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Lou Dobbs This Week

Bush Fends off New Justice Dept. Torture Memo; Larry Craig Refuses to Step Down; Blackwater Employee Writes State Dept. Report Exonerating Blackwater

Aired October 06, 2007 - 18:01   ET

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

TONY HARRIS, CNN ANCHOR: Quickly, very quickly here, we want to update our breaking news story this hour. An explosion in the basement of a Harlem apartment building. I've been going back between the Harlem and the Bronx. My apologies. This is Harlem. West 119th and Fifth Avenue, as many as seven people injured. We're expecting a briefing any moment. We'll bring that to you when it happens in the NEWSROOM. I'm Tony Harris from the CNN Center in Atlanta. LOU DOBBS THIS WEEK begins right now.
KITTY PILGRIM, HOST: ... imported from communist China. Will the Bush administration pay any attention?

And Beijing steps up its efforts to obtain our most sensitive technologies. The ranking member of the House Armed Services Committee, Duncan Hunter, will join us. All that and much more straight ahead tonight.

ANNOUNCER: This is LOU DOBBS THIS WEEK, news, debate and opinion for Saturday, October 6th. Here now, Kitty Pilgrim.

PILGRIM: Good evening, everybody. President Bush tonight is facing major new political challenges. Democrats and some Republicans are furious with the president for vetoing a big expansion in a children's health insurance program. The president says the massive expansion would do little to help the poorest children.

At the same time, President Bush is facing new questions about interrogation methods used by government agents. Ed Henry joins me from the White House.

Ed, now there are reports the Justice Department issued a memo supporting harsh interrogation techniques. What is the is saying about that, Ed?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, it's interesting. This week the president brought it up unprompted by reporters. He realizes he's a bit on the defensive about this subject because it really cuts right to the heart about whether or not this president has leveled with the American people about how the U.S. handles terrorist suspects.

These memos from 2005 that you noted, reported this week by The New York Times, suggest that the U.S. gave the green light for officials to use aggressive interrogation tactics on terrorist suspects. Specifically techniques that critics charge really stretch and push the limits of what's legal and tests the legal limits of what's torture.

Now, the president this week insisted again that the U.S. does not torture people and he also insisted that the intelligence that is gleaned from these sessions with terror detainees help prevent terror attacks here on U.S. soil, helps save American lives.

But as you know, there have been very senior Republicans like Colin Powell, Senator John McCain that have raised questions about whether these techniques really do help bring in good information or do terrorist suspects under pressure during these sessions -- where they're deprived of food, for example, do they just give in to the officials and say whatever the U.S. wants just to stop these tactics? And that's a big question.

And the bottom line here is in the next couple of weeks this could really affect the nomination of the president's attorney general nominee, Michael Mukasey. These documents are from the Alberto Gonzales era as attorney general. But you can bet Democrat will be raising a lot of questions about those upcoming confirmation hearings of Michael Mukasey about what he is going to do on the subject of torture -- Kitty.

PILGRIM: Very valid and important questions, Ed. The other issue for the president is the controversy over children's health insurance. Now, is the president likely to compromise on this issue?

HENRY: Very likely to compromise. He's also on the defensive on that issue. As you know, Kitty, the whole point here is that the president realizes heading into 2008 Republicans have lost the mantle of fiscal conservatism. He has heard that from a lot of conservatives. Conservatives stayed home in 2006, they may stay home again in 2008 on the issue of runaway federal spending.

So the president is trying to show he's serious about cutting Washington spending, trying to rein in the Democratic Congress. The problem is he doesn't necessarily have a lot of credibility because when there is a Republican Congress, the president didn't veto any of those big bloated spending bills, instead he signed them into law.

The other challenge for the president politically is where he's drawing a line in the sand, saying he doesn't want to spend $35 billion that the Democrats want to on this children's health insurance bill. Politically that's tough to defend. A very popular children's program. You know the Democrats already accusing the president of hurting children. And some Republicans have abandoned the president because they feel that this is a tough one to defend.

So what's very likely to happen, the Democrats do not have the votes on Capitol Hill to override the president's veto from this past week. But what is likely eventually, after a lot of fighting, they're going to sit down, negotiate, finally compromise and it's probably going to wind up being closer to the $35 billion for children's health the Democrats want than the $5 billion that the president wants -- Kitty.

PILGRIM: Well, a battle that will certainly carry over well into next week. Thanks very much, Ed Henry.

Rising frustration on the part of GOP tonight over Senator Larry Craig's defiance. Now, Senator Craig is refusing to step down after a restroom sex sting. He suffered a major setback when the judge refused to allow the senator to withdraw his guilty plea.

Dana Bash reports from Capitol Hill.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Hours after losing his court battle to withdraw his guilty plea, Senator Larry Craig defiantly announced he is staying in the Senate, saying: "I have seen that it is possible for me to work here effectively."

That is an about-face from what he said just last month when he announced his intention to resign. Then Craig suggested the men's room scandal made it hard for him to be effective in the Senate.

