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LOU DOBBS TONIGHT

Bush, Congress Move Closer to Enacting Economic Stimulus Package

Aired January 23, 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 President Bush and Congress moving closer to an agreement on an economic stimulus package. President Bush has another idea to help our economy. He wants to expand so called free trade, a policy that's made this country utterly dependent on foreign nations. We'll have complete coverage of that new idea, all of the day's news and much more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Wednesday, January 23. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

President Bush today declared his proposed stimulus package will be robust enough, as he put it, to revive our economy. President Bush sent Treasury Secretary Henry Paulson to Capitol Hill today to negotiate the details of the package with congressional leaders. President Bush also called on Congress to pass more so-called free trade agreements, despite compelling evidence that his faith-based economic policies have failed. President Bush insists that those free trade agreements with Colombia and other nations will actually help increase economic growth. Ed Henry reports from the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lou, in a sign of the urgency of the situation Treasury Secretary Paulson is on Capitol Hill this hour for the second time of the day meeting with congressional leaders trying to hammer out a deal on the stimulus package.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Welcome, Dr. Rice.

HENRY (voice-over): The Bush administration went global Wednesday to calm panic over plunging markets. From Secretary of State Condoleezza Rice in at the World Economic Forum in Davos, Switzerland...

CONDOLEEZZA RICE, SECRETARY OF STATE: The U.S. economy is resilient. Its structure is sound and its long-term economic fundamentals are healthy.

HENRY: To Capitol Hill where Treasury Secretary Henry Paulson continued negotiating a deal on a $150 billion economic stimulus package. Several officials involved in the talks say it would give individuals tax rebate checks of about $800, families would get around $1,600. To win over conservatives the package is also slated to include business tax breaks while liberals are expected to get an extension of unemployment benefits and an increase in food stamps.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I talk to them about my desire to work with the Congress to get a stimulus package passed, one that's going to be robust enough to effect the economy, simple enough for people to understand it and efficient enough to have an impact. I'm confident that we can get something done.

HENRY: Some Democrats seem ready to work with the president.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: People want to know that their leaders understand their struggles and fears and are acting to remedy them.

HENRY: But others are testing the limits of all the talk of bipartisanship by blaming the president for the sagging economy.

REP. RAHM EMANUEL, (D), ILLINOIS: By any measure America is worse off today over the last seven years than it was as a country that George Bush inherited.

HENRY: White House press secretary Dana Perino fired back that Mr. Bush has been pushing Democrats since last summer to reform housing laws to deal with the sub prime mortgage crisis.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: The president is committed to working in a bipartisan fashion, but if they want to go down that road and not work with the administration, the label of the do-nothing Congress could stick in 2008 as it did in 2007.

(END VIDEOTAPE)

HENRY: Now the Congressional Budget Office said today that it is not forecasting a recession in the near term, but the CBO also said that it is now projecting a budget deficit, an annual budget deficit now of $250 billion assigned when you put the budget deficit together with the trade deficit that there are some real economic issues out there that need to be confronted -- Lou.

DOBBS: Absolutely. I believe we should point out as well that that projected deficit does not include the money necessary to either fight the war in Iraq and Afghanistan and global terror. Nor would it of course include the amount of money that would expand that deficit as a result of the economic stimulus package.

HENRY: Absolutely. The money that is going to be spent to try and stimulate the economy is obviously borrowed money, Lou.

DOBBS: Rahm Emanuel taking on the president suggesting this is all his fault. Every poll I've seen at this point says that this kind of partisan bickering at moments of great crisis probably isn't the smartest way to gain votes for the respective parties. HENRY: Absolutely. I can tell you in talking to other Democratic leaders they've clearly heard a message from voters when they were home over the holiday break that they have got to get something done at least on the economy because they realize voters are very angry right now. And if they don't see Democrats accomplishing some things and just throwing bricks at the president they're going to pay a price as well potentially in November, Lou.

DOBBS: Yeah, I think it's getting to be very clear as we watch this primary season unfold that people have had a belly full of the silly little people that manage to get their way to Washington, D.C. and then ignore the needs of American citizens in both parties. Ed Henry thank you very much reporting from the White House.

President Bush apparently believes in so-called free trade will help end this economic downturn and financial crisis. Now that isn't exactly a new idea for this president. It ignores as well the fact that decades of free trade have produced $6 trillion in debt and a historically weak dollar. President Bush today called upon Congress to pass what he called fair trade agreements now. This is new language, fair trade agreements with Colombia, Panama and South Korea.

(BEGIN VIDEO CLIP)

BUSH: American people expect us to be -- expect America to be treated fairly and that's what these free trade agreements do. Certainly doesn't make any sense to say in a country like Colombia, your goods can come our way, but our goods can't come your way.

(END VIDEO CLIP)

DOBBS: Well a lot of things don't make sense.

(BEGIN VIDEO CLIP)

RICE: I'm tempted to ask if you are the conductor.

