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LOU DOBBS TONIGHT

Democratic Presidential Contest Turns Ugly

Aired January 14, 2008 - 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, the Democratic presidential contest has turned ugly. The Obama and Clinton campaigns are facing off over the divisive issue of race and civil rights. Is it a legitimate election political strategy or a distraction from the critical issues that face this nation? We'll have complete coverage, all the day's news and much more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, January 14. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

The bitter contest between Senator Clinton and Senator Obama today intensified, the issue of race, a central issue in the battle for the Democratic presidential nomination now. Senator Clinton and Senator Obama are both apparently trying to win the support of African-American voters with that strategy. Democrats will vote in the critically important primary of South Carolina January 26th. One week earlier, Democrats will vote in another closely watched contest in Nevada. Candy Crowley reports from Las Vegas -- Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Lou, the truth is that the Barack Obama campaign believes this is an argument where they all come out losers. Just within the past hour, Barack Obama has said he believes that this has been a distraction on the campaign trail. He says he is concerned about the tone of the debate and he wants to move back to issues about how to get health care, how to keep jobs, that sort of thing. This sort of call for a truce comes after several days of some really nasty back and forth.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The latest eyebrow-raising comment came from the head of black entertainment television. Bob Johnson was introducing Hillary Clinton and attacked Barack Obama for allegedly questioning the civil rights credentials of the Clintons.

BOB JOHNSON, FOUNDER, BLACK ENTERTAINMENT TV: Hillary and Bill Clinton who have been deeply and emotionally involved in black issues when Barack Obama was doing something in the neighborhood that I won't say what he was doing but he said it in his book.

CROWLEY: Johnson denies he was talking about Obama's admitted drug use while a teen. Bill Clinton, once referred to as the first black president, was under fire late last week for seeming to suggest that Obama's experience was a fairly tale. Clinton denied it but felt the need for damage control on black talk radio most recently with Roland Martin.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I tell you, I got a list of 80 attacks on her going back six months. When his campaign referred to her as a senator from Punjab, on the very same day, they put out a three-page printed release, attacking me.

CROWLEY: Also in the mix, a statement from Hillary Clinton that critics said downplayed the role of Martin Luther King in passing civil rights legislation.

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: You know this is you know an unfortunate storyline that the Obama campaign has pushed very successfully.

CROWLEY: Without flat-out saying it, each side blames the other for playing the race card.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: For them somehow to suggest that we're interjecting race as a consequence of a statement she made that we haven't commented on is pretty hard to figure out.

CROWLEY: On both sides, there is a festering ill-will and the fear that the fracture could leave permanent scars within the party. In New York at a Martin Luther King birthday event, Hillary Clinton seemed to try to calm things down.

H. CLINTON: We may differ on minor matters. But when it comes to what is really important, we are family.

(END VIDEOTAPE)

CROWLEY: Again, Lou, both sides now seeming to try to tamp this down. Obama says he got into this race because he believed that voters really wanted something different, something that was above the traditional bickering. He says it's time to get back to those issues -- Lou.

DOBBS: Well, it's awfully thoughtful of him to say that. But both his campaign and that of Senator Clinton have indulged in precisely that for days now.

CROWLEY: Yeah they've -- and in the end, I'm not really sure either campaign has helped that much. As you noted we are moving into the South Carolina primary, the first time African-American voters are a majority part of the electorate, so it came up I think in that context.

Both sides say this was misunderstood. The Obama campaign says we never got into this discussion. This was fomented by others. But it certainly was a nasty weekend. We'll see if it works with both of them coming up on Martin Luther King, the holiday. We'll see if this works, but both of them have sort of signaled that they want to move on.

DOBBS: One would think that these two candidates with Martin Luther King Day upon us would find it an appropriate time to elevate the public discourse. I think probably nearly everyone in this country would hope so. Thank you very much, Candy Crowley.

Later here, four of the nation's most influential social and political commentators join me. They will give us their assessment of what's been going on between Senator Clinton and Senator Obama and what it all means for this election campaign and what it reflects about our society, if anything.

We'd like to hear from you on this issue. Our poll question tonight is, do you believe the campaigns' emphasis on race and gender is crowding out discussion of critical issues? Yes or no. Please cast your vote at loudobbs.com. We'll have the results for you later here in the broadcast.

Senator Barack Obama tonight is criticizing a lawsuit that could influence the outcome of the Democratic Party caucuses in Nevada on January 19th. The State Teachers' Union is challenging the Nevada Democratic Party over new rules for caucuses that could favor the Obama campaign. Senator Obama says the challenge is quote, "troublesome". Jessica Yellin reports now from Las Vegas. Jessica, what in the world now is going on in this Democratic Party?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, you know it's a battle royal between unions, between a teachers' union on the one hand and the powerful culinary workers' union here that has just endorsed Senator Barack Obama and this battle had led one prominent Obama supporter in the state to accuse the teachers of trying to disenfranchise some of Obama's minority supporters.

