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LOU DOBBS TONIGHT

Dems Launch New Plan to End Iraq War; Blackwater Under Fire for Civilian Deaths; New Farm Bill Guts Meat Inspection?

Aired October 2, 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, a new threat to the safety of our food. Some lawmakers are caving in to special interests and demanding an end to federal safety inspections of our meat and poultry.
Also, the toy industry insists its products are safe. The industry says worries about dangerous imports are what it calls an aberration.

And the governor of New York slams opponents of his plan to give drivers licenses to illegal aliens, but those opponents say they will not give up their fight to prevent New York from becoming a sanctuary state.

All that and much more straight ahead tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Tuesday, October 2nd. Live from New York, sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening, everybody. Senior congressional Democrats today launched a new plan to stop the war in Iraq. Now, those Democrats demanded a war tax to pay for military operations in Iraq. Meanwhile, some members of Congress blasted the conduct of the private security firm Blackwater USA in Iraq. The firm's chairman insisted his employees are not out-of-control hired guns.

First, Dana Bash reports on the Democrats' new battle to challenge President Bush -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Kitty, all the buzz here today was that Democratic idea to raise taxes to help pay for the war. It's an idea that one GOP aide called nothing more than a political gift for Republicans.

(BEGIN VIDEOTAPE)

BASH (voice-over): This is what Democrats wanted their message of the day to be...

UNIDENTIFIED MALE: Three-seventy-seven, the nays are 46, and the bill is passed.

BASH: For the first time a big bipartisan vote approving an Iraq bill, one forcing the president to come up with a withdrawal plan, but this is what's getting all the attention. Senior Democrats announcing a proposal to help pay for the Iraq War by taxing most Americans.

REP. DAVID OBEY (D-WI), CHAIRMAN, APPROPRIATIONS COMMITTEE: It will be a war surtax. It's a percentage of your tax bill. And if you don't like the cost, then shut down the war.

BASH: The proposal would require low- and middle-income Americans to pay an additional 2 percent in taxes. Wealthier taxpayers would see a 12 to 15 percent surcharge. Troops serving in Iraq and their families would be exempt.

OBEY: This war is draining the Treasury dry. It's destroying -- there's a huge opportunity cost that is being paid by the same younger generation that's going to be asked to pay the bill because the president is paying for this war on the cuff.

BASH: But hours later, House Speaker Nancy Pelosi issued a rare public dismissal of a proposal from her confidant John Murtha and Appropriations Chairman David Obey. "I'm opposed to a war surtax," Pelosi said bluntly. In fact, most Democratic leaders could not run far enough, fast enough from the idea.

REP. STENY HOYER (D-MD), MAJORITY LEADER: This is not a party position at this point in time. The leadership has not discussed this.

BASH: Democratic sources say leaders know full well that the war tax idea allows Republicans to resurrect their classic Democrats "tax and spend" attack line and they did.

REP. JIM GERLACH (R), PENNSYLVANIA: I think it's an awful proposal.

BASH: Pennsylvania Republican Jim Gerlach strongly supported the day's bipartisan Iraq bill, but eager to blast any war tax.

GERLACH: It seems to me that many in the Democrat leadership want to increase people's taxes and will find any reason in the world to do that. And I just don't think that is the right direction for our country.

(END VIDEOTAPE)

BASH: We're told that House Speaker Nancy Pelosi found out about this idea last night and despite her opposition to it, she did not try to stop her Democratic colleagues from actually having this press conference and proposing it. An aide saying that she understands their frustration with the war -- Kitty.

PILGRIM: Dana, it makes a political point, but I would imagine that the Democrats are pretty frustrated would Murtha and Obey for taking away from the real message here.

BASH: Knocking them right off message. A lot of Democratic leaders, Kitty, were caught off-guard, most of them making it pretty clear that they were not happy about it. One Democratic leadership aide was pretty blunt about it, saying that even on good days someone is always acting like an idiot when it comes to this whole debate over the war and what the best message is, especially on a day like this when Democrats understanding full well, the leaders, that there is so much frustration that they haven't been able to come together with Republicans to pass something in a bipartisan way, and a day today when they actually did it, again, nobody is really talking about that that much. They're talking about this tax hike idea, an idea that is not going anywhere.

PILGRIM: Thanks very much, Dana Bash.

BASH: Thanks, Kitty.

PILGRIM: Britain today announced it will pull out 1,000 more troops out of Iraq. British Prime Minister Gordon Brown on a surprise visit to Iraq said the troops will leave by the end of this year. About 4,500 other troops will remain. Britain has the second-largest contingent of troops in Iraq after the United States. The U.S., of course, has more than 160,000 troops in Iraq.

Private security contractors continue to play a huge role in Iraq and, today, one of the biggest firms, Blackwater USA, faced scathing criticism from some lawmakers on Capitol Hill. But the Blackwater chairman, Erik Prince, insisted his employees are not reckless gunmen who fire on Iraqis indiscriminately.

Barbara Starr reports from the Pentagon.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): For more than three hours, Blackwater Chairman Erik Prince defended his employees against any suggestion that security contractors are out of control when guarding convoys on Iraq's dangerous streets.

ERIK PRINCE, CHAIRMAN, BLACKWATER USA: And I believe we acted appropriately at all times.

REP. ELIJAH CUMMINGS (D), MARYLAND: Blackwater appears to have fostered a culture of shoot first and sometimes kill and then ask the questions.