(END VIDEO CLIP)

DOBBS: Secretary of State Condoleezza Rice today at Davos speaking there to the conference saying the United States continues to believe in the strength of the economy, and to support free trade as she put it. Rice will be in Colombia tomorrow and Friday.

In our poll tonight, the question is, do you believe as the president and members of his administration obviously do, that the cure for what ails this economy is more so-called free trade? Yes or no. Cast your vote at Lou Dobbs.com. We'll have the results here coming up later in the broadcast.

The political battle over the direction of this economy is also being fought on the presidential campaign trail. Republican and Democratic presidential candidates presenting competing policy prescriptions to end this economic reversal. The candidates' economic advisers today giving new details of those proposals. Kate Bolduan has our report from Washington. (BEGIN VIDEOTAPE)

KATE BOLDUAN, CNN CORRESPONDENT (voice-over): A shaky economy. The top issue on the campaign trail.

UNIDENTIFIED MALE: In making the economy work.

UNIDENTIFIED MALE: Stimulating the economy.

UNIDENTIFIED MALE: Keep our economy going.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Our economy is sliding into recession.

BOLDUAN: But what would the candidates do specifically to fix it? We got a chance to question some of their top economic advisers. Gary Gensler is the lead economist for Hillary Clinton.

GARY GENSLER, CLINTON'S SENIOR ADVISER: If she were president now she would have $110 billion program and she's laid it out, $40 billion would be immediate tax rebate.

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I have a package of $110 billion, 70 of that would go toward dealing with the mortgage crisis.

BOLDUAN: Barack Obama also favors targeted tax rebates for low and middle income Americans but Obama's campaign says he can get the money out faster.

OBAMA: We should set each working family a $500 tax cut, and each senior a $250 supplement to their Social Security check.

UNIDENTIFIED MALE: Ninety percent of Social Security payments are direct deposited, so if we pass this law they could literally put the money out tonight.

BOLDUAN: John Edwards' economic guru says rebates are not the adrenaline shot needed.

LEO HINDERY, EDWARDS' ECONOMIC ADVISER: What you can't do is just write checks and hope that that will ripple through the system in a meaningful way.

BOLDUAN: Rather, Edwards said thinking green offers a short and long-term solution.

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: In fact we can create over a million new jobs as we make this transition. And as we build this green infrastructure we can create a lot of those jobs very quickly.

BOLDUAN: John McCain disagrees. He and his top guns say the quick fix isn't give-backs it's cutting the corporate tax rate from 35 to 25 percent. KEVIN HASSETT, MCCAIN'S SENIOR ADVISER: I think it's much more prudent to take a step to make firms more competitive in the world marketplace.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And the key to it is, is less spending, lower taxes and making sure that we incentivize businesses and corporations to invest and to hire.

(END VIDEOTAPE)

BOLDUAN: The reality, though, Lou, is a solution has to come from here in the nation's capital not the campaign trail. In fact, one Democratic aide calls the candidates' view on a stimulus package irrelevant saying they're running for president, we're trying to pass legislation.

DOBBS: And the arguments and thoughts they're advancing sound well chillingly close to the policies and views that are being espoused by this administration and the Democratically-led Congress. At any rate very little original thinking among those advisers. Kate Bolduan, thank you very much.

BOLDUAN: Thanks, Lou.

DOBBS: Critics say our economic crisis completely avoidable and in fact exacerbated by policy makers. Federal Reserve interest rate cuts leading to the biggest housing boom in history. Central bankers and the Bush administration hailed the financial market innovations that ultimately led to our mortgage crisis. Once the housing market began to soften, our sub prime crisis exploded and as Christine Romans now reports, when you add the failure to regulate and to police these markets and financial institutions, a financial crisis is the result.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): It's the makings of a crisis. In 2001 the Federal Reserve cut interest rates 11 times to save the economy from a bursting tech bubble. Those low rates put more people than ever into homes and sparked an historic rise in home prices. So-called financial market innovation spawned exotic and risky new kinds of loans. Lenders pedaled them with abandon and Wall Street made a fortune trading them like commodities. Now that that bubble has burst Washington is scrambling to fix an economic mess with plenty of blame to go around.

SEN CHUCK SCHUMER (D), NEW YORK: The laissez-faire attitude that this administration has had on housing and the economy have hurt us.

ROMANS: Fed Chairman Ben Bernanke on the job less than a year has been rapped for not recognizing the danger of the housing collapse even as it unfolded and once a venerable Wall Street hero, former Fed Chairman Alan Greenspan is now in the crosshairs for his policies that made borrowing so cheap and reckless.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Alan Greenspan had he been not attending so many of his cocktail parties should have been focusing on the fact that the sub prime crisis was coming upon us.

ROMANS: Plenty of ire in hindsight for a pro business administration, absent regulators and a wide spread failure to regulate and police markets, a trend administration critics say seen in everything from food safety to toxic toys to housing. While congressional Democrats complained, they also don't get off so easy.

KATHLEEN DAY, CTR. FOR RESPONSIBLE LENDING: The regulators should have seen it. Congress should have seen it, but everyone was making so much money in the short run that they were all looking the other way and drinking their own Kool-Aid. They were all believing that you know home prices were going to rise forever.

