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LOU DOBBS TONIGHT

Interview With California Congressman George Miller; Bush Administration Putting Politics Before Americans' Health?

Aired July 11, 2007 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight: The House has passed bold new legislation to help middle-class Americans pay for the skyrocketing tuition costs of our colleges and universities, lawmakers voting for the biggest investment in higher education in more than 60 years.
The chairman of the House Education Committee, Congressman George Miller, joins us.

Also tonight, new charges of censorship and cronyism in the Bush administration, after scathing testimony from a former surgeon general. Is the White House putting political agenda above public good? We will have that report.

And Venezuela's anti-American government helping drug cartels flood this nation with narcotics, and our government appears incapable or unwilling of stopping the drug traffickers. We will have that report, "The War Within" -- all of that, all the day's news, and much more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Wednesday, July 11.

Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

The Republican revolt over the president's conduct of the war in Iraq is growing. Several GOP senators today told the White House they are unwilling to wait until September for a change in U.S. strategy and direction. But Republicans who support the president's policy today won a narrow victory in the Senate.

Democrats failed to pass legislation that would have restricted troop deployments in Iraq and Afghanistan.

We begin our coverage that with Dana Bash Capitol Hill -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, the president sent one of his top aides here to Capitol Hill today to try to stem that GOP revolt against his war strategy.

But several of those Republicans said that they were in that meeting and used that meeting to make their frustrations abundantly clear.

(BEGIN VIDEOTAPE) BASH (voice-over): The president's national security adviser came to Capitol Hill to plead with fellow Republicans for patience on Iraq, to wait until September before trying to change the war strategy. But in what one senator described as a vigorous behind closed doors discussions, several GOP senators, including Lamar Alexander, Robert Bennett and Pete Domenici, all told Stephen Hadley, no, the time to change the mission is now.

They're pushing bipartisan legislation to adopt recommendations of the Iraq Study Group, which would start bringing U.S. troops home by next spring.

But, minutes after that meeting on the Senate floor, the first evidence of how hard it still is for Democrats to turn GOP dissatisfaction into votes against the war.

UNIDENTIFIED MALE: The motion is not agreed to.

BASH: Republicans successfully blocked a Democratic measure to require U.S. troops to get more time at home between deployments.

SEN. SAXBY CHAMBLISS (R), GEORGIA: It is an unprecedented wartime attempt to limit the authority of the president and the military leaders by declaring substantial numbers of troops and units unavailable.

SEN. RICHARD DURBIN (D), MAJORITY WHIP: If this president sends these soldiers over and over and over again without rest, without retraining, without the equipment they need into battle, that is unacceptable.

BASH: Democrats know if they cannot pass a measure meant to ease the war's burden on troops, it's going to be near impossible to pass more controversial legislation to change the war itself and bring troops home.

SEN. HARRY REID (D-NV), MAJORITY LEADER: And already we're seeing some Republicans speak out against the president's policy, his Iraq policy. We hope that they and other Republicans will put their words into action by not just saying the right things but voting the right way.

(END VIDEOTAPE)

BASH: And Democrats will have one new Republican voting their way. GOP Senator Olympia Snowe formally signed on today to the Democrats' plan to demand all U.S. combat troops come home by May 1. But, Lou, that just makes three Republicans, not nearly enough to pass.

DOBBS: Dana, thanks very much -- Dana Bash from Capitol Hill.

The White House tonight is refusing the acknowledge the rising GOP rebellion over the president's conduct of the war. White House Press Secretary Tony Snow, in fact, insisted many Republicans and Democrats agree that a sudden U.S. withdrawal from Iraq would be cataclysmic.

Ed Henry has our report from the White House.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): At his first on-camera session in the new White House briefing room, Tony Snow repeatedly dodged when asked if Republican support for the war is slipping.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: I think public -- I think what you have is -- I don't know. I really don't.

HENRY: But just a few feet outside the briefing room, Senator John McCain admitted the obvious when asked if there's Republican erosion.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Yes.

HENRY: And after meeting with President Bush about his recent trip to Iraq, McCain said he knows why Republicans are defecting.

MCCAIN: I think they are concerned about the upcoming election.

HENRY: The type of candor that's not coming from a White House still trying to redefine what victory in Iraq will be.

SNOW: You don't define victory as keeping troops there. Victory is defeating al Qaeda.

HENRY: When asked if al Qaeda in Iraq and the al Qaeda run by Osama bin Laden are the same, Snow wasn't sure.

SNOW: That's a good -- that I'm not competent to tell you.

HENRY: But on Tuesday, the president sounded much more confident.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The same people that attacked us on September the 11th is the crowd that is now bombing people, killing innocent men, women and children.

HENRY: Snow is also trying to by time by claiming the so-called surge has only been in place for two weeks, even though the president has been sending more troops to Iraq since February.

(on camera): Why do you keep saying that the surge of troops has only been in place for two weeks?

SNOW: No, I said fully operational. I said fully operational.

