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LOU DOBBS TONIGHT

Battle for Democratic Presidential Nomination Escalates

Aired January 21, 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: Wolf, thank you.
Tonight, Senator Obama blasting President Clinton as the battle for the Democratic presidential nomination is escalating. Obama threatening to directly confront Bill Clinton over what he says are untrue statements. We'll have all of that, the latest on the Republican presidential contests, not nearly so volatile, all of the day's news and much more coming up straight ahead tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, January 21. Live from New York, Lou Dobbs.

DOBBS: Good evening everybody. Senator Barack Obama today strongly criticized former President Bill Clinton amid of rising tensions ahead of the South Carolina primary this week. Obama accusing the former president of making statements backing Senator Hillary Clinton that are not supported by the facts, as he put it. Senator Clinton's campaign tonight insisting the president's statements are accurate.

Meanwhile, Republican presidential candidates have launched an all-out effort to win the Florida primary, that on January 29. That primary is the first major test of all the Republican candidates. We'll have extensive coverage here tonight beginning with Jessica Yellin in Columbia, South Carolina. She is following the Democratic campaign -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, the sniping between the Clinton and Obama campaigns is getting increasingly nasty and intense. The Obama campaign believes that Bill Clinton has become his wife's attack dog. And Barack Obama says they are going to start hitting back.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): In an interview with ABC News, Barack Obama did not mince words, saying former President Bill Clinton...

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Has taken his advocacy on behalf of his wife to a level that I think is pretty troubling. He continues to make statements that aren't supported by the facts.

YELLIN: Camp Clinton insists it's just sour grapes because Hillary Clinton won Nevada, but several important African American leaders are warning the former president to tone it down, among those criticizing Bill Clinton, a powerful South Carolina congressman...

REP. JIM CLYBURN (D) SOUTH CAROLINA: As they would say in Gullah Geechee country, he needs to chill a little bit.

YELLIN: And the mayor of Atlanta who appeared to chastise Bill Clinton for his controversial fairy tale comment, saying of Obama's candidacy...

MAYOR SHIRLEY FRANKLIN (D), ATLANTA: Yes, this is reality, not fantasy or fairy tale.

YELLIN: All this comes on Martin Luther King Day as the candidates converged on South Carolina for the next big Democratic primary, here as much as 50 to 60 percent of the voters could be African American. Today the candidates honored Dr. King.

OBAMA: King inspired with words not of anger, but of an urgency that still speaks to us today.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: All three of us are on the journey with you on the march to equality and justice and fairness.

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: The dream is nowhere fulfilled and now we are called to rise up, speak up and finally get it done.

YELLIN: Senator Clinton faces an uphill battle in this state. Several polls taken prior to her Nevada win shows she's lost ground here among African Americans. John Edwards was born in South Carolina. After Nevada wear to quote the candidate himself, "he got his butt kicked", a strong finish in his home state could recharge his campaign, but arguably Barack Obama is under the most pressure to win this state and prove Iowa was no fluke. His challenge, to rally African American voters while staying true to his message of unity. It's a theme he hits in a new ad.

OBAMA: We are one people, all of us pledging allegiance to the stars and stripes...

YELLIN: A message he hopes will carry him through South Carolina and Super Tuesday.

(END VIDEOTAPE)

YELLIN: Lou, it looks like the skirmishing between the Clinton and Obama campaigns is not likely to die down any time soon. Senator Hillary Clinton plans to fly out of this state tonight after the debate, but her husband, Bill Clinton, will be parachuting into South Carolina...

DOBBS: And how soon, Jessica Yellin, will Senator Clinton come back?

I'm understanding now that we have lost Jessica Yellin and as Jessica just reported, African American voters will be playing a critical role in that Democratic primary on January 29 in South Carolina. Whites and blacks make up just about 50-50 the state's Democratic Party electorate and as Bill Schneider now reports from Myrtle Beach, a rising number of African Americans have been shifting their support away from Senator Clinton towards Senator Obama.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Hillary Clinton and Barack Obama are both deeply committed to civil rights.

OBAMA: In the words of Dr. King, we're all tied together in a single garment of destiny.

H. CLINTON: Dr. King taught us that in the end we are all connected, all tied in a single garment of destiny.

SCHNEIDER: Nevertheless, racial differences showed up in Saturday's Democratic caucuses in Nevada. African American Democrats voted for Obama over Clinton by nearly six to one. A few months ago blacks favored Clinton over Obama by a wide margin. What happened?

Obama won Iowa and nearly won New Hampshire, two overwhelmingly white states. The message, maybe a black man can be elected president. Most white Democrats in Nevada voted for Clinton. Latino voters also had a voice in Nevada. They voted nearly three to one for Clinton. If the candidates don't differ much on race, what's the split all about?

