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LOU DOBBS TONIGHT

Florida Democrats Reject Mail-In Do-Over; Presidential Candidates Speak Out About Earmarks; With Weak Economy, Americans Turn to Credit Cards

Aired March 13, 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, tonight Florida's congressional Democrats have rejected a plan that would have given that state's Democratic voters a chance to have their voices heard. We'll have that report, all the day's news and much more, straight ahead here tonight.
Good evening, everybody.

Democrats plunging deeper into disarray tonight as Florida's congressional delegation rejected a plan that would give the state's voters and new chance to be heard in the Democratic Party. And the three presidential candidates joined their Senate colleagues in trying to impose a one-year moratorium on pork barrel spending.

We have complete coverage tonight and we begin first with John Zarrella reporting from Miami -- John.

JOHN ZARRELLA, CNN ANCHOR: Lou, Florida's Democratic Party stepped up to the plate, came up with a plan that would allow Florida voters a chance to revote. But before that plan even got out of the batter's box, House Democrats, Florida House Democrats were saying thanks, but no, thanks.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): The state Democratic Party is proposing what's been rumored for a week -- a vote-by-mail primary.

KAREN THURMAN, FLORIDA DEMOCRATIC PARTY CHAIRWOMAN: This has got to move forward. I think the unrest is not good, and I'm ready to try to give them something to look at. If this is not it, then what?

ZARRELLA: The party's proposal also sets up 50 regional election offices where people can vote in person. According to the proposal, this will ensure disadvantaged communities have the ability to vote.

The plan needs several stamps of approval before it can move forward. If the Obama and Clinton campaigns don't sign off on it, one Democratic Party leader says it's dead in the water.

THURMAN: We don't want to move forward if this is not what people want to do.

ZARRELLA: And with the ink on the proposal barely dry, there are already concerns. Florida Senator Bill Nelson, a leading advocate for a revote, is concerned this plan does not provide a way for the state to verify signatures.

Representative Robert Wexler, an Obama supporter, is not satisfied either.

REP. ROBERT WEXLER (D), FLORIDA: ... is that a mail election would be a chaotic, potentially divisive election that would wind up with two contested elections, not one.

ZARRELLA: State party officials say the revote plan will cost between $10 million and $12 million. Between now and April 14, fundraising to cover the cost and final Democratic National Committee approval.

April 30, last day to register to vote. May 1, set up the 50 regional offices. May 9, ballots go out in the mail. June 3, Primary Day. Whether it's this plan or something else, the national Democratic chairman says there needs to be a resolution for the good of the party.

HOWARD DEAN, DNC CHAIRMAN: The issue is here, is do we want to be united at the convention? If we wanted to be united at the convention, we ought to try to fix this problem now and not wait until the convention to fix it.

(END VIDEOTAPE)

ZARRELLA: Under this proposal, the state of Florida would have nothing to do with the election. It would be run and overseen by private companies. The problem is, Lou, that while everybody seems to be saying something needs to be done, nobody is satisfied with what is being put on the table -- Lou.

DOBBS: Any thought there in Florida that if the Democratic voters are disenfranchised again, that perhaps that everyone in Florida in the Democratic Party ought to just vote for the Republican or stay home?

ZARRELLA: There are a lot of people out there Lou that are telling me that in the long run, these are Democratic leaders of the party, that if this isn't resolved before the convention - if the Florida delegates are not seated, this is really going to come back to the bite the Democratic Party in November, no matter who the Democratic nominee is -- Lou.

DOBBS: Well who could think or even suggest otherwise? It's extraordinary. Thank you very much, John Zarrella.

Michigan's Democratic voters tonight are still without a plan for their revote. State party officials there meeting with representatives of the Clinton and Obama campaigns, coming to no decision however. Michigan, like Florida, stripped of its delegates when it moved its primary to January in violation of national party rules.

The three presidential candidates showed up at their day jobs today, interrupting campaigns to join their Senate colleagues to cast votes on the budget and earmarks.

Dana Bash has our report.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Instead of attending a fundraiser for much-needed campaign cash, John McCain made a rare appearance as his day job in the Senate. Democrats Barack Obama and Hillary Clinton returned to the Capitol, too, after long absences.