SEN. LARRY CRAIG (R), IDAHO: And the people of Idaho deserve a senator who can devote 100 percent of his time and effort to the critical issues of our state and of our nation.

BASH: But now Craig is staying in office, despite a Minnesota judge's rejection of the senator's motion to withdraw a guilty plea he signed, admitting to disorderly conduct in a Minneapolis men's room. Craig says he's innocent and pleaded guilty because he panicked. But in a lengthy order, the judge dismissed Craig's arguments, calling him "a career politician with a college education, he knew what he was saying, reading, and signing."

Craig's attorney says he is considering an appeal. Politically, Craig's decision to remain in the Senate is a big challenge for GOP leaders who tried to force him out, and some are not hiding their anger.

SEN. JOHN ENSIGN (R), NEVADA: So I think it's best for the U.S. Senate, it's best for certainly his party, that if he just keeps his word. He gave us his word he would do something. He's backing out on it and I don't think it's the right thing to do.

BASH (on camera): Other GOP senators tell CNN Craig's decision to stay in the Senate is surprising and a distraction. And Republican leaders are also warning the spectacle of a Senate Ethics Committee investigation, which is still ongoing, will be an embarrassment to both Senator Craig and his Republican Party.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

PILGRIM: Another major problem for the Republican Party tonight, Senator Pete Domenici announced he's retiring for health reasons. Well, Senator Domenici will step down next year and his retirement will give Democrats an opportunity to win another seat in the Senate. Democrats are hoping to win a solid majority in the Senate in next year's elections.

The House of Representatives is demanding that private security firms in war zones should be subject to U.S. law. The House vote follows increasing concerns about the role of firms such as Blackwater USA in Iraq. Blackwater was involved in a controversial shooting incident in Baghdad last month. As many as 20 Iraqis were killed.

Jamie McIntyre reports from the Pentagon.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): This silent Iraqi police video obtained by Newsweek magazine shows the carnage after the September 16th incident, a smoking wreck with charred human remains, another car with blood-soaked seats. On the ground, dozens of shell casings and an Iraqi police officer, gun in hand, surveying the aftermath.

The initial State Department account, called a spot report, said the Iraqi deaths were the result of defensive fire after a convoy was engaged with small arms. That's the security contractor Blackwater's version of events. And, in fact, CNN has learned that that spot report was written by a Blackwater employee.

The State Department insists that doesn't make any difference.

TOM CASEY, STATE DEPT. SPOKESMAN: That spot report does not represent an investigation, a review or anything more than a first blush account of the basic incident itself.

MCINTYRE: The Iraqi police argue the video evidence and eyewitness accounts suggest that innocent actions by Iraqis were met with indiscriminate shooting. But a Blackwater spokesperson tells CNN all the initial statements given by guards at the scene are consistent with self-defense.

The concern that Blackwater's hired guns may have itchy trigger fingers is echoed in a memorandum prepared for a House committee investigating Blackwater and obtained by CNN.

Among the findings, Blackwater has been involved in 195 escalation of force incidents in Iraq since 2005 and 84 percent of the time fired first. The State Department counters and some outside experts concur that that's because Blackwater gets the most dangerous assignments.

ROBERT YOUNG PELTON, AUHTOR, "LICENSED TO KILL": Statistically they're not any more violent or less violent than other security companies.

(END VIDEOTAPE)

MCINTYRE: By Friday, the State Department has come up with a new list of procedures to ride herd over Blackwater. They include installing video cameras on the vehicles, a monitoring and archiving, recording radio transmissions and electronic tracking, sending diplomatic security personnel to accompany Blackwater details, and increase communications with the military in the area as well.

The Pentagon also announced that he would have increased oversight over its security contractors but did not release any specifics -- Kitty.

PILGRIM: Thanks very much, Jamie McIntyre. Thanks, Jamie.

Still to come, communist China still trying to obtain our nest defensive technologies and Lisa Sylvester will have the report -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Kitty, a Chinese firm could potentially have access to Pentagon's computers thanks to a deal that's being crafted by Wall Street. The transaction is being criticized by lawmakers on Capitol Hill and scrutinized by federal regulators -- Kitty.

PILGRIM: Thanks, Lisa. That report is coming up.

Also, the battle escalates over driver's license's for illegal aliens. The author of the Real ID Act, Congressman Jim Sensenbrenner, is our guest.

And some Christian conservatives are furious with Rudy Giuliani. Those conservatives may support a third-party presidential candidate. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: More U.S. defense technology is about to fall into the hands of communist China. A Chinese company with ties to Beijing's military will soon have access to sensitive information that could threaten our national interests. This comes months after computer attacks on the Pentagon allegedly by Chinese hackers.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): 3Com announced a deal that places a minority share of the U.S. computer networking company into the hands of a Chinese firm called Huawei.

James Mulvenon advises the U.S. intelligence community and he worries this deal will compromise U.S. national security.

JAMES MULVENON, CENTER FOR INTELLIGENCE RESEARCH: I think that the Huawei merger with 3Com presents a pretty significant threat to U.S. national security because of Huawei's ties with the military and what that might mean for China's ability to conduct computer network attacks against the United States.

