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LOU DOBBS TONIGHT

Hostage Drama Ends in New Hampshire; Illegal Immigrants Still Given Status

Aired November 30, 2007 - 19:00   ET

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


LOU DOBBS, CNN ANCHOR: Thank you, Wolf.
Tonight states, all 50 of them, considering legislation to deal with the impact of our illegal immigration crisis. All 50 states forced to take action because of the federal government's inability and refusal to deal with the crisis. We'll have that report.

Also tonight, the Bush administration may be recognizing the threat that the nationwide mortgage crisis is posing to our middle class. Will it actually do something to help? We'll find out.

In the mortgage crisis, the rising cost of living, illegal immigration have replaced the Iraq war now is the leading issues in the presidential campaign? Our distinguished panel of political analysts will join me to put it in perspective; all of that, all the day's news and much more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Friday, November 30. Live from New York, Lou Dobbs.

DOBBS: Good evening everybody. A hostage drama ended just moments ago outside a Clinton campaign office in Rochester, New Hampshire, a man identified as Lee Eisenberg claimed he had a bomb. He took hostages and demanded to speak with Senator Clinton. Senator was not in the area at the time and he later released those hostages. Eisenberg surrendered to police moments ago; Senator Clinton thanking law enforcement agencies for bringing the situation to a peaceful end.

Our coverage begins now with Anderson Cooper in Rochester -- Anderson.

ANDERSON COOPER, CNN ANCHOR: Lou, it started about 1:00 p.m. this afternoon when Lee Eisenberg walked into Senator Clinton's office, opened up his coat and showed what seemed to be some sort of a bomb strapped around his waist. About an hour later, he allowed a woman and her child to leave the building. She ran into a nearby office crying, saying that a man had walked in with a bomb and they should call 911.

Over the course of the next several hours, there was a tense standoff in this small town of Rochester, a town of about 30,000 people here in New Hampshire, very close-knit town. The standoff, where the Secret Service was here; the FBI was here; a bomb squad from the state was here as well as highway patrol and local and state law enforcement. This town has never seen anything like this. Senator Clinton's office is very close to Obama's office as well as John Edwards' offices. All those offices were evacuated as was this entire downtown part of Rochester, about a five-block area was evacuated. Schools were shut down as well. One other hostage was released over the next several hours. And as you said just a few moments ago, the last hostage was released, and a few moments after that, Lee Eisenberg walked out of the office with his hands over his head and was made to get down on the ground. He was handcuffed and taken away.

It's still not clear at this point what kind of a device, if any, he actually had around his waist. There is a report, according to a man who identified him as his stepson who said that on the previous evening Mr. Eisenberg had asked him where he could get some highway flares. It is possible that's what was used, but at this point we frankly don't know, Lou.

DOBBS: Anderson, thank you very much. Anderson Cooper in New Hampshire covering the campaigns, of course, of when this incident took place. Thank you very much, Anderson.

The Clinton campaign office in Rochester is on Main Street, and just a few blocks away, as Anderson reported, are the local campaign offices of Senator Barack Obama and former Senator John Edwards, the offices as well as a five-block area were closed off this afternoon. Neither Obama nor Edwards, as in the case of Senator Clinton, were in that area.

Let's go to Mary Snow. She has details for us now on the suspect who is now in police custody -- Mary.

MARY SNOW, CNN CORRESPONDENT: Lou, you know just a short time ago after the standoff ended, Senator Hillary Clinton came out of her Washington home where she had been monitoring the situation. And she gave a statement, saying that she was grateful that the day ended peacefully. She said she is on her way to New Hampshire tonight to thank her staff and law enforcement. Here's a little bit of what she had to say.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I want to thank all of law enforcement. We were in touch from the moment this began with local, county, state, federal law enforcement, and I am so grateful to them for their response which brought this hostage situation to such a good ending.

(END VIDEO CLIP)

SNOW: And Lou, there were reports that the hostage-taker was demanding to speak with Senator Clinton. Senator Clinton refused to answer any details, only saying that she was in touch with the families of the hostages throughout the day, and law enforcement in New Hampshire have told us that the suspect was known to police and that he apparently had said that he was upset about the mental health care situation in the United States. Lou? DOBBS: And there are reports tonight that Lee Eisenberg is mentally ill and is under treatment with medication. What do we know about his mental state and the reason that he took this action?

SNOW: Well, one thing, Lou, that we do know from our affiliate WMUR and a New Hampshire newspaper that apparently Eisenberg had been scheduled to be in court today at 1:30, and this was for a domestic violence hearing with his wife. So we knew that there were a number of problems and this was at 1:30, the hostage situation began around 1:00. But law enforcement do say that he was very well-known to police in Rochester.