Now here is the back story. Sometime ago, the state Democratic Party approved a plan to allow the Nevada caucuses to take place at nine sites, nine casinos in this city. That's because so many workers in Las Vegas are actually expected to be on the job on a Saturday and this allows them to cut out of work for just a few hours, caucus, and have their voice heard and then go back to work.

Nobody seemed to have a problem with this plan, that is, until the powerful culinary workers' union decided recently to endorse Barack Obama. Well this gives Obama the edge inside those casino caucuses and suddenly this powerful teachers' union is saying, that's wrong. They object to the caucus sites. But that wasn't the case when it looked like that powerful culinary workers' union might endorse Senator Clinton or stay neutral.

Well this development has led Barack Obama to say, as you point out today, all of this is troublesome. Senator Clinton maintains look she has nothing to do with this lawsuit. She just hopes the courts work it out by the time the caucuses roll around this Saturday -- Lou.

DOBBS: This is all getting very precious right now in my humble estimation, Jessica. The reality is the culinary workers' union is comprised by some estimate as many as 45 percent illegal aliens working in hospitality, leisure, landscaping there in Las Vegas. There is no question about the issue that is foremost on their minds. What is being done, given everything else, to ensure the integrity of this election, these caucuses in Las Vegas?

YELLIN: Well you know one of the caveats to this endorsement by the culinary workers' union is that they don't necessarily represent that many registered voters. So while as you point out, it has many members, not all of them are, in fact, going to caucus and folks here insist there will be careful checks to ensure that just registered voters caucus goers are allowed to participate. We'll have to wait and see.

DOBBS: Again, precious, precious language but rather than wait, if I may, Jessica, why don't we find out what they're going to do to ensure that those caucus goers have a legitimate standing. In other words, are in fact U.S. citizens exercising their right as citizens to vote?

YELLIN: Why don't I find out exactly what they're going to do and I'll let you know tomorrow.

DOBBS: You've got a deal, Jessica. Thanks for updating us on this. This story is getting better and better. Jessica Yellin from Las Vegas, thank you.

In the Republican race, Republican candidates have made the deteriorating state of this economy a central issue. Polls indicate now that Senator John McCain and former Governor Mitt Romney are leading in Michigan which holds its primary of course tomorrow. Michigan has the highest unemployment rate in the country, almost seven and a half percent. It also has at this point the least representation within the Republican and Democratic Parties of any state in the union. Dana Bash has our report from Kalamazoo, Michigan.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Campaigning in conservative western Michigan, John McCain is trying to repeat his win here eight years ago with what we calls straight talk. Many lost automotive jobs won't come back and it's time for retraining.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We've got to go to strongest part of our educational system in Michigan and that is our community colleges.

BASH: At the Detroit Economic Club, Mitt Romney blames Washington for exacerbating Michigan's woes with too many mandates and regulations, sells himself as a CEO who can fix it.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: That's what I've done all my life. I've taken on complex situations, led tough negotiations, found solutions and then gotten things back on track.

BASH: A native son whose father was governor and an auto executive.

ROMNEY: I've got Michigan in my DNA, I've got it in my heart and I've got cars in my bloodstream.

BASH: Aboard his bus McCain says his years of Senate committee work include the auto industry and he derives Romney's "it's personal" pitch.

MCCAIN: Governor Romney doesn't have that relationship with him. He's been gone since he was a kid.

BASH: Polls suggest that McCain and Romney battle for first but Mike Huckabee is also competing here courting evangelicals, preaching populism.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: One of the reasons we've lost so many jobs starting here is because we have a system of taxation that penalizes productivity.

(END VIDEOTAPE)

BASH: And the race here really is neck-and-neck between John McCain and Mitt Romney and the outcome tomorrow really could have a huge influence on the dynamic of the Republican race because a loss for Mitt Romney in his home state after no big wins so far could fatally wound his candidacy perhaps. And as far as John McCain goes, if he wins here on the heels of a win in New Hampshire, it could put him in command of the Republican race at least until the next contest, Lou, in South Carolina on Saturday.

DOBBS: In South Carolina indeed. But at this point, I can't imagine how the people of Michigan must feel tonight, the Republican Party because Michigan chose to move up its primary. The Republican Party giving only half the delegates that they otherwise would have been entitled to, the Democratic Party with only Hillary Clinton on the ticket and no delegates being permitted to the National Convention, just how upset are people in Michigan with this idiotic situation?

BASH: Well, it's going to be very interesting to see how this turns out based on the fact that there really isn't going to be a Democratic primary here because of the fact that it is open and you could have Democrats and Independents voting. It is entirely possible. No one knows how this is going to turn out.

It's going to be really fascinating to see what happens. It's entirely possible for some Democrats and some Independents to vote tomorrow for candidates that they wouldn't normally vote for perhaps because they don't have a choice otherwise or perhaps because they wanted somehow to change the outcome of this on a national level, so that is a wild card here, a really big wild card here and nobody really knows how it's going to affect it.

