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LOU DOBBS TONIGHT

Presidential Races Wide Open

Aired January 16, 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 Republican presidential race is wide open. Republican voters deeply divided, Republican voters scrambling for advantage in South Carolina, the next Republican battleground in these primaries. We'll have all of that, the latest on the Democratic contest, all of today's news, much more, straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Wednesday, January 16. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. Republican presidential candidates tonight are making an all out effort to win Saturday's Republican primary in South Carolina, Mike Huckabee, Mitt Romney, John McCain, each winning a major primary, Rudy Giuliani and Fred Thompson struggling to win a first.

Senator Barack Obama and Senator Hillary Clinton still appear to be the front-runners in the Democratic race, the former senator, John Edwards, refusing to concede before Saturday's Democratic caucuses in Nevada, if at all. Tonight, we have extensive coverage beginning with Dana Bash in Tigerville, South Carolina -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Lou, three big winners in the Republican race means no front-runner. And the fact that it's coming here to South Carolina also means it is turning more conservative and as volatile as ever.

(BEGIN VIDEOTAPE)

(CHEERING)

BASH (voice-over): Mitt Romney finally found a message that produced victory in Michigan so he's sticking with it down south.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I'm not willing to declare defeat in any industry where we can be competitive. I'm going to fight for every job.

BASH: But Romney admits he's not likely to win South Carolina's primary. He's looking to campaign elsewhere.

ROMNEY: I'm not looking for gold stars on my forehead like I was in first grade. I want delegates.

UNIDENTIFIED MALE: Nobody who has ever won the Michigan primary has got elected president we do that here.

BASH: After his stinging loss in Michigan, South Carolina means everything to John McCain. So the candidate who usually appeals to veterans and fiscal conservatives here added a new stump line, outreach to powerful social conservatives, long skeptical of McCain's commitment to their issues.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I'm proud of my pro-life record, 24 years I've never changed. I've defended the rights of the unborn.

BASH: He's got stiff competition from former preacher Mike Huckabee who appealed to deeply religious Baptist University students telling them the story of when he found Christ at age 10.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: And I remember praying that prayer that day and feeling overwhelmed with the presence and sense that God really did love me.

BASH: And hitting another crucial note, signing a no amnesty pledge.

HUCKABEE: I will fully implement enforcement measures that overtime that will lead to the attrition of our illegal immigrant population.

BASH: The former Arkansas governor is hoping to win with an (INAUDIBLE) pitch, but another son of the south is trying to do the same.

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: Just to cut through the baloney, it was me, not him who received the national right to life endorsement.

(END VIDEOTAPE)

BASH: Because the Republican race is so scrambled no Republican candidate is saying, if I don't win in South Carolina I'm gone. But the reality is that even if South Carolina doesn't play its traditional role this Saturday and that is actually picking the Republican nominee, it's likely to put one or two of the candidates on the fringe, especially heading into the next contest dates. That of course is Florida and super duper Tuesday on February 5th -- Lou.

DOBBS: At this point, the front-runner appears to be, assuming the polls are close to right.

BASH: You know what, there's no answer to that question. There really isn't a front-runner here. It's neck and neck between John McCain, between Mike Huckabee. Really those are the two people who are probably vying for the top spot here. But it's really unclear how Fred Thompson is going to do. Of course he is also vying for it. Mitt Romney, again he said today, he doesn't think he's going to do well here, but he's also pouring a little bit more money in here. We just don't know. It's what makes our job so much fun, Lou.

DOBBS: I think that we're learning rather quickly. Thank you very much, Dana Bash.

Democratic presidential candidates tonight are stepping up their battle to win the Hispanic vote before Saturday's caucuses in Nevada. The powerful Culinary Workers Union is to play a critical role in that effort. The union is encouraging its members to caucus on behalf of Senator Obama, but in point of fact, as many as half of the union's members are illegal aliens. Candy Crowley reports now from Las Vegas. Candy, just how concerned is the Democratic Party, if at all, about possible irregularities, shall we call them, in those caucuses?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well look let me tell you what they say and this is a couple of officials about why they think is this not a problem, OK. They say first of all, the idea that illegal immigrants who are trying to hide from the law are going to show up, sign an affidavit that they're a U.S. citizen and caucus, seems to in the words of one, to be ridiculous.

They also say that given that they really don't see how a massive outpouring of illegals could change a caucus. They said there just won't be this massive outpouring, so there won't be a way to kind of change whatever the caucus decides. I will tell you that also we spoke to a P.R. guy for a couple of these hotels here who didn't want to be named but who said, look, these are multinational corporations here, these hotels. We don't hire illegals. I know I say that at my own peril, but I'm just telling you what they're saying at this point, Lou.

DOBBS: That is delightful. That's one of the better bald face lies to emanate from any corner of this campaign so far, luckily it doesn't come from one of the candidates. But the very idea, that you know that makes perfect sense what you're -- the Democratic Party folks said, because we know that these illegal aliens, for example, would never deign or dare to march in the streets of the United States, demanding rights of citizenship when they're here illegally.

We know they would never, for example, in any way, violate law with fraudulent documents or identity theft or take jobs with improper documentation. So you're right. The nation's mind should be at ease on the issue of the integrity of these caucuses.