STARR: But Prince was not questioned about the controversial shooting by Blackwater personnel in Baghdad that killed a number of civilians last month. The FBI has a criminal investigation ongoing and the Justice Department asked Congress and Prince not to discuss it.

In a written statement, part of which he did not read, Prince indicated the September 16th shootout began when a Blackwater team came under fire. Blackwater's job, Prince says, is to get the people it's protecting to safety when trouble starts.

PRINCE: Most of the attacks we get in Iraq are complex, meaning it is not just one bad thing, it's a host of bad things. Car bomb followed by small arms attack, RPGs followed by sniper fire.

STARR: He spelled out Blackwater's defensive tactics, including lights, sirens and hand signals to stop threatening vehicles and firing disabling shots into radiators or windshields.

PRINCE: Only after that do they actually direct any shots towards the drivers.

STARR: Both Democrats and Republicans said nobody is watching contractors closely enough.

REP. TOM DAVIS (R), RANKING MEMBER, OVERSIGHT COMMITTEE: To date, there has not been a single successful prosecution of a security provider in Iraq for criminal misconduct. Iraqis understandably resent our preaching about the rule of law.

STARR: Prince was questioned about an incident last year when a drunken Blackwater employee shot and killed an Iraqi bodyguard. The man was fired and fined, but not prosecuted.

PRINCE: Look, I'm not going to make any apologies for what he did.

REP. CAROLYN MALONEY (D), NEW YORK: If he lived in America, he would have been arrested and he would be facing criminal charges. If he was a member of our military, he would be under a court-martial, but it appears it me that Blackwater has special rules.

(END VIDEOTAPE)

STARR: Now, Kitty, the committee chairman, Henry Waxman of California, said the key issue for him right now is whether these contractors are being held accountable when there is wrongdoing and whether the work they do is really cost effective. But it should also be said that as Prince pointed out, under Blackwater's operations, no protectee, none of the people -- the high-value people that they protect, have ever been killed in Iraq -- Kitty.

PILGRIM: Barbara, a quick follow-up. Where do we stand on the FBI investigation into Blackwater?

STARR: That criminal investigation is still ongoing. The FBI in the initial stages of gathering evidence. It certainly does open the door to the possibility of criminal prosecutions, but that would be a long ways down the road -- Kitty.

PILGRIM: Thanks very much, Barbara Starr.

Insurgents have killed another one of our troops in Iraq. The Marine was killed in al-Anbar province west of Baghdad. One of our troops has been killed in Iraq this month, 66 in September, 3,809 of our troops have been killed since this war began, 28,093 troops wounded, 12,600 of them seriously.

The United States is still technically at war with North Korea, but that did not stop the South Korean president from visiting North Korea today. South Korean President Roh traveled to North Korea by road and he stopped briefly at the demilitarized zone to cross the border on foot. And later, President Roh met with the North Korean leader, Kim Jong-il, in the North Korean capital of Pyongyang. Now some analysts say the South Korean leader's visit is designed to boost its sagging approval ratings at home.

Elsewhere in Asia, another top-level meeting this time between the military ruler of Myanmar and a U.N. envoy. Now this meeting took place after the Myanmar's regime's violent crackdown of pro-democracy protesters.

Dan Rivers is in Thailand and has this exclusive report.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN CORRESPONDENT (voice-over): This is the ugly face of military repression the generals who control Myanmar have tried so hard to cover up. The images just smuggled out by men and women who risk their lives are at least two days old. The pictures taken just before Myanmar's foreign minister claimed security personnel had exercised what he called the utmost restraint.

The soldiers corralled those they caught in the middle of the road. Some prisoners already clearly injured, watched over by an officer in the now silent street. Earlier, the smuggled video showed a very different scene: the deafening chant of a confident crowd marching peacefully through the city.

But the moment was short-lived. The demonstrators flee. Soldiers bark orders as an injured protester is attended to by an anxious friend trying to stay out of sight, and in the street, the remains of the stampede.

Those who run fast enough are searched and loaded onto trucks by men who are not wearing uniforms. Backing up protesters' claims that plain-clothed intelligence officers were operating in their midst, smuggled evidence seeping out of this isolated country that the pro- democracy movement is being ruthlessly crushed, pictures that are likely to define Myanmar's government to the world.

Dan Rivers, CNN, Bangkok.

(END VIDEOTAPE)

PILGRIM: Still to come, the toy industry can't shake off its addiction to cheap toys from communist China. Christine Romans will have the report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, the toy industry is playing up its new toys for the holiday season and playing down concerns about dangerous imports from China. We'll have that story for you right after the break.

PILGRIM: Thanks very much, Christine.

Also, Congress may overturn decades-old laws to protect the safety of our food. We're going to have a special report on that.

And Governor Eliot Spitzer of New York puts the interest of illegal aliens and the lobby before our national security. We'll have the story.

(COMMERCIAL BREAK)

PILGRIM: A provision in the new farm bill would unbelievably allow for fewer federal inspections of meat. This comes in the midst of a recall of more than 20 million pounds of frozen hamburger meat.

As Lisa Sylvester now reports, food safety advocates and many others are stunned by the move to cut federal inspections.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Alex Donley died at 6 years old from E. coli poisoning after eating a contaminated hamburger. That was in 1993. His mom is now a food safety advocate.