DOBBS: Well, everybody can vote on that Democratic ballot, as you say, and the fact is, Hillary Clinton's name is the only one on it. You've got -- if the other candidates saying please don't do that, of course. They're the ones, the precious darlings, who pulled their names from that ballot. Why in -- what motivation would there be for anyone to put up with a candidate who wouldn't honor the state of Michigan and its residents' problems and they are painful problems by going along with these partisan games, both parties playing them, to the disadvantage of Michigan and its residents?

BASH: And Michigan is a swing state in the general election and whether or not this hurts Democrats in the long term in November of 2008 is going to be an important question. You know Democrats they have the same problem in the state of Florida, also a swing state. Democrats aren't campaigning there either, Lou.

DOBBS: The only thing more ridiculous than partisan politics are the politics of Republicans and Democrats, in my humble estimation. Thank you very much, Dana. Dana Bash.

BASH: Thank you.

DOBBS: Still ahead here more on this campaign and the critical importance of the economy to voters of Michigan and other states. Christine Romans will have the report for us. Christine, they're finding out there's something about the economy going on that most Americans don't like.

CHRISTINE ROMANS, CNN CORRESPONDENT: That's right, Lou. Michigan has been losing middle class jobs now for seven years, fewer jobs mean fewer opportunities for those who graduate. And as the tax base erodes, so does the revenue needed to shore up failing schools and prepare students for this global economy -- Lou.

DOBBS: Looking forward to your report, Christine. Thank you.

The Bush administration considering a plan to prevent this economy from slipping into recession unless it has already done so, we'll have that special report and the war on our middle class.

Governor Arnold Schwarzenegger has utterly failed to resolve California's financial crisis. He hasn't had a lot of help. Now he's considering what some would call extreme measures. You won't believe in some cases just how extreme. Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: The three leading Republican presidential candidates tonight are in Michigan in advance of tomorrow's primary election. The focus is on jobs. Michigan, of course, has been hard-hit on employment that lost jobs in Michigan for seven years in a row. As Christine Romans now reports, Michigan's shrinking middle class tax base and fewer job opportunities are creating serious challenges for that state's public education system.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Detroit is a place where the auto jobs are disappearing and the public schools are struggling with the lowest graduation rates in the country. It's a vicious cycle.

CINDY BROWN, CENTER FOR AMERICAN PROGRESS: You just can't make new investments in education when your revenue base is declining because of your economy.

ROMANS: Fewer jobs mean fewer opportunities for those who graduate. And as the tax base erodes, so does the revenue needed to shore up failing schools and prepare students for a global economy, a global economy that has decimated the state's middle class manufacturing base. Michigan's unemployment rate is the highest in the nation, 7.4 percent according to the Labor Department. Michigan has lost jobs for seven straight years, the longest losing streak since the Great Depression, 450,000 jobs gone, according to researchers at the University of Michigan.

DONALD GRIMES, UNIVERSITY OF MICHIGAN: We're going to lose jobs again in 2008. People talk about the one-state recession. You could almost say Michigan's been in a one-state depression.

ROMANS: The state rapidly losing high-paying jobs in autos, manufacturing, construction, and gaining a smaller number of jobs in education, services and hospitality. According to Michigan economists, those jobs pay half, at best, what the jobs that are lost paid. Michigan's governor calls her state the epicenter of the global shift of manufacturing jobs and blames Washington.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: We're mad as hell. We are mad as hell at these unfair trade agreements.

ROMANS: Others say the causes are much more complicated. Bad mistakes and industry, health care costs, whatever the reason, most agree when those jobs go, so do opportunities and resources for education.

(END VIDEOTAPE)

ROMANS: A new report from "Education Week" magazine gives public schools in Michigan as a whole a grade of C. But last year, the same group estimated only a quarter of Detroit freshmen graduate four years later. The school district says it's more like 61 percent. Either way, unless the economy improves, there is not much hope for ailing public schools especially in those struggling big cities.

DOBBS: We just heard Governor Granholm in your report say they're mad as hell. But think about what that state is putting up with. I understand Governor Granholm is a Democrat. I understand that there are lots of issues there. But for the people of Michigan to tolerate these two political parties basically telling them to go to hell when they have the leading unemployment rate in the country, when they have had the longest standing loss of jobs of any state in this country, there's something wrong with the people in Michigan if they put up with this kind of nonsense.

There's sure as the dickens something wrong with their elected representatives to put up with this. And there's something wrong with those two political parties to look at that kind of pain, that kind of suffering, the impact of these idiotic faith-based trade policies, by the way, initiated by both President Clinton and President Bush and carried out to a vengeance by this president. There's something wrong when all this is just being allowed to stand. This should not stand in the United States of America.

ROMANS: Of all that pain and suffering that you mentioned, Lou, of that there is absolutely no doubt on the campaign trail, among the people in Michigan, among the politicians on both sides of the debate about how the global economy and outsourcing and manufacturing and unfair trade policies, how all that plays out, there is agreement on that.

DOBBS: And look at the candidates sitting in Michigan. Mitt Romney, Senator John McCain talking about he's the biggest free-trader in the country. Well glory be, how in the heck a man can sit there and say that he is going to bring change, as Senator McCain has, to Washington when he simply emulates the policies that have led Michigan and working men and women all over this country into these straits is, to me, inexplicable and inexcusable.