Many blacks support Obama for the same reason many women support Clinton. Pride not prejudice. There is also a division by age. Young Democrats favor Obama. Older Democrats support Clinton. Clinton does well among Democrats concerned about the economy. Older Democrats look to her to deliver the goods.

H. CLINTON: I want a moratorium for 90 days on home foreclosures in America.

SCHNEIDER: Younger Democrats are attracted to Obama's inspirational message of hope and unity.

OBAMA: That's the unity, the hard earned unity that we need right now. That is the effort, the determination that can transform buying optimism and the hope.

SCHNEIDER: What we're seeing is a clash of political styles, not political principles. In South Carolina where almost half the Democratic voters are African American, we'll see if those differences can cross racial lines.

(END VIDEOTAPE)

SCHNEIDER: To borrow a phrase once made famous by Walter Mondale, Clinton is the "where's the beef" Democratic. Obama is the "new menu" Democrat. That's not black and white. That's partisan and post partisan -- Lou. DOBBS: All right, it is -- it seems all of the above, but there is no doubt whatsoever that this Democratic Party right now, when you see 83 percent as we saw in the exit polls coming out of Nevada of black voters voting for Obama and the vast majority of women voting for Clinton, we're seeing something here that is not exactly the stuff of great comfort.

SCHNEIDER: No, it isn't. Although it's interesting that a lot of people are asking you know whether say Latino voters are not supporting Obama because he's African-American. Very few people are asking, well, are African-American voters supporting Obama because they won't support a woman. I don't hear that question asked very much.

DOBBS: No the question you are hearing me ask, though, Bill Schneider, is you're going -- you're seeing this kind of support along racial lines for Senator Obama coming out of the Nevada caucuses. What percentage of the white vote did Senator Obama receive in those caucuses?

SCHNEIDER: The white vote, he got about 35, 34 percent of the white vote in those caucuses, so he's getting about a third of the white vote. Of course in Nevada...

(CROSSTALK)

SCHNEIDER: It's about the same.

DOBBS: And what is interesting is it seems to me that the national media had better be paying close attention to what's going on here because these candidates certainly are not. They're talking -- they're so -- it seems to me at least completely subsumed by identity and group politics that they're losing track of sometimes proportion and propriety, if I may put it that way. What do you think?

SCHNEIDER: I think that's true and I think a lot of this, you know when we see a racial divide like that there's an instant conclusion that's racism. It's because of the racial tension that flared up in the campaign. Well not necessarily. There are other things involved as well.

DOBBS: Yeah, I like your line that you uttered which is it's pride not prejudice and may that be so, but it is also a great thing that white voters are not exercising pride or prejudice in seemingly moving their votes equally amongst the candidates who are vying for that party's nomination. Well worthy of note I think and given the climate that's being created in that battle. Thank you very much, Bill Schneider in South Carolina.

SCHNEIDER: Sure.

DOBBS: There to cover tonight's debate. As we reported, this election battle between the Clinton and Obama campaigns and their surrogates is turning somewhat nasty, to put it mildly. Joining me now from Myrtle Beach, senior political correspondent Candy Crowley -- Candy, there is an increasingly ugly tone, there's another way to put it in this campaign. What in the world are these candidates thinking about?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: They're thinking about getting in the White House Oval Office is what they're thinking about. I mean they've got a very close race and they have a very big prize and when you put those two together and you put them in South Carolina, although this started before this, but you put them in South Carolina, which is known for the sort of the stealth campaign, you know putting fliers into the mailbox, the push polling, that kind of thing, what you get is a fairly divisive, fairly bitter race, and that's what you've got.

DOBBS: Aren't these campaigns basically insulting the people of South Carolina, the voters of South Carolina, saying you're so dumb, you're so ignorant that you won't mind our dumb ignorant tactics whether we're supporting Senator Clinton or senator Obama or one of the Republicans for that matter?

CROWLEY: You know in some ways -- in some ways I don't think they can help themselves because here's what has happened to politics over the past 10, 15 years. You have got this new cycle that the campaigns feel very much they cannot let an hour go by unless they respond to the other candidate. Do not get hit unless you hit back. I mean that is the mantra of politics now. It is how it has been for some time, so you're seeing this sort of constantly all day long.

I mean I can tell you that if there is a conference call from Barack Obama on a certain subject, the minute that conference call is over I will get a notice that there will be a conference call on the Clinton side about the same subject, so they will not let it rest because that's what politics has become, a sort of jab, jab back.

DOBBS: Well there seems to be conspiracy by his absence a fellow who is benefiting from all of this and that is Senator John Edwards on the Democratic side, is that -- does that look to be significant?

CROWLEY: Significant probably is the key word. We saw that he did bump up in the national polls after that sort of bitter race spat they had for about a week in New Hampshire, Clinton and Obama. We did see Obama -- we did see -- sorry Edwards go up and part of that is that old saying, if A and B fight, then C is the beneficiary of all that. He is going to have to be a much bigger beneficiary in order to kind of move back up into that top tier though.

