book on worldwide terrorism says America needs to wake up. Jed Babbin, author of "In the Words of Our Enemies," he joins us.

RICK SANCHEZ, CNN ANCHOR: Hello again, everybody. I'm Rick Sanchez here in the "CNN NEWSROOM." Here's a story we're following right now. A massive blaze in Utah is spreading today like wildfire. At last report the so-called Milford Fire has charred an excess of 280,000 acres. At least nine states are being besieged today by fires from Arizona to South Dakota where a fire-related death was reported this afternoon.

Also a budget crisis in Pennsylvania, it needs to be resolved by midnight or more than 24,000 state workers could have to go on furlough. The Democratic governor, Ed Rendell is locked in a battle of wills with the Republican legislature in his bid to pass a comprehensive energy plan. High-level talks are going right now.

A British toddler is safe and sound and back in her parents' embrace. Nigerian gunmen released Margaret Hill a short time again. The 3-year-old is OK. She was kidnapped Thursday. The government had demanded that her father, an oil industry executive, take her place, but he didn't.

Pakistani officials have given a last warning to backers of a radical cleric holed up in a mosque in Islamabad. Authorities say the cleric is holding hundreds of women and children as human shields and has dozens of hardcore militants, including some with links to al Qaeda. Occasional gunfire rang out throughout the day there.

Israel has approved the release of some 250 Palestinian prisoners. The move is designed to bolster support for embattled Palestinian Authority President Mahmoud Abbas and improve relations between Israel and Abbas' Fatah Party.

And day two in the running of the bulls. Pamplona, Spain, of course, the Festival of San Fermin, an event lived up to the fearsome reputation it has gained. Most of the runners managed to keep the bulls at horn's length, others ran a foul of the angry beasts. Two people were gored, seven others were crushed. No one has been killed in a dozen years, but still we're left with the question, why?

Also "Transformers," it blew out the box office this weekend. Its estimated take is $67 million, give or take a few hundred thousand. The movie garnered the highest non-sequel seven-day performance in history, besting the previous record set by "Spider- Man," or as my son calls it, "Spidey."

Also "Ratatouille" has legs. The animated movie came in second with about $29 million in its second weekend out. And Michael Moore's "Sicko" continued its healthy take. The documentary added screens again this weekend. It took the number 10 spot for the weekend.

I'm Rick Sanchez. If news breaks out, I'll break in. Now let's go back to Kitty Pilgrim. She's filling in for Lou.

(COMMERCIAL BREAK)

PILGRIM: My next guest says we should listen carefully to the words of terrorists. He says America has no shortage of enemies and the warnings should be taken seriously. Jed Babbin, a former undersecretary of defense, has a new book, "In the Words of Our Enemies." He is not surprised that medical professionals were involved in the bomb plots against Britain.

(BEGIN VIDEOTAPE)

JED BABBIN, AUTHOR, "IN THE WORDS OF OUR ENEMIES": I think we really shouldn't be too shocked about the fact that these people are well-educated, wealthy and risen high in society. The fact is that this is an ideological struggle.

People are not propelled into terrorism only by poverty and disruption. They are propelled by a hatred and very deeply based ideology that does not allow them any other path in life. We have to study what these people are saying and what their leaders are saying to really understand what's going on.

PILGRIM: Certain thinkers have described it as atomization of the al Qaeda movement, this breaking apart into small groups, very small cells. Do you agree with that assessment? And if that's the case, how on earth do you fight it?

BABBIN: Well, yes, I do agree. I think al Qaeda is more, if you will, a brand or a franchise than it is really a movement. I don't think they have the command-and-control to deal with all of these folks around the world.

To deal with it is a bigger and more profound question, Kitty. The real issue is, do we define our enemy in a particular way, do we understand first that radical Islam is not a religion, it's an ideology?

Islam is a religion. But radical Islam is an ideology. We have to fight it the same way we fought Nazism and Communism, both in the kinetic war, to find and destroy these people where we can.

And also, we have to fight the ideological war. We have to show the world why their ideology is a failure. It promises poverty and death and destruction. Why can't we just say, we're Americans, we offer opportunity and prosperity. It sounds like a better deal.