NANCY DONLEY, SAFE TABLES OUR PRIORITY: I assumed that what you buy in your grocery store and what you can order in a restaurant was safe. Well, I was dead wrong.

SYLVESTER: Nancy Donley is among those fighting to keep Congress from rolling back federal inspections of meat and poultry, rules that have been in place for 40 years. A provision buried in the 2007 farm bill would allow up to 80 percent of all federally inspected plants to opt out of the federal program and be inspected only by their state.

State standards are supposed to be equal to federal standards, but critics of the legislative change insist they're not up to par. A 2006 USDA inspector general report raises questions on the uniformity of state standards.

SEN. BARBARA BOXER (D), CALIFORNIA: Allowing uneven and lax state standards to replace a uniform federal standard is not only inappropriate, it is irresponsible.

SYLVESTER: Proponents of the change say the current system put small meat producers at a disadvantage by not allowing them to sell their products across state lines while foreign producers can sell anywhere in the United States.

REP. COLLIN PETERSON (D-MN), CHAIRMAN, AGRICULTURE COMMITTEE: If we can set up a system to certify plants in Honduras or Guatemala, we can certainly certify plants in Minnesota. And that's what we're trying to do. We're not trying to weaken the standards.

SYLVESTER: But as the second-largest recall of tainted meat is under way, now is not the time to cut back on meat inspections, say food safety advocates. Federal inspectors are able to pull toxic foods off the shelves quickly and efficiently, state inspectors do not have the same authority.

(END VIDEOTAPE) SYLVESTER: The provision in the farm bill passed in the House in July without a lot of fanfare or publicity. The measure is now being considered in the Senate where it is facing more opposition -- Kitty.

PILGRIM: Lisa, in the range of products that are inspected in this country, meat was considered among the best inspected products. Why would they begin to weaken this one system that apparently works reasonably well?

SYLVESTER: And that is one of the things that critics of this rule change, they are asking that very same question. Here you have a system, it has been working, it has been working for 40 years and now they want to roll back this provision primarily because it will benefit business interests -- Kitty.

PILGRIM: Unbelievable. Thanks very much, Lisa Sylvester. Thanks, Lisa.

And still part of the farm bill is the country of origin labeling, it's called COOL, and COOL was actually signed into law back in 2002. It required country of origin labeling information on some imported meat and fish. It has never been fully enacted, mostly due to pressure from food industry lobbyists and other special interest groups.

And that brings us to the subject of tonight's poll. Who should be responsible for meat inspections, federal government, state government? Cast your vote at loudobbs.com. We'll bring you results a little bit later in the broadcast.

Toy companies today attempted to reassure Americans that their products are safe and that may be a hard sell, given the millions of children's toys and products recalled this year. And just today the Consumer Product Safety Commission announced another recall of toys made in communist China. Target is recalling more than 80,000 Plush Boys Rattles due to a choking hazard.

As Christine Romans reports, the toy industry is hoping it can allay consumer fears so it can have a profitable holiday season.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): These are the 12 toys the toy industry says will be hot this Christmas. And where are they made?

CHRIS BYRNE, TOY INDUSTRY ANALYST: Everything that you see here, almost every promotional toy is made in China.

ROMANS: After a summer of millions of recalls of imported toys with dangerous design flaws or tainted with lead, toy executives putting the positive spin on a hellish year for toy customers.

NEIL FRIEDMAN, PRESIDENT, MATTEL BRANDS: (INAUDIBLE) make the consumer feel pretty good about what they're going to be buying going into the holiday season.

ROMANS: Mattel's productive integrity chief says every lot of holiday toys is being tested.

DAVID KOSNOFF, SR. DIR., PRODUCT INTEGRITY, MATTEL: Everything coming out of Asia and our vendor source plants has been tested and is safe for the holiday season.

ROMANS: At an event designed to play up the season's hot-selling toys, organizers played down consumer fears about where those toys are made.

CARTER KEITHLEY, TOY INDUSTRY ASSOCIATION: I think that we will see -- you know, continue to see a lot of product coming from China. The Chinese manufacturing operations, I've been through them, they are very good. What we have seen happen here is really truly an aberration.

ROMANS: For American toy brands, there is much at stake. The Toy Industry Association the over the past year $22.5 billion in toys were sold in the U.S. market, 80 to 85 percent of those toys made in China.

BYRNE: Well, I think some parents are obviously going to be concerned about Chinese toys, but at the end of the day, it's the kids who are specifying what they want.

ROMANS: Still, there is no doubt, the headlines and the recalls have left consumers angry and asking questions.

EDWARD SCHMULTS, FAO SCHWARZ: We're seeing a heightened level of parental scrutiny of toys, which I think is a good thing. They're asking questions and really thinking about the appropriateness of toys for their children.

ROMANS: FAO Schwarz now lists the country of origin of all the toys it sells on its Web site.

(END VIDEOTAPE)

ROMANS: Now there will likely be more recalls. But the overall message, the factory floor for America's toys is in China and will stay there. Companies will test those products more and toy industry insiders said that means toys will cost more, Kitty, starting some time next year.

PILGRIM: These assurances are laughable. Everything is OK until it's not and then it's really not OK.

ROMANS: It's a really important time of the year. They've got 12 toys, a lot more than that that they're trying to push on American consumers because this is their big profit season.

PILGRIM: Well, it is a make or break moment for American consumers too to make good decisions. Thanks very much, Christine Romans.