DOBBS: Well would it be helpful for him, given the climate of things in this Democratic race for him just to insult and attack both Senator Clinton and Obama, follow the template that's been laid down?

CROWLEY: No because I tell you Edwards has always been the counter programmer in this race. He really has. He started out just kind of in your face. You know he was known as the angry candidate. The minute those two started to go at each other he kind of stepped it back a little and began to get out there saying this is about the issues, so he has always been the counter programming campaign.

DOBBS: Sort of - I assure you (inaudible) being facetious in asking the question in terms of change in style, but perhaps... CROWLEY: Right.

DOBBS: ... anything is possible the way this thing is going right now. Candy...

CROWLEY: Absolutely, all things are possible in politics, Lou.

DOBBS: Candy, thank you very much, as always, Candy Crowley.

CROWLEY: Sure.

DOBBS: The Democratic presidential debate begins in Myrtle Beach, South Carolina in less than one hour now. Opening ceremonies have begun in the Palace Theater in Myrtle Beach. CNN is hosting I'm proud to tell you the debate with the Congressional Black Caucus Institute. The debate will begin at 8:00 p.m. Eastern. We'll have live coverage right here on CNN and it doesn't look like something that anyone would want to miss.

In tonight's poll we want to know isn't this campaign enough to make you proud to be an Independent? Cast your vote at loudobbs.com. We'll bring you results here later in the broadcast.

Also ahead we'll have much more on the influence of race, of racial politics, identity politics, group politics on this campaign. Also troubling new evidence of the rising dangers to this nation from the drug cartels in Mexico. Casey Wian will have our report -- Casey.

CASEY WIAN, CNN CORRESPONDENT: Lou, Mexican drug cartel violence continues to spill across our southern border. The latest victim, a U.S. border patrol agent. We'll have details coming up, Lou.

DOBBS: Thank you very much, Casey. And a revolt by governors against new driver's license rules real I.D., the rules intended to protect this nation from a terrorist attack. We'll have the story and tell you what's behind it.

And Republican presidential candidates facing off ahead of the critically important primary in Florida. That special report upcoming next. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Mexican drug violence is worsening every day, but today, Mexico announced the capture of one of that nation's top drug traffickers, saying the trafficker, Alfredo Tranleva (ph) was a high ranking member of the drug cartel operating in Santa La State (ph). The cartel member allegedly in charge of transporting drugs, bribing government officials, laundering money and commanding two separate groups of hit men for the cartel. The Santa La (ph) cartel is in a violent war with a rival cartel for control of the lucrative drug routes into the United States.

Well Mexico's drug violence is spilling over to the U.S. side of the border and of course with tragic consequences. A U.S. border patrol agent killed over the weekend trying to protect this nation from drug smugglers. Casey Wian has our report.

(BEGIN VIDEOTAPE)

WIAN (voice-over): Border patrol agent Luis Aguilar was killed in the line of duty Saturday, trying to stop two vehicles fleeing for the Mexican border. The border patrol says the pursuit began Saturday morning just west of Yuma, Arizona where interstate aid crosses California's Imperial Sand Dunes, a popular spot for off-road enthusiasts and drug and alien smugglers. Border patrol agents were following a hummer and a pickup truck when the suspected drug smugglers turned off the interstate and headed toward Mexico. Agent Aguilar tried to throw a strip lined with spikes in front of the vehicles but was struck and killed by the hummer in front of fellow agents.

AGENT JEREMY SCHAPPELL, BORDER PATROL YUMA SECTOR: I would not consider it an accident, it is definitely another just more of the border violence that we've been preaching about in the past. Smugglers will do anything they can go get their cargo in.

WIAN: Homeland Security Secretary Michael Chertoff said in a statement "I'm outraged by this tragic loss. Dangerous criminal groups have chosen to respond to our tougher security posture at the border with increased violence and mistakenly believe we will give way in the face of violence. We will continue to show them how wrong they are."

The smugglers escaped across the border. Mexican authorities say they found their vehicles burned in Mexicali. Chertoff says the Mexican government assured him they will help track down the killers and bring them to justice. The FBI is leading the U.S. investigation into the agent's killing. Agent Aguilar was 32, a five-year border patrol veteran, survived by his wife, two children and brother, who is also a border patrol agent.

(END VIDEOTAPE)

WIAN: Aguilar is the 16th border patrol agent killed in the line of duty since 2000. Also nearly 1,000 agents were assaulted last year alone as Mexican drug cartel violence continues to spill over the border -- Lou.

DOBBS: Well it is unconscionable what the Department of Homeland security is doing to our border patrol agents. They're leaving them basically naked against the onslaught of illegal alien smugglers, drug smugglers on our border. How in the world, and I've got to ask this, Casey, how in the world with other agents there, were there not efforts and successful efforts to stop those two vehicles re-entering Mexico?