SYLVESTER: Huawei's founder is a former Chinese soldier. One U.S. defense official is quoted as saying the company supplies the Chinese military with communications networks. Huawei denies that. 3Com provides U.S. government agencies with network wireless security including the Pentagon. Nuclear arms control expert, Gary Milhollin says the business deal could potentially give Huawei access to the Defense Department's computer network capabilities.

GARY MILHOLLIN, WISCONSIN PROJECT ON NUCLEAR ARMS CONTROL: The issue is access to technology. And the issue is getting U.S. technology on the cheap, taking it home and using it against us, which is what Huawei has done in the past.

SYLVESTER: According to an Iraq Study Group report, Huawei violated U.N. sanctions by providing transmission equipment switches to Iraq. Bain Capital Partners, the deal's primary investor, has agreed to a voluntary review by the Treasury Department's Committee on Foreign Investment in the United States.

In a statement, Bain Capital said: "We believe the U.S. government review in this matter will conclude that the company will be firmly controlled by an American firm, have only a small minority foreign shareholder, and that the deal presents no risks to national security.

(END VIDEOTAPE)

SYLVESTER: Treasury Secretary Henry Paulson will recuse himself from the government review because of his ties to Goldman Sachs. Paulson is a former CEO of Goldman Sachs and that investment firm is advising 3Com on the merger -- Kitty.

PILGRIM: Thanks very much, Lisa Sylvester.

Well, I talked with the ranking member on the House Armed Services Committee and Republican presidential candidate Duncan Hunter. I talked to him about the red flags this business deal is raising for our military and national security.

(BEGIN VIDEOTAPE)

REP. DUNCAN HUNTER (R-CA), PRESIDENTIAL CANDIDATE: Potentially, this goes right to the heart of cyber security for the Department of Defense, because this Chinese company has a -- will have as a strategic partner -- and that's what they say they're going to become with 3Com, which is our company, which does cyber security for DOD under classified contracts. They would presumably have access to techniques and to capabilities that would endanger our particular cyber security.

So this is -- this goes right to the heart of something which is very important to DOD. And while they're only an investor, the press release that was put out said they will be a strategic partner, implying that they are going to have access to technology. They're not just money people pushing money into a deal with a firewall between them and America's security company. They're going to be part of that company. They're going to be a part owner. That could potentially be dangerous. So we asked the Committee on Foreign Investment, headed by Secretary Paulson, to undertake a full review. And the letter requesting this review is signed by myself and Pete Hoekstra, who is ranking member on the Intelligence Committee.

PILGRIM: You know, the equity group, Bain Capital Partners, insists "the deal presents absolutely no risk to national security." That's a quote. You and Congressman Hoekstra sent a letter, which you just referred to, to Treasury Secretary Paulson.

I'm going to read a quick quote for the benefit of our viewers: "At stake is whether Huawei will control voting seats on the board of the new company. And, far more importantly, will it have access to technology, research and development of the new company?"

And you're also worried that U.S. intelligence and military contracts may come through the same company. Is this a big danger?

HUNTER: I think it's a big danger. And, you know, the Bain Capital spokesman obviously didn't read Huawei's own press release, which didn't say they were simply going to be money people. It said they would be a strategic partner. That means they get involved in the inner workings of the company. And the inner workings of this company have to do with cyber security, partly for the Department of Defense of the United States of America.

So, you know, these investment groups are great at putting out very vague press releases and the U.S. military often has to clean up after them. In this case, we don't want to have to clean up after them. We want to prevent this deal if it looks like it has got any danger to national security whatsoever.

PILGRIM: Is it clear to you that this deal was structured to not raise any red flags?

HUNTER: It looks like it's a subtle investment here. You've got a -- you've got the Bain Capital making the primary buy. They've got this strategic partner, which is Huawei, which is sitting off to the side. But, nonetheless, when you have money, you have access.

And if you've got access to technology and to procedures and to capabilities, that means at some point you can exploit those capabilities. And that means that this area we're already worried about for the Department of Defense -- because China has made cyber attacks on DOD assets already. So we know that they're going after that capability and the U.S. Department of Defense.

So anything that goes after that particular sensitive area, we've got to be very careful about. So I think we need the Committee on Foreign Investment to take a real thorough look at this thing, report back to the president and report back to the armed services committees and the intelligence committees in the both the Senate and the House.

PILGRIM: All right, thank you very much. Representative Duncan Hunter, thank you, sir.

HUNTER: Absolutely.

(END VIDEOTAPE)

PILGRIM: Still ahead tonight, buyers beware. Millions of toys made in China already on the their way to the United States just in time for the holiday season. Now considering the recent massive recalls, will any be taken off the shelves?

And the religious rights as it would rather lose a presidential election than support the wrong candidate. We'll have a report on that. Stay with us.

(COMMERCIAL BREAK)

HARRIS: Very quickly, we want to bring you an update on the breaking news story we've been following for an hour now in the CNN NEWSROOM. An explosion in the basement of an Harlem apartment building. The latest figures now into CNN, 17 people injured. CNN's Jim Acosta is on the scene right now.