CROWLEY: Well, let me tell you another thing that really is interesting along the campaign trail. Our producer Sasha Johnson (ph) points out at one of these events with Hillary Clinton, somebody shouted out do you have to be a U.S. citizen to caucus? So these campaigns understand that there is in fact a language barrier and some confusion about how these Nevada caucuses actually work, so it's going to be a really interesting Saturday, let's just say that.

DOBBS: It should be an interesting Saturday. We're laughing about it here. But the reality is this is serious business. We're talking about the integrity of our Democratic process. And it's an integrity that is not being preserved through the efforts and the concerns of many state governments or electoral boards across the country.

It's a very difficult issue. So the Democratic Party, with all of the assuaging comments, what that really adds up to is they're taking no additional steps to assure that everyone who caucuses is legal and properly there within the caucus.

CROWLEY: Well, one of the things they say they're going to do here, particularly along the strip where they have these at-large caucuses where the culinary workers and others, by the way will get a chance to go ahead and caucus. They say listen they're going to have to show, first of all, an employee I.D. and they are going to have sign that affidavit that says listen I'm a U.S. citizen. I am eligible to vote.

The Democratic Party says it will then check that against voter registration rolls. And then if there are any discrepancies they will refer it to the state. It's a felony to say that, but you do have to sort of step back and think OK after this is all over and done, what's the incentive to actually take those names and match them up against the registration. So you know they're the ones, you know obviously, enforcing it. So we'll see how it comes out.

DOBBS: Indeed we will. The Culinary Workers Union with just about half of its membership assumed to be illegal aliens there to begin with supporting Senator Obama. That ought to be just -- I don't know why anyone would be concerned at all about this situation. Candy, thank you, as always, for your excellent report. Candy Crowley, we appreciate it.

All presidential candidates are promising to end the culture of corruption in our nation's capital. Tonight, a former congressman and lobbyist has been indicted on charges of money laundering, conspiracy and obstruction of justice. Former Congressman Mark Siljander is accused of being part of a terrorist fund-raising group for radical Islamist terrorists. Kelli Arena has our report from Washington, D.C.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): As corruption cases go, this one is a shocker. A former United States congressman is accused of taking $50,000 in dirty money from a charity group tied to the Taliban and al Qaeda as payment for trying to get that group off of a government list of charities that supports terrorists.

JOHN WOOD, U.S. ATTORNEY: He knew that the money was proceeds of unlawful activity, so that could be either knowing that the money was stolen federal funds or could be simply that he knew it was being used for some purpose other than the purpose for which it was given.

ARENA: According to the indictment, ex-congressman turned lobbyist, Mark Siljander, allegedly took the cash, laundered it, then lied about it to federal prosecutors claiming it was for a book he was writing about how to bring Christians and Muslims together. Nice idea -- but far from the truth, at least as prosecutors see it.

UNIDENTIFIED MALE: Congressman Siljander told federal officials he had not been hired to do any kind of lobbying or advocacy work on behalf of IARA and that the money or checks he received from IARA were for charitable donations.

ARENA: In fact the charity that he's accused of lobbying for, the Islamic American Relief Agency, allegedly sent $130,000 to an Afghan terrorist before it was shut down in 2004. And where did the charity get the money from in the first place?

Some of it, allegedly, came from U.S. taxpayers. The government gave the charity the money for aid projects in Africa, but when those projects fell apart prosecutors say $84,000 of it never came back. What's remarkable here is that Siljander's former colleagues on Capitol Hill describe him as a committed Christian, a man of deep faith.

REP. RAY LAHOOD (R), ILLINOIS: I think people will be shocked to learn of this news. Because I think most people really viewed Mark as a man of God and some who is deeply religious.

(END VIDEOTAPE)

ARENA: For the record, Lou, Siljander's lawyer says that he vehemently denies the allegations and that he will plead not guilty.

DOBBS: As you said at the onset, I mean this is a report that is -- you know there is lobbying and it's proportions in Washington, D.C. are obscene. They are disgusting and we have to roll back the influence of lobbyists. But when we have a report such as yours, I mean this is enough to make you want to throw up. Kelli, thank you very much.

ARENA: You're welcome.

DOBBS: Kelli Arena from Washington, D.C.

Well, in Iraq, our troops are continuing an offensive against al Qaeda terrorists north of Baghdad. Three more of our troops have been killed during the offensive. Twenty-two of our troops have been killed so far this month; 16 of them in northern Iraq; 3,926 of our troops have been killed since this war began; 28,938 of our troops wounded; 12,942 seriously.

Coming up next, our middle class is reeling, our mortgage crisis is escalating, but the White House and Congress are still not taking action to do anything about it to help working men and women in this country and their families. Christine Romans will have our report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a sense of urgency grows on Capitol Hill about the state of the economy and our elected leaders are moving quickly with competing economic stimulus plans. The White House says the president will have its own plan soon. Is it all too late, Lou?

DOBBS: Christine, thanks, we're looking forward to the report.