ROMANS: Home prices of course will not rise forever. Merrill Lynch forecasts prices will tumble at least 25 percent over the next three years.

(END VIDEOTAPE)

ROMANS: For years this administration and the one before it lauded record home ownership as a symbol of strength in the American economy. Now an estimated two million could lose that valuable asset and for the rest, even near historically high levels of home ownership in this country, how much of our homes we actually own is plummeting -- Lou.

DOBBS: The equity obviously consumed to make up for amongst other things the Internet and technology bubble in the crash of 2000. The idea, watching Senator Harry Reid, the majority leader blabbering on about this administration, did he forget the Democratic leadership council, the Clinton administration, the go-along policies of the Democratic Party over the past decade to go along with the absolutely absurd faith-based economic policies of this administration and Republican Party?

These two parties have been complicit in allowing Wall Street and corporate America to literally have their way in the marketplace without regulation, without constraint, without responsibility and without conscience.

ROMANS: There's something about watching the old guard in Washington blaming each other for these problems when they've all been there for a very, very long time and some would say presided over the entire thing.

DOBBS: I would love for these folks in this administration and the Democratic leadership and Congress to take a vow of silence, shut up, get to work, set aside every other piece of business, get that stimulus package put together, and understand quickly that they've got to roll back these idiotic failed policies that are really creating great pain, destroying jobs for our middle class, for working men and women and their families in this country. This is not a game and they act like it's a game.

And -- anyway, there's a special place reserved and a very warm place for all of these people who are conducting themselves so irresponsibly. Christine Romans thank you very much.

ROMANS: Sure.

DOBBS: Still ahead here, President Clinton launches another blistering attack against Senator Obama. Jessica Yellin will have our report from Charleston, South Carolina. Jessica, what is going on?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, while candidate Clinton left the state to campaign elsewhere, former President Bill Clinton unleashed on the Obama campaign calling its tactics a political hit job among other things. He also had some sharp words for those of us covering this race -- Lou.

DOBBS: I can't wait to hear that, Jessica. Thank you very much.

Also parts of Mexico, tonight they're moving closer to an all-out civil war as the Mexican government takes on the powerful drug cartels along our border with Mexico. We'll have a special report for you. And this nation's mayor, some of them want to defy the will of the American people and Congress on the issue of illegal immigration. We'll have the story of these geniuses that have decided they know better than anybody, especially the people, and we'll have that story as well, a great deal more coming right up.

Stay with us. You don't want to miss it.

(COMMERCIAL BREAK)

DOBBS: A former Mexican police official convicted today in a U.S. court of drug trafficking, conspiracy and money laundering. Carlos Landin Martinez (ph), a high ranking member of the Gulf (ph) cartel, one of the seven drug cartels in Mexico, they said Landin (ph) ran an operation in northeastern Mexico that provided smugglers with a safe route into this country. Police corruption in Mexico is one of the critical problems facing authorities there as they try to stop these cartels. And as Casey Wian now reports, there's new evidence that drug cartel violence is spreading across the border into the United States.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): In a Tijuana house next to an elementary school Mexican federal police this week discover what they say is a drug cartel's shooting range. Inside the soundproof room, dozens of automatic weapons, tens of thousands of rounds of ammunition and gas masks. Tuesday in Mexico City, 11 alleged cartel hit men were arrested with an even larger weapons cache.

EDGAR MILLAN, POLICE SPOKESMAN (through translator): We're sure they're the commands of the cartel structure operating in Mexico City. They have high-powered weapons like grenades, missile guns, and jackets.

WIAN: Also this week four police officers from Nuevo Laredo, just across the border from Texas, were arrested on charges of working for drug cartels. Mexican soldiers rounded up suspects and temporarily surrounded police stations there and in two other nearby cities, clearly an escalation of Mexican President Felipe Calderon's crackdown on drug violence.

TOM FITTON, JUDICIAL WATCH: We need to be prepared for the blow back from Mexican military operations just south of the border. It's nothing short of a civil war in some of these border towns in Mexico and as our government prepared for the drug runners and the alien smugglers that are going to be pushed out as a result or the Mexican military flexing its muscle on our southern border.

WIAN: Judicial Watch obtained new documents from the Department of Homeland Security, citing 25 incidents where armed Mexican military or law enforcement officers illegally crossed into the United States last year. Homeland Security says most of the incursions were intentional. Six occurred near where U.S. border patrol agent Luis Aguilar was killed Saturday by suspected drug smugglers fleeing back to Mexico.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: I have been in close touch with my counterparts in Mexico. The Mexican authorities are working very closely with us to find, apprehend and bring to justice the perpetrators of this brutal, heinous act, which is an affront not only to the family but to the entire country.

WIAN: Homeland Security says at the current rate assaults against border patrol agents could reach 1,500 this year.