What lured the presidential candidates to the Senate? Legislation to ban the controversial practice of earmarks for one year. All three candidates support it, but for McCain, railing on earmarks is a signature issue.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: In 24 years as a member of the United States Congress, I have never asked for nor received a single earmark pork barrel project from my state. Senator Clinton had gotten $342 million worth of earmark pork barrel projects. The senator from Illinois, because he's junior, had only gotten about $92 million.

BASH: McCain hopes to appeal to Independent voters fed up with Washington by making earmarks a major dividing line with Democrats.

MCCAIN: And in both cases, its hundreds of millions of dollars, of taxpayer dollars that are absolutely outrageously wasted.

BASH: Obama did suddenly comply with one McCain demand, revealing for the first time what earmarks he sought in 2005 and 2006, his first two years in the Senate. And on his way to Washington, Obama renewed his attack on McCain for wanting to make the Bush tax cuts he initially opposed permanent.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: These are all steps that John McCain rightly said were irresponsible when they first came up, that certainly were unprecedented at a time of war.

BASH: But for all the campaign discourse, pleasantries back in the club of the Senate. McCain and Clinton saying hello. And this -- knowing the press was watching, Obama engaged Clinton, and the two sat for several minutes of one-on-one conversation, making sure to smile.

Lest anyone use this to rekindle talk of a so-called dream ticket, across the Capitol, the House speaker warned, no way.

(END VIDEOTAPE)

BASH: And the Senate is still in session. They are still voting on those budget-related matters. In fact, they're heading into their ninth hour of consecutive voting. But they haven't voted yet on that issue of the one-year moratorium on earmarks.

And John McCain, he left a couple of hours ago, he went to Philadelphia to attend a previously scheduled fundraiser for his presidential campaign. He was in a bit of a tug of war with the Democratic leadership about the fact that they didn't hold this earmark vote earlier.

So Lou, he's going to come back tonight. They expect to have these votes late into the night, in order to cast that vote against earmarks -- Lou.

DOBBS: The Senate is nothing if not efficient, Dana. The earmark legislation, is it expected then to pass, that moratorium, that ban on pork and earmarks?

BASH: You know, it's always dangerous to make a prediction, but at this point in talking to Democrats and Republican, they actually think it's not going to pass. It's probably not going to pass, because a lot of the Democratic leadership, they're not for it.

They don't think it's a good thing, to ban earmarks for a year. It's going to be also interesting to see how the Republican leader votes. But at this point, the presidential candidates are going to vote yes, it's probably going to fail.

DOBBS: It's going to fail and -

BASH: Don't hold me to that.

DOBBS: It's going fail or pass?

BASH: The expectation right now is that it's likely to fail, but having covered the Senate long enough, at this point they say it's close enough that I just want to leave myself a little bit of wiggle room there.

DOBBS: We will certainly grant you that and we applaud your courage of stepping out that far. I will go this far with you, Dana. I believe that anytime that the United States Senate could act against its interest in pork barrel spending and take a responsible vote or responsible legislation or initiative, you can bet it will fail.

Dana, thank you very much. Dana Bash at the U.S. Senate.

Now we'll see how much trouble you're in and how much trouble I'm in.

BASH: I bet you're right.

DOBBS: Thank you very much, Dana.

Congress today trying to close a loophole that allows some defense contractors from Medicare and Social Security taxes. Lawmakers are acting after accusations that former Halliburton subsidiary KBR used foreign based shell companies to avoid paying taxes when hiring Americans to work in Iraq.

Kate Bolduan reports.

(BEGIN VIDEOTAPE)

KATE BOLDUAN, CNN CORRESPONDENT (voice-over): It's the largest U.S. defense contractor in Iraq. KBR, once a subsidiary of Halliburton, has billions of dollars in government contracts to rebuild the war-torn country's infrastructure. But some congressional Democrats accused the company of not paying an estimated $100 million a year in taxes.

SEN. JOHN KERRY (D), MASSACHUSETTS: It doesn't even pass the most basic smell test.