Jim, what's the latest.

JIM ACOSTA, CNN CORRESPONDENT: Tony, well, the initial reports got everybody very concerned about this incident but as it turns out, there have been no deaths reported as a result of this explosion. This was a gas leak that caused a flash fire inside this five-story apartment building here in Harlem according to New York Fire officials.

But at this point only 17 injuries, and I say only, only because the initial fear at one point is that there were multiple deaths. But what New York Fire Department officials are saying now, 17 injuries including three critical, including one child. And so at this point a sigh of relief here in Harlem. Mayor Michael Bloomberg was on the scene to check out what was happening here. He was briefed by fire officials. But in the end this turned out to be not a false alarm but much les serious than previously thought -- Tony.

HARRIS: And, Jim, I don't know if you can hear me, if you're having IFB issues, let me know. There were some initial eyewitness reports of the explosion taking place in what is described as an illegal restaurant. Has that been confirmed?

ACOSTA: We haven't been able to confirm that yet. Fire officials were asked about that. They said they were investigating. They did say that there were some initial reports that there was a meth lab in this building and they smacked that down. They said that is not what happened here. So a Saturday afternoon, maybe it was just too nice a day. Folks got ratcheted up based on what was some preliminary, very serious information, but in the end the gas explosion, which is a fairly common occurrence in New York City with these old apartment building, it happens from time to time.

HARRIS: OK. CNN's Jim Acosta for us in Harlem. Let's get you back now to LOU DOBBS THIS WEEK.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): ... Republicans and the leading GOP presidential hopefuls.

TONY PERKINS, FAMILY RESEARCH COUNCIL: To the degree that the party moves away from those principle issues, social conservatives, evangelicals will move away from the party.

KING: Giuliani is of most urgent concern. He supports abortion rights, including taxpayer funded abortions as New York mayor. Giuliani also marched in gay rights parades and called the city's domestic partners benefits a model for the nation.

PERKINS: These are fundamental issues, these are black and white issues. These are issues that there's just no room for negotiation.

KING: The Giuliani camp plays down the threat, noting polls showing strong support among church-going evangelicals and Catholics. Asked Monday about the conservative opposition, the former mayor played what he views as a trump card.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I run the most competitive against Hillary Clinton by a big, big margin. And I take some Democratic states from her, nobody else does that.

KING: There are huge hurdles to third-party candidacies, but one born of social conservative frustration would be a huge threat to Republican chances.

ANDREW KOHUT, PEW RESARCH CENTER: Somewhere between a big problem and a nightmare. Christian conservatives, both white evangelicals and Catholics represent 40 percent, 50 percent of the Republican base. No, they're not all going to defect to a third party. But if a significant number of them do, it just adds to the troubles that the GOP can look forward to in November.

KING: The goal of the conservative leaders is to derail Giuliani's candidacy now. But if they fail and he wins the nomination, they insist they are not bluffing.

UNIDENTIFIED MALE: The train has left the station in terms of conservatives feeling that we have to have a strategy for conservatives to govern America. We have not locked into one strategy or another strategy, but high on that list is the consideration for a third party.

KING (on camera): The social conservative leaders acknowledge the third party route would likely help the Democrats next year. But they say is it a price they are willing to pay if the alternative is to quietly allow a social moderate like Giuliani to take control of the Republican Party they have dominated since the rise of Ronald Reagan.

John King, CNN, Washington.

(END VIDEOTAPE) PILGRIM: And James Dobson, founder of Focus on Family Action, echoed that comment this week. Now writing in a New York Times op-ed piece, Dobson said: "If major political parties decide to abandon conservative principles, the cohesion of pro-family advocates will be all too apparent in 2008."

Dobson added that if no candidate meets their values, religious conservatives will support a third-party candidate or start a party of their own regardless of the candidate's ability to be elected. Quote: "Winning the presidential election is vitally important, but not at the expense of what we hold most dear."

Coming up, we'll discuss the influence of religion on politics with our panel of distinguished political analysts.

And then, New York's governor wants to issue drivers' licenses to illegal aliens. We'll speak with a congressman who thinks the plan is a step backward for national security.

And are toys getting any safer? We'll have a special report and we'll hear from two consumer experts. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: There were more recalls this week of dangerous toys and children's products made in Communist China. More than half million items are being pulled off store shelves because of lead contamination. Now, these latest recalls come as Congress finally acts to remove lead from children's products.

Christine Romans reports Congress is also working to make big business and governments accountable for the safety of children's goods.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Another day, yet another recall -- innocent looking wooden baby blocks from KB Toys. And just in time for Halloween, Frankenstein tumblers from Dollar General. The Consumer Products Safety Commission and the toy industry say recalls show the system is safe and working.

But both the House and the Senate have introduced tough bills to protect children.

Alan Korn is a safety expert who found six recalled toys in his own son's toy box.

ALAN KORN, SAFE KIDS WORLDWIDE: I think everybody is in agreement here -- let's just get the lead out of the toys altogether.