PILGRIM: Yes. Let me just quote from your book, because I think it's quite brilliant. In your book you say: "We Americans are great talkers but are often not great listeners. And to our detriment, we assume that we comprehend the mindset of our adversaries."

And you write: "When some dictator threatens to end our way of life, destroy our economy and end our influence over his nation, we usually either ignore him or rationalize his statements in our own context rather than judge him better through an understanding of his culture, history and ideology."

Are we blaming the victim here, though? I mean, are we really that short in understanding? It's almost incomprehensible why people would send their children out as suicide bombers.

BABBIN: Well, let me parse that out a little bit because a couple of parts to your question, there.

PILGRIM: Big question, sorry.

BABBIN: No, no, it's OK. I mean, the first issue is, do we really -- are we blaming the victim? I don't think so. We're really just being Americans. We're pretty big-hearted people. We don't like to think evil of people.

And when we see someone like Mahmoud Ahmadinejad saying we're not going to have Israel on this planet much longer, we're saying, ah, well, come one, it's just puffery. Well, sometimes it's not. People don't always act in their enlightened self-interest. Sometimes there really is evil in the world.

The second point is, there's a lot of people out there who think it's very easy to bash America. And it is. My issue and my job and what I'm hoping to do with this book is to help penetrate this and to help separate the real danger from just the noise.

PILGRIM: You know, I'd really like to get to another point. And you're' hearing this a lot, sort of, out on the street, in conversation. Many critics of the Iraq War blame the U.S. military presence there for increased anti-Americanism and say that we're actually making the situation worse by being in Iraq.

What do you think?

BABBIN: Well, I think there is some measure of truth in that. I think there are people who are attracted to terrorism because we have been in Iraq. However, there are so many others who are attracted to terrorism for so many other reasons. These people don't hate us only because of Iraq. They have hated us, as I show in the book, for decades and decades, much longer before this.

PILGRIM: You know, I wish we had 20 minutes to do this, but I have to change subjects to China, growing military build-up there. Many people say engagement will work and that will sort of unplug the military aspirations of China. Some say, no, we really should keep our eye on this.

What's your view on the rising military dominance of China in the region?

BABBIN: Well, basically we have to look at history. And you know, I think Churchill was right. In history are all the secrets of statecraft. There's no nation in history that has ever risen to superpower status except on a tide of war. That includes us.

So when we look at China as an emerging superpower, we have to see what they're trying to do. I think the issue -- and the White House gets very nervous whenever I talk about this, but our policy toward China should be containment.

We should go to the nations around China and say, you don't want to be in their path. We don't want you to be conquered. Let's kind of get together and let's have a -- if you will, a hawkish diplomacy toward China.

PILGRIM: I have to go to Russia. Vladimir Putin, President Bush met this week. Russia's democracy seems wobbly at best. It's very disturbing some of the things coming out of Russia at this point.

How worried are you about Russia?

BABBIN: Very. Russia, you know, "Pootie-Poot (ph)" is not a good guy. He is trying to restore and he has restored autocracy. He is very dirty in the international market.

And when Vladimir Putin, as we quote in the book, says that the Iranians are his partners, I think that pretty much says it all. This guy is allied with the terrorist nations. We have to be pretty aggressive, again, a hawkish diplomacy toward Russia.

PILGRIM: A must-read, this book. Former Undersecretary of Defense Jed Babbin, the author of "In the Words of Our Enemies." Absolutely brilliant book.

Thank you, sir.

BABBIN: Thank you.

(END VIDEOTAPE)

PILGRIM: Just ahead, running on empty. Senator John McCain cuts his staff as he struggles to survive the presidential race. Three of the country's best political analysts will join me with that and much more. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Joining me now, three of the country's best political analysts. In Washington we have Diana West, columnist for The Washington Times; here in New York, Errol Louis, columnist for The New York Daily News; and syndicated columnist Miguel Perez.

And thanks for being here. You know, let's bring ahead to next week. On Monday, defense authorization bill will be taken up by the Senate. We already had this past week Senator Pete Domenici breaking ranks with the president on the war in Iraq.

How do you assess the entire debate on the defense spending bill and the Iraq issue? Miguel, let's start with you?

MIGUEL PEREZ, SYNDICATED COLUMNIST: Well, Senator Domenici, I think, and Lugar and others are positioning themselves for the next election. They're all running reelection. And they're basically taking a middle-of-the-road position here. They're not saying, I want to withdraw troops immediately, I don't want to cut funding.