(END VIDEOTAPE)

HENRY: Now, White House officials say that, as early as tomorrow, the president will release a preliminary report to Congress on progress in the Iraqi government, whether or not they are meeting key benchmarks.

We are told it will be a mixed bag. It will show some progress on the military side, little, if any, progress on the political side, more bad news for a White House very much on the defensive right now -- Lou.

DOBBS: Ed, thank you -- Ed Henry from the White House.

New questions tonight about the competence of Homeland Security Secretary Michael Chertoff. Chertoff declared he has what he called a gut feeling that this country faces a heightened risk of a terrorist attack. But he didn't give any specifics.

Democrats tonight are demanding an explanation.

Kelli Arena has our report from Washington -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Lou, Secretary Chertoff says that he was actually surprised at the reaction to his statement. He says that he may have gotten more colorful with words than he has in the past, but he argues that there are some very good reasons why he's concerned.

(BEGIN VIDEO CLIP)

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We do see some general trends that are concerning. We see the fact that they are training in certain parts of Pakistan.

We see the fact they have now reached into North Africa and they have got an affiliate in North Africa. We have seen over the last year increased activity in Europe. And, of course, there's a vulnerability there because of our visa waiver program.

And I even look at the public statements that we have seen with great frequency in the last few months as a sign perhaps that they are getting a little bit bolder and trying to raise expectations.

(END VIDEO CLIP)

ARENA: And, Lou, as you know, al Qaeda's number two released another video message today. Chertoff, again, said that he sees nothing specific or credible suggesting that an attack is imminent. But he's urging Americans to remain vigilant.

And that, of course, set off his critics, who say that he's just a fearmonger, making statements like that to divert attention away from other issues.

And, so, I challenged him, Lou, on that point. And he said, if anyone wants to support complacency, that's their prerogative. He says he hasn't seen any sign that al Qaeda is any less eager to attack.

DOBBS: Kelli, thank you very much -- Kelli Arena from Washington. Some government officials apparently share Secretary Chertoff's concerns about a rising terrorist threat. The Associated Press is reporting tonight that government analysts have concluded that al Qaeda has regained strength and now rivals the operational level it had in the summer 2001, just before the 9/11 attacks.

Well, everyone certainly hopes that Chertoff is wrong about his gut feeling that al Qaeda might attack this summer. And one good reason to hope he's wrong is the fact that Transportation Security Agency screeners reportedly failed a series of security tests at Albany International Airport in New York -- the "Times Union" newspaper reporting screeners there failed to notice a fake bomb in five out of seven tests at that airport.

In one case, the screeners actually confiscated a water bottle from carry-on luggage, but failed to detect fake bomb components in the same bag. The TSA tonight is declining to confirm or deny the results of those tests.

Coming up here next: new evidence that Venezuela's anti-American government is helping drug cartels smuggle narcotics into the United States. We will have an exclusive report.

Also tonight: the Bush administration facing charges it's trying to censor its own officials, putting its political agenda ahead of the public interest.

And scathing new criticism of the State Department's failure to sort out what is nothing less than a national disgrace, the huge backlog in the issuance of new passports.

We will have that report, all the day's news, and much more straight ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A showdown looms between Congress and the White House over the firings of eight federal prosecutors.

Citing executive privilege, former White House counsel Harriet Miers will defy a congressional subpoena by not showing up tomorrow before a House panel investigating those firings.

But Sara Taylor, the president's former political director, today told the Senate Judiciary Committee looking into the matter that the president was not involved in those firings. Taylor answered some of the panel's questions, even though she was ordered by the Bush administration not to reveal internal White House deliberations on the issue.

The Bush administration tonight faces new charges it's trying to censor its own officials, this after scathing testimony from a former surgeon general, Richard Carmona. He said the White House is putting its political agenda ahead of the public good.

Christine Romans reports. (BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Three former U.S. surgeons general say partisan politics interfered with the public interest. Dr. Richard Carmona served the Bush administration from 2002 to 2006, and alleges his public speeches were censored.

VICE ADMIRAL RICHARD CARMONA (RET.), FORMER U.S. SURGEON GENERAL: The vetting was done by political appointees who were specifically there to be able to spin, if you will, my words in such a way that would be preferable to a political and ideologically preconceived notion that had nothing to do with science.

ROMANS: He says he was censored, among other things, on stem cell research, abstinence-only sex education, and Plan B, the emergency contraceptive.

The White House denied it.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Nobody, as far as I could tell, was -- quote -- "muzzling him." But, on the other hand, there's certainly nothing scandalous about saying to somebody who is a presidential appointee, you should advocate the president's policies.

ROMANS: But critics see the president's policies at odds with science and cronyism counter to the public good.

NASA's top climate scientist says the White House tried to censor his global warming research. In 2005, the president's environmental quality chief, a former oil industry lobbyist, came under fire for downplaying global warming in official reports.

More recently, the president's appointment to the Consumer Product Safety Commission, an industry lobbyist, withdrew his name after an uproar over a $175,000 severance from the industry he was to supervise.

A pattern?