ROMANS: Democratic Congressmen have introduced the Lead Free Toy Act to ban lead from toys, toy jewelry and products used by children under age six -- doing what importers and the government agencies have not.

REP. KEITH ELLISON (D), MINNESOTA: Over the last couple of decades, you know, the prevailing political wisdom has been to reduce government to the size where you can drown it in a bathtub, right?

And we've seen what happens when you do that.

ROMANS: The CPSC currently has about 400 employees, compared with more than 1,000 in 1981.

Meanwhile, the trade deficit with China exploded to $232 billion last year.

SEN. MARK PRYOR (D), ARKANSAS: The agency itself has withered on the vine. It's not been able to keep up, especially in the area of imports. And the Consumer Products Safety Commission today is just not equipped to handle the challenges in the U.S. economy.

ROMANS: Pryor is sponsoring the Consumer Product Safety Reform Act in 2007 in the Senate. It would allocate millions for a modern testing laboratory and toughen fines for companies that import dangerous products.

PRYOR: A lot of times what these companies do is, you know, when they see a fine -- a million dollar fine or whatever it may be, hey, that's just the cost of doing business.

ROMANS: The Senate legislation would dramatically increase civil penalties, now capped at $1.8 million.

(END VIDEOTAPE)

ROMANS: The acting chairwoman of the Consumer Products Safety Commission testified in the Senate panel today, again defending her agency, saying the recalls show the agency is being aggressive and keeping children safe. But in hearing after hearing, lawmakers from both sides of the aisle have said Kitty, this agency needs a dramatic overhaul.

PILGRIM: There's ample evidence of that. Thanks very much, Christine Romans.

Well now November/December are the biggest months for toy accounting for as much as two-thirds of annual sales in the United States. Last year, toy sales totaled $22 billion. I talked to Ed Mierzwinski of the U.S. Public Interest Research group about the problem, as well as Don Mays, who is senior director of product safety at "Consumer Reporters." Now the president of the Toy Industry Association and the chair of Consumer Product Safety Commission declined to appear on the program. First, I asked Don Mays if we're going to see more recalls.

(BEGIN VIDEOTAPE)

DON MAYS, CONSUMER REPORTS: Absolutely, we're going to see more recalls. This holiday season, consumers shouldn't be making a choice between leaded and unleaded toys. Retailers have to step up to the plate and make sure that all the toys that they put in the hands of children this holiday season are safe and free from lead hazards.

PILGRIM: Yes. Let me quote the Toy Industry Association - the enormous Toy Fair going on in New York. We went over there and looked at everything. Really got an eyeful. And this what the Toy Industry Association president said to us.

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're very good. What we have seen happen here is really, truly an aberration.

PILGRIM: Ed, do you buy that?

ED MIERZWINSKI, U.S. PUBLIC INTEREST RESEARCH GROUP: Well, American toy manufacturers are not testing the toys they get from China. They're ignoring safety rules and letting the bad toys get through.

Consumers are scared.

PILGRIM: They certainly are. You know, Sherrod Brown of Ohio -- Congressman -- or Senator Sherrod Brown of Ohio -- has talked about Halloween because this, of course, predates the Christmas season. And he's voiced concern about Halloween toys. You have a lot of toys that are very close to the face and the skin, masks and things.

And is there a danger here?

I mean are we prepared enough for the season that's just around the corner? Don?

MAYS: Not really. I mean we've been advocating that there needs to be more testing and inspection of products before they're shipped into this country. And now it's a matter of relying on the retailers to make sure that the toys that are being carried on the shelves are free of any hazards.

They have to step up to the plate here.

PILGRIM: And, Ed, what do you think about the preparedness of the upcoming season? I mean, presumably, everything has been manufactured already. It's on -- it's on -- being shipped from China, basically, at this point, isn't it?

MIERZWINSKI: You know, it's in the big pipe coming from China. It's already here. It's in the toy stores. They're ready to roll it out. Consumers should take matters into their own hands. They should look at our Web site, toysafety.net, or Don's Web site, consumersunion.org, to find out more about what they can do to protect themselves.

But, absolutely -- the toys have already been manufactured. The retailers are stepping up their inspections. But it's time for Congress to act.

PILGRIM: Well, yes. Let me follow up on this. They're about to reform the Consumer Product Safety Act. Do you believe that that will be sufficient? MIERZWINSKI: Well, the Consumer Product Safety Act needs reform so they can go after corporate wrongdoers. They need to ban lead in everything -- not just in paint. And they need to increase import inspections and hold companies accountable before they bring products over the U.S. line, that those products are guaranteed to meet U.S. safety standards. Absolutely, if they do all those three things, we're in better shape than we are now. But the manufactures have miserably failed to do their job.

PILGRIM: You know, Nancy Nord, the acting chairwoman of the Consumer Product Safety Commission, we have watched her on several occasions basically throw up her hands and say we don't have enough resources in sort of a hopeless manner. Do you think that's an abdication of responsibility? Do you think she really is very hard-pressed to fix this problem? What's going on here with the Consumer Product Safety Commission?