Also tonight an astonishing fight between two government agencies over your food safety, what in the world is going on? Is this really our government? We'll have a special report and we'll have the very latest on an outrageous miscarriage of justice, two former border patrol agents in prison now for a year for shooting and wounding an illegal alien, Mexican drug smuggler to whom the Justice Department gave immunity to testify against those agents.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Economists told Congress today that a plan is needed and soon to turn our economy around. The stranglehold on this country's middle class is tightening as home foreclosures worsen, prices soar and quality jobs continue to disappear. As Christine Romans now reports there's absolutely no guarantee, of course, that Congress nor the administration will do anything about it.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): On Capitol Hill, a growing sense of urgency about the ailing U.S. economy. Larry Summers, Treasury secretary under Bill Clinton, says there's a risk a recession could be long and severe.

LAWRENCE SUMMERS, FORMER TREASURY SECRETARY: A risk of doing too little, too slowly, with respect to the recession forces that are gathering are far greater than any risk that the political process will do too much too rapidly.

ROMANS: The president just wrapped up a trip to the Middle East, and a spokesman says he will talk to congressional leaders about the economy by phone Thursday. Democratic Senator Chuck Schumer...

SEN CHUCK SCHUMER (D), NEW YORK: If this isn't done in the first quarter, finished, signed, sealed and delivered and already going into effect, it may be too late.

ROMANS: That the situation is worsening, there's little doubt. Wealthy investors and Middle Eastern and Asian governments have bailed out America's top financial institutions. American consumers are spending less. Food and energy costs are rising and more people are out of work.

LAWRENCE MISHEL, ECONOMIC POLICY INSTITUTE: Middle class family who may have an income of about $52,000, that as a result of the higher unemployment, their incomes are going to be $1,400 less this year than what they were in 2007. And there will be a further deterioration in 2009.

ROMANS: Democrats talk about extended unemployment benefits, food stamps and help with home heating oil. Republicans favor tax cuts for business investments and lower corporate income taxes. All the while, there's a feeling Washington is fiddling while Rome burns.

REP. JIM SAXTON (R), NEW JERSEY: There's a real risk that a stimulus package will morph into a special interest Christmas tree, with politicians designing the economic stimulus package a positive impact on the economy is far from guaranteed.

ROMANS: A not so subtle sub plot, the promise of bipartisanship with plenty of barbs.

(END VIDEOTAPE)

ROMANS: Democrats saying the president is late to the problem, Senator Chuck Schumer actually blamed the president for not acting sooner to mitigate the sub prime mortgage crisis. And he said the president has not been engaged in this process. Also today Senator Schumer said the chairman of the Federal Reserve was supportive of economic stimulus, but has not endorsed any specific proposals yet, Lou. We'll hear from Ben Bernanke, the Fed chief tomorrow. We'll see what he has to say about any kind of stimulus or what it should like.

DOBBS: The American people, it seems to me, can be forgiven, for saying out loud, but to have a government that is not responding here is absolutely unacceptable. Whether a Democratic leadership in Congress or this Republican president. The signs are clear. They're unavoidable to all who would observe them. And for no action to take place on the part of this Federal Reserve or this Congress or this president is just, it's unacceptable.

ROMANS: It was last February that (INAUDIBLE) and the housing market was looking like it was starting to come unraveled. Last February, it's been quite a while we've been seeing this evidence start to build, I mean if something happened right now with the economic stimulus plan, would it already be too late?

DOBBS: Yeah. Well and then we have the issue of which policy has led to the situation we're in.

ROMANS: Well...

DOBBS: Christine, thank you very much.

That brings us to our poll question tonight. Do you below any of the presidential candidates -- excuse me -- I apologize -- presidential candidates have what it takes to revive the U.S. economy? I was choking on that question in fear of the answer. Yes or no. Cast your votes at loudobbs.com. We'll have the results here later in the broadcast.

There are conflicting messages tonight from two government agencies charged with protecting us from unsafe food in this country. The Food and Drug Administration announced yesterday that food from cloned animals is safe to eat, but the Department of Agriculture today asked farmers to keep that food off the market. Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Food fight between the Food and Drug Administration and the Department of Agriculture on the same day the FDA OK'd food from many cloned animals. Agriculture Department official Bruce Knight said quote, USDA has encouraged technology providers to maintain their voluntary moratorium on sending milk and meat from animal clones into the food supply during this transition" -- end quote.

The concern: Are American consumers ready to buy foods from cloned animals or their progeny? The FDA did not call for labels identifying which foods these are at the supermarket and those who support the decision explain why.

GREGORY JAFFE, CTR. FOR SCIENCE IN PUBLIC INTEREST: Is there a way to label those and should they be labeled? And would labeling provide really useful information to consumers or would it just be sort of the equivalent of a skull and cross bones and prevent people from -- stop people from buying it?

SCHIAVONE: Days before the U.S. decision, the European food safety authority in a draft resolution reported that foods from cloned animals or their offspring were in all probability safe. But the E.U. has made no final decision to allow sales of these products. And if they were to be sold in Europe, there's an expectation they would be labeled.

JOHN BRUTON, E.U. AMBASSADOR TO THE U.S.: We believe that the consumer is entitled to this information. And we believe it is not a matter for some elite group to decide that they can make the decision for the consumers. And there must be information for the consumers on any issue even with the slightest (INAUDIBLE) are safety consideration attached to it.