(END VIDEOTAPE)

WIAN: That would be a 50 percent increase over 2007. In a statement a Homeland Security spokeswoman said Secretary Chertoff has made it very clear that we are going to use every tool in our power to protect our border agents and do whatever the American people have demanded, secure our borders. Right now, Lou, there are 2,600 National Guard troops on our southern border with no power to apprehend anyone.

DOBBS: And they are near the border not actually categorically on the border.

WIAN: Correct.

DOBBS: You said that Chertoff said we're going to use all the tools available. Then why is it that one of those tools -- that is a simple handgun on the side of one of our border patrol agents, not a single shot was fired at the two vehicles who ran over Agent Aguilar and killed him.

WIAN: It's anyone's guess at this point. We're still not getting any more details from the border patrol about the circumstances...

DOBBS: Wasn't it the border patrol's responsibility here to put that information forward? This is absolute -- as Secretary Chertoff said, this is an affront to the nation. And to have this officer die on the border with Mexico and for this border patrol and its hierarchy and Department of Homeland Security not to give us the details of this shooting is contemptible, it is unconscionable and it is unacceptable, period.

WIAN: Lou, I must say that the FBI is leading this investigation. The border patrol says it's not going to comment because the FBI is leading the investigation...

DOBBS: Right.

WIAN: ... into this shooting and the FBI is the one that's refusing to give us any details at this point.

DOBBS: Well the FBI and the border patrol both are part of what department?

WIAN: Homeland Security.

DOBBS: Michael Chertoff, the secretary of Homeland Security, who in my judgment should have been fired long ago has a responsibility to inform this nation. It's about time he acted like he was a public servant instead of a lackey for an administration that is completely without conscious when it comes to enforcing border security and controlling illegal immigration, and fighting and winning the war on drugs. Casey Wian, thank you very much.

We're just learning now that Mexico today said it has made an arrest in the killing of that border patrol agent. The Associated Press is reporting that border patrol agent Luis Aguilar was killed Saturday when he tried to stop that vehicle driven by fleeing drug smuggler near Yuma, Arizona.

Those smugglers, as Casey Wian reported, fled into Mexico. The suspect we are told has been arrested in the Mexican state of Sonora. A Texas community is tonight making another attempt to deal with the impact of illegal immigration. Farmers Branch last night passed an ordinance that would bar illegal aliens from renting an apartment or home in their town.

The new law requires the city to check a renter's immigration status with the federal government, all renters. Last year illegal alien amnesty advocates and business special interest groups sued to block a similar law in Farmers Branch. The case is still tied up in court. Attorneys for Farmers Branch now say their new ordinance will hold up to any constitutional question. Critics disagree. They say they will challenge this new ordinance as well in court.

Up next here, mayors bowing to business and amnesty special interest groups in their push for so-called comprehensive immigration reform. The cities, these mayors, I wonder why they're doing that. We're going to tell you next.

And former President Bill Clinton says the rhetoric from the Obama camp is crazy, but that's not all he said. We'll have more from the fiery former president.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: The U.S. Conference of Mayors is holding its annual meeting in Washington and the conference has decided to call for so- called comprehensive immigration reform. Amnesty is back brought to you by the mayor's conference. It is simply another effort by special interest groups, socio ethnocentric interest groups and big business to bring amnesty to millions of illegal aliens and to keep our borders wide open. Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The U.S. Conference of Mayors is calling on Washington to open the door to roughly 12 million illegal immigrants in the United States, illegal immigrants drawing on a wide menu of public services funded by U.S. citizens.

MAYOR DAVID WALLACE, SUGARLAND, TEXAS: What we're basically focusing on is wanting to make sure that we have a path to citizenship, but at the same time these individuals are paying for those services that you just mentioned. There have been a lot of discussions about worker visa program and tied to that worker visa program is the application for U.S. citizenship.

SCHIAVONE: And explicit statement of policy from the Conference of Mayors states, quote, "Local law enforcement should not be required to stop, interrogate, detain or otherwise participate in immigration enforcement activities."

But by the same token, the group calls on the federal government to authorize payments to localities for, quote, "emergency health services, prosecution and the incarceration of undocumented immigrants." Some groups opposed to such measures say that will only makes matters worse.

BRIAN DARLING, THE HERITAGE FOUNDATION: Their solution is no solution to the problem. If you give amnesty to illegal immigrants it may solve some of the problems of the local mayors, but it will not solve our illegal immigration problem.

SCHIAVONE: For all students under the age of 21 the Mayor's Conference also declares it should be national policy to quote, "Guarantee a public education for all children regardless of their immigration status."

PROF. KRIS KOBACH, UNIVERSITY OF MISSOURI: They have no political accountability for that. No one is going to hold them personally accountable before the voters for taking that position. On the other hand, when they're back in their hometowns and they're actually passing ordinances or voting on ordinances then the constituents have a say.

(END VIDEOTAPE) SCHIAVONE: And Lou, there is a bottom line consequence to this path to citizenship as described by the U.S. Conference of Mayors, a Heritage Foundation study estimates when all of these illegal immigrants start to collect federal retirement benefits the net cost will be more than $2.5 trillion -- Lou.