MAYS: Well, clearly, she's not stepping up to the plate the way that she needs to. The bill that's going to be discussed could provide more resources for the Consumer Product Safety Commission, which is desperately needed. They are woefully under staffed and under funded. It will provide more -- more money for them to operate, more staffing and more authority, so they can take control of these 15,000 different types of products that they regulate.

PILGRIM: You know, Ed, you spoke about the retailers taking more responsibility. We heard a Mattel executive, a vice president, apologize to a Chinese official -- the chief of product safety.

What do you think about that apology?

MIERZWINSKI: Well, he apologized to the Chinese officials. China had some toys that contained lead paint. Mattel had some toys that had dangerous magnets that it had designed badly in America, even though they were manufactured over there. So I think he apologized for blaming them for the whole problem.

And that's not good enough. Sorry doesn't work. Mattel's got to admit that it didn't do the job and its Chinese suppliers didn't do the job either. But when the rubber hits the road, it's Mattel's fault, not some third party contractor over there, when it comes into America.

And we'll be looking forward to Commissioner Nord's testimony. She has got to step away from this idea that it's unsolvable. It is solvable. She's got to demand help.

PILGRIM: You know, quite honestly, the commercial relationship between Mattel and their Chinese producers is irrelevant to a parent who is sitting there trying to decide which toy they're going to buy.

MAYS: That's right.

PILGRIM: This sort of dialogue between Mattel and China is not fixing the problem, is it, Don?

MAYS: That's exactly right. I mean they -- they really need to make sure that they have the safety net in place through all steps of that supply chain.

Initially, the problem was an issue where Mattel had entrusted the testing of the toys that were being manufactured to the very factory that was producing them. Now, that's a lot like the fox guarding the hen house. They need to have independent, third party testing of the products and certification of those products, so that consumers can be assured that what they buy is safe it use for their children.

PILGRIM: Gentlemen, we are so glad that you're on this issue. And we thank you very much for bringing it to our attention and staying on it with us as we investigate this.

Don Mays and Ed Mierzwinski, thank you very much.

MIERZWINSKI: Thank you, Kitty.

(END VIDEOTAPE)

PILGRIM: Still to come tonight, we'll see who has the big money in the record-breaking fund-raising quest in the 2008 presidential race.

Also, the author of a bill setting national standards for drivers' licenses is dead set against New York state's plan to grant licenses to illegal aliens. He says the measure has some far-reaching consequences.

(COMMERCIAL BREAK)

PILGRIM: The outcry over New York Governor's Eliot Spitzer's plan to issue drivers' licenses to illegal aliens, that is intensifying. Most of New York state's county clerks who are in charge of the Department of Motor Vehicles says they don't want to violate federal law by issuing licenses to illegal aliens. And Spitzer's plan also runs counter to a congressional law that mandates a national standard for drivers' licenses by 2009. This bill is called the Real ID and Congressman James Sensenbrenner is the author of it. He talked with me about the real consequences of Spitzer's plan.

(BEGIN VIDEOTAPE)

REP. JAMES SENSENBRENNER (R), WISCONSIN: The effect of Governor Spitzer's proposal is to force every New Yorker who wishes to board a plane, get into a courthouse and maybe even open up a bank account under a federally ensured institution, to spend $97 to get a passport.

The real I.D. Act is voluntary. States that comply have their driver's licenses be valid for federal identification purposes. States that don't comply -- and that apparently is the governor's plan -- are forcing their citizens to get another form of federal I.D. so that they can use it for federal purposes, such as I described.

I think when the people of New York find out that all of them are going to have to spend almost $100 to get passports if they want to get on a plane, they will rise up in arms. And they should. PILGRIM: Yes. That will definitely be a public backlash. And we're hearing quite an outcry now.

There are eight states that currently don't require applicants to prove that they're legally in the country. That's Hawaii, Maine, Maryland Michigan, New Mexico, Oregon, Utah and Washington. New York used to have the absolute strictest standards for driver's licenses and -- under Pataki -- and they're rolling those back.

Do you think that New York State is regressing in terms of security for this country?

SENSENBRENNER: Well, obviously. And the 9/11 Commission recommended that we do something similar to real I.D. because they pointed out that the 9/11 hijackers had a pocket full of drivers' licenses that were issued by a whole bunch of states. And they said very clearly that identification documents are as important to terrorists as explosives.

Now, listening to what Spitzer and his supporters are saying, there's a provision in the real I.D. Act that allows states to issue driving permits to illegal immigrants, which are not valid for I.D.

Now, if the governor wants to prevent people who are legally here with New York drivers' licenses from getting passports or other things, then he ought to use that part of the real I.D. Act and issue illegal immigrants a driving permit that very clearly states on the face of the permit that it is not valid for federal I.D. purposes.

PILGRIM: That would seem to be a reasonable way to go.

This is what Governor Spitzer said about the 9/11 Commission, who recommended the real I.D. Act.