(END VIDEOTAPE)

SCHIAVONE: Lou, the cost of cloning just one animal and the tens of thousands of dollars currently makes it unlikely that clones themselves will enter the food chain. But there's general agreement that it's just a matter of time before products from the offspring of those clones winds up in the supermarkets with consumers incapable of telling where their food came from -- Lou.

DOBBS: Incredible and the fact that no one in Congress and forget about this administration is insisting that there be truth in labeling whether it comes to the issue of origin or whether it comes to cloned food, I mean, how is this going to resolve itself in all likelihood?

SCHIAVONE: Well, people say that -- there are some cattlemen who say that there are products of cloned animals already in the food chain. Now the government says that's not the case but there's no way of telling for sure. But what's interesting, Lou, is in the European Union, they're going to poll the population in all of their 27-member states and ask those people what they think about cloned meats.

DOBBS: Isn't it remarkable that the European Union is functioning more -- as more of a democracy than the United States of America? It is truly incredible.

SCHIAVONE: It's really -- it really resonates the difference between the two approaches really resonates. And they are going to label, if they decide to go ahead with it, which the United States says right now, nobody has to label.

DOBBS: Absolutely. All right, Louise, thank you very much. We appreciate it. Good report, Louise Schiavone from Washington.

Up next here democracy at risk, only two weeks into the primary season and already we've got a recount. We'll have a special report tonight on questions about the integrity of voting machines in the next major primary.

And one-year later border patrol agents Ramos and Compean remain in prison. We'll have the latest on one of the worst miscarriages of justice in our country's history.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: A year ago tomorrow, former border patrol agents Ignacio Ramos and Jose Compean reported to federal prison. They began serving their sentences of more than a decade for shooting and wounding an illegal alien drug smuggler. That drug smuggler given immunity by the U.S. attorney in exchange for his testimony against the two agents. We've reported extensively here on a miscarriage of justice it's all that unparalleled in this country's history. And we will continue to do so as we follow the story of these two men serving harsh prison sentences for simply doing their jobs. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Already a year has passed since Ignacio Ramos and Jose Compean began paying for something that happened more than two years ago. While on patrol near the Mexican border, they shot and wounded a man who turned out to be a drug smuggler. While the Bush administration protected the victim, admitted drug smuggler Osvaldo Aldrete Davila with immunity, they treated the agents as violent criminals, belatedly adding a weapons charge carrying a 10-year mandatory minimum sentence. They also prevented the jury from hearing about Davila's drug smuggling history. They were convicted on charges that included assault with a dangerous weapon and tampering with an official proceeding, but it's the victim's drug smuggling history that is now a key issue in their appeal.

DAVID BOTSFORD, ATTORNEY FOR IGNACIO RAMOS: I would rank the limitation of the cross examination of Davila and the inability to get before the jury the true facts and circumstances surrounding Davila as perhaps one of the strongest reversible errors I've ever seen in 30 years of practicing law.

WIAN: Two of three appellate judges now considering the Ramos and Compean case criticized prosecutors for an overzealous prosecution. Attorneys for the agents are seeking either an acquittal or a new trial. Congressional efforts to free the agents have all stalled.

REP. DANA ROHRABACHER (R), CALIFORNIA: We've done all we can. The president of the United States was the one person who could have done something to bring justice to this horrible case. He chose not to do so, and in doing so, he exposed an arrogance and coolness of his personality that won't soon be forgotten.

WIAN: Davila who allegedly continued to smuggle drugs across the border while under a federal immunity was arrested in November and charged with smuggling drugs in the United States.

(END VIDEOTAPE)

WIAN: As for the agents, family members say they received hundreds of cards and letters in prison during the holidays from supporters. Their best hope now remains with the Fifth Circuit Court of Appeals in New Orleans, which is expected to reach a decision within 45 days -- Lou.

DOBBS: And to just further emphasize, the fact is Davila was charged with making those drug runs leading up to the trial, before he actually testified against these agents.

WIAN: Absolutely, government prosecutors knew full well that he was engaged in drug smuggling, continuing to engage in drug smuggling while this trial was going on, also, he was doing it likely with the aid of a border crossing card given to him by federal prosecutors so he could testify against the agents -- absolutely outrageous, Lou.

DOBBS: And in your reporting and reporting of our colleagues here, showing those -- that card and the opportunity given by the U.S. attorney. This represents, as I've said time and time again, one of the worst miscarriages of justice, but it was carried against men sworn to enforce our laws and to secure our borders makes it even more reprehensible to me, the fact that this court system has not yet acted.

This appellate court has an opportunity to right things and we certainly must hope so. But the fact that this president, his Justice Department carried out this prosecution and this president hasn't got the capacity of character, the generosity of at least the spirit to care about what has happened to these men under his administration, to me, compounds his crime against justice and the American way. It is truly disgusting.

WIAN: And baffling, Lou.

DOBBS: Well, we'll get this all unwound and hopefully as we proceed, we're going to find out about the motivation of those who carried out this prosecution and insisted upon it. Casey, thank you very much, Casey Wian.