BRIAN DARLING, HERITAGE FOUNDATION: And I don't think this administration's any more political than the Bill Clinton administration or the Reagan administration or any other before that.

ROMANS: He says it's Washington that is more politicized than ever, not the White House.

(END VIDEOTAPE)

SNOWE: But the three former surgeons general and NASA's James Hansen disagree. Hansen says, in 30 years of government service, he has never seen anything like it. Hansen said he is -- quote -- "glad to see others making clear that science is being ignored, or worse, suppressed," Lou, "for political reasons and ideology."

DOBBS: Christine, thank you very much -- Christine Romans.

Time now to look at some of your thoughts.

Cecille in New Jersey said: "Lou, don't you find it interesting that Michael Chertoff wants to instill in the American people the fear factor just as the Democrats and a number of Republicans are calling for the removal of our battle-worn troops from Iraq?"

Elizabeth in New York: "Lou, first, Chertoff says, because the immigration amnesty bill didn't pass, he can't secure our borders. Now he has a gut feeling that we might be attacked. A gut feeling? With all the wiretapping and eavesdropping, this is what they come up with, Lou?"

Bart in Michigan: "A hearty amen, brother. I share you sentiment in hoping that American electorate has finally awakened to the fact that their elected representatives are no more than shills for corporate America and the lobbyists."

For more thoughts on what I believe to be a lame-duck president and a number of other lame ducks in Washington these days, and why I'm an independent populist, please read my column on CNN's Web site. You can go to CNN.com or LouDobbs.com.

We will have more of your thoughts here later in the broadcast.

And tonight's poll question is: Do you plan or are you considering changing your party affiliation from Democrat or Republican to independent before the 2008 election? We would like to get a sense of that. So, please vote at LouDobbs.com. We will bring you the results here later in the broadcast.

This week, motorists paying an average of $3 for a gallon of gas again. Refinery slowdowns may push gasoline costs even higher. To help lower those prices, Congress has overwhelmingly passed the so- called NOPEC law. It gives the Justice Department the right for the first time to take legal action against OPEC. The Organization of Petroleum Exporting Countries has kept oil prices up by controlling more than 40 percent of the world's oil supply.

Using NOPEC authority to smash the OPEC cartel would benefit motorists.

But, as Bill Tucker now reports, the oil lobby and the Bush administration say they will fight it all the way.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Three-dollar-per gallon gasoline must have caught the attention of Congress. The House has passed a bill known as the No Oil Producing and Exporting Cartels Act of 2007, or NOPEC, by a vote of 345-7, giving the president the right to file suit against OPEC.

REP. STEVE CHABOT (R), OHIO: It will give us one more weapon against in the arsenal against the OPEC countries who are artificially manipulating the prices of gas. TUCKER: The bill would make it -- quote -- "illegal for any foreign state or agent of any foreign state to act collectively or in combination with any foreign state to limit production, set the price or otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product."

The bill is not popular with the oil industry or its advocates.

JERRY TAYLOR, CATO INSTITUTE: I think it's a ridiculous proposition for the United States Congress to believe that it has the power to regulate economic activity abroad and on companies that are not doing business in the United States.

TUCKER: NOPEC is now included in the Senate version of the energy bill, which passed by a vote of 70-23. That means that NOPEC has a veto-proof majority in the House and the Senate.

But the White House Office of Management and Budget believes the bill should be vetoed, saying that it could lead to oil supply disruptions and an escalation of prices, an argument roundly rejected by the bill's author.

SEN. HERBERT KOHL (D), WISCONSIN: Most of all, this would say to those -- to the 12 OPEC countries, somebody is watching what you do. And that somebody in this case would be the president of the United States.

TUCKER: Supporters acknowledge that NOPEC alone will not bring down energy prices, but call it another weapon to be used with a comprehensive energy policy.

(END VIDEOTAPE)

TUCKER: And, as to the question of price manipulation, NOPEC supporters note that OPEC meets routinely throughout the year expressly for the purpose of setting production quotas and price targets, Lou.

DOBBS: Well, it's a wonderful, I think, easy bill to get energized about. But the fact is, I can't imagine the enforceability quotient being very high for this legislation.

TUCKER: Well, It's very interesting. One...

(CROSSTALK)

DOBBS: Short of dispatching the United States Navy.

TUCKER: Exactly. One, it doesn't require that the president sue. And, as all the supporters agree, this president is not likely to sue OPEC.

And, second, they do say they could attach assets here in the States. They insist that it's enforceable. And I kept asking about that all day long. DOBBS: Well, the point being that disruptions that the administration and oil lobby suggests will occur -- they say it outright -- those kinds of disruptions in either supply or price are precisely why we need an energy bill. I'm not sure we need what is called -- you know, comprehensive has become such a popular word in Washington, hasn't it?

TUCKER: Isn't it, though?

DOBBS: They have got to have a comprehensive -- I will settle for an effective, rational piece of legislation that deals with energy independence.

Bill Tucker, thank you very much.

Coming up next: Communist China is upset that the FBI is trying -- trying its hardest to search out Chinese spies working in the United States. We will have a report on who the FBI is talking to and who they are asking for help, and why that has upset China.