DOBBS: Why was he so well-known to local law enforcement?

SNOW: Well one of the things that came out is that last spring he had held a news conference. He wanted -- he was demanding that police wouldn't put stickers in un-parked cars or something to that effect. That was one of the things that he had been very vocal about. There have been reports about his past and that is something we're still looking into.

DOBBS: OK. Thank you very much, Mary Snow.

In Washington, D.C. today new evidence of communist China's increasing arrogance toward the United States, and China has denied some U.S. military ships and aircraft access to Hong Kong, as we've reported here. In one case, two Navy ships were seeking protection from storms at sea and were denied safe harbor by the Chinese government.

Bush administration officials are trying to downplay the obviously rising tensions between China and the United States, saying that the United States wants to put those issues in the past, as they put it, and to move on to what they call broader issues, whatever that means. Barbara Starr has our report from the Pentagon -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well Lou, the U.S. may want to move on, but that may be difficult, because every day now we are learning more details about what China is refusing the U.S. military to be allowed to do in Hong Kong, the extent of Chinese denials to the U.S. military far more extensive than the Pentagon initially revealed. Today we learned that another ship has been denied a port call in Hong Kong, a frigate, the USS Reuben James already denied a port call for a new year's visit into Hong Kong.

And also today we learned for the first time that a C-17 aircraft making a routine supply visit to the U.S. consulate in Hong Kong also turned down for flight access into China. Now, just listen for one minute to what the commander of the Kitty Hawk aircraft carrier had to say when he got back to Japan in the last couple of days after his ship was turned away.

(BEGIN VIDEO CLIP)

REAR ADMIRAL RICK WREN, U.S. NAVY: One of the great attributes of the United States Navy is our flexibility. We can go anywhere anytime, except to Hong Kong.

(END VIDEO CLIP)

STARR: But still, Lou, as you say, perhaps the most troubling element to the U.S. Navy is that in fact those mine sweepers were turned away and denied safe harbor during a storm out at sea, raising many questions for the U.S. military about how much they can rely on the Chinese, and still the Bush administration not really offering of an understanding about why China has taken these actions, whether it's arm sales to Taiwan, receiving the Dalai Lama or just some bureaucratic snafu, as one official said, but after denying now a total of nine ships and an aircraft into Hong Kong, it's hard to see how it's just a snafu. Lou.

DOBBS: I don't think we should be too concerned about what the Bush administration does or does not understand about the Chinese motives and actions here. This administration has demonstrated, whether it's on the issue of free trade, whether it is the issue of these kinds of absolutely embarrassing international incidents, that this administration is going to be without any kind of oar in the water, if you will, and without any kind of direction.

Is there any sense of outrage on the part of the admirals and the general staff there in the Pentagon? I mean to hear an admiral, as we heard the other day, say this is perplexing, wouldn't it be better if these admirals and generals just shut up, if that is the best and strongest response they can have to an obvious insult from a foreign government?

STARR: Well let me add to the perplexing part right off the bat, Lou. Many admirals, many senior commanders in the Pentagon had no idea about these additional refusals that came to light today. They were stunned when they found out about it. This information is coming out in drips and drabs, and it's very clear that until today there's been very little understanding at the Pentagon about the total picture of what China is up to.

Two Chinese military delegations are expected in the United States next week for some long-scheduled visits. It remains to be seen if they show up and if those meetings take place.

At the Pentagon about the total picture of what China is up to. Two Chinese military delegations are expected in the United States next week for some long-scheduled visits. It remains to be seen if they show up and if those meetings take place.

DOBBS: And it's hard to imagine what the United States would have to say to them if they did show up. This has become a silly affair driven by political pressure from the White House and this administration to the U.S. military, which is now getting confused between a diplomatic and a military role. It's hard to understand why there's no reaction from the Pentagon or the White House.

STARR: At this point, you know, I think what you're pointing to is exactly what is going on. This has now become an issue of international significance, government to government, far above the level of the U.S. Navy, but for Navy sailors, Lou, there is a very serious issue at hand. If U.S. Navy sailors are denied safe harbor by any country in a storm when they cannot safely be out at sea, which is what happened here with China; that is a very serious matter for America's service members.

DOBBS: Thank you very much, as always, Barbara Starr reporting from Pentagon.

Coming up next, the foreclosure crisis in this nation threatening millions of American homeowners and their families, what is your federal government doing about it? Kitty Pilgrim is here tonight with the report -- Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Lou, sources tell us one proposal being discussed is the freeze of low sub-prime interest rates in the hopes that people can keep their homes when these mortgages reset next year, but it's not clear if that will work. We'll tell you more about it -- Lou.