(BEGIN VIDEO CLIP)

GOV. ELIOT SPITZER (D), NEW YORK: As we've seen, 9/11 has been the excuse for so much bad policy. Yet some have called on it one more time to strike fear in the public consciousness.

(END VIDEO CLIP)

PILGRIM: Tamper-proof identification seems like a pretty sensible judgment in the wake of 9/11. And yet you have Governor Spitzer criticizing that decision.

SENSENBRENNER: Well, of all the people who shouldn't be criticizing that decision, it should be the governor of the state that suffered the biggest losses in 9/11. Now, this commission was a bipartisan commission. And, as a matter of fact, one of the first bills the Democrats in Congress passed H.R. 1, was to, as they said, fully implement the provisions of the 9/11 Commission report.

Evidently the governor of New York hasn't got the message from his Democratic colleagues down here in Washington.

PILGRIM: Congressman Jim Sensenbrenner, thank you very much for coming on the program to talk about a critical issue to this country.

Thank you, sir.

SENSENBRENNER: Thank you.

(END VIDEOTAPE)

PILGRIM: Coming up, is Republican presidential hopeful John McCain staging a comeback? We'll ask our political panel next.

(COMMERCIAL BREAK)

PILGRIM: Joining me now are three of this country's best political analyst. We have Errol Louis with the "New York Daily News," syndicated columnist Miguel Perez and from Washington D.C., we are joined by Diana West with the "Washington Times." Thanks for being here with us.

The president is not doing well in the polls, neither is Congress. Congress is actually doing worse. Let's take a look at the latest "A.P/Ipsos" poll. Job approval ratings: Bush, 31 percent, Congress 22 percent. It's been a fairly bruising week for the president with quite a few issues. Miguel, what do you think about these approval ratings?

MIGUEL PEREZ, SYNDICATED COLUMNIST: I'm not surprised. I think it's very significant that Congress is doing so poorly because Congress, we had high expectations in the last election.

And, you know, gave the Democrats a majority and nothing happened. So I think, you know, people are down on the president because we already know that the president is not doing well. But we expected a lot more from the Congress and the Congress has not materialized.

PILGRIM: Highly unpopular war, Diana, but do you think there are other things are factoring into this disapproval of Congress?

DIANA WEST, WASHINGTON TIMES: Well, things don't seem to improve week to week, do they? The thing that really fascinates me about the numbers is that Bush is higher than Congress, which suggests to me that there is disapproval of the Democratic Party.

It seems like there's not -- as Miguel was saying, there was hope for that Congress that has really crashed and burned. And that just seems to keep the whole presidential election a little more interesting to me because it doesn't seem like there's one side that is really getting traction.

PILGRIM: You know, so many of the issues in the country these days are basic issues that impact American families. The SCHIP battle for children's healthcare this week was a particularly difficult battle on Capitol Hill, especially for the president.

And Errol, let's just listen to what the president had to say about it and then we'll get your comments on it. (BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The policies of the government ought to be to help people find private insurance, not federal coverage. And that's what the philosophical divide comes in.

(END VIDEO CLIP)

ERROL LOUIS, NEW YORK DAILY NEWS: I think the philosophical divide is he in that same speech, slammed the idea of this expanded insurance as a new middle class entitlement. And I was watching and I said, well, what's wrong with the middle class entitlement? I mean, this is the broad middle of the country that needs to take care of their children.

If you add a war to that, failure on an immigration bill, possibly upwards of two million people facing foreclosure and no action out of the Congress or out of the White House and then something like this, it's not that hard to see why the approval ratings are so low.

PILGRIM: Democrats need about 15 to 20 votes in the House to override the presidential veto. Why can't Democrats override this veto? That's the problem, if they're so strongly committed to this.

LOUIS: Well, it was never that clear to me that they were strongly committed to it. In fact, quite frankly there were some shenanigans with the way the thing was sold, price tag on it really was finagled.

It might only cost $35 billion or so. But it falls off a cliff after a couple of years and the price starts to soar. And they really weren't up front with the public about that. Just another case, as with immigration, where the true cost, the true facts really weren't explored and shared with the public. And to that extent, the institution I think can be held accountable.

PILGRIM: Miguel?

PEREZ: When you have a government, a president spending so much money on the war and he's turning around and saying the children cannot have health insurance, it's outrageous.

And I think the Democrats are going to get a lot of mileage out of that. Diana was talking about, and I need to go back to that. She was talking about how the low polls for the Congress now may reflect the presidential elections. I don't think so because the Republican Party is disintegrating.

PILGRIM: Well, we'll get into the elections and the polls in a minute.

PEREZ: For many, many reasons they're disintegrating.

PILGRIM: The other thing -- go ahead, Diana. You want to respond to that? WEST: I would say there's disintegration all around. But I think that, again, this is the, you know, I haven't been agreeing very much with president bush myself lately. But on the SCHIP, it definitely does come down to an expansion of government versus the private sector.

And when you look at the way this thing is supposed to be financed with on the backs of cigarette taxes, I heard a study out of the Conservative Heritage Foundation that said we had to get 22 million new smokers to finance this bill, which is very funny, finagling as Errol said.