WIAN: The border patrol is not giving any details about the pursuit that happened leading up to this tragic event while the investigation continues, but it does bring up a lot of issues. You wonder if this outcome would have been different, had there been a fence in that area. You wonder if this outcome would have been different if the cases of agents Ramos and Compean had not happened. Other border patrol agents were in that area likely armed, certainly armed, you know you wonder if they thought twice about pulling their weapons given what happened to their fellow agents who were in jail for more than a decade for trying to stop a Mexican drug smuggler.

DOBBS: The very idea that this officer, this law enforcement officer protecting this nation's borders was killed and without consequence is shameful, and no one should be more ashamed than those leading the Department of Homeland Security and the United States border patrol, because this is absolutely unacceptable to the United States and to the American people. I mean, my God what are they thinking about?

And the very idea that the prosecution of Ramos and Compean, if that played a part in the minds of any of those border patrol agents, you know, there's going to be a special place in hell reserved for the prosecutors of those two agents in the U.S. Justice Department and in the Bush administration. Let's hope that was not the case. Casey, thank you very much. Casey Wian.

Coming up next, states revolting over federal plans for real I.D. drivers' licenses. We'll have a special report and tell what you they're thinking about.

And another state attorney general cracking down on legal licenses for illegal aliens. He doesn't think their giveaway makes a lot of sense. Imagine that.

And more trouble from high-tech voting machines without any paper backup or paper trails. We'll have an in-depth report.

And three top Democratic presidential candidates facing off tonight in a debate right here on CNN. Clinton versus Obama versus Edwards, versus one another, all of that and more coming right up. Stay with us.

(COMMERCIAL BREAK)

DOBBS: This broadcast, more than any other, has reported on the dangers of electronic voting machines and reported on the threat posed to the integrity of our electronic process by those electronic voting machines that do not provide a paper trail. South Carolina is the first state to use touch screen voting machines without a paper trail, in its primary last Saturday and of course it will hold another primary on the 29th for the Democrats. South Carolina's election commission kept insisting that everything would be fine, even though there was no way to do a recount. However, as Kitty Pilgrim reports, for one county in South Carolina, the primary was simply a disaster.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Electronic voting machines and up to 80 percent of precincts in one county in South Carolina failed. For several hours, election officials tried in vain to switch the machines on. It turns out they forgot to push the reset button after testing the machine. JOE NEAL (D), S.C. STATE LEGISLATURE: As a result, the people at the poll appeared to be unprepared for this eventuality and were trying to resort to paper ballots and apparently there were not enough of those to accommodate those who wished to vote.

PILGRIM: Election workers scrambled to draw makeshift ballots out of scraps of paper, then at the end of the day another fiasco, they couldn't close down the machines to tally the vote.

WARREN STEWART, VERIFIEDVOTING.ORG: At least some of the machines had been programmed as if the Election Day was January 26th. The Democratic primary that's happening next Saturday.

PILGRIM: The vote result was delayed by a day until technicians could work on the machines to get the vote tallied. The state election commission defends the system, calling the problem human error, adding South Carolina's voting system is performed today as it was designed to perform. Duncan Buell, a computer scientist warned about the voting system.

DUNCAN BUELL, LEAGUE OF WOMEN'S VOTERS: If the problem is that the machines we have require a process that is not foolproof when you translate it to the precinct level, then we need to re-think how we run those elections.

PILGRIM: The state election commission admits they have no way of knowing how many people ended up not voting because of the problem.

(END VIDEOTAPE)

PILGRIM: Now as it stands now, more than 30 million registered voters will have to vote on paperless electronic voting machines in the presidential election -- Lou?

DOBBS: Kitty, thank you very much, Kitty Pilgrim.

Time NOW for some of your thoughts, Matt in Missouri said, "Lou, perhaps you can explain this to me. Obama, Clinton and Edwards are all senators, so why would anyone consider them Washington outsiders and quote, 'change agents'?" Beats me, frankly.

And Ray in Tennessee, "Hey Lou, your comments make too much sense. You are no politician, that's for sure." You're quite right about that.

And John in Illinois, "I'm getting tired of all the promises from the candidates on both sides. I still remember the old saying about politicians running for office: After all is said and one, more is said than done."

Good advice for us all to remember, and Tim in Florida, "Electile dysfunction: The inability to become aroused over any of the choices for president put forth by either party in the 2008 election year."

Thank you for sharing that addition to our lexicon. We'll have more of your thoughts here later in the broadcast. Each of you whose e-mail is read here receives a copy of my new book "Independents Day: Awakening the American Spirit". It's the book that every single one of these candidates for president wants to you read, without question, the Democratic and Republican Parties they want you to, well, no they -- none of them want you to read it really, but I do. I hope you will.