DOBBS: Thank you very much, Kitty. We look forward to that report, which we can actually talk about, some action being considered at least by our federal government.

All 50 states now have considered passing their own laws to deal with the impact of our illegal immigration crisis, as the federal government refuses to take action. We'll have that special report and a great deal more, straight ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: This nation is confronted by an illegal immigration crisis, and that crisis is certainly not limited to a handful of border-states. It affects the entire nation. And our federal government has abandoned its responsibility to secure our borders, to secure our ports and to administer an intelligent visa program. As Bill Tucker reports now this year lawmakers in all 50 states have introduced legislation to deal with the impact of that illegal immigration crisis.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Illegal immigration is not a border state issue. One thousand five hundred sixty-two pieces of legislation are a testament to that. That's how many bills have been introduced in 50 state legislatures so far this year dealing with immigration, almost three times as many as last year; 244 of those bills have become law in 46 states.

DON BALFOUR (R), GEORGIA STATE SENATE: We need to be able to guard the borders and obviously states can't do that, but then if we can't do that part, what can we do? I think our constituents across this nation are asking for us to get involved, to do whatever we can do.

TUCKER: And increasingly they are, according to the National Council of State Legislatures, the bills range from education, employment, health care, human trafficking, law enforcement, public benefits and I.D. drivers' licenses.

SHERI STEISEL, NATL COUNCIL OF STATE LEGISLATURES: We have a lot of frustrated states out there dealing with the costs and the consequences, but not having all the tools to solve the problem.

TUCKER: So they are creating the tools. This year, Oklahoma passed an omnibus set of laws that cracks down on employers of illegal aliens and denies those illegal aliens state welfare benefits. Arizona passed one of the toughest laws and to cracking down on employers to prevent them from hiring illegal aliens. Advocates of the states taking action expect the trend to grow, not slow.

KRIS KOBACH, ATTORNEY: States are only scratching the surface and becoming acquainted with what is permissible under federal law for the states to do. You know I think they're going to be, you know opening up the hood and the more they tinker with this engine, the more they're going to discover that they can improve the situation.

TUCKER: As for why all the action at the state level and not the federal level?

(END VIDEOTAPE)

TUCKER: Well perhaps it's because politicians at the state level are much closer to the people they represent and literally much easier to get a hold of, Lou, which tends to make for a more responsive representative form of government.

DOBBS: Well, the fact is that those elected officials in Washington are quite a distance from most of their constituents, and they're a heck of a lot closer to those socio-special interests -- socio-ethnic special interests and of course corporate America's lobbyists. The American people don't have a chance right now.

Both of these political parties are indifferent to the welfare of the American people, the common good. They're selling out to every special interest they can just so they get a good chunk of that $2 billion worth of largess that corporate America pours into Washington, D.C. It's great to see the states taking action. It's great to see a pushback against the mindless nonsense emanating from these so-called elites in both political parties in Washington, D.C.

TUCKER: And it's very interesting because these are popular initiatives in the states, Lou. They've got the approval of the people. You would think at some point they get the attention of Washington where people would realize what's happening out there.

DOBBS: You're not going to get the attention of Washington until -- and no one will get the attention of Washington until there's a push-back against both of these political parties, and all of you watching and listening tonight who think being a Republican or a Democrat means something in this country, you're not paying attention to who's being put forward as candidates for both of these parties. It's fascinating, and we're going to see more of it, you think?

TUCKER: I think we are. In fact, it tripled. Year over year it tripled in terms of the number of bills introduced and the number of laws passed and they expect it to continue.

DOBBS: I think what I hear here is...

(CROSSTALK)

DOBBS: ... the sound of hope. Thank you, Bill Tucker.

TUCKER: You bet.

DOBBS: Time now for some of your thoughts; Carl and Lyn in Ohio wrote in to say, "Lou, we watch your show every night and appreciate your reporting style and honesty. Please keep the pressure on big government and big business to do what's right for the American taxpayer and worker."

We call the American taxpayer and worker on this broadcast the American citizen. And we kind of want those folks, Carl, we want them to kind of in Washington to kind of figure out that we are citizens in this country first and taxpayers and units of labor maybe a little later.

Well Norm in Michigan said, "I love my country, but this government and Congress needs to get off their rear ends and start taking care of their own. And all of these candidates running for the highest office in the land are pathetic."

I think you've put it rather correctly and distinctly.