BOLDUAN: The allegations are that KBR, based in Houston, set up shell companies in the Cayman Islands, a tax haven. By saying Americans work for the Caribbean companies, KBR avoided paying U.S. payroll taxes. Critics say this deprives KBR's workers of retirement benefits and the government the money it needs to fund Social Security and Medicare for everybody.

REP. RAHM EMANUAL (D), ILLINOIS: You cannot use a subsidiary to avoid paying taxes and get a government contract. The taxpayers are not going to be played for dumb money here.

BOLDUAN: So lawmakers, citing an investigation by the "Boston Globe," are pushing a bill that would close a legal loophole that lets KBR out of paying payroll taxes.

KERRY: We're going change the law so that this kind of act is not just unethical on its face, but clearly illegal.

BOLDUAN: KBR acknowledges in a statement that the two Caribbean companies were set up "in order allow us to reduce certain tax obligations of the company and its employees." But the spokesperson defends the action, saying the companies were established "in accordance with IRS rules and regulations, to be competitive in the market." But lawmakers say they're determined to put an end to this practice.

EMANUEL: If an individual or a family in the United States didn't pay their taxes and were somehow getting some other service, we would hold that individual and throw the book at them. Why does a company get a different set of laws?

(END VIDEOTAPE)

BOLDUAN: Now if the bill passes, Lou, it would mean that the law would apply to the future work of the company's American employees, meaning KBR would not be responsible, would not owe additional taxes from the previous years -- Lou.

DOBBS: We wouldn't want a company that has been accused of overcharging the U.S. government for its activities in Iraq, moving its headquarters to be closer to their market, as they said, putting their CEO over in the Emirates.

And for transporting tainted water to our troops. We want to have hands off, a gloved approach with KBR. Rahm Emanuel, it seems to me, any responsible congressman or senator would want to throw the book at this company.

BOLDUAN: Well and that's exactly the reasons you cite right there, Lou, are some of the reasons why these Democratic lawmakers say that they would like to throw the book at this company. They say what they're doing is immoral, and now they're trying to make this tax loophole illegal.

DOBBS: And when that arrogant spokesman for that company suggested they were within the law, I would love to have the gentleman join us on this broadcast for an up close and personal discussion on the issue.

Kate, outstanding reporting, an outstanding story. Thank you very much, Kate Bolduan from Washington.

Turning now to the war on our middle class. With our weakening economy, many Americans are using the credit cards to pay for basics, including groceries and gasoline. And as their credit card debt rises, Congress says it's time for a card holder bill of rights. In point of fact, it's past time.

But as Christine Romans report, the powerful credit card companies are doing their best to make certain that that consumer bill of rights never, ever happens.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Tarek Salib's finances are a house of cards, credit cards.

TAREK SALIB, CREDIT CARD HOLDER: I missed one of the payments on the card and it jumped my rate from 8 percent basically to 30 percent.

ROMANS: Outrageous fees, penalties for paying off high balances and skyrocketing interest rates. House lawmakers are considering a credit card holder's bill of rights that would require at least 45 days notice of any interest rate increases and giving card holders the right to cancel the card and pay their balance at the existing interest rate, and prohibit excessive fees.

ELIZABETH WARREN, HARVARD LAW SCHOOL: No family should be brought low by schemes designed to prey on the unwary.

ROMANS: Author Elizabeth Warren says nearly half of all credit card holders missed a payment in 2006, the last year of available data. One day late on one card warrants a $28 late fee on average.

In some cases, interest rates can spike above 30 percent. Credit card companies sudden rate increases, critics say, are as dangerous as the adjustable rate sub-prime mortgages called exploding loans.

REP. MAXINE WATERS (D), CALIFORNIA: I think we could label credit card agreements land mine loans because it is not at all clear to consumers how or when the interest rates are going increase.

ROMANS: But industry representatives oppose any new regulation. CARTER FRANKE, JP MORGAN CHASE: We are concerned that this bill would reduce the availability of credit at the very time when Congress is doing all it can to increase credit availability and stimulate the economy.