DOBBS: Well these mayors, and I mean every single one of them should be thrown out of office from -- by the electorates of their cities. This is one of the most -- anyone supporting this in my opinion is absolutely without conscience, pandering to socio-special interest groups, pandering to corporate America, and acting in absolute, absolute contravention of their responsibilities in office. This is absolutely disgusting.

SCHIAVONE: Lou, there's no evidence that a lot of their constituents are on their side, but as our analysts say, when they are under this umbrella group they don't have to have any accountability for these very controversial positions that this document states.

(CROSSTALK)

DOBBS: Every single one of these mayors who is supporting this, we're going to give them as much daylight as one possibly can. Because their citizens should know that they are acting in absolute disregard of both their responsibilities and the purview of their office and we're just going to be delighted to share the reality and the truth of their positions with their constituents.

SCHIAVONE: It's an amazing document, Lou.

DOBBS: Are you kidding me? Politics in America right now is an amazing process. Louis, thank you very much; Louise Schiavone from Washington.

Time now for some of your thoughts.

Dominick in New York saying, "Lou, has the immigration problem been fixed? There was not one question about illegal immigration in the debate;" the democratic presidential debate. You know, I noticed that. I wonder why.

And Gary in California, "Lou, what are my chances of claiming an illegal immigrant as a dependent on my Federal income taxes. It sure feels like I've been supporting them."

We'll have more thoughts later in the broadcast. Each of those whose e-mail is featured will receive a copy of my book, "Independents' Day: Awakening the American Spirit.

Coming up, next, I should point out you can read more thoughts how the political and economic leaders squanders the nation's wealth and my views on the current financial crisis we face. My latest column is at LouDobbs.com. Hope you'll read it.

Up next, one state taking bold action to address concerns about those e-voting machines without paper trails. We're talking about the very integrity of our voting system in this country. We'll have a special report.

Also, the White House and congressional leaders scrambling to come up with a stimulus package; I'll be talking with three of the best political analysts in the country to assess that idea.

And what's going on in that presidential race? President Bill Clinton saying Senator Barack Obama has launched a hit job. The battle between Clinton and Obama escalating. That's Barack and Hillary. We'll have the story.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: President Bill Clinton today intensified his criticism of Senator Obama. President Clinton launching a scathing verbal attack against his wife's principle rival for the democratic nomination at a campaign stop in South Carolina. Jessica Yellin has our report from Charleston.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CORRESPONDENT: Remember this guy? Bill Clinton, the policy walk.

FMR. PRES. BILL CLINTON, UNITED STATES: We're facing a prospect that a couple million people could be foreclosed on. All of the experts are worried about moving into a recession.

YELLIN: And in South Carolina Hillary's campaigner in chief.

UNIDENTIFIED MALE: Is Senator Clinton tough enough?

CLINTON: Half of the time when she shows how tough she is, people say she's too tough.

YELLIN: He spent almost two hours working this Charleston crowd in that artful Bill Clinton way fighting to win here.

CLINTON: One of my rules is, never look past the next election or you may not get past the next election.

YELLIN: At first, he seemed to tread lightly when criticizing Obama, here for supporting the Bush energy bill.

CLINTON: He voted for that. I think because there was a lot of, I don't want to overstate this, I think he did it because there was money for ethanol.

YELLIN: When I followed up after the event the president unloaded.

CLINTON: I never utter a word of public complaint when Mr. Obama said Hillary was not truthful. Was poll driven. When he put out a hit job on me, at the same time he called her the senator, I never said a word. YELLIN: The question that triggered this. I asked him to respond to a charge by an Obama supporter and former head of the South Carolina Democratic Party that the Clinton's tactics are reprehensible and reminiscent of Lee Atwater, the late republican mastermind.

CLINTON: They're feeding you this because this is what you want to cover. This is what you live for. But this hurts the people of South Carolina. What they care about is not going to be in the news coverage tonight. You don't care about it. You care about this. The Obama people know that. They spin you up on this and you go along. The people don't care about this. They never ask about it. You're determined to take this election away from them. That's not right.

(END VIDEOTAPE)

YELLIN: Lou, you heard the president there accuse the media creating conflict over race. But in truth the former president addressed that issue first. He told the voter in that audience both Obama and Hillary Clinton are getting votes because of their race and gender. That's why some people think his wife will not win in South Carolina. Read into that what you will. As Senator Clinton has said, they are in it to win it. Lou?

DOBBS: I think it's interesting to see that frustration. We're seeing frustration on the part of Senator Obama, Senator Clinton, President Clinton, obviously, but there's something in what he said, I think. He said the press is going to suck that stuff up. And spin it out and play it back. And we do, every day, every night. Don't you think?

YELLIN: I think we do. But I also think this is the first race in which you see both a viable African-American candidate and a viable woman. We have responsibility to actually address the racial issues that come up on the campaign trail.