And Randy in Pennsylvania, "I like to 'buy American' but the only thing made in America that's for sale are the politicians."

We'll have more of your thoughts here later in the broadcast. Each of you whose e-mail is read here receives a copy of my new book, "Independents Day: Awakening the American Spirit", and we should point out that book is now available for immediate purchase by the dozens in your local news store -- bookstore.

Turning now to a new television show that is adding a new twist and pushing the amnesty agenda and a new exposure of a media gone mad, a reality program that gives three immigrants with temporary visas, legal immigrants, the opportunity to marry a lovely American citizen and thereby stay in the country legally, beyond their visa expiration date.

The host of the show -- the show is called, by the way, "Who Wants To Marry a U.S. Citizen? Makes clear to all contestants that marriage or legal status is not guaranteed, but the show will pay for a wedding party and a honeymoon should there be a marriage. It's unclear that if there isn't a marriage whether there would still be that opportunity.

Critics say the program perverts the concept of marriage and the immigration process. That should pose absolutely no problem given the low state of entertainment media and reality television in this country. Stay tuned, as they say. Up next, we'll tell you what forced one state to stop giving away drivers' licenses to illegal aliens and why you can expect more states to surrender their madness.

And is help really on the way for millions of homeowners in this country facing foreclosure because of predatory lending programs, predatory lenders and a government that has no idea of what its responsibilities are in regulating markets? We'll have that report -- of course, fair and balanced and objective, as always. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Nationwide public outrage forcing New York's governor, Eliot Spitzer, to abandon his proposal to give away drivers' licenses to illegal aliens, but eight states still award drivers' licenses or privileges to illegal aliens. Oregon is one of the most prolific in handing them out, but that apparently is about to end. As Christine Romans now reports, massive criminal abuse has forced Oregon's governor to act.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The governor of Oregon has issued emergency rules, granting Oregon drivers' licenses only to citizens and legal residents. His November 16th executive order meant to, quote, "combat identity fraud and identity threat theft and to protect our national security".

LINDA FLORES (R), OREGON STATE HOUSE: Definitely we have a problem. They check Social Security numbers now at the Department of Motor Vehicles for people who are receiving commercial drivers' licenses. Don't do that for ordinary individuals. We have an eight- year licensing cycle, so it's kind of an open invitation for people to abuse the system.

ROMANS: The executive order now requires a Social Security number or a valid foreign passport and proof of legal status from U.S. Citizenship and Immigration Services. The Oregon governor's executive order cites "criminal organizations both inside and outside Oregon using Oregon's permissive standards in order to assist persons to illegal obtain drivers' licenses and identification carts from DMV."

RICK METSGER (D), OREGON STATE SENATE: Drub trafficking is a major, major problem in the western United States, and the state- issued I.D. is one of the conduits that helps them commit those crimes.

ROMANS: But the move met with outrage from business, church and advocacy groups. The Ecumenical Ministries of Oregon: "We believe drivers' licenses should be available to all capable residents of Oregon regardless of immigration status."

From farm workers in the nursery trade: "The governor's order creates more problems than it solves. We have to make sure our work force can get to work." And advocacy group CAUSA of Oregon said the governor has "signed away undocumented immigrants' access to a driver's license, creating a nightmare for the immigrant community and a public safety risk for all Oregonians."

It's a public safety threat, they say, because people will drive anyway, now without taking the driving test and learning the rules of the road.

(END VIDEOTAPE)

ROMANS: But the Department of Homeland Security supports Oregon's shifts to a more secure license. DHS says it has no jurisdiction over state DMV's, but makes it clear it in no way supports giving drivers' licenses to illegal aliens -- Lou.

DOBBS: What in the world -- common sense, absolute concern for the common good and national security arriving in the state of Oregon. I mean what will happen next?

ROMANS: The governor says that he does support giving a driving certificate to people in the country illegally. That may be where this debate goes next, but we talked to some people in both Houses of the Legislature there, and they say they don't think there's the public support right now for that.

DOBBS: There should not be public support for it. Again, it is absolutely a form of affirmation, of illegal status in this country. What in the world are these people thinking about?

ROMANS: Well at the very least right now the governor is trying to shut down what they say their own task force and what they say immigration (INAUDIBLE) of course and have told them is a dangerous, dangerous loophole. Just seriously very too loose, the rules in Oregon.

DOBBS: I can't you wait for the socio-ethnocentric interest groups to besiege the governor of Oregon and the Oregon legislature, calling them racist, hateful, unwelcoming, I mean I can't even think of all the terms they will use, despite the fact that any one of these people could go down and get an international driver's license without any requirement for the state to issue one, if they really wanted it. Why in the world aren't they applying for international driver's licenses?