ROMANS: You have to hope that after Tuesday on Wednesday that around the country people are still talking about the problems in Michigan and what's causing them, Lou, so that other places where the manufacturing base is declining we don't see the same sort of fallout.

DOBBS: Well I can guarantee everybody watching this broadcast will be focusing on the people in Michigan long after that primary is over and the idiotic policies that have been pursued here. Thank you very much, Christine Romans.

State education departments all across the country fairing poorly as you might expect in the "Education Week" report we just referenced. We'll be taking a look at exactly where they failed when the research director of "Education Week" joins us here later in the broadcast.

And tomorrow night, we want to remind you, there will be a LOU DOBBS TONIGHT special report, "Independents Day: Awakening the American Spirit". Tomorrow night we're going to examine why voters all across the country are fed up with the Democratic and Republican Parties and looking elsewhere for leadership and we'll be taking a look at the issues that the candidates of both the Republican and Democratic Parties seemingly want to ignore. That's tomorrow at 8:00 p.m. Eastern Time right after our regular edition of LOU DOBBS TONIGHT. We hope you'll join us.

Well Maryland is considering a proposal that is reminiscent of New York Governor Eliot Spitzer's failed proposal to give away drivers' licenses to illegal aliens. Governor Martin O'Malley of Maryland is now proposing a two-tiered system that we continue to issue drivers' licenses to illegal aliens in that state.

Maryland is now one of four states issuing licenses to illegal aliens in this country despite the objection of the Department of Homeland Security and despite common sense. State officials say the two-tiered plan would address federal security concerns and ensure highway safety. They're as full of it as Governor Spitzer and his folks in New York were when they were proposing much the same thing. Good going, Governor. We'll be following the progress of that proposal in Maryland for as long as necessary.

Coming up next here, will the Bush administration and the Democratically-led Congress actually come together on a plan that will ease the financial crisis hitting our middle class? We'll have that report.

And Governor Schwarzenegger under fire for California's out-of- control spending, the same problems that cost the last governor his job, it turns out those Band-Aids don't work. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The state of our economy has emerged as the single most important issue for voters of both parties yet our elected representatives in Washington have done little more than talk about the struggles of middle class Americans and their families. President Bush only recently acknowledged that there could be a problem with our economy and as Kitty Pilgrim now reports, middle class families are waiting for all the talk to turn into action.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Federal Reserve Chairman Ben Bernanke meeting with House Speaker Nancy Pelosi today. Democrats trying to force the Bush administration to do something about the middle class financial crisis.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: I want to convey to the chairman the concerns that the American people have in meeting their day-to-day needs.

PILGRIM: But the Bush administration has long been denying the problem. Until recently, President Bush repeatedly insisted the economy is doing fine. But last week acknowledged many Americans are anxious about the economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: On the one hand, we'll continuing to set a record, on the other hand, there's mixed news.

PILGRIM: As the Bush administration looks at a possible stimulus package, many are saying it's too little too late.

JOHN IRONS, ECONOMIC POLICY INSTITUTE: To try to say the economy is fundamentally strong, but there's problems and I think they need to pick one side of the fence and I think they need to realize that the economy is weak for the middle class. It weak for low-income people and that something needs to be done about it.

PILGRIM: Working Americans are struggling to pay for higher gas prices, heating bills, medical costs, and higher education. Recent unemployment numbers have spiked. The flood of foreign imports is replacing American made products and that means American jobs are lost.

ALAN TONELSON, U.S. BUSINESS & INDUSTRY COUNCIL: Our output is actually down in more than 100 critical manufacturing industries and that's a major sign of American competitive weakness that feeds back to the living standards of our people.

PILGRIM: President Bush is expected to unveil details of an economic stimulus package in coming weeks possibly during the State of the Union message on January 28th.

(END VIDEOTAPE)

PILGRIM: Secretary Paulson when asked about a stimulus plan said working through the situation will require patience and he added it's better to get the policy right rather than announce it quickly. But meanwhile, the middle class is waiting for some kind of action -- Lou.

DOBBS: Well Secretary Paulson is being an absolutely, I mean a shameless dissembler. The idea that this would be a rush to a programmatic response, the fact is this administration has not done anything, has been aware of the crisis in terms of our credit markets for the better part of a half a year at the very least. They understand what's happening to the middle class. This is pure politics. It's got to be removed from the issue and we have got to start talking about how we're going to move ahead.

PILGRIM: You're absolutely right, Lou. The evidence has been plain for quite some time and certainly they cannot be thinking about it for the first time right now.

DOBBS: And in terms of monetary policy, Ben Bernanke, the chairman of the Federal Reserve, he now has come to the conclusion that perhaps we might think about dropping interest rates. I mean across the board there has to be some intelligence.

One of the things that is driving these markets and investors nuts worldwide is the United States is exhibiting a lack of leadership. Irrespective of the program or the approach taken by this administration and this Congress, the fact is we have such befuddled leadership in this country, the rest of the world has got to be looking at us and our markets and wondering what in the world are those fools going to do next, none of which helps in terms of the credit market crisis, none of which helps in terms of interest rates or the strength of the dollar.