So what are they really saying? They're saying, I want to be in the middle so that the voters can be a little confused about who I really am.

(LAUGHTER)

PILGRIM: Confuse the voters. Sounds like a great strategy. Diana?

DIANA WEST, COLUMNIST, THE WASHINGTON TIMES: Well, but -- that could well be what they have in mind. They haven't done anything brave or striking here. What we're seeing is a break, half of which I personally agree with. American soldiers should not be looking for American security going house to house in Iraq cities.

But the second shoe that drops in all of the Republican senatorial statements is that they want to fall back to the Iraq Study Group, which I think is just as unrealistic as the current Bush strategy.

The Iraq Study Group calls on Iran and Syria to help us quell unrest in Iraq, and furthermore, wants to delegate Iran's nuclear ambitions to the U.N. Security Council, which means Russia and China. So this isn't a new strategy. This is a different more of the same.

PILGRIM: Errol?

ERROL LOUIS, COLUMNIST, THE NEW YORK DAILY NEWS: New Mexico is a purple state. Sometimes it goes red; sometimes it goes blue. You've got a Republican in the Senate, Domenici. You've got a Democratic governor who's running for president, Bill Richardson, who's a real Democrat. It went for Gore, New Mexico did; it also went for Bush.

So you've got to, sort of, look at the real politics of it. He's up for re-election. He knows that the public, not just in New Mexico but really all across the country is really closely divided on this. And he and other Republican senators, they don't want to -- they want their majority back if they can get it. They certainly don't want to lose any more seats.

So I think what you're seeing is the first bit of, not panic, but real serious political concern that they're going to ride this Iraq War into a catastrophic defeat at the polls next year.

PILGRIM: It really does beg the question, though, is President Bush losing political capital by the second? This week he commuted Lewis "Scooter" Libby's prison sentence. He says a full pardon may not even be out of the question. How is all this affecting him politically, Miguel?

PEREZ: Oh, he's definitely losing political capital. And I think what he did with Libby thus far -- and the pardon is still out there as we know. But what he has done thus far really, I mean, you know, basically, he sends out a message to the rest of the world that in this country some people are above the law.

And it happens -- you know, some other presidents have done the same thing, of course, with pardons. But this one in particular, this is a member of his administration that he's basically pardoning already. I mean, basically, saying he's not -- he doesn't have to go to jail. He got the little pass that we all get when we play Monopoly.

PILGRIM: The White House has basically railed against President Clinton and Hillary Clinton for remarks they made about this pardon. Let's take a look at what Tony Snow said: "I don't know what Arkansan is for chutzpah, but this is a giant case of it."

You know, he was referring to the Clintons' decision to pardon 140 people on his last day in office. Is there a bit of duplicity in this, Diana?

WEST: Well, I would agree. I mean, the Clinton pardon list was a group of mountebanks and criminals that is really historic in its dimension. We had terrorists, drug dealers, financial fugitives, all of this. I think that the Scooter Libby commutation -- I'm not sure the president would have done it had he not lost on the amnesty bill. I think he was reaching out to the base.

I think it was the appropriate decision, myself, because I think that there was no underlying crime in this whole prosecution. We knew the leaker -- or rather the prosecutor knew the leaker was out of the State Department for years and continued this, what I think, was a very political prosecution, that name in the State Department being Richard Armitage.

But I think that the president was trying to do something that he though his base would approve of. And I'm not sure that he would have felt that way he had won on amnesty. But...

LOUIS: I think there are two things going on here. One is -- first of all, Tony Snow was right. It does take a lot of nerve for somebody in the Clinton camp to sort of raise this question on this particular issue. But that doesn't mean that it's not a problem.

I mean, what he did is terrible for really two important reasons. One is that this administration argued over and over again that there should be no departures from the very harsh federal sentencing guidelines, and this is a case where he just threw it away. He didn't even consult with his attorneys. He just sort of, like, dictated it.

And then, secondly, it really does raise the question of, not, necessarily a cover-up, but certainly by not giving him the full pardon -- which he could have done, by not giving him that, it now enables Scooter Libby to say, well, I have an appeal pending. I haven't been fully pardoned. I'm sorry, I can't come to Congress and tell you what else I know.