ROMANS: I'm not sure about the reciprocity in Oregon for international driver's license, Lou. I know that it is one of the things you can use to get an I.D. for an Oregon driver's license, but we haven't seen the last of this. We're going to hear about new rules next week, and then in February they're hoping that this is really shut down.

DOBBS: Well and we've got a few states to go. And I think it's about time that the word got out to them that this is just not going to stand. I mean it's absurd. And how this has happened, sort of below the radar and what we're really talking about -- again, let's remind everybody, this is a way in which to commit outright voter fraud in this country.

We're already with -- I mean depending on whether it's 12 or 20 million illegal aliens in this country that is influencing the number of congressional seats in various states and the balance of power in the U.S. Congress. And this is something no one is talking about. And the fact that we have opened up the door in these instances to voter fraud, should concern every single American.

ROMANS: When you apply for a driver's license, it says right there, it is the law that you have to get a form to register to vote as well. The driver certificates they say solves that problem maybe because with a certificate you won't be required by law to be signed up to vote.

DOBBS: Absolutely. All right, thank you very much, Christine Romans.

A new study shows a dramatic increase, by the way, in English fluency among Latino immigrants to their American-born children. The Pew Hispanic Center found that only 23 percent of Latino immigrants, legal and illegal, say they are fluent in English, but 88 percent of their children say they are.

However, if you break down the English skills of recently arrived legal and illegal immigrants by the nations they come from, the results are quite different and shocking. For example, 71 percent of immigrants, legal and illegal, from Mexico, the largest group of recent immigrants, say they speak little or no English at all. The study appears to make no distinction obviously between legal immigrants and illegal aliens, but demonstrates clearly that immigrants, both legal and illegal, from other nations, tend to demonstrate much higher rates of proficiency in English than those from Mexico. And, of course, those legal and illegal immigrants, the majority of them are from the nation of Mexico.

Up next here, shifting focus, the war on the middle class now, equal importance if not surpassing the war in Iraq in voter concerns. Do the candidates understand it's not just the economy, stupid?

And the federal government talking to lenders looking for a way out of the sub prime mortgage mess. Does help come too little too late? Will help come at all? We'll have the report. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We have a credit crisis in this country, and the treasury department is now in talks with mortgage companies trying to address at least some of the impact in the epidemic of sub prime loans that are being foreclosed upon. As Kitty Pilgrim now reports however, talk may sound cheap to millions who have already been hurt by predatory lenders and an absentee government.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT: The signs are all over American and while Main Street has been reading them for months, it appears Washington is just catching up. The U.S. Treasury Department is meeting with major banks and mortgage lenders about a plan to help families facing default. One of the proposals being discussed is the freeze on some sub prime interest rates, but some question the details of such a plan.

JAMES CARR, COMMUNITY REINVESTMENT COALITION: The question is for how long? If the period is short, say about three years, all that will do is delay the pain and inevitable foreclosure, because house prices are not likely to rebound strongly enough within a three-year period.

PILGRIM: Not all borrowers are equal. Some were foolish, taking on more debt than they can handle. Others were duped by predatory lenders and some hit by adversity simply couldn't make their payments. Not all will be treated alike. The Treasury Department won't release the details of the plan, but some recent comments by Secretary Paulson shed light on just who may get help. "Borrowers who are current on payments at the lower rate might be candidates for fast-tracking into refinance or loan modification. Others who struggled with even payments at the teaser rate may not have these options." Getting all the parties to agree on restructuring may be difficult. Mortgage servicers, banks, investors in mortgage securities all have different interests, and some may be adversely affected if interest rates are frozen.

JOHN NASSER, CENTER FOR RESPONSIBLE LENDING: Depending on the industry parties to voluntary work all of this out, it's just not going to lead to the solution on scale that we need a solution to reach.

PILGRIM: Financial analysts say only about 1% of sub prime mortgages have been successfully restructured so far.

(END VIDEOTAPE)

PILGRIM: Treasury Secretary Henry Paulson says he expects a plan by the end of the year. Sources say details of that plan may come as early as next week, but Lou it's still too late for many families who have already lost their homes and not at all certain that help will come for many thousands more.

DOBBS: We're talking a number of foreclosures through last month. What is the number again?

PILGRIM: Last month it's in the millions, but I don't know exactly.