DOBBS: No, I think you're right. I think you're right. I'm also locked in my view of the world which I don't think it matters a damn whether a candidate is black, or what their ethnicity or gender is. We're being played pretty hard here by Obama's camp. He comes across so precious that he wouldn't take a swing at a Clinton. And the Clintons come across that they are so experienced and careful they wouldn't swing at Obama. We know it's nonsense. That's what we have to get to. It's a tough -- I like what President Clinton said the other day. You said he kind of liked watching Senator Obama and Senator Clinton go at it. Showed they have a little spirit about them. You know, I don't know how that's being received in South Carolina, I would guess fairly well, actually.

YELLIN: Well, I tell you all of the campaigns try to stay positive in front of the people when speaking in public but behind the creeps we reporters were being called on to endless conference calls, slamming each other right and left. The negative is out there. It's very rare you see it come into full public force as we have this week.

DOBBS: You know, it's good to see a spirited public arena from my perspective. Because that means some folks really care. My guess is the folks in South Carolina care a lot too. It's going to be fun to see how this unfolds at the -- in the primary, upcoming shortly here. Thank you very much Jessica Yellin, outstanding job of reporting as always.

And a reminder to vote in our poll tonight, do you believe as the president and members of his administration do, that the cure for what ails the economy is more of the good old so-called free trade? Yes or no? Cast your vote at LouDobbs.com. We'll have the results here in just a few minutes.

Up next a startling study said the Bush administration made hundreds of false statements about Iraq in the run-up to the war. I'll be talking with three of the best political minds in the country about that and a lot more.

And our democracy at risk with e-voting without paper trails; some states don't seem to care. We'll have a special report on who's fighting to protect our democratic process, who isn't and how many tens of millions of Americans may not have their votes count.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: The South Carolina democratic primary is now less than three days away. Incredibly, the state of South Carolina plans to use the same electronic voting machines that mall functioned last Saturday in the republican primary. Voters were forced to use scraps of paper to cast their ballots. South Carolina election officials, well they continue to defend that electronic voting system of theirs but as Kitty Pilgrim now reports, an increasing number of states are giving up on electronic voting and ensuring the integrity of their state's votes.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT: Colorado legislators today agreed to dump touch screen voting and go back to paper for the election.

GOV. BILL RITTER (D), COLORADO: It ensures a paper trail. It minimizes the possibility of technology failures that have caused Election Day problems in the past in Colorado.

PILGRIM: The agreement requires legislation but has bipartisan report.

ALICE MADDEN, COLORADO GENERAL ASSEMBLY: My kids tell me retro is in. So I guess going back to the old fashioned retro way of voting is what we're looking at. Sometimes just because something is old- fashioned doesn't mean it's wrong.

PILGRIM: But in South Carolina a different story. Burned once with malfunctioning machines in last Saturday's republican primary, the state is still going to use the touch screen machines without a paper trail in this Saturday's democratic primary. South Carolina uses the same electronic machines that lost 18,000 votes in the Sarasota County, Florida congressional race in 2006. It's the same machine experts say flipped votes in Texas, Indiana, Pennsylvania, Florida and South Carolina also in that year.

JOHN BONIFAZ, VOTERACTION.ORG: It's time to investigate these companies that have been marketing a defective product across the United States, to hold them accountable for doing that and to have just dicks all across the country, recoup millions of dollars of taxpayer money spent on this defective product.

PILGRIM: Florida will use paperless voting in its upcoming January 29th primary. Five other states, Delaware, Georgia, Kansas, New Jersey and Tennessee will either use all paperless or mostly paperless touch screen voting on Super Tuesday February 5th.

(END VIDEOTAPE)

PILGRIM: There's really no excuse for states to cling to the electronic voting systems. A bill in congress will pay for the change for a more secure paper ballot system if the states want to change back. It's clear Colorado made a tough decision but one that will look very support on Election Day. Lou?

DOBBS: And very responsible. The reality is, because no one thinks -- we're focusing on this, the issue is that these machines are not reliable to the degree they should be and with a paper trail, verified paper system. There is -- at least you're protecting the integrity of the system so you have a recount. People must understand, you can't have a recount without that.

PILGRIM: That's exactly right. Anyone would love technology if it worked. These machines often malfunction.

DOBBS: Kitty, thank you very much. We should salute the state of Colorado, their government, their legislature and their governor for taking the responsible step. Kitty, thank you very much.

Coming up, at the top of the hour, the "ELECTION CENTER" and John Roberts. John?

JOHN ROBERTS, CNN ANCHOR: Lou, thanks very much. Coming up in 14 minutes time, it's "ELECTION CENTER" at the top of the hour. Tonight I'll be speaking live with democrat John Edwards. He was born in South Carolina, desperately needs a win there this coming Saturday.

We'll also take you to a part of South Carolina known as the corridor of shame because of its rural poverty and decrepit schools literally falling apart. We'll hear what people there are hoping for from the new president.

And how are the republican candidates promising to deal with a threat of a recession as they look ahead to the Florida primary next Tuesday.

All of that and more coming your way at the top of the hour. Lou we'll see you very soon. DOBBS: Thank you, John.