Coming up next, a rising number of states governors refusing to implement the real I.D. law on drivers' licenses, a law intended to protect this nation from terrorism. Why? We'll have that report.

And the attorney general of one state trying to stop illegal aliens from obtaining drivers' licenses is among my guests here tonight.

Also Rudy Giuliani stakes his entire campaign on the upcoming Florida primary. Now just eight days away. We'll have the story.

And tensions over race and racial politics escalating three of the country's best political analysts join me to talk about that and a lot more on this Martin Luther King Day.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: A tough, rational new federal law designed to fight terrorism and to secure our borders and ports is now being criticized. Montana's governor, Brian Schweitzer, is leading a revolt against a new driver's license law, a revolt of governors. As Bill Tucker reports, the governor's opposition could make life difficult for state residents.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT: Few states are as committed to the opposition of Real I.D. as Montana. Real I.D., passed by congress and signed into law by President Bush three years ago, establishes a national set of standards for state's driver's licenses to meet in order to be considered secure licenses. The Montana legislature has voted not to comply with the act. Now, Montana's governor, Brian Schweitzer, is taking the lead in what he hopes will become a revolt against the federal legislation. In letters to the governors of 17 other states Governor Schweitzer is "asking you to join with me in resisting the DHS coercion to comply with the provisions of Real I.D. I would like for to us speak with one unified voice." Those opposed to Real I.D. call it an unfunded mandate and raise privacy concerns, saying compliance amounts to a big brother-style national I.D., a claim that proponents dispute.

BRIAN ZIMMER, COAL. FOR SECURE DRIVER'S LICENSE: Actually it's not a national I.D. card because it's not produced by the national government. It's not produced by the federal government. It's produced by state government so by definition, legally and constitutionally it's a state I.D.

TUCKER: States are allowed to opt out of Real I.D. It is not mandatory but if they opt out, their driver's licenses will not be considered secure by federal standards. That means citizens of those states won't be able to use their driver's licenses to enter federal buildings or board airplanes. States have until May 11 to file for an extension of the rules. An extension gives the state until 2014 before they must meet the requirements.

(END VIDEOTAPE)

TUCKER: So far, 34 states have either set aside money or legislatively begun to accommodate the move to comply with Real I.D., according to the Coalition for Secure Driver's License. Only five have passed opposition opposing it, suggesting that Governor Schweitzer is perhaps waging a little bit of uphill battle here, Lou.

DOBBS: Well, it is an uphill battle and I talked with Governor Schweitzer on a number of issues in years past. Typically a rational fellow, this seems to be absolutely straightforwardly counter to the interests of the citizens of Montana.

TUCKER: You would think so, but the state has been stalwart in their opposition to it. It has a weird alliance of groups out there. The National Rifle Association and the ACLU have actually gotten together to fight Real I.D. in the state.

DOBBS: Well, I haven't gotten much problem with taking them both on if they're wrong and if they're joined together here, boy, that sounds like a marriage made in hell, doesn't it, the ACLU and the NRA.

TUCKER: It's an interesting set of bedfellows.

DOBBS: The governor's got quite a reach there. We'll find out more about that. Bill Tucker, thank you very much.

Well, we'll be talking with Montana's governor about his Real I.D. revolt tomorrow. Governor Brian Schweitzer joins us here on the broadcast tomorrow evening.

Michigan is one of eight states that handed out driver's licenses to illegal aliens, gave them away but a few weeks ago that state's attorney general issued a ruling that stops Michigan from effectively granting illegal aliens legal status. Just a short while ago here, Michigan secretary of state announced and I think it's just been within the past hour that illegal alien also no longer be able to receive Michigan driver's licenses.

Joining us now is Michigan Attorney General Mike Cox. I want to just say to you Attorney General, you have done something that very few other state officials have done, which is to interpret law and the context of our society in what seems to me to be a remarkably rational fashion.

MIKE COX, MICHIGAN ATTORNEY GENERAL: Well, Lou, thank you. Obviously in Michigan, we're right on international border. We have actually three ports of entry in Detroit, Port Huron, Upper Peninsula, three international bridges and international tunnel. It's a major concern, security concern, here in Michigan so we stepped up and did what we could. I think we came down with a very simple prospect, that here in Michigan, we can't say someone's a resident if the federal government says they're here illegally, and recognizing the U.S. constitution, which I know you put in your books, under article six says the federal government has the power to say who is here illegally, who isn't and if they can't touch or change that.

DOBBS: Would you, again, Attorney General, say those few words, that the state of Michigan cannot make an illegal alien a resident?

COX: It's that simple, Lou. One of my predecessors issued an opinion that if someone was "a resident of Michigan," that means they were employed in the state of Michigan, that we didn't have to look whether they were illegal, here illegally and of course, that's wrong, and we changed that opinion of law, and now you saw the secretary of state is going along with it, and at the end of the day, you know, the law matters, and the law is supposed to protect people and that's what we're doing here in Michigan.