Coming up, the Clinton campaign crushes the competition in the money race for '08. Now is the Obama camp reeling? We'll have details on that.

And rising outcry over New York's plan to issue driver's licenses to illegal aliens. We'll have a report on that. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: He's facing strong opposition, but New York State Governor Eliot Spitzer is pushing ahead with his plan it give drivers licenses to illegal aliens. As Bill Tucker reports, opponents are raising new legal and political obstacles.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): In New York State, illegal aliens will soon be welcomed and protected, if Governor Spitzer can follow through on his plan to grant them drivers licenses. They will even have their own separate process for getting their licenses.

GOV. ELIOT SPITZER (D), NEW YORK: Undocumented immigrants will not be able to get a license in the over-the-counter manner that lawful residents currently go through. Instead, they will submit six points of identification to a central document verification unit and DMV, the first of its kind in the nation where specially trained staff will verify their validity.

TUCKER: In essence, New York State will do a background check on illegal aliens. And, no, he will not share information gathered from illegal aliens getting their license with federal immigration authorities. That is none of their business, the governor effectively says.

SPITZER: We enforce the state laws. We make sure that those who are here get the benefit of the community that we have defined by virtue of those state laws.

TUCKER: Those who oppose him, he says, are using heated rhetoric and hysterical allegations, yet he is quick to brand his opposition as anti-immigrant.

SPITZER: There has already been very significant pushback, as you've seen the nature of the rhetoric, the anti-immigrant emotions that have been fanned and preyed upon.

TUCKER: His opponents answer, saying they are not anti-immigrant but they are against rewarding people who have broken the law. And they're concerned about turning New York State into a sanctuary state.

REP. TOM REYNOLDS (R), NEW YORK: What the governor is doing is changing a program, not to provide legals. They already can submit and provide an opportunity to get a drivers license. This is illegal that are here illegally and the governor is setting up an open door.

TUCKER: There is some dispute whether Spitzer can make these changes unilaterally. Many, including the governor, believe he has the power to make the change by executive order. (END VIDEOTAPE)

TUCKER: But the New York State Republican Party has filed suit against the governor, challenging his authority, arguing that legislative action is what is required in order to carry this off. There will be a hearing here in New York City tomorrow, Kitty, of those who are opposed to this. Of course, we will be there and bring the story to you tomorrow night.

PILGRIM: Look forward to that. Thanks very much, Bill Tucker.

We would like to point out we did invite New York Governor Eliot Spitzer to join us on the program to discuss the drivers license issue, but he declined.

Time now for some of "Your Thoughts." Shawn in Kansas wrote: "It looks like the Mexican government has finally become even more outrageous than ours. Demanding citizenship for all illegal aliens and blaming Americans is just too much bravado for me. Where is their shame in allowing so many of their citizens to live in poverty and do anything about it? I have had a belly full."

And Georgiette in Washington writes: "Where are our elected officials? Why did they allow the former Mexican president and others to come to this country and push their amnesty agenda? We need to call our congressmen and demand an explanation."

Bob in Florida wrote: "Hey, Lou, get back on the job, we all miss and need you on the front line in the fight against amnesty."

Lou, by the way, is recovering well from his tonsillectomy and we expect him to return soon and we'll have more of your e-mails later in the broadcast.

Also coming up, rising fury after a federal judge delays a government program to enforce our immigration laws. Congressman Ted Poe is among those who are outraged. He is our guest.

Also, startling new numbers about Senator Hillary Clinton's efforts to raise money for her presidential campaign. And Senator Barack Obama says the Congress failed the American people on the issue of Iraq. Three leading radio hosts will join us to address Senator Obama's election campaign. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: It's a record year for Democratic fund-raising for the presidential campaign. Senator Hillary Clinton is crushing her chief rival, Senator Barack Obama. Figures released today show the New York Senator with her best three-month fund-raising totals for the year.

Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice over): Third quarter fundraising is traditionally slow. It's the summer. People are away. Early contributors have maxed out.

The Hillary Clinton and Barack Obama campaigns said they expected to raise only about $20 million. Impressive, but less than the second quarter.

On Monday, Obama's figures came in, about $20 million, as expected.

The first thing Tuesday morning, the Clinton campaign released its number -- $27 million.

Wow!

MARK PRESTON, CNN POLITICAL EDITOR: And, clearly, the Clinton campaign wanted a day of their own, so that's why we saw the numbers released this morning. Right now, they're carrying the headlines on all the major news stations and all the Web sites.

SCHNEIDER: First quarter this year, Clinton and Obama both raised about $26 million. Second quarter, Obama moves ahead, $33 million to $27 million.

Third quarter, the lead shifts to Clinton, $27 million to $20 million.

Totals for the year so far, Clinton, $80 million. Obama, $79 million.

This is getting exciting.

The money race looks very different from the polls, where Clinton has maintained the lead. In our monthly poll of polls, Clinton was 15 points ahead in early summer, 18 points in August and 19 in September. That's one reason her fundraising has picked up -- more and more people think she'll win, and people like to bet on a winner.

The Obama campaign points out that it's raised nearly $75 million for the primaries -- about $12 million more than Clinton. But in the last quarter, Clinton's primary contributions totaled more than Obama's for the first time. There is one unanswered question -- not how much you raised, but how much you've still got.

PRESTON: We don't know how much money they've spent, how much money they actually have in the bank.