Up next, Senator Barack Obama declaring he will again bring what he calls real change to Washington while President Bill Clinton steps up his attacks on Senator Obama. The democratic presidential campaign is getting really interesting. I'll talk with three political analysts about that and more next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me now, three of the best political analysts; Pulitzer Prize winning columnist, New York Daily News, Michael Goodwin; Michael, good to have you here. Democratic strategist Hank Sheinkopf, Hank, thanks for being here; and from Tampa, Florida, Jonathan Martin, Politico.com, getting ready for the big primary down there.

Let's start, Hank with what's going on with the Bill Clinton, Barack Obama and poor Senator Obama. He can't tell which Clinton he's in a dog fight with. Do you think it's occurred to him it's both now?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: It's called rope-a-dope. Stand up and punched on one side. Stand up again and get punched on the other and so something stupid. Don't attack Bill Clinton. It's not smart and I'll tell you why. He's a democratic idol. He's also the guy for democrats who reminds them when we had reasonable peace. By the way, the economy seemed to be working and he wasn't George Bush. Not a good week for him.

DOBBS: What do you think, Michael?

MICHAEL GOODWIN, NEW YORK DAILY NEWS: I'm not sure. I think Bill Clinton's performance that you had earlier on the show, I mean it's a strange performance. Here's a man, president of the United States. He's a gazillionaire, thanks to his public job. He was president. His wife is running for president and he seems full of self-pity and anger. It's very unbecoming and it's strange. It's like this drama of the Clintons and their feelings, the chip on their shoulder that they're victims, I think it's tiresome. I think it could help Obama.

DOBBS: Do you agree, Jonathan?

JONATHAN MARTIN, POLITICO.COM: I think I'm more sympathetic to what Hank is saying actually. A lot of democrats still just plain like Bill Clinton and the fact is that when he's in the spotlight talking about his administration, that's not necessarily a bad thing for his wife.

DOBBS: If that is the situation; what I'm finding interesting is the media response to this because the stories are unfolding as Bill Clinton is being bitter, angry. How dare he get upset and go after -- you know, we've never had this situation before where we've got a relatively young former president, in Bill Clinton, who, instead of retiring from the public stage, my god, he's stepping forward all of the way to the front lights. I think it's an interesting situation. SHEINKOPF: We've never seen the story headline that says best throws chair out window. OK. Pat Nixon jumps up and down. We don't see these things. The closer we come to this public a figure in the first person role was Jackie Kennedy for quite frankly, we've seen nothing like this before and by the way, we've never had a Bill Clinton before. He's changed democratic powers.

DOBBS: You could have a George Bush. This could get interesting. You could have a real dog fight between the Bushes and Clintons. The Bushes may get kind of upset that Obama is taking over the role of the McCoy's in this view.

GOODWIN: Right. Lou, I'm reminded too, we talked about this last week in terms of the former president, the stature of a former president is important. Jimmy Carter is also known as a terrible president but great ex-president. I think Bill Clinton is sacrificing by being down and dirty. I think it's unbecoming and I think it is going to backfire.

MARTIN: If I could just add, Lou, real fast that if it ultimately means that his wife is elected president, then perhaps in the end it's worth it. They called him a ward healer. It's a tough charge. But ultimately if she becomes president that vindicates his term in office and it means that the Clinton legacy was more than just eight years for war and peace between two Bush wars.

DOBBS: But after a while, it gets a little tiresome the dynasty battles. Hank, let's all listen to what Mitt Romney had to say about this country's economic condition today.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: There's concern that somehow we're going to go into a global recession of some kind so this is a worry. There's right now an anxiety that you find as you go across the country and I can tell you that I'm convinced that we don't have to be anxious, that America can be strong, that our economy can lead the world as it has for so many years but it's going to take some changes.

(END VIDEO CLIP)

DOBBS: Wow. We have a new change agent.

SHEINKOPF: Well, what are the changes? Mitt, you made your money off excess capital. What are you going to do for the boys of Detroit who are walking the streets? Give me a break.

DOBBS: Senator Obama is changing things too. We just -- I don't know what the changes are. What I do know we've got an economy on the brink of a major disaster and we've got people fiddling like fools here.

GOODWIN: Well, look, obviously the price of oil and how much of our money is going to the Middle East for oil as a huge part of our trade deficit. DOBBS: You mean you think American people care about the price of a gallon of gasoline, the American people care about the fact that they can't afford college tuition for their kids that their public schools are failing? I mean listening to this nonsense. President Bush and Condoleezza Rice, Jonathan Martin is talking about more free trade deals as a solution. They don't even under it's part of the problem.

MARTIN: Lou, nobody has been sounding the trumpet louder than you for the past year and now it's come to the forefront of the race. I was with Romney and he was emphatic about the fact that you know times have become tough and his message is that basically I can sort of calm and soothe your nerves. His folks are very, very confident that with the economic message now at the forefront of this race, he's in a very, very strong place given his credentials as sort of the businessman outsider.