Let's take a look now at some of your thoughts. Mike in Florida wrote in about the campaign events held in Spanish in Nevada. "Lou, just how much pandering are we supposed to put up with? I thought this was America where we conduct our business in English. Did Nevada all of a sudden secede to Mexico?"

Gerald, in Texas, "Lou, almost all of those morons in congress have been on the federal payroll most of their lives. Why in the heck haven't they noticed that something is wrong in the United States? If they have ideas how to fix it now, what have they been doing all of those years?"

Excellent questions and observations, in my opinion. We'll have more of your thoughts later in the broadcast. Each of you whose e- mail is read here, receives a new copy of my book "Independence Day, Awakening the American Spirit," the book that Corporate America, the Democratic Party, the Republican Party, and all of the establishment elites just don't want to you read, they don't want to you think about reading it. They don't want you to think.

Coming up next, republican and democratic candidates learn tough lessons from the Michigan primary. We'll have that report for you.

Also tonight, troubling new questions about the integrity of our voting system, new doubts about those e-voting machines just before the all-important South Carolina primary.

And corporate elites trying to stop the state of Arizona from tackling illegal immigration. I'll be talking to advocates from both sides of this increasingly bitter issue and fight next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Mitt Romney tonight is savoring his victory in the Michigan primary, as he pushes towards South Carolina to extend his streak, trying to appeal to a broad range of republican voters, a strategy that worked well for him for the first time in Michigan. Bill Schneider has our report.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN CORRESPONDENT: South Carolina is a crucial test for both parties. That's where candidates have to face the base, each party's most loyal supporters. For republicans, that means conservative and evangelical voters. For democrats, that means African-Americans.

Last week, John McCain and Hillary Clinton came roaring out of New Hampshire with new momentum. This week, voters in Michigan sent them a message, watch your base. McCain explains his defeat in Michigan and a favorite son vote for Mitt Romney.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Michigan voters were good to the native son and I understand that and support their decision.

SCHNEIDER: But McCain's problems run deeper. In Michigan, conservatives preferred Mitt Romney over McCain by a wide margin.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I take my inspiration from Ronald Reagan and George Herbert Walker Bush, who took their inspiration from the American people.

SCHNEIDER: Romney even edged out Mike Huckabee among evangelical voters.

The South Carolina vote on Saturday will tell us whether the republican base is ready to embrace Romney or Huckabee or Fred Thompson or maybe McCain. Or will they remain divided?

With no democratic campaign in Michigan, Hillary Clinton easily won. But Michigan had a message for her, too. Watch the base.

Two-thirds of African-American voters in Michigan voted for an uncommitted slate. One reason, John Conyers, Michigan's high respected African-American congressman endorsed Barack Obama and made a radio ad urging Obama supporters to vote uncommitted. Asked how they would have voted if Obama's name had been on the ballot, African- American voters said they preferred Obama over Clinton by better than three to one.

(END VIDEOTAPE)

SCHNEIDER: Now, Michigan didn't have a democratic campaign so it really wasn't a fair test. The first reliable test of African- American sentiment comes in South Carolina on January 26th.

DOBBS: Well, the reality is, even organizationally, "The New York Times" and "Washington Post" played the democratic side of that primary very low down, as if to cooperate with the Democratic Party. But the reality is, quite a few votes were cast.

SCHNEIDER: Yes.

DOBBS: And Senator Clinton won it.

SCHNEIDER: Yes, she did.

DOBBS: She had the only one smart enough to get her name on there.

SCHNEIDER: Yes she did.

DOBBS: I don't understand why there's not a campaign slowing there been for Senator Clinton, I'm the only one smart enough to get my name on this.

SCHNEIDER: She didn't get any delegates.

DOBBS: She didn't get any delegates, but has a win, right?

SCHNEIDER: She does have a win.

DOBBS: As always, Bill Schneider, we appreciate your analysis. We thank you, Bill Schneider.

Well, new questions tonight about the electronic voting machines that will be used in the upcoming South Carolina primary. Those voting machines do not have a paper trail, and as Kitty Pilgrim now reports, that could leave this election vulnerable to fraud and a possibility of recounting. Stay with us. (BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT: Election activists warn the 11,400 ES&S voting machines used in the Michigan primaries could malfunction. And without a paper trail, will not be able to be accurately recounted. This as New Hampshire begins recounting its results today. New Hampshire's recount made possible by their paper trail.

South Carolina's state attorney general defends its paperless system saying in the event of a botched election, "Our grand jury would investigate and we would prosecute any election fraud that goes on." But fraud isn't the only concern.

HOLLY JACOBSON, VOTERACTION.ORG: It's not just that these systems can be tampered with, but also that the systems have been seemingly designed poorly, and they fail on Election Day. Fraud or intent for fraud aside, these systems just don't seem to work well. And that, we know.

PILGRIM: In Sarasota County, Florida, in 2006, the congressional race tallied an alarmingly high number of missing votes, 18,000. In 2007, security concerns led Ohio to decommission a similar model to those that will be used in South Carolina. ES&S say Ohio's assessment is inaccurate. "We disagree with some of the report's technical findings. Other issues raised in the report ignore the fact that accurate elections require a combination of security features built into voting elections, along with the efforts of election administrators."