(END VIDEOTAPE)

SCHNEIDER: Both Clinton and Obama seem to have the money they need for a sustained primary race. And they have a lot more than all nine of the Republican candidates put together -- Kitty.

PILGRIM: One thing is clear, Bill, this a big money race.

SCHNEIDER: It certainly is. All records are broken.

PILGRIM: Thanks very much. Bill Schneider.

Thanks, Bill.

Well, Democratic presidential candidate Senator Barack Obama today blasted Senator Hillary Clinton for supporting the war in Iraq five years ago. In a foreign policy address on the fifth anniversary of an anti-war speech, Senator Obama reminded his audience that he opposed the war from day one.

Today, Candy Crowley went one-on-one with Obama about the war in Iraq.

CANDY CROWLEY, CNN CORRESPONDENT: Kitty, rival campaigns and Obama critics say, yes, he was one of the earliest opponents of this war. But they say his record since then has been less than clear.

(BEGIN VIDEOTAPE)

CROWLEY: I want to talk about your Iraq speech, because you have also said since then that you're not sure what you would have done had you been in the Senate because you weren't privy to the intelligence.

SEN. BARACK OBAMA (D), ILLINOIS: The only time when I said I'm not sure what I would do if I were in the Senate was right before the Democratic convention, when we had two nominees that, obviously, I did not want to be criticizing right before they got up and received the nomination.

CROWLEY: But you didn't mean it?

OBAMA: So -- well, no. What I'm suggesting is, everybody had difficult choices to make. And I -- and these were difficult choices. I made the right choice.

I think that Senator Clinton has been effective in trying to blur the distinctions. And it's our job to make these distinctions clear to the American people.

CROWLEY: I want to also ask about something you said recently, which was that you couldn't commit to having U.S. troops out of Iraq by 2013, which would be the end of your first term.

What does that say to all of the people who thought last year they voted to get out of Iraq?

OBAMA: What I said is, is that I would retain a very limited number of troops to carry out functions that we carry out in other areas of the world that aren't war zones -- protecting our diplomatic and civilian corps, our embassy -- and having a strike force, which might be in Iraq or in the region, to target al Qaeda in Iraq.

CROWLEY: Isn't that war?

OBAMA: Well, but the point is that we are going to have the need to engage in potential military actions in the region, against targets in the region. They -- that is very different from having a set of troops in the midst of a civil war.

(END VIDEO TAPE)

CROWLEY: As for why his campaign lagged by double digits behind Hillary Clinton in the national polls, Obama says Americans are just starting to pay attention -- Kitty.

PILGRIM: Barack Obama, by the way, was a state senator in Illinois when Congress voted in October 2002 to give President Bush the authority to use military force to oust Iraqi leader Saddam Hussein.

Coming up, more on the Clinton/Obama battle.

We'll hear from three of the nation's leading talk show hosts. And they will tell us what their listeners will have to say about this contest.

Also, a federal judge delays a plan to crack down on illegal workers.

We'll hear from one congressman who's angry this case is even in court.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: A new measure to crack down on employers of illegal aliens was put on hold again last night. A federal judge extended the delay of a proposed rule change by the Department of Homeland Security for another 10 days. Now, the new rule would increase penalties on employers who keep illegal aliens on the payroll.

(BEGIN VIDEO TAPE)

PILGRIM (voice-over): For years, the Social Security Administration has sent out so-called "no-match" letters. But a proposed DHS rule change would now inform employers they have 90 days to clear up discrepancies or face fines and possible charges.

A lawsuit was filed by the ACLU and a coalition of labor and immigrant advocacy groups. Lawyers for the plaintiffs say the rule is discriminatory and DHS is putting an unfair burden on employers.

LUCAS GUTTENTAG, ACLU ATTORNEY: The Department of Homeland Security is trying to create a legal liability out of the "no-match" letters that does not exist and that we don't believe can legally be imposed by changing the rule. It's not authorized by Congress. It's not part of the statute. And DHS does not have the authority to hijack the Social Security system to turn it into an immigration enforcement scheme.

PILGRIM: But the government argues that the rule would give employers more than adequate time to ensure they're following laws already on the books. TOM DUPREE, DEPUTY ASSISTANT ATTORNEY GENERAL: This is a rule that provides much needed guidance and clarity to employers who want to comply with the law and who want to understand their obligations when they receive a "no-match" letter. This rule serves that purpose.

PILGRIM: The updated "no-match" letters were supposed to start going out last month. The government has 140,000 letters ready to mail employers as soon as the judge grants permission.

(END VIDEO TAPE)

PILGRIM: Congressman Ted Poe is a strong supporter of toughening our laws on illegal immigration.

And he asks, since it's already illegal to hire illegal aliens, why is this case even in court?

Well, Congressman Poe joins me now from Capitol Hill.

Thanks for being with us, sir.

REP. TED POE (R), TEXAS: Thank you, Kitty.

PILGRIM: You know, Judge Charles Breyer said that employees -- it would cause irreparable harm to enforce this.

What do you think about it?

You're a former judge yourself.

POE: Irreparable harm means that somebody is going to jail for hiring illegals. It's been against the law for years for employers to knowingly hire illegals. Homeland Security now is basically telling the employers, we're going to enforce the law, you're going to have to pay fines if you hire illegals. And now we have a federal judge saying nope, don't tell the employers that, and basically preventing the enforcement of an old law against employers.