DOBBS: You didn't say CEO president again, did you? Because I've just had a bellyful of CEO presidents.

MARTIN: He didn't say CEO, he said private sector.

DOBBS: All right. We're going to be back with our panel in a moment. First a reminder, please vote in our poll. The question is do you believe as the president and members of administration do that the cure for what ails the economy is more of that good old so called free trade? Yes or no? Cast your vote at LouDobbs.com. We'll have the results when we come back and we're coming right back. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We're back with Michael and Hank both here in New York with me obviously, Jonathan, down there in Florida you've got three days, less than three days now. What's driving this race and who is going to -- who is going to really emerge on the republican side?

MARTIN: Well, Lou, the focus is certainly on the economy. That's what all of the candidates are now talking about. A new poll out today shows that this race has increased between Mitt Romney and John McCain. Rudy Giuliani faded here some. His gambit to try and avoid the early states and sort of camp out here appears to be not working. So this is coming down to a Romney/McCain battle and what's ironic, Lou, about this is that this is what started '07. It was these two guys that started this race last year. Now it seems like we'll be back to John McCain and Mitt Romney again. It's McCain's experience and national security credentials versus Romney's outsider/economic message.

DOBBS: The economy obviously voters across the country identifying that as a number one issue, as Jonathan said, certainly in Florida. Who, among these candidates in both parties does that favor as an issue, if anyone at all?

GOODWIN: Well, I suspect for the republicans it does favor Romney, because although he hasn't laid out precise issues. I don't think any of them addressed the total scope of the problems that we have.

DOBBS: No one serving in government.

GOODWIN: That's right. It's not a stock market problem. It a not a short-term problem.

DOBBS: It's a public policy problem.

GOODWIN: It's a long-term problem and the nation as a whole. Nonetheless, I do think it probably does Romney is more comfortable on the issue, talks about it. McCain looks as though he would rather talk about Iraq or the military.

SHEINKOPF: McCain is a war hero. This country has a history of electing war heroes, people who have served in our nation. He can make the argument very simply I served in a war. I've lead people. I know what has to be done. I'll bring the best and brightest around me. I've worked for a living. The other guys move money around for a living. I understand how you feel. It's a better argument I think.

DOBBS: And there's also these statements about as you were talking about Jonathan Martin, assuaging people's concerns and their fears. You know this is not -- the last thing I want to see is the election of a paternalistic or maternalistic candidate to office and a government that has decided that we're a bunch of idiot children who sort of cower in dark corners sucking our thumbs. You know the American people have got a lot of guts. We're pretty smart folks. We're just -- you know what we have a problem here is when one of these idiots running for president thinks he or she is (AUDIO GAP) -- I don't see this kind of stuff working. Do you, Jonathan?

MARTIN: Well, Romney certainly today when I saw him cast himself as somebody who had the sort of private sector experience to try and fix this economy and try and turn it around. Now, that worked in Michigan, where obviously they're having some very unique difficult times there...

(CROSSTALK)

DOBBS: He's a native son there, too.

(CROSSTALK)

MARTIN: That certainly helped there. And now it remains to be seen if that's going to work here.

There is no question the economy is the top issue. As Michael said, that helps Romney, but I want to say real fast, though, that McCain has got something going for him right now, and that's the fact that he has all the buzz around him in this race, and he's picking up a lot of support right now, and has big mo.

DOBBS: What about Ron Paul? You know, I'm not hearing a lot about Ron Paul...

(CROSSTALK) SHEINKOPF: Save his money and buy a house. Bottom line here is real simple, Lou: Guy who stands up and says Washington and Wall Street has put us in trouble and we need some change is the guy that's going to score some points on the Republican side.

GOODWIN: See, that's too simple too, and I think that's the problem. We're talking about short-term things in a campaign, it's the worst time to get long-term solutions. The person who's going to be president is going to deal with the long-term problem. They ought to start thinking of it now.

DOBBS: You know, and it would be kind of nice if the folks who are already in office would do a little thinking too. Maybe serve the public interest a little...

(CROSSTALK)

DOBBS: Remarkable. We thank you very much. Jonathan Martin. You say it's a two-man race on the Republican side in Florida now?

MARTIN: That's what it increasingly sounds like down here, Lou, right.

DOBBS: You think Romney is benefiting by the economics here, Michael Goodwin?

GOODWIN: Only if he wants to run as the third party, not in the Republican Party.

DOBBS: And I guess you think that the Democratic Party will kick rear ends no matter what?

SHEINKOPF: I'm not sure about that, Lou. I think people are pretty smart.

DOBBS: I do, too. And that's one of the reasons we all get along so well. I think we've all got that same respect.

Thank you very much, Hank Sheinkopf, Michael Goodwin, Jonathan Martin, thank you, sir.

Results of our poll tonight: 96 percent of you do not believe, as the president and members of his administration do, that the cure for what ails us is more free trade.

Thanks for being with us tonight. Join us here tomorrow. Thanks for watching. Good night from New York. "ELECTION CENTER" with John Roberts is next -- John.

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