And these befuddled fools in this administration and leading this Congress all very well understand that what I'm saying is the abject and absolute truth. So try to do a little thinking, folks, if you will out there on Capitol Hill, Pennsylvania Avenue, wherever you may be tonight. Thank you very much, Kitty, Kitty Pilgrim.

Time now for some of your thoughts; Louis in Colorado said "Lou, just when I thought the Democrats would slide into the presidency, they go and do the one thing that will beat them, ignore the illegal immigration problem."

Well there is more than one thing, but they're certainly pursuing those as well.

Barbara in Pennsylvania, "Well Lou, I finally did it. After many years of blind obedience to the Republican Party, I have joined the growing ranks of proud Independents."

And we thank you and congratulate you.

Dean in California, "Lou, I read that Clinton and Obama have been taking potshots at you and Republicans are mad at you, too. That means you're doing something right." You know, I happen to think you're absolutely correct in that assessment. But we'll see how many more people we can upset with our campaign for annoying the orthodoxies and the elite establishment in this country.

Mary in Maryland said, "Voters should learn as much as they can about the candidate of their choice. Basing our votes on likability got us that likable guy George Bush. Buyer beware." Sound counsel.

We'll have more of your thoughts 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," Corporate America, The Democratic Party, the Republican Party, well they just don't want you to read it. God love them, defy them.

Senator McCain among republican candidates campaigning in Warren, Michigan over the weekend. At a town hall meeting, the following exchange took place.

UNIDENTIFIED MALE: How about Lou Dobbs as your vice president?

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: A little straight talk, I don't think so. Could I say -- could I remind you that the vice president only has two duties -- one in the case of a tie vote in the united states senate, the vice president casts the tie-breaking vote. The other is to inspire daily as to the health of the president.

DOBBS: Well, I thank Senator McCain for his consideration although it was very quick consideration.

Coming up next, the state of California's finances are a complete mess. Governor Schwarzenegger is struggling. We'll have a special report for you on a state in real trouble.

The issue of race threatening to divide the Democratic Party is the battle between Senators Clinton and Obama intensifies. Four of my favorite social and political commentators join me next.

And our public school system has let down an entire generation of Americans and we've let that generation of Americans down as well.

Stay with us. All of that and more straight ahead.

(COMMERCIAL BREAK)

DOBBS: We look now to the state of California and a financial crisis of staggering proportions. The grave situation in California is reminiscent, I'm sure for Governor Schwarzenegger, of previous years. He came to office promising to lead the golden state back from the brink of insolvency and bankruptcy. Now the state of California faces a deficit of more than $14 billion. And that's only one estimate. Other estimates range higher. The governor recommending a 10% cut in all state programs and to children, schools, the elderly and prisons, meaning early release for tens of thousands of inmates in California's prisons. And today, state lawmakers began to parse Schwarzenegger's proposed solution to California's crisis to no good effect. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: California Governor Arnold Schwarzenegger is proposing his latest proposed solution.

GOVERNOR ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We're spending $400 million to $600 million a month more than we're taking in and we can do nothing to stop it.

WIAN: Accept to adopt in the words of one lawmaker, the Sweeney Todd budget, a protracted blood bath, everyone getting their throat cut and dumped in the basement. The plan to carnage includes slashing spending on public education, nearly 10% in a state that already ranked 47th nationally in educational quality and 49th in the number of teachers per student. One teachers' union estimates that cuts would mean spending 700 to $1,000 less per student and cripple programs like school counselors.

JOSH PECHTALT, CALIFORNIA FEDERATION OF TEACHERS: Any of the programs that really mean something to children, those are going to be the first ones to be eliminating. I think this is going to be devastating.

WIAN: Other proposed cuts include prison funding. It would mean the early release of 22,000 convicts with less than 22 months on their sentences, convicts the state calls low-risk and less supervision for nearly 19,000 parolees. The budget would also reduce inspections of child care centers, elderly residential facilities, even livestock. Virtually every state department would be affected.

California's projected budget deficit is more than those faced by New York, New Jersey, Florida, Arizona, Virginia and Massachusetts combined. Schwarzenegger blames the fiscal crisis on the mortgage industry meltdown, the housing slump and the failure of state lawmakers to establish a reserve fund that would save money from high revenue years for lean economic times. He's now proposing a constitutional amendment that would replace the state's automatic spending increases with automatic cuts when revenues fall.

(END VIDEOTAPE)

WIAN: He's also refusing to consider a tax increase. Schwarzenegger points out the healthiest 10% of Californians pay 80% of the state's tax revenues. Lou?

DOBBS: A fine mess in Sacramento. And why California, one of the richest states in this nation, continues to have such failures of leadership. What is going on in that state?

WIAN: It seems like the state legislature just won't learn its lessons. This is the same thing we went through with Gray Davis a few years ago, the same thing that got Gray Davis kicked out of office, the inability to stop these automatic increases in spending when California's economy is doing well. As Governor Schwarzenegger says, the state's basically relying on how well rich people do in the state. When they don't do well, the state really suffers, Lou.