Congress blasts the State Department for those just unbelievable passport delays. Will the government fix the problem? How will they fix the problem? Do they understand the problem?

Stay with us. We will find out.

(COMMERCIAL BREAK)

DOBBS: Lawmakers today blasted the U.S. State Department for massive delays in the issuance of passports -- millions of Americans applying for those passports in recent months trying to comply with new security regulations, as well as seeking renewals. The result, delays as long as four months, outraging the public and the Congress as well.

Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Applied for a passport this year? Then you know what it's like, long lines, delays, in lots of cases, missed travel. Members of Congress know all about it.

UNIDENTIFIED MALE: What a travesty.

UNIDENTIFIED MALE: My office in New Jersey has been swamped.

SCHIAVONE: With the standard wait for passports no longer six weeks, but 12 weeks, the State Department has a lot of explaining to do, especially since the crush could have been anticipated three years ago, when the rules of travel in and out of the U.S. in the Western Hemisphere were changed to require passports for air travel this year and by land and sea possibly next year.

REP. GARY ACKERMAN (D), NEW YORK: One would expect somebody to have taken note, and perhaps concluded that maybe millions of additional Americans were going to apply for a passport. Duh.

SCHIAVONE: The State Department itself reports that, where there were 12.1 million passport applications in 2006, officials now expect to process nearly 18 million passport applications in 2007.

In 2008, 23 million passport applications are anticipated, going up to an expected 30 million by 2010. More than 2,000 people have been hired to handle the crush, and with people working around the clock, the government hopes to catch up by the end of September. But given the volume and the pressures, the question is asked, how reliable is the final product?

MAURA HARTY, STATE DEPARTMENT BUREAU OF CONSULAR AFFAIRS: We will never shortcut our obligation to the integrity of the passport system or the document itself. We have robust, robust, broad prevention procedures in place.

SCHIAVONE: Procedures that citizens know are not exactly airtight.

REP. BRAD MILLER (D), NORTH CAROLINA: We have had folks get back passports with incorrect information. And, on a couple of occasions, we have had people get the wrong passport in the mail, to get someone else's passport in the mail.

SCHIAVONE: Until September, when the problem is expected to be under control, U.S. travelers may proceed to their destinations in the Western Hemisphere as long as they can demonstrate that they have applied for and are waiting for a passport.

(END VIDEOTAPE)

SCHIAVONE: Lou, making passports all the more important to millions of Americans is that more and more employers and government agencies are requiring them not just for travel, but to prove citizenship -- Lou.

DOBBS: And, Louise, the State Department, first of all, can't staff the -- can't staff the Foreign Service, can't staff the embassy in Baghdad, can't seem to handle a passport renewal or application in less than three months, certainly, at the outset, as long as six months, we have heard about.

The State Department is a complete managerial and operational mess. And is it also true they have outsourced some of the processing of those passports, if not all, to the private sector?

SCHIAVONE: They have brought in people who have retired from the State Department to process these passports. The fact is that the State Department, if you ask people who work at the State Department in these important jobs, they say that there are just not enough people at the State Department to do the Foreign Service jobs, to do the passport processing jobs.

The passport union told Congress that the passport adjudicators are retired to process two -- one passport every two-and-a-half minutes. They say, you just cannot do a good job doing it that way.

DOBBS: Well, it is remarkable.

Did anyone at the State Department, Louise, just before we wrap up here, have the courage and the knowledge to tell you when this mess will be fixed, when this crisis will end, and how long an American citizen might have to wait in the future for their passport application or renewal?

SCHIAVONE: You used to be able to count on six weeks' processing time for a regular passport. It's now up to 12 weeks. They say they hope by the end of September working around the clock with additional people, they can do this by the end of September, meet that six-week time frame.

DOBBS: All right, Louise, thank you very much -- Louise Schiavone.

Up next: The House of Representatives passes legislation trying to prevent another Dubai Ports World fiasco or even worse. We will be joined by the sponsors of the bill, Congressman Carolyn Maloney, Congressman Barney Frank.

Also, lawmakers taking action to help middle-class Americans pay for the skyrocketing costs of higher education. I will be joined by the Education Committee chairman, Congressman George Miller.

And shocking new video tonight illustrating communist China's complete failure to assure the safety of its food exports to this country.

Venezuela's anti-American regime helping drug cartels. What is your government doing about it? We will have that exclusive report next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Violent Mexican drug gangs are responsible for a scourge of drugs coming across our southern border. Now there's a new front in the border drug war that's easy and reliable for drug smugglers. The new cocaine drug route begins in Colombia, on to Venezuela and its anti-American president, Hugo Chavez. From there, drugs being smuggled to the Dominican Republic, eventually ending in the United States.

Kelli Arena now reports from Santo Domingo, the capital of the Dominican Republic, in a report that you will only see here.

(BEGIN VIDEO TAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT: (voice-over): It's a tourist paradise.

UNIDENTIFIED MALE: Tons of drugs.