ROMANS: And potentially hurt profits. Consumer credit expert Katherine Porter (ph) testified late fees are the third largest revenue stream for credit card companies.

(END VIDEOTAPE)

ROMANS: Now five credit card holders scheduled to give their story were excluded at the very last minute. According to committee staff, credit card companies said they simply didn't have enough notice about those consumers on the panel and they wanted the witnesses to sign a waiver allowing the card companies to publicly comment and examine on their financial histories.

For issues of privacy and fairness, the citizens, Lou, were in the audience but they were not allowed to give their testimony. Carolyn Maloney hopping mad tonight about that.

DOBBS: Well the congresswoman should be. This Congress, this president should say enough is enough. We're talking about 30 percent interest for American consumers.

The average debt of a credit card holder in this country, $8,000 a card. Talk about those late fees. I mean, this is usury. You don't have to be a genius to run a credit card company. There are a lot of people you could get from the mafia to do it.

ROMANS: You have to be a genius to read those credit card agreements, though. Sometimes they're 30 and 40 pages long. Very dense, small black print on white paper and you still can't quite figure out what the disclosure is there for the interest rate.

DOBBS: How did Maxine Waters describe it?

ROMANS: She called them land mine loans. You know, we talked about the sub prime loans, everyone called them exploding loans. You've got this loan and all of a sudden, the interest rate explodes.

She says it's just as dangerous, the credit card loans because suddenly you miss a payment, and then, boom, the interest rate explodes on that loan and all the other credit cards you have, too. Coming at this time, it's pretty tough as well.

DOBBS: With all due respect to the folks of Chase there and other banks, one of the problems with dealing with folks like us is we actually have an institutional memory and some knowledge of the subject when it comes to business and economics.

Perhaps those folks over at Chase forget that the reason for these extraordinary high rates was at one time, we didn't know precisely how these would work and so thanks for giving some incentives. In point of fact, nearly every bank and every credit card company in the country understood very soon and very early on that the real pay off was to reduce paper in their transactions and to create giant deficiencies, which have become a profit center for all of these banks and credit card companies.

And if I'm wrong, folks, please come on and tell me I'll all wrong. We'll straighten the record out. But the truth is, you're gouging consumers. The Congress and this president have been permitting it and it's time, thank goodness for that congressional hearing. Maybe we're going to see this nonsense stop.

ROMANS: The Feds are reviewing the matter and the Senate, Senator Menendez is also looking at this very closely, Lou.

DOBBS: Well, you know, they can look at it closely. It's time for people to start getting things done. You know, playing to the fears of people instead of actually doing something to remove their fear is where this Congress, these two political parties don't quite grasp their responsibilities. I'm not a fan of either party, if you can't tell.

Anyway, thank you very much, Christine. I'm a great fan of yours - Christine Romans.

Time now for our poll: Should Congress bring back usury laws and limit credit card interest rates?

Yes or no, cast your vote at loudobbs.com.

We'll pass the results along to of course the leadership of the Senate, the House, the presidency, yes, we'll include George W. Bush and of course all of the heads of the credit card companies and most of the major banks.

Coming up next, lawmakers reacting to calls for raising the number of visas for foreign workers.

Louise Schiavone has our report -- Louise.

LOUISE SCHIAVONE, CNN CORRESPONDET: Well, lots of pushback today after one of the richest Americans on the planet asked Congress to let his company hire more foreign workers -- Lou.

DOBBS: Yes, the poor baby. Microsoft can't afford to hire Americans. They have just under a thousand H1B visa workers. Unbelievable. Louise, we look forward to your report.

Also, is the federal government threatening the constitutional right to bear arms? Is this administration diluting the second amendment? The conviction of a Wisconsin gun owner raises serious questions tonight about the intentions of our government. We'll have that report.

And border state governors worried about security, border security - want the federal government to leave thousands of National Guard troops left in place. Not withdraw them from the border, as they are now doing. We'll have that report, a great deal more. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Well, the governors of our border states asking the federal government for more help to protect our border with Mexico. Operation Jump Start, which sent 6,000 National Guard troops to protect our border, is scheduled to end in July. But the governors want that deployment extended.

Casey Wian has our report.