DOBBS: Unfortunately that happens to be apparently a favored paradigm in the nation right now in many quarters, putting a marketing prosperity for everyone on how well the wealthy do. It will be fascinating to watch and let's hope positive results ensue. Thank you very much, Casey Wian, from Los Angeles.

Public education, once the great equalizer in this country, is failing our nation's young people. A new report from Education Week rating the performance of the nation's school systems. Christopher Swanson is the director of editorial projects and Education Research Center, the research director for Education Week. Chris, good to have you here.

CHRISTOPHER SWANSON, RESEARCH DIRECTOR, EDUCATION WEEK: Pleasure to be here.

DOBBS: Your reaction to the most comprehensive study conducted of public school systems.

SWANSON: This is our 12th year doing quality counts and unlike in the past where we've mostly focused on policy, we're looking at both achievement, performance in the public schools and in the states as a whole as well as policy..

DOBBS: You gave everyone a grade in doing so, which is sort of ironic, I suppose in education. But the best overall scores, New York, Massachusetts, Maryland, New Jersey, Virginia. I have to tell you, I think people living in those states are going to be shocked to find their schools rate that high.

SWANSON: I think some of them will, some of them won't. I think what those states at the top of the list have in common is strong performance of the public schools but very active policy. States like New York, the first thing people think is New York City. New York City may be a fairly low-performing city but the state as a whole does very well and is very active in policies.

DOBBS: And I think we have, in my judgment, we have to give Mayor Bloomberg, Joel Kline, the head of the education system in this city, a lot of credit for trying to turn this thing and in many cases, doing so successfully. It is a huge problem.

The nation as a whole is a C. That isn't exactly something Americans should be proud of. What's going on?

SWANSON: It's a combination of factors. And the C is not the most shocking finding we had. If you look at the performance of the public schools specifically, the nation gets a D plus. Underneath that D plus is the real story, what you find when you look at a combination of current levels of performance, improvements over time and poverty gabs or equity, you find very uneven performance. No state is at the top of the nation in all three areas.

DOBBS: So how is it that as we listen to, in my opinion, this rather mediocre slate of candidates running for their party's nomination, republican and democrat, that not a single one of them is pointing to public education as a crisis in this country and talking about what he or she will do about it?

SWANSON: As somebody who works in education, that's very frustrating. Just in the past week or so, the economy seems to be emerging as the top issue. But what we all know I think and when we think about it for at least two seconds, the thing that drives the economy, that keeps America in the strong place around the world is a strong education system. If you don't have well-educated workers who can adapt to the 21st century ...

DOBBS: You've got a bunch of idiots in this country, Chris, if I may say, who think that this political system, this great free enterprise democracy of ours, this representative republic, was created because of some sort of economic model rather than the inverse. That's the kind of idiocy we're dealing with in both political parties and we're watching an entire generation of Americans literally being abandoned by my generation and every succeeding generation. How long can we tolerate inaction and expect the American dream to survive?

SWANSON: I think the stakes are higher than they've ever been. A generation ago when we thought about education, first and foremost in our mind was not achievement of the public schools and the way we think about test scores and other outcomes and we weren't thinking quite as much about the high stakes of international competition. We can't wait much longer.

DOBBS: I'm not one of those who, Chris I think you know, who thinks we can blame our failings in public education on international competition. I think that's a bunch of dribble peddled by a bunch of corporate elites who know better and should have our figurative heels on their necks for doing so. We'll try to keep them, those heels, well placed. Thank you for bringing light to this serious, serious crisis facing this nation. The news isn't good, but thank god we've got you looking at it. Chris Swanson, thank you very much, Education Week, the study. If people want to go in detail, where do they go?

SWANSON: They can go to our website, www.edweek.org.

DOBBS: Edweek.org. All right. Thank you very much.

Coming up next here, the Clinton and Obama campaigns raising the divisive issue of race in this presidential campaign. Four of my favorite political and social commentators, they just happen to be among the country's best, join me here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me now, as we discuss this presidential campaign, a distinguished panel. In Washington, D.C., Joe Madison WOL Radio, XM Radio as well. Joe, good to have you with us. And as frequently as we can have him, LOU DOBBS TONIGHT as well.

JOE MADISON, WOL RADIO: Anytime.

DOBBS: And in Nashville, Professor Carol Swain, Vanderbilt University Law School. Professor Swain, also one of our contributors here. And it is great to see you.

PROF. CAROL SWAIN, VANDERBILT UNIVERSITY LAW SCHOOL: It's great to be here.

DOBBS: Roland Martin WVON Radio in Chicago joining us from CNN headquarters in Atlanta. Roland is a CNN contributor. And despite that, we welcome him in anyway.

And here in New York, Errol Louis, member of the editorial board, "New York Daily News." Thanks for all of you being here.