ARENA: And drug runners' haven.

UNIDENTIFIED MALE: We're still retrieving bails from the water.

ARENA: Hispaniola boasts more than 800 miles of turquoise coastline used for snorkeling and smuggling -- cocaine, mostly, from South America to the United States.

PETER A. REILLY, DRUG ENFORCEMENT ADMINISTRATION: There's not many beaches. There's a lot of cliffs. There's mountains all along the coastline, making it hard for the -- for the technical teams to get to the beach to -- to seize the drugs.

ARENA: Many of those drug flights come from Venezuela, officials say. That country's president, Hugo Chavez, outlawed U.S. anti-drug air patrols over Venezuela, accusing DEA agents of spying.

With no way to control the source, the DEA must try to control the transit points, like Hispaniola. It's an island shared between Haiti and the Dominican Republic.

REILLY: One of the problems is the resources. They don't have the necessary resources to -- to combat this problem.

ARENA: He wins for understatement of the year. Currently, about 10 percent of U.S.-bound cocaine is now shipped through Hispaniola. Drug flights are up fourfold in the past four years.

But the Dominican Republic has no radar to track drug planes. The drug control agency does have eight Vietnam-era Huey helicopters, but they don't have night vision capability and most drug drops are made at night. What's more, they can't fly too far from shore.

GENERAL RAMIREZ FERREIRA, DOMINICAN REPUBLIC DRUG CONTROL AGENCY:

(THROUGH TRANSLATOR): So if you have had a water drop 20 miles out, that helicopter can not respond.

ARENA: As bad as it seems, the country is still in better shape than Haiti. General Ramirez Ferreira just secured eight airplanes from Brazil to intercept drug flights and he's cleaned his rank of about 3,000 corrupt drug agents, replacing them with young, untainted agents right out of school.

The fruits of the new push?

A closet full of drugs.

(on camera): The Dominicans have seized over a thousand kilos of drugs so far this year. Most of it, as you would suspect, is cocaine.

(voice-over): Baby steps for sure. But the DEA is trying to help the D.R. Get up and running by lending resources and personnel. This remote windy air strip was used by drug runners, but Dominican authorities did not know it existed until the DEA noticed a drug drop.

UNIDENTIFIED MALE (THROUGH TRANSLATOR): We're about an hour away by land from the closest detachment we have and the nearest town.

ARENA: Hard to stop the drugs from getting in and hard to stop them from getting out to the next stop in the drug pipeline -- Puerto Rico, just 70 miles away.

Kelli Arena, CNN, Santo Domingo.

(END VIDEO TAPE)

DOBBS: And the government of Venezuela tonight disputes our report. It says there are no increasing amounts of Colombian cocaine passing through Venezuela. But just yesterday, Venezuela's own justice minister called for a great national crusade against drug trafficking. And a recent United Nations report ranked Venezuela as number three in the world for cocaine seizures.

Updating the U.S. war against drugs in South America, Colombia today said the Pentagon can use its airfields to try to interdict and apprehend drug runners.

That offer comes after Ecuador's president called President Bush a "dimwit" and refused to renew Washington's lease on an air base there.

We'll have more on the battle against illegal drugs tomorrow.

Kelli Arena will be reporting from Puerto Rico, which some DEA agents say is this nation's third border in the war on drugs.

Communist China again today trying to reassure the United States its food and other exports won't sicken or kill us -- not an easy task after countless cases of poisonous food, toxic toothpaste, dangerous toys and faulty tires. But China's promise to clean up its act may be a promise that it simply cannot keep.

Kitty Pilgrim has our report.

(BEGIN VIDEO TAPE) KITTY PILGRIM, CNN CORRESPONDENT: These are pictures China doesn't want you to see -- literally billions of rats infesting crops in China. The country of fake pharmaceuticals, deplorable hygiene and contaminated food wants to clean up its image. A Chinese official defends Chinese products, saying: "isolated cases should not be blown out of proportion to mislead the public."

Fact -- contaminated Chinese seafood is hardly an isolated case. From October, 2006, to May, 2007, over a period of eight months, the FDA repeatedly found Chinese fish contained chemicals banned in the United States. The Chinese official claims the case of a Chinese company engaging in illegal exports should not be exaggerated as the failure of the safety regime of the Chinese government.

Fact -- China shut down 180 food manufacturers in China and executed the official charged with taking bribes to authorize the manufacture of dangerous drugs.

But a recent study by A.T. Kearney Management Consultants found it would take $100 billion to improve China's food safety standards.

JIM MOREHOUSE, A.T. KEARNEY: We've been talking in the wilderness for almost four years on this issue and it's delightful to -- that there's -- others are finally awakening to the fact that we need to apply some attention to food safety in China.

PILGRIM: The Chinese say the concern over Chinese toothpaste is due to the fact different countries have different standards on the percentage of diethylene glycol allowed.

Fact -- no diethylene glycol is allowed in North or South American countries, or in most countries in Asia.

The State of Connecticut is still scrambling to clear store shelves.

RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: We have now seized about 1,100 tubes of toothpaste at about 120 stores surveyed around the state.

PILGRIM: The Chinese claim that certain levels of diethylene glycol are "harmless."

(END VIDEO TAPE)

PILGRIM: Well, the Chinese just today pledged to crack down on manufacturers who use diethylene glycol. That comes a bit late for the 94 people in Panama who died last year after taking medicine contaminated with diethylene glycol imported from China.

Another 293 deaths in Panama are still under investigation -- Lou.

DOBBS: They hired the man -- or they fired -- they literally fired the man responsible in China for 10 deaths in China. They executed him. With that many deaths in Panama, I wonder if there will be other offerings. It's -- this is absurd, that U.S. importers and distributors are being this cavalier with the health of American consumers.

PILGRIM: The people we talked to today say that a Band-Aid is being put over this. This is -- it needs much more attention than it's ever going to get from the Chinese government or it's currently getting from the U.S. government.

DOBBS: Absolutely.

Kitty, thank you very much.

Kitty Pilgrim.

Most Americans are concerned about food safety and an overwhelmingly large number of us want to know where food comes from.

A new study in "Consumer Reports" magazine says 92 percent of consumers want to know the country of origin of the food they're eating. There is a law that requires a label of origin on some foods, but its implementation has been blocked by -- you won't believe this -- by special interest groups and industry lobbyists.

New concerns tonight about communist China's huge spying operations in this country. Now the FBI is calling for your help in identifying Chinese spies, amid growing evidence that China is now this nation's greatest intelligence threat.

Casey Wian has our report.

(BEGIN VIDEO TAPE)

CASEY WIAN, CNN CORRESPONDENT: (voice-over): The FBI's San Francisco office bought ads in three Chinese language newspapers last week, asking Chinese immigrants to help prevent "subversive elements from harming our country."

The ad says: "We would like to speak with individuals who have information about any intelligence service whose intent is to harm the U.S. we especially welcome anyone who has information about the Chinese Ministry of State Security to contact our office."

the FBI says it's an effort to reach a larger audience, to meet its counterintelligence objectives.

but the Chinese Foreign Ministry calls the ads "absurd, totally groundless" and expresses is indignation.

China also claims Chinese state security will never do anything subvert other country's governments or to undermine the interests of our countries' national security.

JOHN PIKE, GLOBALSECURITY.ORG: The proposition that Chinese intelligence agencies are not in the business of spying, I think, is absolutely laughable. And it's just bewildering why the Chinese government would make such an incredibly silly statement that would, I think, just call the integrity in any other statement that they would make into disrepute.

WIAN: In fact, dozens of Chinese nationals have been charged with passing military and economic secrets to China while living in the United States. The conviction of former defense engineer Chi Mak two months ago is just the latest example.

The FBI estimates China set up 3,000 front companies in the United States to spy and steal information. And U.S. intelligence officials say China is the United States' number one intelligence adversary. you wouldn't know that listening to China's president Tuesday.

PRESIDENT HU JINTAO, CHINA (THROUGH TRANSLATOR): We should strengthen strategic cooperation in international and regional issues and make even greater contributions to maintain world peace and promote common development.

WIAN: The FBI says the newspaper ads are not in response to any specific espionage threat in San Francisco, just an effort to region the area's huge Chinese immigrant community.

(END VIDEO TAPE)

WIAN: Some members of that community, however, have complained to the FBI that they are being unfairly portrayed as potential spies.

However, U.S. intelligence experts say China does, in fact, urge Chinese nationals in the United States to help the motherland -- Lou.

DOBBS: Surprising naivete on the part of some of those folks to make such a protest. It is -- in this war on terror, for example, a question that the FBI is asking nearly every person in the country.

WIAN: Absolutely. Naivete is one charitable way to put it. Most Chinese nationals know that they are expected by folks that are still in communist China to help communist China improve its science, technology and military capabilities. And many of them agree to help them do that.

DOBBS: As demonstrated in the trial of Jean Mak and his conviction.

Casey Wian, thank you very much.

WIAN: OK.

DOBBS: Coming up next here, is the United States finally ready to crack down on foreign control of our nation's infrastructure?

Are we about to get serious about national security?

We'll be talking with two people who want to make it so. They're doing something about it -- Congressman Barney Frank, Congresswoman Carolyn Maloney on today's vote on the CFIUS bill.

The student loan reform legislation threatened with a White House veto. The chairman of the House committee on education joins me. Congressman George Miller will tell us why he thinks this bill will be the most important legislation to help college students in more than a half century.

Stay with us.

All of that and more, coming right up.

(COMMERCIAL BREAK)

DOBBS: The House of Representatives today overwhelmingly passed legislation that gives the government more power to prevent the sale of American companies vital to national security. The bill is designed to prevent a repeat of the Dubai World -- Dubai Ports World fiasco or worse.

Sponsors of the legislation, Congressman Carol Maloney and Congressman Barney Frank.

They join us tonight.