The South Carolina League of Women's Voters released a report this week, "This system has not been designed with security as a basic requirement and it should not be used for voting in South Carolina."

(END VIDEOTAPE)

PILGRIM: Congressman Rush Holt will provide a boil for funding to put paper trails in for this year's presidential elections. This is a problem that many states seem to have left for the last minute, Lou.

DOBBS: Yeah, a lot of states, despite a lot of reporting, it's unbelievable and it doesn't make a lick of sense. Thank you very much, Kitty Pilgrim.

Coming up here next, the presidential candidates take their battle for votes to South Carolina and Nevada. We'll take a look at the impact of those states. I'll be talking with our distinguished panel of political analysts.

And one state's efforts to crack down on illegal immigration being challenged by big business, small business and business, I'll be talking with the author of the law and one of the plaintiffs trying to block it. He has something to do witness chamber of commerce, I believe.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: President Bush has just arrived back in the United States, the president arriving at Andrews Air Force Base. We're going to go to those pictures. The president has just pulled up off the runway there, arriving. And he's at the Andrews Air Force Base now in Maryland. And what you're seeing there through all of that darkness, is Air Force One. Take my word for it, please. And during his visit to the Middle East, the president, of course, trying to encourage Israelis and Palestinians for the peace deal. The president will end that peace deal by the end of this year, not unlike his predecessor, President Clinton, who tried to do the same thing in his final year in office. President Bush also warning Arab leaders about the rising danger from Iran. Again, the president has just returned home after visiting the Middle East, an eight-day trip.

Well, Arizona's new employer sanctioning law challenged in federal court today; a coalition of businesses and special interest groups arguing that that law is unconstitutional. Joining me now, Russell Pearce, Appropriations Chairman of the Arizona State House who authored the new law. Good to have you with us.

RUSSELL PEARCE (R), ARIZONA STATE HOUSE: Always good to be here.

DOBBS: And Glenn Hamer, president and CEO of the Arizona Chamber of the Commerce Industry, the Chamber one of the 12 plaintiffs challenging this law. Good to have you with us, sir. Thank you very much for being here.

GLENN HAMER, ARIZONA CHAMBER OF COMMERCE & INDUSTRY: Thank you, sir.

DOBBS: The idea that this law was challenged leading into its implementation before it took effect. What is, in your opinion, Mr. Hamer, the reason it should be overturned?

HAMER: Well, first of all, I want to say that the Arizona chamber strongly supports punishing businesses who knowingly break the law and as you know, federal law does have punishment, including jail time, if there's a pattern in practice. We simply feel that this law goes too far and will harm law-abiding, legitimate businesses.

DOBBS: You're laughing, Russell Pearce, why is that?

PEARCE: Well you know, first of all, even Judge Wright said, you have a high burden to bear here. This is constitutional. Not only that, it has three areas, if you will, of safe haven for them in the bill. First of all, if they use the I-9 process, you get an affirmative defense. We have a good-faith clause in the bill that says if you do it honestly and don't cheat, you know we give you a good-faith clause to assume you're doing the right job. Then if you use the e-verify system, which is designed to help them follow the law, the only reason to not use it is they don't want to know who they're hiring and we give you a rebuttal presumption of innocence if you use that. It's absolutely outrageous. Then on top of those three safe haven areas, the government has to prove you knowingly hired. You can't get in trouble from mistake. You can't get in trouble for an accident. You have to do it by purpose. They don't want to follow the law.

DOBBS: Mr. Hamer, the chamber of commerce, my gosh, you want to follow law, don't you?

HAMER: Absolutely, and in fact, we're signed up for e-verify and we are doing everything we possibly can to educate people about the law. In fact, we're holding a seminar tomorrow on enforcement with the Maricopa County Attorney General.

DOBBS: May I ask, Mr. Hamer, don't you think you should be educating your members?

HAMER: Absolutely. That's exactly what doing. We're holding a seminar with Andy Thomas.

DOBBS: Can I help you with that? It's illegal to hire an illegal alien. How complicated is it?

HAMER: That's not complicated. The problem is, the way the law's drafted, it allows for anonymous complaint. That's not right. With all due respect, in terms of the protections afforded, well that would be a lot different if that ended an investigation. If a small business is complying with the i-9 form in good faith, that should end it. I mean if you're putting a prosecution through, that isn't itself can be the death penalty which is one reason I'm sure that the NFIB is supporting this legal action.

DOBBS: I'm sorry, who is?

HAMER: The National Federation of Independent Businesses.

DOBBS: They have a death penalty. I'm sorry, you lost me there, Mr. Hamer.

PEARCE: Me too.

HAMER: No, Mr. Dobbs I said that you have -- one of the reasons why you have small business organizations opposed to this law is the concern that the way the law is drafted, sure, it is true when Mr. Pearce is saying in terms of having defenses. But wouldn't it make sense to end the investigation, if you could determine if a business has in good-faith complied with the i-9 process.

PEARCE: Can I respond to that?

DOBBS: Real quickly, if you will.