Let me turn first to you, Errol, you wrote in your column today on Senator Obama. Getting the full Clinton treatment, as you put it. This is what a part of what Errol wrote. "It's a hell of a call to make the political equivalent of asking whether a back-alley baseball bat ambush is a hate crime or 'merely' a mugging." Now if I may say, that's also a hell of a piece of writing.

ERROL LOUIS, NEW YORK DAILY NEWS: Well, thank you. I think it's true. I've been watching political campaigns at every level, starting from when I was covering these little back-alley fights in Brooklyn 20 years ago. And this is the kind of thing that you see in New York politics. You see what the Clintons are doing here, which is attack after attack after attack by surrogates, by the candidate herself, by the candidate's husband.

DOBBS: Appropriately?

LOUIS: I think unfortunately. I think the question about whether or not they've crossed some line about racial sensitivity is less important than the fact that there's going to be an attack today, tomorrow and the next day. And the point of these things is to try and make people so disgusted that they don't participate. And we know that apathy will hurt the Obama campaign worse than the Clintons.

DOBBS: Roland Martin talked with the former president earlier today regarding one of Bill Clinton's earlier reports. Let's listen to that.

(BEGIN AUDIO CLIP)

BILL CLINTON, FORMER U.S. PRESIDENT: When I said what I did, the Obama campaign went right out and told everybody I had attacked his campaign or him as being a fairy tale, which is not true. I've always complimented Senator Obama in hundreds of appearances on Hillary's behalf.

(END AUDIO CLIP)

DOBBS: Roland, your reaction to what the former president said?

MARTIN: Again, your graphic I think was right when you talk about this whole issue of damage control because really when Congressman Clyburn came out in the "The New York Times" on Friday and said he might endorse someone in the campaign because of the Clintons' remark, that caused a shudder in both campaigns. I thought this thing was going to end. Bob Johnson makes his comment yesterday -- he is trying to, in some way, salvage his legacy. But also do all he can to usher his wife into the white house. There's no doubt about it.

DOBBS: Inappropriately or appropriately, because I have to say, most folks, I think fair observers would have to say, if Bill Clinton has about as good a track record as one could imagine on civil rights, does he not?

MARTIN: Right, he has a track record on civil rights, no doubt. Obama has one as well. Senator Clinton turns --

DOBBS: Let's be really honest. Senator Obama, now I'm going to get into this, Senator Obama's track record is a very short one. Senator Clinton's is a very substantial one.

MARTIN: Yeah, but you are a state senator and you sponsor the bill to track racial profiling -- but you can only speak to what you've actually done. So remember also, Obama is 46. Bill Clinton is ten plus years older than him. I would expect he's done more. Again, it's a matter of what have you accomplished in the time that you had.

DOBBS: Professor Swain, your thoughts?

SWAIN: I disagree. And I did not feel that the comments made by Hillary Clinton about Lyndon Johnson being needed to realize Martin Luther King's dream, I did not view those as racist. And I think it's quite appropriate for the Clintons to compete for the black vote.

As an African-American, I find that there's all sorts of pressure on people to switch their allegiances and to vote on the basis of race. I believe that voting on the basis of race sets the nation back and we should be striving for the kind of society in which black voters will not blindly vote for democratic candidates, that they will look at both political parties, look at all the candidates and vote for the best-qualified person. That's what we should be striving for.

DOBBS: I would have to certainly agree with that. Joe Madison, your thoughts?

MADISON: I'm sick of all of them. No, I'm very serious about it. Bob Johnson has some nerve with the smut that was peddled on B.E.T. all these years. You're looking at something who's not a thermometer. I don't just take the temperature, I try to set the temperature. I got arrested a few times protesting against some of the smut B.E.T. put out and then to backpedal and say, I didn't mean his drug use and yet I'm wondering if there's a double standard. If I were the Clinton administration, I would distance myself right now from Bob Johnson.

Look, Lou and everyone else that's listening, this is an insult to all of us. 56.5% of full-time black workers in the United States of America make less than $13 an hour, less than $13 an hour. We're watching jobs being all short. We're watching Mexican presidents insulting black workers, white workers. I don't give a tinker's you- know-what about what Bill Clinton's done in the past or what Obama's done in the past. I want to hear a legitimate debate about what you're going to do about education, employment, foreclosures and all these issues that impact black America and urban America and how you put people to work. That's what I want to hear and I want to hear the media address these issues and not this crap about who's calling who what names when we know thousands of people helped to bring the civil rights movement about.

DOBBS: Quite a few folks for quite a few years.

We're going to come back to this very issue in just one moment. But first, what's coming up at the top of the hour. CNN tonight kicking off a new nightly special report on the presidential campaign; it's called "CNN ELECTION CENTER," hosted by John Roberts. John joining us tonight from Warren, Michigan with a preview; John?

JOHN ROBERTS, CNN CORRESPONDENT: Good evening, Lou. Joining us tonight from Warren, Michigan where auto workers are feeling like an endangered species these days. We're going to hear from them as we set the scene for tomorrow's big Michigan primary. And first-time voters, the growing cloud of Arab American voters and I'll ask republican Mitt Romney what he will do for the state where he was born and for millions of other Americans worried about losing their jobs. It's the "CNN ELECTION CENTER." Join Anderson Cooper and me coming up at the top of the hour. See you in a few minutes. Lou?