DOBBS: It's over 1.5 million, if I recall. We're talking about the prospects of 2 million more foreclosures on the resets of the ARMs. These by the way are not necessary the so called sub prime mortgages but the Paulson statement that the government might be so good to discuss freezing interest rates for those who have been able to keep up with their mortgage is stupid beyond belief. Those are not the people who need the help. It is the people that he says would not get the help that is those who could not even keep up with the teaser rates. PILGRIM: That's right. The people who are already out, the real worry is this is going to be defined so narrowly, and this is what the people were telling us today who represent the interest -- you know, the consumer groups, this will be defined way too narrowly to help anyone, really.

DOBBS: The reality is at least they're talking about. The first move of course was to do what comes naturally to elites like Henry Paulson and his ilk. They thought about saving the money center banks and putting together a 75 to $100 billion a rescue fund, a superfund for the banks and the lenders, but the reality is at least now they're focusing on the homeowners. If they want to do something that will have long lasting impact, they will try to do as much they can to accommodate every one of those homeowners who's at risk rather than banks who, by the way, in case anybody is questioning whether we're pro-people here or pro-institution. Let me be clear. This broadcast is pro-people. I don't really care about the ignorant lenders who thought they were so clever to get into this line of business and to take advantage of, cross historical boundaries between underwriting, brokerage and insurance, and of course, get into this sub prime lending.

The reality is that we don't have an honest, straightforward, public official in this country, in the federal government I should say who can say, now imagine this, candor coming from the European Union about their crisis, which was created by our sub prime mortgage lending, their minister of finance and economics saying their crisis was created by what he calls snooty bankers who thought they were so clever that they didn't need to follow the lessons of history or prudent, prudent lending. I would love to hear Paulson say you know our problems were caused by a bunch of elite, nonsensical snooty bankers, but then he would have to include himself, wouldn't he?

PILGRIM: I don't think that will happen.

DOBBS: I don't either, darn the luck. Thanks, Kitty; Kitty Pilgrim.

Coming up next, Rudy Giuliani; he is facing tough questions about some reports of misused public funds when he was New York City's mayor, or is he really just the targets of another political hit and smear campaign? Is this a politics of personal destruction? Or is it just really strong investigative journalism revealing the character and the nature of the man?

One of the most outspoken democratic critics of the war has had a change of heart. Congressman John Murtha now says he thinks the so- called surge strategy is working. Good grief, you don't want to be a democratic presidential candidate right now, not with John Murtha changing direction.

And what in the world do you do if you're Nancy Pelosi and Harry Reid? Well, we always have some suggestions for them, but we'll be asking our panel three of the best political analysts in America what they think. Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Joining me now, three of the best political analysts in the country and friends all. Republican strategist Ed Rollins, also a former White House political director, and "New York Daily News" columnist, Pulitzer Price winning, Michael Goodwin and syndicated columnist Miguel Perez, a good guy as well.

Miguel, what is in the world is going on? It doesn't look like the folks in Iowa have chosen a winner yet. It looks like it's close and to hear all this advance and pundits, they're lamenting the idea there's not a clear winner.

MIGUEL PEREZ, SYNDICATED COLUMNIST: I am very excited about Mike Huckabee. I like him. I'm surprised how well he is doing. I think there is hope for the Republican Party after all.

DOBBS: You're excited as well? Michael, let's start with you.

MICHAEL GOODWIN, NEW YORK DAILY NEWS: It is close in both contests. You've got a three-way race in the Democratic Party for the lead in Iowa, and the republicans basically it's Romney and Huckabee at the top, Giuliani not too far behind, but it's interesting. I think it's better for democracy when we have crowded fields with a lot of people with different talents, different backgrounds, getting a smattering of votes, it keeps everything in the game.

DOBBS: Ed, is there in any of this a surprise?

ED ROLLINS, REPUBLICAN STRATEGIST: Well, the surprise I think -- not that Iowa always has appealed to someone like Mike Huckabee and traditionally Iowa has always shaken it up a bit, but I think the critical thing here is we got into a race where they thought you had to be rich or famous in order to compete because of February 5th, and I think Huckabee has come in with no money, basically reinforced his base, and I think it's a process of those who did have a lot of money and spent it have not moved forward. There's been a whole series of people stumbling here, and Mike has gone through the center and his message is having appeal.

DOBBS: Rudy Giuliani one of the best financed candidates on the very day of the republican debate announced there was some question being raised by Politico.com in the way about money used for his security was accounted for in the city budget?

ROLLINS: I don't think the question is about money being used for security. The mayor certainly has a right to be secure and his spouse has a right to be secure but while his wife was in Los Angeles protected being by police, his girlfriend was driving around in the Hamptons with police protection. I think those are little things that people understand, and I think particularly after Kerik and his girlfriend and all the rest of it, I think little ordinary people out in Iowa, and South Carolina and what have you, don't quite relate to this. They see this as kind of an arrogance of power.