CASEY WIAN, CNN CORRESPONDENT (voice-overs): About 2,800 National Guard troops are on the U.S./Mexico border under Operation Jump Start, a temporary deployment to help the border patrol while it hires more agents.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We've currently expanded the border patrol to more than 15,500 agents with plans to reach over 18,000 by the end of the year.

WIAN: Jump Start began in 2006 with 6,000 troops. As the border patrol adds agents, the guard's numbers are reduced. The entire guard force is scheduled to be withdrawn in July.

All four southwest border governors say that's too soon. Arizona's Janet Napolitano says new delays in the virtual border fence project increased the need for a high level of National Guard troops.

She wrote Homeland Security Secretary Michael Chertoff this week saying, "Now that proposed improvements in border security measures will not come to pass anytime soon, the federal government has no excuse to scale back the program. Common sense dictates that the drawdown should stop."

California Governor Arnold Schwarzenegger personally asked President Bush to extend the deployment, adding "we cannot afford to jeopardize the safety and security of our fellow Americans by removing personnel prematurely." The Government Accountability Office also has concerns about the border patrol's planned 6,000 agent increase.

RICHARD STANA, GOVERNMENT ACCOUNTABILITY OFFICE: Officials believe that the border patrol training academy can handle the influx of new agents, but expressed concerns to us about their ability to provide sufficient training and supervision to new agents once they are posted to border patrol field offices.

WIAN: So far National Guard troops on the border have assisted in 140,000 arrests, helped seize 286,000 pounds of drugs and built 37 miles of fence.

(END VIDEOTAPE)

WIAN: Now Senator Pete Domenici of New Mexico has proposed a bill to extend Operation Jump Start at full strength indefinitely. The Department of Homeland Security however says in a statement, "We've been clear since day one that the role of the National Guard at the border was to provide temporary support of the border patrol" -- Lou?

DOBBS: Well yes, the darlings in the leadership of the Department of Homeland Security have been very clear -- they don't intend to secure that border in any way, shape or fashion. What I'm shocked about, Casey Wian, those border governors, particularly Napolitano of Arizona and Schwarzenegger of California, they're actually talking about border security concerns?

WIAN: Absolutely they are. They're very concerned because no matter what they feel about amnesty and whether illegal aliens in the United States now should have the right to stay here, the fact that the borders are not secure are having very real implications for their states, for their state budgets, for crime rates in places like Arizona and California.

It's really incredible that the government of Mexico for example can find resources to send 30,000 agents out to fight cartels, but the government of the United States can't afford to keep 6,000 National Guard troops on the border to help the border patrol.

DOBBS: Well, you know, this administration has got a peculiar, twisted mind when it comes to the subject of economics and fiscal policy, among with a host of other policies, if I may hazard the statement.

Casey, thank you very much - Casey Wian.

One Democratic senator is demanding a federal investigation into whether the Transportation Department broke the law by spending federal money to go ahead, despite congressional opposition and absolute scriptures against a pilot program that allows Mexican trucks on our roads. That pilot program is part of NAFTA.

It allows Mexican trucks, at the discretion of the Bush administration, to travel anywhere in the United States. And at a hearing this week, Senator Byron Dorgan of North Dakota simply blasted the secretary of the Department of Transportation for her absolute defiance of Congress and starting that program, even though Congress cut its funding in December.

(BEGIN VIDEO CLIP)

SEN. BYRON DORGAN (D), NORTH DAKOTA: I think that there's an arrogance here with respect to federal agencies. There would not be a hearing if the Department of Transportation had complied with congressional intent. Congress has explicitly said you may not proceed with the pilot program.

(END VIDEO CLIP)

DOBBS: Senator Dorgan went on to say continuing that program is straightforwardly a slap in the face of Congress, not to mention the American people. Coming up next, the second amendment is under fire. We'll have a special report on one man's fight to clear his name after a rifle malfunction at a firing range landed him in court. It could land him in prison.

And fighting for American workers. At lease one member of Congress is standing up for American jobs tonight. We'll have that report and a great deal more, still ahead. There's hope, we'll be right back.