First, congratulations on winning passage of the bill. The -- there are -- we're trying to protect this country, in CFIUS, the last count I saw was, Congresswoman, 15 -- more than 1,500 deals looked at by CFIUS, the Committee on Foreign Investment in the United States, and only three had been rejected.

Is this bill a reaction to that?

REP. CAROLYN MALONEY (D), NEW YORK: It absolutely is, Lou.

As you mentioned -- and thank you for having us on today on this important bill.

But --

DOBBS: Well, congratulations to you both.

This is --

MALONEY: Well, thank you.

But after the Dubai Ports fiasco, as you said, that it was clear that we needed stronger review processes in terms of protecting our national security, particularly for foreign government investment in our country. And this bill sets forward clear procedures. It creates a heightened security procedure and -- but does not discourage safe foreign investment that creates jobs and boosts our economy. It's a win-win.

DOBBS: And, Congressman Frank, the idea that CFIUS is operated in such secrecy, not deigning to really let anyone in Congress know what it's doing or be responsive to it, this legislation, should it be signed into law, does it change all of that?

REP. BARNEY FRANK (D), MASSACHUSETTS: I hope so, Lou.

But part of the problem is that the way this process of foreign investment has been conducted recently, it's born the hallmark of the Bush administration, which, as you know, is incompetence.

I mean how all these wise people managed to forget that Dubai Ports -- or not realize what a problem that would be, you know you can't -- you can't legislate common sense. You can try to protect against bad things.

As nearly as you can, this is a bill that does two things that Carolyn talked about. It encourages foreign investment. That's insourcing when it's done right. But it also provides a strict procedure for dealing with those areas which could be a security problem.

DOBBS: Well, when you talk about the Dubai Ports World and security, it is easily recalled that the president and members of his administration first said that there was no security implication whatsoever in the attempted purchase by Dubai Ports World, a government owned, a United Arab Emirates owned company.

And, secondly, that there were no security issues or involvement whatsoever at the Ports.

Both statements, of course, absolutely demonstrated to be incorrect.

Well, let me ask you this. The idea that foreign investment is now necessary, the administration is charging ahead, the committee, in your judgment, the Committee on Foreign Investment, will it be more -- would you believe that it would be more responsive --

FRANK: Yes.

DOBBS: -- to the interests of the country?

Or -- I know you're excited, and nearly everyone is, about foreign investment and investment in foreign countries --

FRANK: Lou, here's why.

DOBBS: -- and investment in foreign countries.

FRANK: Can I say why?

DOBBS: But raising the level of --

FRANK: Lou, here's what we've done --

DOBBS: -- security interest, seems to me to be the great benefit here.

FRANK: Well, what we've done is this. There's some personal responsibility. You know, one of the problems with Dubai Ports was it was nobody's fault.

DOBBS: Right.

FRANK: Everybody was blaming everybody else. Well, we've got to build -- and Carolyn Maloney took the lead in drafting this -- it's better structured now. There's real responsibility of these department heads.

Plus, by the way, we have added to the committee the director of national intelligence. Previously, the intelligence community wasn't represented.

DOBBS: Right.

FRANK: But I think the main thing we've got -- and there's another point. After they've approved these things, they have to report it to Congress. So before a deal can be consummated -- because they submit the deals, respectively, as soon as they have approved a deal, they have to submit that to Congress. So that deals with the secrecy and it also gives us some accountability. And, if they do screw up again, which I don't rule out, it gives us a chance to react in a way that could stop it.

DOBBS: Congresswoman Maloney, you get the final word.

Is this a done deal?

MALONEY: Oh, I think so. It's one of the few areas that we have agreement. The secretary of the Treasury supports it, the president. It passed overwhelmingly in the Senate. And the vote today will send it to the president. And it may be one of the bills that he's not going to veto. (INAUDIBLE).

FRANK: Lou, can I just ask, if I get invited to a signing ceremony with the president, can I give him your regards?

(LAUGHTER).

DOBBS: If you would, please.

FRANK: I'll be in enough trouble anyway.

DOBBS: Well, that would --

MALONEY: And --

DOBBS: That would assure further trouble.

MALONEY: And, Lou, it will track those CFIUS projects that are withdrawn from the project to see what happens to them --

DOBBS: Right.

MALONEY: -- to make sure they, in fact, follow the law.

DOBBS: Well, congratulations to you both and -- on very important legislation.

FRANK: Thank you.

DOBBS: And we thank you for being here.

MALONEY: Thank you for your interest.

DOBBS: A reminder now to vote in our poll -- do you plan or are you considering changing your party affiliation from Democrat or Republican to Independent before the 2008 election?

We're going to be trying to get a sense of -- of your view on this over the course of the next few weeks.

Please cast your vote tonight at loudobbs@cnn.com.

We'll have the results here later in the broadcast.

Up next, the war on the middle class. Millions of our students being forced out of education by the high cost of college. Education Committee Congressman George Miller joins us to talk about a bill that promises substantial financial relief.

Stay with us as we continue in one moment.

(COMMERCIAL BREAK)

DOBBS: Today the House of Representatives passed legislation promising relief to millions of our college students who depend on what is now a corruption plagued student loan program.