DOBBS: Certainly. And do you think, Attorney General, that this straightforward interpretation of law and the constitution will be attractive to others charged with enforcing our laws in other states, say 49 other states?

COX: Well, Lou, I hope so. As you indicated, there's still seven other states out there right now that still issue driver's licenses, still illegal. I would direct them to the back of one of your books "War on the Middle Class" or a copy of the United States constitution and look at article six and see what it says there about federal pharmacy. Now sometimes the states we fight against the federal government rightfully so but this is a case where the federal authorities determine who is illegal, who is not and states shouldn't add or detract from that and certainly, certainly when it involves something as important as who is here illegally and who isn't.

DOBBS: Attorney General Mike Cox, congratulations on what you've accomplished, the reasoning. Also I knew I'd find a great, terrific attorney and a great American. I didn't know you would be quite so well-read but thank you very much Attorney General Mike Cox.

COX: Well, thank you, Lou.

DOBBS: thank you.

Coming up next, the issue of race in this campaign, the democrats are going crazy. Our distinguished panel of political analysts will be joining me.

Also, Florida's GOP primary shaping up as a critical contest for Rudy Giuliani. Will there be a payoff for all of his efforts in that city? Will his Florida strategy work?

And global financial markets are plunging, fueled by fear of recession and market crisis. We'll have the latest for you.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Markets all around the world today plunged in reaction to the growing likelihood that this country's economy will be entering a recession. Also, a concern to investors around the world, the Bush administration's proposed stimulus package, and leadership issues in this country.

Shares in Tokyo, Hong Kong, India, China, all fell sharply. In Europe, British stocks plunged 5.5 percent while stocks in Germany fell more than 7 percent. The U.S. dollar did improve slightly from record lows against the euro, concerns there that the European Central Bank won't lower interest rates to accommodate an ever-weakening dollar.

After taking a Martin Luther King holiday break today, American stock markets will open tomorrow and they're expected to open sharply lower. The Dow Jones, S&P 500 and NASDAQ Futures all pointing to losses of more than 4 percent on the open tomorrow morning. Commodity futures for gold and silver also lower, but President Bush says he's not concerned. Friday he said the country will be "just fine," if congress passes $145 billion of tax relief to encourage consumer spending and assure economic growth.

Our slowing economy has become a very important issue in this presidential campaign. Republican candidates fighting to win next week's Florida primary are putting tax cuts at the top of their agenda, none more so than Rudy Giuliani. John King has our report from Orlando.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT: Alone across the finish line at the famous Daytona Speedway but Rudy Giuliani suddenly has company here in Florida and good reason to be nervous.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: My republican opponents all want to do tax reductions of one kind or another but none of them are as bold as mine.

KING: That's just the warm-up. Giuliani is getting more personal, as his heavy investment here appears more and more at risk.

GIULIANI: I supported the Bush tax cuts. John McCain sided with the democrats and voted against the Bush tax cuts. Mitt Romney was equivocal in his support for the Bush tax cuts.

KING: The former New York mayor spent 50 days campaigning in Florida, talking tough on national security.

GIULIANI: Our goal in Iraq has to be victory in Iraq.

KING: And signing up support while his rivals were slugging it out elsewhere where.

GIULIANI: We going to win Florida? Thank you, god bless you!

KING: But the competition is here now and eight days before Florida votes it, is not Giuliani getting the crush of attention.

Cuban coffee at Miami's Versailles Restaurant is the stuff of local legend. Giuliani has made end roads in the Cuban American community but John McCain believes his support is deeper, that can help him follow up his win in South Carolina with another victory here.

JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We come into Florida with some wind at our back.

KING: At the moment, the economy is the lead debating point.

MCCAIN: I understand the economic difficulties that are affecting Florida and this country.

KING: McCain says he opposed the Bush tax cuts because the plan did not include spending cuts. Now he says he backs the white house plan to stimulate the economy with new tax cuts and rebates but adds a warning.

MCCAIN: If congress loads it up with the park barrel projects which is the major reason why we've gotten into this mess obviously I would be in opposition to it.

KING: Giuliani for months predicted a big win in Florida to springboard into the Super Tuesday contest but not only has he lost his commanding lead, two new polls show him trailing Senator McCain in one of the biggest Super Tuesday prizes, Giuliani's home state of New York.

John King, CNN, Orlando.

(END VIDEOTAPE)

DOBBS: In the democratic contest, we're just a few minutes away from the final democratic presidential debate before the South Carolina primary this Saturday. Tonight's debate begins at the top of the hour at the Palace Theater in Myrtle Beach. CNN, of course, hosting the debate with the Congressional Black Caucus Institute. We'll have live coverage at 8:00 p.m. eastern on CNN. Please be with us. And make certain you join us tomorrow at 8:00 p.m. eastern for a special edition of LOU DOBBS TONIGHT INDEPENDENCE DAY, AWAKENING THE AMERICAN SPIRIT. You'll definitely want to see that.