(COMMERCIAL BREAK)

DOBBS: Microsoft's Bill Gates is calling on Congress to raise the number of foreign workers companies can bring in to this country, instead of hiring American workers. But tonight, at least one leading lawmaker says companies like Microsoft perhaps should hire American workers first.

Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

SCHIAVONE (voice-over): In remarks to a fawning congressional panel --

REP. RALPH HILL (R), TEXAS: Let me tell you, we're really honored by your presence.

UNIDENTIFIED FEMALE: I agree with you on just about every point that you've made in your testimony.

SCHIAVONE: Microsoft founder and multi-billionaire Bill Gates complained that U.S. high-tech firms face a global labor disadvantage because the number of H1B visas for highly-skilled individuals capped at 65,000.

BILL GATES, MICROSOFT CHAIRMAN: Computer science is not a game played only in the United States. It's not like a local competition. It's more like the Olympics, where at the end of the day, you're going to compete with the best in the world.

SCHIAVONE: But one professor in the field who studies the issue disagrees.

RON HIRA, AUTHOR: The facts are pretty clear that these aren't sort of the gold medal winners in the Olympics. You can look at the wages. They get paid about $50,000 a year. Most of them have no more than a bachelor's degree.

SCHIAVONE: Republican Senator Charles Grassley wants visa reforms requiring employers search for American workers first, before they scour the globe.

SEN. CHARLES GRASSLEY (R), IOWA: There's got to be a good faith effort by a corporation to advertise and seek out American workers first. And then and only then, would they be able to bring in H1B workers.

SCHIAVONE: The latest government figures show nine companies in India secured almost 20,000 of the 65,000 H1B visa slots. India's commerce minister Kamal Nath told the "New York Times," the H1B is "the outsourcing visa."

(END VIDEOTAPE)

SCHIAVONE: Well, Microsoft is not alone in its quest for more foreign workers. The companies joined by Google, Intel and Hewlett Packard. Senator Grassley says requests are tone deaf to the economy worries of American workers -- Lou.

DOBBS: Yes. And it's pretty much an insult to everyone. Can you imagine insulting the people sitting there fawning over Bill Gates there because he thought that those people were stupid enough to listen to his nonsense and think he was being correct and accurate. I mean that is breathtaking stuff.

SCHIAVONE: Well, he's got a lot of money, Lou, and you can imagine what they must be thinking as they see him sitting there, thinking campaign contributions, the Bill and Melinda Gates Foundation, they can farm out a lot of money to various congressional districts.

DOBBS: If we could just create maybe a little image in their mind of maybe our working men and women in this country, their families, the future of the country, the common good, the national interest, little mental pictures like that. I mean that is really, absolutely disgusting.

But the fact that Bill Gates sits there -- everybody, one congressman saying that he agrees with almost everything he said. Well, I disagree with nearly everything he said. Absolutely disagree and he was absolutely wrong.

And as you point out, most of those visas in the top 20 going to Indian companies in this country for the purpose of domestic outsourcing. I mean what part of this doesn't Congress get? How can they sit there with a straight face -- they weren't even a straight face, they were just scrunched up with their lips smacking for Bill Gates as he just simply distorted reality.

SCHIAVONE: And what's so amazing is that you have the Indian commerce minister literally calling H1B the outsourcing visa.

DOBBS: The Indian government represented ably by honest and effective people.

Thank you very much, Louise Schiavone from Washington.

Well, time for some of your thoughts.

Raymond in Missouri said: "Lou, I think it's so sad that Bill Gates finds the people of the United States so stupid that in a population of over 300 million people, he can't find 1,000 smart people to work for him. The United States made it possible for him to become the billionaire he is now. Why is he now kicking us in the face?"

A great question.

And Robert in Colorado: "Hey Lou, I think it's time for Bill Gates and all those idiots in Congress to remember where they live."

Good idea.

We'll have more of your thoughts her later. Each of you who's e- mailed us right here receives a copy of my book, "Independents Day: Awakening the American Spirit."