Congressman George Miller helped shape that legislation, the chairman of the House education committee.

Congressman, Mr. Chairman, congratulations on getting this legislation through.

The -- give us a sense of the beneficiaries and the cost of the legislation.

REP. GEORGE MILLER (D-CF), EDUCATION CHAIRMAN: Well, the beneficiaries are families and students that are struggling to pay for their education. We took $18 billion in excessive subsidies, which was an entitlement program for banks and lenders, and we recycled that money to help low-income students with an increase -- a dramatic increase in the Pell grant and to provide for a cut in the interest rates for middle-income families on the loans they take out for their students and make it much cheaper for them to -- to go to college. They'll save about $4,000 on the average indebtedness of the student, which is about $15,000.

It's a big -- it's a big, big day for middle-income families and low-income families.

DOBBS: Yes.

And it comes at a critical time, as prices are rising, as the student loan program, Sallie Mae, is in great difficulty.

Mr. Chairman, some of the opponents, including the ranking member of your committee, are saying that this bill does not provide enough relief in the format -- for students -- in terms of more money for Pell grants; suggesting it is too costly.

Let's take a look at what the president had to say.

The White House today issuing a statement reacting to the passage, saying that "it fails to target aid to the neediest students currently in college and creates new mandatory federal programs and policies that are poorly designed and would have significant long-term costs to the taxpayer."

What do you say?

MILLER:

What do I say, is each and every one of these programs is paid for because we took an entitlement that was there for bankers and the lenders and we put it in place for middle-income and low-income families. These programs are paid for.

When the Republicans had complete control of the government, they didn't do anything to help the Pell grant students. We put in a $500 increase over the next five years. The president promised a $5,100 Pell grant. He's never done anything about it. And now all of a sudden they want to do something about Pell grant to -- and hurt middle- income families, hurt low-income families, hurt, you know, policemen and firemen and other people that we give loan forgiveness to.

It's outraged that they come in it in the eleventh hour and now act like they care about these students. Last year, they took $18 billion away from the lenders and they gave -- they sent it to pay for the tax cuts for the wealthy.

DOBBS: Right.

Very quickly, the students and beneficiaries, Sallie Mae, today the sharers of Sallie Mae, as you probably know, I'm sure you know, dropped 10 percent. The private equity group led by JC Flowers saying it may not carry out its $25 billion takeover of the student loan firm, blaming the legislation that may cut federal subsidies.

Your reaction?

MILLER: Sallie Mae told us that they could live with these -- with these cuts. I think what you're seeing is negotiations between a buyer and a seller who want to get a better price.

We have met with the small lenders, the big lenders, the nonprofit lenders. And all of this talk, they didn't like what we were doing, but they could live with it. And that's the analysis of Wall Street, also.

DOBBS: Well, and the analysis on the part of working men and women and their families trying to meet these high prices.

MILLER: It's a big day for them.

DOBBS: I have to believe this is one battle won in the war on the middle class. Mr. Chairman, congratulations.

MILLER: Thank you.

DOBBS: Thanks for being here.

MILLER: Thank you. DOBBS: George Miller.

Coming up at the top of the hour, "THE SITUATION ROOM," Wolf Blitzer -- Wolf.

WOLF BLITZER, HOST, "THE SITUATION ROOM": Thanks, Lou.

Nearly six years into the war on terror, there's now some very disturbing new signs Al Qaeda is back to where it was before 9/11. We're going to tell you what intelligence experts are now seeing.

Also, former President Richard Nixon candid, uncut and cursing his opponents -- we'll play revealing newly released recordings for you.

Plus, a former surgeon general of the United States leveling some very serious charges. He says the Bush administration tried to play politics with your health by silencing him. You'll be hearing from him in the coming hour.

All of that, Lou, coming up, right here in the "SITUATION ROOM".

DOBBS: Thank you.

Still ahead, the results of our poll tonight.

Stay with us.

We'll be right back.

(COMMERCIAL BREAK)

DOBBS: And wow!

The results of tonight's poll, the results?

Eighty-six percent of you saying you plan to or are considering changing your party affiliation from Democrat and Republican to Independent before the 2008 election.

We're going to be surveying this question over the next few weeks to get a sense of what appears to be a serious and profound trend developing in this country.

Time now for one last e-mail. Bud in Indiana writing in about our poll question last night, which was do you believe the U.S. government and corporate America are responsible for American dependence on Chinese imports?

"Yes, yes, yes, and yes. And loss of jobs, lack of support for our education system, the war in Iraq, poor port control, lack of inspection of imports, open borders, privatization of roads and a mountain of asinine, insane, greedy desires that have not yet come to light that we will be paying for for generations to come. This nation is at war. Corporate America and, at present, we, the people, are still asleep and losing our freedoms daily and our jobs."

Thanks for being with us tonight.

Join us tomorrow.

For all of us, thanks for watching.

Good night from New York. "THE SITUATION ROOM" begins now with Wolf Blitzer -- Wolf.

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