PEARCE: Because, first of all, they were using the e-verify system and were cheating, teaching people how to cheat the system so good-faith is a proper defense. Arizona will no longer be a safe haven for illegal employers or illegal aliens. Enough is enough. The economic harm, the lives that are lost, the damage that is lost, the destruction and the rule of law, we recognize damage to America for what's going on. They ought to get behind this, it's called fair and legal employment act because it's fair and legal.

DOBBS: We're going to have to jump. I apologize.

PEARCE: You bet you.

DOBBS: Mr. Hamer, I'll give you the last word. You have to appreciate how it looks to the entire country, for the chamber of commerce to be trying to stop a law from being implemented, enforced that goes directly to the issue of illegal immigration and illegal employment of illegal aliens in this country. You fought this law all along. I mean, you do have to appreciate how that looks.

HAMER: Well, we feel we're playing Russian roulette with the state's economy, and we need to make some justifications so that law- abiding citizen, being protected.

PEARCE: They are.

DOBBS: Russell Pearce, we thank you very much. Thank you, gentlemen. Appreciate it.

PEARCE: Thank you.

DOBBS: DOBBS: FBI agents and agents from immigration and customs enforcement in carrying out an enforcement action. We'll be bringing that story to you in a moment.

Coming up at the top of the hour, we'll be joining John Roberts in the Election Center. John has a preview of what we're covering tonight, John?

JOHN ROBERTS, CNN CORRESPONDENT: Lou, thanks very much. And good evening to you. CNN Election Center coming up at the top of the hour. Tonight, we're in Las Vegas, Nevada. Right here on the strip. Nevada the fastest-growing state in the nation, but also the state with the nation's worst foreclosure rate. I'll ask democratic presidential candidate John Edwards what he would do about the national mortgage crisis and the looming recession.

We'll also look closely at Nevada's union voters who have a big issue here, illegal immigration. Lou, looking forward to seeing you at the top of the hour.

DOBBS: Absolutely. John, thank you.

FBI agents and agents from immigration and customs enforcement, as I was saying, today raided a Washington, D.C. motor vehicles branch. Five people were taken into custody, including a DMV employee who was arrested for illegally selling driver's licenses. There are reports that some of those licenses were sold to illegal aliens.

Now three years ago, the FBI raided the same motor vehicle center and arrested a clerk for selling fake driver's licenses. They're apparently not learning too quickly there.

And a reminder now to vote in our poll. The question is do you believe any of these presidential candidates have what it takes to revive the economy? Yes or no. Cast your votes at LouDobbs.com. We'll have our results here in just a few minutes.

Up next, find out who Senator Obama and Senator Clinton are blaming for the controversy over racial petty politics that has dominated their campaigns for days now.

And Mike Huckabee pledges no amnesty for illegal aliens. We'll be talking with three of the nation's sharpest political thinkers. All of that and more coming right up. Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Presidential campaign wide open on the republican side; three winners in the first three major contests. It's pretty wide on the democratic side as well. Now, up to Nevada and South Carolina to give us some clearer sense of direction. Joining me now, three of the best political thinkers here in New York. Michael Goodwin of the New York Daily News, democratic strategist Hank Sheinkopf and from Charleston, South Carolina, Jonathan Martin, Politico.com. They're campaigning hard behind you there Jonathan. Let me ask you, this amnesty pledge by Huckabee, the impact?

JONATHAN MARTIN, POLITICO.COM: Well I think it could be significant for him. One of his problems here, Lou, the fact that it's viewed as sharp on immigration, clearly here in a conservative state, the base of the GOP with that immigration, he's trying to appeal to the more hard-core base of the party. He's going to do well with the evangelicals here in South Carolina. He's now reaching out to the more regular GOP activists with his pledge today.

DOBBS: Hank, do you concur?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: Absolutely, this is a southern strategy meant to cut Thompson apart and get rid of him once and for all. He's saying all the right things. He's talking about abortion, again. He's talking about immigration. He's talking about taxes. That's a blend for southern politics if there ever was one, Lou.

DOBBS: And amnesty pledge. Sort of shocking. This is smart politics, in your judgment?

MICHAEL GOODWIN, NEW YORK DAILY NEWS: Was your name on the bottom of that?

DOBBS: Well, you know what, I would sign it. I would sign it.

GOODWIN: I thought you wrote it. It is smart politics for Huckabee in the south. And everything for Fred Thompson is riding on South Carolina. So if Huckabee can beat him in South Carolina, then that really opens a path to him for February 5th, where there are a lot of southern states in super duper Tuesday. So he could be one of the two main republicans emerging from February 5th. DOBBS: I asked Dana Bash, Jonathan Martin, about who she saw as leading on all the polling both internal and the broader polls. And she said there is no clearer front-runner. Do you concur with that caution? Have we learned something as we go into this new primary?

MARTIN: Lou, for political junkies, this race is a dream. The fact is there is no GOP front-runner. There's arguments being made for five of the candidates, really, at least going into Saturday, they have a shot. Look, I think Mike Huckabee needs to get a win here on Saturday, otherwise, he's going to be painted simply as someone who did well among the evangelicals. At the same time, McCain has to do well here on Saturday, showing that his success isn't just limited to New Hampshire. I think we're going to have more clarification after the vote here on Saturday, but still, going into Florida, you know, on the 29th, this race still fairly wide open for the GOP.