I'm going to send one to Bill Gates because I like him so much. And a reminder to watch the LOU DOBBS SHOW and to listen to the LOU DOBBS SHOW, our new three-hour radio broadcast each afternoon. Go to loudobbs.com to find the local listings for the LOU DOBBS SHOW on the radio.

Coming up next, the Democrats' dilemma to hold a do-over or not. Will the nomination be decided by Michigan and Florida revotes? Or by superdelegates? Two leading political scientist join me and ahead.

And ahead, outsourcing American jobs and our national security. I'll be talking with a congressman who's fighting the Air Force's decision to sell out American workers and our national security.

The second amendment is under fire. The Supreme Court will be rendering a decision this term.

And we'll be telling you the story of a family facing prison time after a rifle he loaned discharged what's the Alcohol and Tobacco Firearms people call automatic fire.

We'll have that report, it will disturb anyone who cares about the second amendment and who owns a gun in this country. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: One of our basic freedoms is the right to keep and to bear arms. It is under fire tonight. An army reservist was convicted in federal court, I quote, "transferring a machine gun," end quote, after his 20-year-old AR-15 rifle malfunctioned on a shooting range.

That malfunction caused the rifle to fire multiple rounds with one pull of the trigger. Now the husband and father of three is a convicted felon and he's facing prison.

Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice over): In July of 2006, David Olofson life dramatically changed. A raid under the command of the Bureau of Alcohol, Tobacco, Firearms and Explosives was carried out on his home in Berlin, Wisconsin by the local police, the Sheriff's Department and the ATF.

DAVID OLOFSON, CONVICTED GUN OWNER: They used tools to -- you know hydraulic tools to fly apart the door frames, kicked the door in. The S.W.A.T. team was fully armed with body armor.

TUCKER: Olofson's computers, gun manuals and gun collection were all seized. No illegal weapons were found. But Olofson was charged with a felony. Prior to this, Olofson had no criminal record. He's an army veteran, honorably discharged. He was, up until his arrest, serving in the Army Reserves. He's a husband and the father of three young children.

Olofson's problem began when he lent a rifle to a young man, Robert Corniki(ph), to be used on a local firing range.

(on-camera): Corniki brought the rifle here to the Berlin Conservation Gun Club. He fired at least 800 rounds on several different occasions before the two multiple burst rounds that the ATF said made the gun a machine gun.

(voice-over): This past January 8, Olofson was convicted on the charged of transferring a machine gun, a violation of federal law and he now awaits sentencing.

Federal law defines any gun which fires more than one bullet with one pull of a trigger as a machine gun. That conviction ended his military career and could land him in prison.

Nationally gun owners are alarmed because the gun in question is not or has not been until now considered a machine gun. It is an AR- 15 semiautomatic rifle. Olofson's was made by Olympic Arms SGW.

While no one keeps exact statistics on the gun, the National Rifle Association says tens of thousands of AR-15s are legally owned in the U.S. Gun owners are now wondering if their guns misfire, will they go to jail? And are their second amendment rights in jeopardy?

Olofson's defense lawyers are adding laws to explain the government's logic.

BRIAN FAHL, FEDERAL DEFENDER SVCS. OF WISC.: A lot of what the government was attempting to prove and their theory of the case, you know, just seemed to contradict common sense. You know, if something malfunctions, you get it fixed, don't charged or prosecute somebody as a felon.

TUCKER: But they did. And that's exactly why David Olofson found himself in federal court.

(END VIDEOTAPE)

TUCKER: Now we can't tell you why the government brought its full weight to bear on a man living in a town of 5,500 people in the middle of Wisconsin. We asked for an explanation but the U.S. attorney in Milwaukee declined to comment because Olofson is awaiting sentencing.

Tomorrow, Lou, we'll take a look at some of the inconsistencies in the government's case against Olofson.

DOBBS: This is a remarkable story, a disturbing story. I don't think anyone -- I got to say it straight up to ATF, I got the greatest respect for the work that all of you do. I am also a gun owner. I believe fervently, strongly, passionately in the second amendment, I think as most Americans do.