So this is not a straightforward bill. It's not a straightforward issue because, as I understand it, children who don't have health insurance and do have catastrophic problems are already covered under Medicaid.

PILGRIM: It is a difficult issue to sort out because it's so much spin on this entire issue. We're going to come back in a minute, to the presidential campaigns, which are fascinating this week. And we'll have more of our round-table ahead, so stay with us.

(COMMERCIAL BREAK)

PILGRIM: We're back with our roundtable. Here in the studio with me are Errol Louis of the "New York Daily News" and syndicated columnist Miguel Perez. Joining us from Washington, Diana West with the "Washington Times."

While we were talking polls and the president and Congress, we might as well go to the election polls. Democratic choice for president - this is the latest ABC News/"Washington Post" poll. Clinton 53 percent, Obama 20 percent and Edwards 13 percent.

And the thing that's interesting is that Clinton raised $27 million in the last quarter. And that really beat Barack Obama, who raised $20 million since July. So she's really pulling ahead in fund- raising and pulling ahead in the polls. Her strength is considerable. Miguel, do you think that it's a done deal at this point?

PEREZ: I've been saying it all along. It's for her to lose and it doesn't look like she's gonna. You know, the rest of the Democrats right now are not criticizing her enough, I don't think. It's because some of them are really run for vice president, in my opinion. So they don't really want to step out there. But, you know, she's got it.

PILGRIM: Well the other thing is that perhaps there is a little bit of cohesion because they're so far ahead no one wants to upset the apple cart. Diana?

WEST: I think Miguel is right, I think there is a big race for vice president going on although I doubt it's going to be those two fellows.

PILGRIM: Let's look at Republicans. Did you want to weigh in on Democrats, Errol?

LOUIS: Just to say that it's going to make Iowa that much more of a hotly contested race. That first primary, the three front- runners are all within a couple of points of one another and it won't do Barack Obama to have $79 million if he gets blown out in the first three states. So we should look for him to make a big, big push in Iowa. Edwards is going to do the same. He has been strong in Iowa all along.

PILGRIM: Iowa is going to be fascinating, we'll be glued to that. Let's look at Republicans. Again, ABC News/"Washington Post" poll. Giuliani, 34 percent, Thompson, 17 percent, McCain 12 percent.

McCain has been an interesting dynamic lately. Miguel, what do you think of McCain's progress?

PEREZ: I'm impressed and I hope he keeping going because of all of them, he's the one that - I've always said that he's the one that I like best. Unfortunately you know, the immigration issue and his position on the war hasn't helped him very much. But he's my candidate. As far as the Republicans are concerned, you know, he's my hope.

PILGRIM: All right. Diana?

WEST: Well, he's, you know, he's hoping that slow and steady wins the race. I don't think so. I think again we're looking at our front-runners at this point.

PILGRIM: OK.

LOUIS: It's almost ancient history now but back in 2000, McCain blew out George Bush on the New Hampshire primary by upwards of 20 or 30 points, I think. And he's looking to try and make that magic happen again. So we'll see if he can pull it off.

PILGRIM: Yeah, I guess that is ancient history, but thanks for reminding us all.

Let's talk about Rudy Giuliani. He was in Philadelphia. This is a topic that we enjoy and he went to the shop that posted the sign about speak English when you're ordering. It was a pizza shop, I believe. And he has always said that you should be able to -- he says, no, you should be able to read, write and speak English. He -- when he was mayor of New York, he had a much softer position on some of these issues with recent immigrants and his positions have definitely softened. Miguel?

PEREZ: He is obviously playing to the people who are insecure about language, who think that Latinos are trying to take over when it's totally false. And I wasn't very happy to see him doing that. Frankly, if Rudy Giuliani keeps going back and forth trying to please both sides, then he's not doing a good job of it.

PILGRIM: Immigration is a tough issue. Illegal immigration is probably one of the toughest issue of this campaign. Diana, do you think treading a line on this is advisable?

WEST: Treading a line?

PILGRIM: Yeah.

WEST: You mean in terms of not quite going one way or the other?

PILGRIM: Right.

WEST: Oh, I think it's ill advised. I think that this is the big issue that could bring out a solid Republican base. It was very important all summer long with Republicans to fix the border, to get hold of the whole illegal immigration issue. And if Rudy Giuliani does not do that or any of the candidates do, I don't think they'll find solid support in the primaries.

PILGRIM: Yes, a lot of candidates are trying to find their footing on this, Errol.

LOUIS: You can hardly recognize this as the same man who was mayor of New York for eight years. These positions are diametrically opposite. I don't know if the candidates - his opponents are going to make much out of it, but this isn't softening. This is transformation.

PILGRIM: All right.

PEREZ: And a lot of people are feeling betrayed because of it.

PILGRIM: Well, we make most of it. OK Errol Louis, Miguel Perez, Diana West, thanks very much.

And thank you for joining us. Please join us tomorrow. For all of us here, thanks for watching, enjoy your weekend. Good night from New York. "THIS WEEK AT WAR" starts right now with Tom Foreman.

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