DOBBS: I've got to tell you, as an independent populist watching this campaign, I am delighted there isn't a clear cut front-runner. I'm delighted that this process is going to go forward. I am astounded frankly by some of the savants, gurus and pundits who want this thing to be over with instantly. I'm delighted with the people who have the voice of who is going to be nominated with the two parties.

GOODWIN: Particularly in the republicans, what's interesting is in each state, you had a different winner and you've had a different winner which a different base of the party. That's interesting to me. The republicans are turning out in different states in different ways. Who knows where it's going but it's a very different mix.

DOBBS: Well, I love the fact that people are talking about well the republicans don't have a front-runner for them now. It's a problem for them. I'm sorry, who is the front-runner in the Democratic Party?

SHEINKOPF: Does either party have a front-runner? And where are the American people going to make their own choices, Lou?

DOBBS: I think right now. I think, as I have said before, the American people are awakening to the nonsense that is partisan blather that is pronounced by all of these candidates in my humble opinion. Stay with us. We're coming right now. We'll find out who will prevail in South Carolina. This panel will give us an assured answer to that question that you can rely upon I assure you 100 percent. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Joining me again, here in New York, Michael Goodwin, Pulitzer Prize winning columnist, New York Daily News; Democratic strategist Hank Sheinkopf; from Charleston, South Carolina tonight, Jonathan Martin, Politico.com.

The idea, Hank, that the democrats have got this thing settled somewhere between three candidates, I guess there is that. We've seen both the Obama and Clinton campaigns lose, it seems valuable days over this, petty racial based politics that they undertook. Is it over and what will be the price?

SHEINKOPF: People are saying, I think a lot of people particularly African-Americans are saying who cares it pops on both their houses. But what's going on all over the land, Elvis impersonators, Nevada, very important, is love me tender, love me true, and let me stab you in the back as well. That's what's going on.

DOBBS: Do you concur, Michael?

GOODWIN: I'm not sure I'm part of that. I know all about the Elvis impersonators. I happen to believe that the dust up over race probably served Obama well in the states where black voters are important such as South Carolina.

DOBBS: I mean as Bill Schneider reported here tonight, 73 percent of black voters going to Obama said they would have voted for Obama had they not had to vote uncommitted against Senator Hillary Clinton. That seems significant.

GOODWIN: Well and I think also look, the Clintons have always played rough in politics but they've always had black voters on their sides. Now I think some of the black voters are starting to see what it's like to be against the Clintons. I mean you really get the rough treatment and that's what Obama got and I don't think it's going to play well for Hillary in some of these states.

DOBBS: Jonathan, are the Clintons really so much tougher than anybody else? Are they such thugs in the pristine American political process?

(APPLAUSE)

I take it they're not applauding my question there (inaudible). Is there any chance at all that you heard what I asked?

MARTIN: No, Lou. Go ahead. I'm sorry.

DOBBS: I think - can you hear me now, Jonathan, or not?

MARTIN: I can. Yes, sir. Yes, sir.

DOBBS: I was just asking, are the Clintons in your judgment such thugs as they are being described here in part by our friend and colleague Michael Goodwin and others in this pristine political process, where everybody plays patty cake?

MARTIN: Look, politics is a very, very tough business. The Clintons play it tough. A lot of folks do on both sides of the aisle, there's no question about it.

I do think, though, that as this Democratic race grows more competitive and especially if Obama wins here in South Carolina, which a lot of folks think he's going to, this thing could get very, very ugly going into February 5th. SHEINKOPF: Getting ugly? It's been ugly, it's going to get more ugly, and there's no ugliness to end this. This is American politics. It's combat.

DOBBS: And Jonathan Martin has just said he thinks, if I may, make sure that I'm correctly interpreting you, Jonathan, he said that he thinks Obama is going to win.

SHEINKOPF: He said he was going to win South Carolina.

DOBBS: That's what I'm talking about.

SHEINKOPF: I want to see what happens in Nevada. I want to see what - I'd be curious as to whether the working class of America is able to deliver a vote, as opposed to middle-class people.

DOBBS: Who wins the Republican?

SHEINKOPF: Republican...

DOBBS: South Carolina.

SHEINKOPF: South Carolina, I think I have to give the edge to McCain, for different reasons.

GOODWIN: I think certainly Obama will win South Carolina, and I think Huckabee is going to surprise McCain in South Carolina.

DOBBS: Jonathan?

MARTIN: Yes, I think South Carolina on the Republican side is between McCain and Huckabee. It's a question of McCain's military following, his veteran following on the coasts down here, versus that of the Christian community of Huckabee. Democratic side, it seems like Obama is in a very, very strong spot down here.

DOBBS: Jonathan Martin, thank you very much. Michael Goodwin, Hank Sheinkopf, thank you very much, gentlemen.

Tonight's poll results: 68 percent of you do not believe any of the presidential candidates have what it takes to revive our economy.

Thanks for being with us here tonight. Please join us tomorrow. I'll be with you over the next hour tonight here on CNN in the CNN Election Center, along with John Roberts, who is reporting live tonight from Las Vegas.

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