DOBBS: How many home states does Mitt Romney have? We've got Michigan, Massachusetts -- where are we going here? I like his campaign approach.

ROBERTS: This is the place he was born, so I think that would count as the home state, Lou.

DOBBS: Absolutely. John, we look forward to it.

Still ahead, more with our distinguished panel. Race, politics, economics, issues? We'll be right back.

(COMMERCIAL BREAK)

DOBBS: We're back with our panel. Joe Madison, Professor Carol Swain, Roland Martin, Errol Louis, let me ask you, much has been made of Bob Johnson, former head of B.E.T., supporting Hillary Clinton. Roland, you talked with him, you debated him. The reality is the man has the right to support a candidate. What's wrong with that? MARTIN: Right. I don't think was criticizing him for that. It was the fact that when you listen to the comment. It was the voice, the inflection, how he sort of --

DOBBS: Wait a minute, Roland. We're getting too precious here. Why shouldn't the man be able to shovel just as hard and fast as everybody else?

MARTIN: Here's the difference. When you sit here and make a comment and then release a statement saying, that's not what I meant, I meant the community organizing, not the drugs. Come on. Be honest about what you were talking about.

MADISON: It was a bunch of bull. The reality is you can support whoever you want to. Magic Johnson supported Hillary Clinton. Look, I don't care. I honestly don't care. Guys, please, with this debate coming up on CNN with the Congressional Black Caucus, listen to the people who call our shows and talk about public policy issues to turn us around.

DOBBS: I'm listening to them, Joe, just like you are.

LOUIS: For a guy who comes out of media who allegedly has his finger on the pulse of black America, to stand up there and use that moment he had to dredge up something from 12 years ago.

SWAIN: I think it's very relevant ...

DOBBS: When a 34-year-old man is writing memoirs, that when I want to know what's that about? Carol? Professor Swain?

LOUIS: He's got on agent.

SWAIN: Given the problem that drug abuse continues to be in the black community I think is quite valid for some people to bring that up and see it as a concern. And Bob Johnson should have stood by his implied comments. I think it was about drug use and instead of denying it, he should have defended it.

MADISON: But the key is --

DOBBS: It is about saying what you mean and meaning what you say and if we can get these candidates to do that.

I just want to share some numbers with the audience that maybe you're not aware of. In 2007, black adult unemployment in this country was 8.3%. 4.1% for whites. It's kind of interesting to go back to the early days in the war on poverty. The ratio is just about the same. It's been improving, a significant improvement, but the ratio is about the same. Annual unemployment rate for teenagers, think about the last time you heard a presidential candidate in either party talking about these numbers -- annual unemployment rate for teenagers, 16 to 19 years of age, 29.4% for blacks, 13.9 for whites. Annual unemployment rate for males 20 years of age and over, 2007, 7.9% for black males, white males, you see the ratio, you see part of the problem and it's a problem we have to fix and we've got to all start asking ourselves, why in the world aren't we hearing these presidential candidates talk about these numbers?

MARTIN: And also why aren't we asking the questions? You have to have people sitting at the tables who are going to ask the questions versus having debates about illegal immigration.

DOBBS: Wait a minute, wait a minute, wait a minute, Roland.

MARTIN: Gotcha! I gotcha.

DOBBS: Roland, thank you very much. Thank you all. We'll have more of your thoughts and the results of our poll next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight: 96 percent of you say the presidential campaigns' emphasis on race and gender is crowding out discussion of critical issues, and maybe this day will be the end of that nonsense.

Let's take a look at some of your thoughts. Steve in Texas: "Lou, as I was waiting to press one for English on the phone the other night, I wondered how long it would be before English would be further down the list."

Janet in California: "I really don't see why people have a problem showing identification for voting. Every day when we shop for groceries, buy a car, buy a house, we're required to show our ID. What's the big deal about showing our ID when we vote? Oh, I get it. It's only a problem when you're not an American citizen and have no ID."

And Margaret in Missouri: "Why isn't the American Civil Liberties Union screaming that if illegals are given amnesty of any kind, then American citizens should also be given amnesty when they break the law?"

And George in New Jersey: "Lou, what message is being sent when members of the do-nothing Congress are winning primaries - Clinton, McCain and Obama? If they did not do anything then, they are not doing anything now. Then what makes people think they will do anything if they become president?"

And L. Burt in Colorado said: "Lou, being endorsed by Gary Hart and John Kerry is like being given two free tickets on the Titanic."

We love hearing from you. Send us your thoughts at loudobbs.com. Each of you whose email is read here receives a copy of my new book, "Independents Day: Awakening the American Spirit." The book that corporate America, the Democratic and Republican Parties don't want you to read. Too much stuff in there to make them uncomfortable.

We thank you for being with us tonight. Good night from New York. CNN Elections Center begins right now with John Roberts from Warren, Michigan - John.

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