PILGRIM: You know, I'd like to get your comments on a detail of this. The ACLU says DHS doesn't have a right to the Social Security Administration data. Now, the way this works is a letter goes out and says you have a "no-match" and a DHS notice accompanies the letter.

That's not sharing data yet, is it?

POE: That is not sharing data. And what happens is the Social Security Administration, if they get so many of these "no-match" from employers, they do notify Homeland Security and then Homeland Security does get involved and says, look, this could be used against you in court. They're putting them on notice. You've got 90 days to figure out what the problem is with this employer or employee, fire them if they're illegally in the country. And because of that, now a federal judge says, basically, do not enforce the law, do not hold employers accountable for knowingly hiring illegals. This is absurd.

PILGRIM: You know, this 90 days -- he's what the AFL-CIO said after the ruling. I'd like to read it to you. Go ahead and we'll listen.

(BEGIN VIDEO CLIP)

SCOTT KRONLAND, LAWYER FOR AFL-CIO: The department is seeking to impose new obligations on employers to re-verify employees. And we contend that the department does not have the legal authority to do that.

(END VIDEO CLIP)

PILGRIM: New obligations -- it's always been the obligation of an employer to verify that the Social Security matches the employee, correct?

POE: No question about it. They have an ongoing duty to make sure that the people they hire have a name -- that name matches Social Security numbers. It has been the law. Members of Congress have notified Homeland Security that they have the authority under the law to go ahead and let these employers know that they could be prosecuted. They have the authority to do that. We've got a federal judge that says, no, you can't do anything about illegal immigrants. And, once again, we have those who pander to the cheap plantation labor getting their way in court, to the detriment of the United States.

PILGRIM: Let's talk about someone who is here legally. If they find out their Social Security doesn't match their name because of a typing error or a misspelling, some failure to change the name after becoming married or something, it's to their benefit to have this straightened out, isn't it?

This does not penalize people who here legally who are working legally.

POE: That is correct. It doesn't penalize people who are here legally. It doesn't penalize American citizens who, for, as you mentioned, changed their names.

Homeland Security is telling these employers, you've got a mismatch here. Figure out what the problem is and if the person is illegally in the country, you could be fined for hiring this person. Otherwise, correct the mistake with the Social Security Administration.

So I think putting them on notice is a good thing. And they shouldn't be -- the Homeland Security certainly shouldn't be prohibited from prosecuting people who continue to hire illegals.

PILGRIM: Congressman Ted Poe, thank you very much for coming on the program tonight.

Thank you.

A reminder now to vote in tonight's poll -- who should be responsible for meat inspections, the federal government or state governments? Cast your vote at loudobbs.com.

We'll bring you the results in just a few minutes.

Also up next, the Clinton juggernaut -- can her rivals still stop her on the road to the Democratic presidential nomination?

Some of the best radio talk show hosts in the country will join me with their thoughts on that.

Also, the frontrunner among Republicans in the presidential race speaks out on immigration. We'll have that and more right after this break.

(COMMERCIAL BREAK)

PILGRIM: For a closer look at today's issues, we welcome some of the best radio talk show hosts in the country.

Warren Ballentine with Syndication 1 in Raleigh, North Carolina.

WARREN BALLENTINE, SYNDICATION 1: Good afternoon.

PILGRIM: Charles Goyette joins us from KFNX in Phoenix, Arizona.

CHARLES GOYETTE, KFNX PHOENIX: Hi, Kitty.

PILGRIM: Hi.

And Joe Madison, "The Black Eagle," from WOL in Washington, D.C. He's here in New York tonight. And thanks for being with us.

JOE MADISON, WOL, WASHINGTON, D.C.: Thank you.

Glad we could be here.

PILGRIM: And thanks for making the trip to New York.

BALLENTINE: Thank you, Kitty.

PILGRIM: Gentlemen, I'd like to start with Governor Spitzer, who has managed to raise quite a bit of controversy with his action to open up drivers licenses to illegal aliens.

And, Warren, I know you've spent a good bit of time on this, discussing this.

What are your viewers saying?

BALLENTINE: Well, my viewers are very upset about this. And, to be honest with you, Kitty, I'm a little concerned as a citizen and as an attorney. One of the things that I'm worried about is if they're going to issue these licenses, if they're giving these people the right to drive and if they're giving them the right to drive, if they go out and kill somebody, can we sue the State of New York? Also, the Interstate Commerce Clause is going to come into effect here, because if you're giving somebody a license, you're giving them a right to drive from state. And the illegal issue comes into play because if you're pulled over and you have a legal drivers license from the State of New York, you're -- the question of you being here illegally may not ever be addressed because you have a legal driver's license.

PILGRIM: Yes.

BALLENTINE: And I mean it's a lot of different issues that's coming to play here with this.

PILGRIM: You know, and, certainly, Charles, you know -- and, also, this document is your entree onto an airplane, isn't it?

GOYETTE: You know, Kitty, I think all of this stuff is headed toward a national I.D. card. I'm very, very sad to say that.

MADISON: Yes.

GOYETTE: I believe that's where we're going. And it is a concomitant -- it is inevitability with the national security state that the Republicans and the Democrats have ushered in in this country with The Patriot Act and more.

We're headed toward a national I.D. card. We're headed to being vassals or surfs of the state. And I've looked at the field of presidential candidates. There's only one guy who's outspoken against this kind of stuff, and it's Congressman Ron Paul. He's been against this idea of a national security state for a long time. And he's starting to look more and more attractive with each passing day.