Also tonight, Senator Barack Obama, President Bill Clinton, squaring off again in what has become a very public, very ugly feud. We'll discuss their latest conflict, race and politics, and much more with our panel of leading political analysts.

Stay with us. We're coming right back.

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DOBBS: The Culinary Workers Union in endorsing Senator Barack Obama is refusing to address some rising concerns that illegal aliens make up a significant part of its membership in Nevada. The union, of course, strongly supporting Obama in the Nevada caucuses Saturday, not sufficiently enough for the senator, as it turns out. Tonight the union is saying "our firm policy is that we do not request the immigration status of our union and we never will." That came up with the estimate as much as 45 percent to 50 percent of their membership there being made up of "immigrants." It's sort of an interesting don't ask, don't tell policy that probably would throw the nation into chaos if employers followed the same ideas. I would like the head of the Culinary Union, if we may, just invite to come join us here. We'll talk about don't ask, don't tell, when it comes to the issues of legal status in this country.

Well, the democratic candidates facing off in a debate just a few minutes from now actually in South Carolina, hoping to win, of course, support from African-American voters. The electorate split just about evenly, 50/50 between African-Americans and white voters.

Joining me now to discuss the issue of the campaign and race- based politics, Errol Louis, columnist, New York Daily News, CNN contributor, more specifically LOU DOBBS TONIGHT contributor by golly and Joe Madison, WOL Radio in Washington, D.C., XM Satellite Radio, a friend of this broadcast. Great to see you here. And in Nashville, LOU DOBBS TONIGHT contributor Carol Swain, editor of "Debating Immigration," an important book and professor of law and political science at Vanderbilt University. Good to have you with us, Carol.

PROF. CAROL SWAIN, VANDERBILT UNIVERSITY: Thank you.

DOBBS: Let's start, if I may, Errol, with you. We thought it was over, and Senator Obama can't leave it lone, President Clinton can't leave it alone, their surrogates and supporters can't leave it alone. What in the world is going on?

ERROL LOUIS, NEW YORK DAILY NEWS: I think Candy Crowley put it right earlier in the broadcast that they're fighting for the most powerful political position in the world. Nobody wants to let anything get past them. It was tit-for-tat. It was always just under the surface. Even when they declared the so-called truce people in people campaigns were telling me it's not over. We'll try to settle down as best we can but you see it even with Bill Clinton, they can't let it go, there's always got to be a response, another shot back at the other side and here we are.

DOBBS: Today during the services for Martin Luther King observation, observance of Martin Luther King Day, Mayor Franklin down in Atlanta taking a shot. I mean nobody seems to be willing to let it go.

JOE MADISON, WOL IN WASHINGTON, D.C.: They better let it go because quite honestly the people have let it go. I spoke at a large Martin Luther King Day breakfast in Washington D.C. and as I was waiting I just happened, usually make it a habit to talk to the waiting staff, the real people, and the lady who was serving us, our breakfast, she said to me, Lou, you know, she has listened to all of the speeches and we were talking about the candidates and she said you know, I am sick and tired of this, and I can't afford to be sick and tired because I can't afford health insurance. So these candidates are listening, they better let it go.

SWAIN: They should let it go, and it reminds all Americans what they don't like about democrats, and it seems like it's impossible for them to move beyond the identity politics, the multiculturalism, all of the things that they created that are really holding us back because it doesn't last to talk about issues. We always talk about identity politics and not what's in the best interests of Americans.

MADISON: Wait a minute, see, I'm the registered independent here, but she's sitting here saying democrats, excuse me. You've got white male republicans that are waddling in wanting to be like Ronald Reagan, who, by the way, opposed the '64 civil rights act, who, by the way, supported the racist apartheid regime in South Africa, and who, by the way, as we celebrate Martin Luther King's birthday, really didn't want to sign that bill, but was politically forced to. So you know, the republicans' hands aren't clean on this.

SWAIN: Let's talk about the republicans on another day and let's talk about the democrats now.

MADISON: Let's talk about both of them today.

That's why I'm an independent.

LOUIS: I tell what you, the republicans are enjoying all of this bloody warfare, I get e-mails, I get probably ten every day from the Republican National Committee just, and it doesn't say anything about any republican anywhere, all it does is repeat and enhance and forward all of the attacks the democrats are making.

MADISON: This is renewable ammunition.

DOBBS: It should come back. The idea that on Martin Luther King Day, we've got folks, I mean carving each other up on this stuff.

MADISON: Here's what I'm hoping to hear today, one is that the war in Iraq is extremely expensive.