So what they're really trying to do is dampen this down, stop any further inquiries. And that stinks.

PILGRIM: And also an effective way to do it is to do it this week when it really is a very slow news week and a holiday week for many Americans. We'll be right back in a minute. Stay with us.

(COMMERICAL BREAK)

PILGRIM: And we are back now with our panel. And let's go straight to the campaigns, which are really fun to talk about, especially because some of the money is showing up. And it has been interesting, Senator Barack Obama trails Hillary Clinton in the polls but leads her in money.

Miguel, what do you make of this?

PEREZ: That means he has got time to spend money. And that's what it's all about. In this particular presidential election, it's all about who has got the money and how long they can last. That's the problem we're seeing with McCain. They're saying he may not be able to last past Iowa and New Hampshire because he has been able to raise very little money.

So it really is about the money this time.

PILGRIM: Diana?

WEST: Well, I think the money and the polls are out of step with one another. I mean, I think that the money, in Senator Obama's case, shows that there is great hope for him that he will develop into a viable candidate. But I think the polls reflect that he doesn't really excite people when he opens his mouth, in his political acumen and his speeches.

So it's an interesting -- I think there will be probably some kind of catch-up here eventually. But we're so early...

(CROSSTALK)

WEST: That's what we're seeing.

LOUIS: I mean, that's right. I mean, Clinton is just a lot closer to closing the deal. And she has closed the deal with a lot of voters. That's what you're seeing in the polls. The people who either liked her husband or liked what they have heard from her. She has been campaigning, really, nationally for quite a while now. They're locked in and they're going with Clinton.

Obama has got a much tougher job and he's going to need all of that extra money to introduce himself over and over again to people who still maybe didn't see him, you know, at the national convention in 2004, don't know his history and want to know more before they'll feel comfortable.

There's so much at stake with so many different issues right now that people are not going to lightly throw their allegiance to an unknown, even a very attractive one.

PILGRIM: And, as you point out, Senator Clinton has a great asset at her side. Let's listen to what she said about Bill Clinton campaigning with her.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON, (D-NY), PRESIDENTIAL CANDIDATE: It has been so much fun having Bill with me the last couple of days. We've had a great time traveling across Iowa. It is so much like what we did for all those years in Arkansas.

(END VIDEO CLIP)

PILGRIM: There has been some discussion, though, that he might be slightly upstaging her. Do you think that that's a problem, Miguel?

PEREZ: Absolutely. And I don't think it's an asset for her. I mean, the guy shines brighter than she does wherever they stand together. And I think that the media is going to continue to cover that angle of the story, what is he doing to overshadow her, how is he overshadowing her? That hurts her.

LOUIS: It's an interesting gender switch. In the past, you'd have a very strong male candidate and might have their wife maybe step forward a little bit to try and soften them around the edges. That's really what Bill is doing for Hillary here. She comes across as strong. All the polls show it. People are confident in her ability to lead. They wonder, though, if she's really going to connect with them.

And then there he is to bite his bottom lip and, you know, choke on his words a little bit and mist up when he's talking about 9/11. And I think it's going to work.

PEREZ: What I think he demonstrates is that he's a lot more human than she is, more compassionate. He makes people cry, he makes people laugh. And somehow she doesn't get around to doing that very often.

PILGRIM: The subjective assessment is often very important. Go ahead, Diana?

WEST: Well, I was just going to say, I mean, we had eight years of Bill Clinton misting up for the camera.

(LAUGHTER)

WEST: And then in some situations, at funerals, et cetera, for Ron Brown, if people remember that, stopping when the camera was off. I mean, there's a lot of phoniness to this emotional quotient with the Clintons.

And it really depends on how much the relationship reminds people about what we really didn't like about those eight years, which had to do with so much of the backstage scandals at the White House that Senator Clinton has managed to avoid discussing for most of her own political career.

So it is really what kind of trip down memory lane we take remains to be seen.

PILGRIM: That makes for great campaign watching, though, however. Thanks very much for being with us this weekend, Errol Louis, Diana West and Miguel Perez, thank you.

Thanks for being with us tonight. Please join us tomorrow, for all of us here, thanks for watching. Have a great week, good night from New York.

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