PILGRIM: Joe?

MADISON: But, you know what's really stupid about this -- and I'm not going to mince words with this -- is when I heard the governor today announce he's going to have a separate place for what...

BALLENTINE: Yes.

MADISON: ...illegal aliens...

BALLENTINE: Yes, that's...

MADISON: ...immigrants to go. So can you imagine if you're with the immigration service, all you have to do is just sit there and wait to see who gets in line.

PILGRIM: Well, can you imagine if the line is shorter what the (INAUDIBLE)...

MADISON: I mean, so what person who is here illegally...

PILGRIM: Right.

MADISON: ...is going to go and say, OK, legal over here, illegal over here.

(CROSSTALK)

MADISON: Who's going to do that?

GOYETTE: Right. Right.

PILGRIM: That's -- it really boggles the mind how that would work out logistically.

MADISON: Well, two hours we couldn't get away from this...

PILGRIM: Oh, really?

MADISON: And not one caller -- one caller -- supported it. Not one.

PILGRIM: Well, that's interesting.

You know, you bring up the whole presidential race. Rudy Giuliani was in Philadelphia yesterday and he visited Geno's cheese steak shop, where they had a sign that said "This is America, please order in English."

All the candidates are going to have to address...

MADISON: Well, he should have went across the street to the other one.

(LAUGHTER)

MADISON: And then they didn't have to worry about that controversy.

PILGRIM: Yes. Well, let me...

MADISON: He didn't. So that's why he's in the trouble he is with -- you know, I -- it's ridiculous.

PILGRIM: Right. Well, Giuliani has toughened his position on immigration. He said -- he said that to become a citizen of the country, you should be able to read, write and speak English. But when he was mayor -- I mean New York is basically a sanctuary city. And he had a much, much more inclusive, softer approach.

Warren, what do you think about the candidates and trying to reposition their attitudes on some of these issues?

BALLENTINE: Well, you know, Kitty, I think Giuliani is a flip- flopper. I think he's trying to get votes. He's trying to position himself more in line with the American people to get these votes out here. And I think the true -- the true sense -- I agree. I think Ron Paul has took a great stance on the immigration issue.

But I've also got to say this. I think that the Democrats have an opportunity right now to come forward and seize this opportunity. But I think so many of them are concerned about getting votes that they're trying to see which way it's going to go before they come out and take a political stance.

GOYETTE: Well, you know what?

PILGRIM: Charles, go ahead.

GOYETTE: They're all trying to reinvent themselves. They all -- none of them have any core beliefs. There is nothing you can depend on. This is like George W. Bush running in 2000 for a more modest foreign policy.

(LAUGHTER)

GOYETTE: There is nothing any of them believe in, other than trying to get a monopoly on some kind of power in Washington.

This brings us back to Ron Paul, once again, who says I'm not running for president because I want to tell you what to do with your life, I'm running for government because I want to back the government out of your life and out of your affairs.

MADISON: And they're all looking to the future. The AFL-CIO, years ago, would never have taken the position they've taken on immigration, as it relates particularly to depressing wages. Look where they are now.

Democrats are looking to the future. They, in essence, I firmly believe, are saying to black America -- the majority of my audience and Warren's audience -- is basically, you guys are now in the lower tier of our political future. And they're pandering now to the future. That's exactly what's going on. AFL, the Democratic Party and, to some degree, the Republican Party, is pandering to big business because look at the decision with the "no-match" today.

PILGRIM: That's right.

MADISON: That is a big business decision.

BALLENTINE: Yes, it is. That's right. That's right.

PILGRIM: Warren, weigh in on this.

Go ahead.

BALLENTINE: Yes, I mean I think Joe is right on the money with this. I think the Democrats are purposely taking the position that they're taking because they're looking at it saying, look, African- American people in this country, we either have your vote already -- because most of us vote Democratic, including myself -- or they say, well look, we don't need to focus on you so much because we have so many other people in the Hispanic community that may be voting for us. And they're looking at big business and they're looking at immigration as the two keys to usher this new era in.

And I've got to agree with my other colleague on the show about this national I.D. card. I think that is all coming to fruition in the next couple of years to be.

PILGRIM: Charles, anything to say on this?

Or should we move on to the next...

GOYETTE: Well, yes, let's move on. I've got a lot of other stuff I want to talk to you about, Kitty.

PILGRIM: Well, you know, the one thing I really want...

(LAUGHTER)

PILGRIM: God, believe me, we have more.

Hillary Clinton -- let's go into this -- beat her Democratic rival in fundraising. She got $27 million last quarter versus $20 million from Obama raised in the quarter. He was ahead, though, slightly in the second quarter.

What does this mean in fundraising?

And does money equal the nomination?

And I'll start remote, so, Charles, go ahead.

GOYETTE: You know, these people sell off a little bit of themselves each time they stick out their hand and they agree to do something for somebody to collect the money.

(LAUGHTER)

GOYETTE: And by the time they're in office, there's nothing left. No wonder they have no core beliefs -- slice by slice by slice they sell themselves away. Hillary is no different.

We are faced with a really, really tough challenge to people here that want to expand the war, continue to rule and brand name America and de-capitalize this country. And I think it's time the American people wake up to a whole bunch of them -- the Rs and the Ds alike.