DOBBS: Is there a war going on in Iraq?

MADISON: A recent poll indicates that's an issue, $500,000 a minute is being spent.

DOBBS: Almost 4,000 lives.

MADISON: Exactly. Prices are going up on food, gasoline, and home utilities, and paychecks are going down. This is what I'm hoping Wolf and the other moderators will talk about at this debate today. It's kitchen table issues that transcend race and, by the way, I think transcend parties.

DOBBS: You know, I don't think I'm naive. I don't think you're naive. I don't think any of us here, but I don't think -- I think, I'll take a poll, four of us, is there any one of us who doubts if this country wants to and if its leaders want to, we can cut the nonsense on race and we can start seeing examples from our leaders rather than distractions from our leaders and to watch it from the, whether it, you know, I swear, whether it's Huckabee on the issue of gay marriage, whether it is Obama on the issue of taking on Bill Clinton, whatever it may be, or Senator Clinton taking on Obama, what the heck is the point of all of that?

LOUIS: It can happen and it needs to happen, and I'll be looking, frankly, to John Edwards to be the one to sort of provide some of that balance hopefully tonight. In South Carolina you've got I think 25 percent of all black South Carolinians are living in poverty. These are real issues. There's something like a 13 percent unemployment rate down there. If anybody's going to break outside of it, John Edwards has promised that he would, maybe he can do us a favor tonight and help get them back on track.

SWAIN: I hope they do devote some time to illegal immigration and the impact on the black community.

DOBBS: Absolutely. Well, Carol and Joe and Errol, we'll be right back and have more with our panel in a moment.

A reminder please to vote in our poll; the question tonight, isn't this campaign enough to make you proud to be an independent? Cast your vote at LouDobbs.com. We'll have the results when we come back.

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DOBBS: We're back with our panel now. I want to turn our panel, of course Errol Louis, Joe Madison and Carol Swain.

Carol, I want to start with you. The economy is number one on the minds of voters according to recent polls. Where is the solution? You know I love the idea of the incumbent in all of the questions whether it be in these debates or whether it be on the part of the media something the president of the United States can direct an economy of $13 trillion. What do you think about the candidates' position particularly the democratic position on the economy and all the problems we're facing right now?

SWAIN: It seems to me that the democratic position is the usual position that we get, they're going to create more jobs, but there's not enough details for you to really evaluate it, and that's one of the problems. We know that if we do head into a recession that African Americans will be the ones that are hardest hit. Whenever we look at the unemployment rate, it's African Americans are like double whatever it is the white race.

DOBBS: Professor Swain is exactly right. We reported on those unemployment rates for young black Americans, for young African Americans, period, in this society. And 40 years ago, the ratio stays about the same. It's improved. There's no question about that and important improvements but that ratio, that gap between whites and blacks remains just about the same.

MADISON: Now is the time to go back 40 years, of course, this year, King was assassinated but 40 years ago also the Kerner Commission Report was issued. This would be a great time and I know people are going Joe what is the Kerner Commission Report? Go back and get it. Google it and you'll see similarities. You know, in Philadelphia we talk about the murder rate and the crime rate and interviewed the police commissioner and the former police commissioner there in over 50 percent of the young African-American men there, unemployed.

DOBBS: And the numbers it's progress but it's in many respects an illusory progress.

MADISON: But the professor is right. So what are the details of the plan?

SWAIN: What bothers me is so much that so many young black men have given up looking for work. It's not that they don't want to work. People look at them and because of the stereotypes and some of them, you know, come from their behaviors in the past, they just don't get given a chance, they don't feel they have a chance, they give up and it makes everything worse off.

DOBBS: Jesse Jackson held a Wall Street conference on the issue of the sub-prime mortgage crisis and how it's affecting everyone but in particular, black homeowners. It's devastating.

LOUIS: Massive problem and frankly another case where as Dr. Swain says, not enough detail. You've got two candidates, Edwards and Clinton, saying they would propose a freeze on mortgage interest rates, Clinton for five years, Edwards for seven. Aside from the fact that it's probably impossible to implement that.

DOBBS: It is impossible.

LOUIS: Yes I mean the red ink would fill the capital mall to the top of the Washington Monument. I mean just a non-answer.

MADISON: And predatory lending is a major issue in the African- American community to the point that the NAACP is suing several companies because they believe they have red lined or whatever, they have targeted them.

DOBBS: And as we talk hopefully on Martin Luther King Day about all the progress, the fact that the NAACP is the group that is bringing that lawsuit instead of the United States Justice Department. It's terrible.

We want to say thank you to all of you. We're going to have to jump here pretty quickly, because upcoming is that debate. The results of our poll: 88 percent of you saying the campaign is enough to make you proud to be an independent. I join you.

We thank you for being with us tonight. Join us here tomorrow. Good night from New York. The Democratic debate in South Carolina begins right now.

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