DOBBS: I would agree with you about the ordinary people but as I say, there are no little people in America. What do you think, Michael?

GOODWIN: Giuliani himself said this is a political hit job designed to open up his personal life. He's basically right on both counts, but I think it's a legitimate story about his personal life. He's the only guy ever to really seek the White House who has been married three times and it was a very messy divorce from wife number two.

DOBBS: Oh, my gosh, I mean, come on. It's still his personal life for crying out loud. How does this in any way pertain? I mean John F. Kennedy for crying out loud had one wife and how many affairs?

GOODWIN: We don't know. We only knew later.

DOBBS: We only knew later. I'm just saying what standard are we holding here?

GOODWIN: Well, times have changed, though, and I think whether it is right or wrong, this is now part of the vetting process. He's going to have to go through this. He may still win the nomination.

DOBBS: Do you think this story has legs?

GOODWIN: Oh, yes.

DOBBS: Do you?

PEREZ: I don't. What I see here is basically this story coming out of the concern supposedly that city money was being spent to guard the mayor when he was visiting his mistress. It's not. It's about pointing out that the mayor had a mistress. That's all it is.

ROLLINS: More importantly, Rudy Giuliani wants to tell you all the good things he did. He wants to tell his side of the story and some of the statistics aren't quite accurate.

DOBBS: How unlike a politician.

ROLLINS: Now what will occur is the other side. The policemen are going to tell their side of the story. The firemen are going to tell their side of the story. People will look hard at his record, because that's his great strength. As far as his personal life, it may not be anybody's business, but it's this, I don't want to tell you how I made my millions of dollars of Giuliani partner. I don't want to disclose who those clients, even though some of them are foreign, some of them may be -- you can't have secrecy if you decide you want to run for public office.

PEREZ: Those are far more serious.

ROLLINS: Far more serious but he wants to stonewall it, tell you his side of the story and it's just not going to happen.

GOODWIN: Actually, Lou, I entrust the voters to sort it out. I think the job of the media is to provide the information, to push for it, even when it's unpopular and the voters will make their choices. DOBBS: Michael, you and I love this craft, but the reality is you know that we carry on a lot -- we carry a lot of water in this business, journalism, for a lot of politicians, who know how the game is played, and we do and we rationalize it by the public's right to know, there's disclosure, and somehow that never applies to the stuff that really calls for real heavy mental lifting, doing the deep research, meanwhile, budgets are dropped, and we're doing horse races and the politics are personal. I happen to think the Clintons were exactly right about that. By the way, if you think this is a Clinton news network, I can tell you a lot of things about the Clintons I don't like, too.

GOODWIN: In "New York Times" today, they had a story about Rudy Giuliani and the money issue we're talking about. They had six bylines on it. They won't have six bylines on a story on the Pentagon budget or on the new, you know, situation in Iraq.

DOBBS: Speaking of the Pentagon budget, we got to take a quick break, we're going to come back and talk about John Murtha and all the problems he's created, Miguel, for some democratic presidential candidates who now are on the wrong side of illegal immigration and maybe the war on Iraq, but first coming up at the top of the hour a special edition of "ANDERSON COOPER 360." Anderson tonight reporting from Rochester, New Hampshire. Anderson?

ANDERSON COOPER, CNN ANCHOR: Yes, Lou. Thanks very much. Coming up on this special 8:00 edition of "360," we're live from the scene here of the hostage drama, where much of the nation's attention has been focused all day long. The reason, of course, is because of this man, Leland Eisenberg, who at around 1:00 today walked into a Hillary Clinton campaign office, said he had a bomb strapped to his waist, and held four people hostage. It lasted for about five hours. It ended just a little more that an hour ago. It has been a very fluid situation. Clearly there are a lot of questions. We're going to try to get the answers here on the ground.

We're also going to bring you the latest on the Sean Taylor murder investigation. Three people under arrest in that case. We'll bring you up to speed. That's a special edition of "36" at the top of the hour. Lou.

DOBBS: Anderson, looking forward to it. Thank you very much. Anderson reporting from Rochester, New Hampshire.

We'll be back with more on the madness of presidential politics and other madness. We'll be talking with our distinguished panel. Stay with us.

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DOBBS: We're back with our panel. I want to turn to Miguel Perez. Miguel, national correspondents are complaining all over the place including columnists like yourself that they can't get access to Hillary Clinton. What's going to be the fallout of that?