PILGRIM: Obama took the moment today, during a speech in Chicago, to point out that he had opposed the war five years ago when he spoke out against the U.S.-led invasion of Iraq.

Let's listen to a quick sound bite of what he said.

(BEGIN VIDEO CLIP)

OBAMA: In 2009, we will have a window of opportunity to renew our global leadership and bring our nation together. If we don't seize that moment, we may not get another. This election is a turning point. The American people get to decide -- are we going to turn back the clock or are we going to turn the page?

(END VIDEO CLIP)

PILGRIM: A clear effort to set himself aside.

BALLENTINE: Kitty...

PILGRIM: Go ahead, Warren.

BALLENTINE: Kitty, I absolutely love Obama, and I'm going to tell you why. I love him because he speaks about inclusion -- including everybody. And I think that's going to be key here for the next president.

Also, with this fundraising thing here, it's two things that we've got to make perfectly clear. One, Hillary Clinton is getting money from lobbyists and campaign contributions. Obama is not getting that. This all grassroots for him right now. And I think that shows a big key here. I know the polls are saying one thing, but I really like the fact that he's talking about inclusion. He's not talking about excluding anybody else.

Right now, I'm a fan of Barack Obama.

GOYETTE: Kitty?

PILGRIM: Joe...

GOYETTE: Kitty...

MADISON: (INAUDIBLE)...

PILGRIM: Well, let Joe in on this for a second.

(CROSSTALK)

MADISON: The only thing I was going to say is that, quite candidly, I don't care how much money they raise. I want to know where they stand on issues. That's what I want to see the news media focus on, not how much money they raise.

Now, you want to talk about big business, this is big business.

Why does the news media interested in how much money they raise?

Because media is going to get the bulk of that money.

(LAUGHTER)

MADISON: TV, what we're on...

PILGRIM: Yes.

MADISON: ...is going to get the bulk of that money. Obama, five years ago, gave a speech that most people didn't hear. He said he would have voted differently. I thought that your correspondents' questions were very poignant. I want to tell Warren and the world that I have given up my Democratic affiliation. I have given up any thought of ever being a Republican. And now I'm an independent with a small "I". And I have said to the candidates -- quit complaining about not getting enough time. I'll give you three hours on my show -- all of you -- Republican and Democrat, not to take calls from inside Washington...

PILGRIM: Anybody taking you up?

MADISON: Well, I think Obama is close to taking me up on it. And then once he does, the rest of them will follow suit.

PILGRIM: Charles, you get the last word.

Go ahead.

GOYETTE: Well, let me just tell you, I think Obama is giving himself too much credit for his opposition to the war. It was very convenient for him to say that he opposed it before he was elected. But since he has been a United States senator, he has fallen right in every line on every vote to continue the war, authorize the war...

MADISON: Yes.

GOYETTE: His voting record on the war is identical to Hillary Clinton's.

MADISON: Right.

GOYETTE: It's not as though there was ever a proposal to strand those Americans half way around the world and leave them. But the war needs to be stepped down and de-funded and he hasn't done anything to get it done.

MADISON: And the soldiers need to come home .

PILGRIM: Gentlemen, we'll leave it there.

OK.

MADISON: Yes.

BALLENTINE: Well, none of them has done that...

PILGRIM: Gentlemen, we've got to leave it here.

They're telling me we're out of time.

Come back.

We'll continue with it.

BALLENTINE: Thank you.

PILGRIM: Thank you so much.

Joe Madison, Charles Goyette and Warren Ballentine.

Thank you.

BALLENTINE: Thank you, Kitty.

MADISON: Thank you.

PILGRIM: Coming up at the top of the hour, "THE SITUATION ROOM WITH WOLF BLITZER" -- Wolf.

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

Anita Hill speaking publicly about allegations against her by the Supreme Court justice, Clarence Thomas, in his new book. She talks to CNN about the new chapter in the showdown that goes back 16 years. You're going to want to hear what she's telling us.

Also, we'll show you why Democratic presidential candidate Barack Obama is accusing some of his rivals of trying to rewrite history on Iraq.

Plus, we have exclusive video of that brutal government crackdown on pro-democracy demonstrators in Myanmar -- images of monks being beaten and a lot more. We have the pictures the country's military leaders don't want you to see.

All that and a lot more coming up, Kitty, right here in "THE SITUATION ROOM".

Thanks very much, Wolf.

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

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Now, the results of tonight's poll -- 86 percent of you say the federal government should be responsible for meat inspections.

Time now for some of your thoughts.

Mike and Ruth in Missouri wrote to us: "If illegal immigrants want rights, they should return to their home country and fight for their rights there."

Don in Missouri wrote: "Will there ever be a time when our government officials will work for we the people and not just themselves?"

Lisa in Maryland: "Get better soon, Lou. We miss you. Thanks for representing the middle class. No one else is."

And Sally in Pennsylvania wrote to us: "Wishing you a speedy recovery, Lou. We miss all of your great input on the issues."

And Lou is recovering well from his tonsillectomy. And we do expect him to return soon.

We love hearing from you.

Send us your thoughts at loudobbs.com.

Thanks for being with us.

Please join us tomorrow.

Among our guests, Congressman Jim Sensenbrenner, who led the fight for the Real I.D. Act. He'll give us his response to the New York governor's plan to give driver's license to illegal aliens.

For all of us here, thanks for watching.

Good night from New York.

"THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.

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