PEREZ: I fled from communist country when I was a little kid. They manipulated the media. Hillary Clinton's campaign, her staff, remind me of that mentality. It's like planting reporters, and making sure that the media, you know, people -- basically they have a whole line of defense around her -- but it's really -- it's really -- the effort by some candidates, not just Hillary, to manipulate the presses an insult to all our intelligence. We should -- all of the American people should really be concerned and defend the right of the press to really question these people.

DOBBS: Michael, what do you think?

GOODWIN: Among the candidates I've known through the years and Hillary is one of the worst, the most difficult to get to. There's kind of an imperial court around her that protects her. You often see in the newspapers, for example, or on TV, she's never quoted directly. It's the spokesman. Whereas most of the other candidates will say it themselves or say it in their own words, there is -- and I think that to me is troubling going forward. If she's going to be in the White House, you have to assume this kind of campaign would carry into the White House, so now is the time to demand that she become more accessible.

DOBBS: Ed?

ROLLINS: The media needs to demand. I mean the bottom line is this is all part of the process. As a political strategist, you know I always try to protect my candidates, but at the end of the day you also want to have that access. You want to have that ability to communicate. If you don't give them access at all times, sooner or later they'll start cutting you off and not running the stories, and at the end of the day, you're the one that loses out and the public loses out.

DOBBS: I got to tell you, a candidate doesn't - at least shouldn't give you the respect of a response, I don't care what they have to say about anything, and I don't think -- first of all, the audience on this broadcast thinks pretty much that they have very little to say of substance anyway, and there's a great deal of distrust of these candidates. That distrust is mounting I think because of something that happened today. That's Congressman John Murtha who's been a harsh and absolutely steadfast critic of the Bush administration and the conduct of the war in Iraq, saying, Miguel, he thinks the surge strategy may be working now.

PEREZ: If Murtha says it, you've got to believe it. What he's saying is it's working militarily, not politically, and that's what we've been saying all along. It's like unless the Iraqi leaders do something, it's all worthless.

DOBBS: See, I'm one of those people who's not been saying it, because I'm not smart enough to figure out how the military can drive a political solution. I can understand how the military can conduct military operations, that is, war, but I do not believe that the military was ever designed for a political objective.

PEREZ: But they were sent there with the idea that they were buying time so the Iraqis could get their act together. DOBBS: What are the implications, Michael, for these democratic candidates? This has got to create huge, huge problems for these democratic candidates.

GOODWIN: Absolutely, and I'm sure there are other members of the House who feel the same way. It's very hard to deny the facts. That's what Nancy Pelosi and Harry Reid have to keep doing is deny the facts.

DOBBS: And today, what some thought might be a compromise between the White House and the democratic leadership on war funding collapsed and now the leadership on Capitol Hill is confronted with Murtha's position.

ROLLINS: They will pay a big, big price. If the surge did not work, which I think most democrats were hoping that it would not work so that they could basically have their withdrawal failure, at this point it is working, and everybody has said that, independent viewers have said it, and I think at the end of the day, the soldiers can make the political system. They can create a safer environment and it's up to the Iraqi people if they said to basically make their government go and function, but we've done our job, and these kids that have gone there and paid a big price, have done their job, and they ought to be applauded and they ought funded until we're finished.

GOODWIN: One of the other things you see Lou too is lots of stories about people coming back to Iraq, the middle class, those who left coming back. Things are clearly changing there, not in the democratic playbook.

DOBBS: From Baghdad.

GOODWIN: That's not what the democrats want to see, so they have to figure out a new plan, while they fight against the war while accepting the facts.

DOBBS: And while the democrats, just to conclude with the republicans on this thing, the democrats struggling with the issue of immigration and border security, the war in Iraq, the republicans don't seem to have a clue about anything.

PEREZ: Do you remember Michael Jackson that did that dance, when he was moving forward, but actually was moving backwards?

DOBBS: The moonwalk.

PEREZ: That's what it reminds me of.

DOBBS: Don't you know I'm a pop culture guy?

ROLLINS: Michael Jackson is not hip anymore.

DOBBS: That explains it.

ROLLINS: I think the dilemma republicans have is they are still fearful of breaking from Bush totally, and the country has broken from Bush totally. And the country's not going to create a third term for any republican, for Bush, and someone's got to break away and start talking about things that matter to ordinary people.

DOBBS: I think people are moving well ahead of these two parties right now. Hallelujah, Miguel, thank you very much, Miguel Perez, Michael Goodwin, Ed Rollins, thank you. Have a great weekend.

Coming up next, we'll have some more of your thoughts. Stay with us. We're coming right back.

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