And to have a man the full weight of the government come down on this man, to make it clear, as I read the transcript of the case, he loaned the weapon on him like this, it -- to make it really clear, as I read the transcript in this case, this man loaned this weapon, right, to a fellow who wanted to buy it perhaps. He goes to the firing range, he fires it, one, two -- with one pull of the trigger, two rounds are fired.

TUCKER: Right.

DOBBS: The third jams and suddenly it's a big deal.

TUCKER: Yes.

DOBBS: I mean this is...

TUCKER: You've got it right. And what you're missing is he fired about 800 rounds or more before that round he shot --

DOBBS: It's semi automatic fire.

TUCKER: Semi automatic fire, before that gun jammed.

DOBBS: Unbelievable. And we can't get a straight story on this at all. And I would hope that the NRA, that the ATF, that the Justice Department, everybody, all of the folks, step in here and look at what you're doing because it doesn't make a sense.

There's nothing proportionate here. And this is an army veteran we're talking about. This is --

TUCKER: With 14 years of service, 16 years, excuse me, when you combine his reserves service with his regular army service, we're talking about a man with 16 years of military.

DOBBS: A man who deserves a lot better from his government.

We'll continue this report tomorrow and throughout. Bill Tucker, thank you.

The Supreme Court next Tuesday will hear oral arguments in a landmark second amendment case that could have national implications for gun ownership rights in this country. At issue the constitutionality of a Washington, D.C. law that bans handguns.

A federal appellate court last year ruled the ban unconstitutional. Now in a surprising move, the U.S. Justice Department is arguing that the case should be returned to the appellate court for further review, which could lead to restrictions on gun ownership. All thanks, of course, to the Bush White House but the Bush administration is at odds with its own Justice Department.

As a result, Vice President Dick Cheney signed a brief that on opposes the Justice Department's decision. More than 300 members of Congress also signed that brief supporting the second amendment and gun ownership rights. Could this administration get more screwed up? We'll take that up question when we have far more time.

Up next here, will Florida's Democratic voters ever have a chance to be heard? Will they be disenfranchise again by the Democratic Party ? Two leading political scientists join me.

Congressman Norm Dicks says the U.S. Air Force needs to explain its outrageous decision to award a major military contract to a European company. These are just here next.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Well, outrage on Capitol Hill over the outsourcing of that $35 billion contract to a European company that builds airbus.

Congressman Norm Dicks says the Air Force's decision is simply flawed. He's fighting that decision with everything he's got in his power.

Joining us live from Capitol Hill, Congressman, good to have you here. Are you going to prevail?

REP. NORM DICKS (D), WASHINGTON: Yes, Lou, I think we are going to prevail. I think because the Air Force told Congress that it wanted a medium-sized tanker, testimony by Secretary Mike Wynne, and because they even gave us documents as late as December, which indicated that they were going to buy a medium-sized tanker, rather than a large tanker, I feel they've misled the Congress. I think we have every right to stop this program.

DOBBS: Well, Boeing has never protested one of these contracts before. But I mean, that's a pretty major screw up to throw the Air Force to say, well, we will just take the big one instead of the medium one like we've been telling you all. How in the world did the - Secretary Wynne explained that one?

DICKS: Well, he had no explanation. He said because it's under protest, we just - he said we followed the regulations. We were open and transparent. They weren't open and transparent. The reality is they changed the criteria for this competition and made some changes after Northrop Grumman threatened to pull out of the competition that made it possible for the A330 to compete.

DOBBS: The airbus. DICKS: Now -- yes, the airbus. This is a subsidized airplane. The A330 and the A340 were built together -- and they received $5 billion in launch aid and that wasn't even considered.

DOBBS: Well -- there's not only subsidized, we have -- the United States has an action before the World Trade Organization as you well know...

DICKS: Right.

DOBBS: ...bringing forward those subsidy charges. How -- and I heard Secretary Wynne say, well, you know, they're confident they stayed within the law. What kind of moronic process do we have that permits this kind of thing? I don't care whether it's within the law or not, it's -- it lacks basic judgment, it lacks a strategic sense, it lacks any kind of maturity of reason. What in the world is the federal government doing here?

DICKS: Well, I think what they've done, we've passed the laws over the years, and they apply to the United States competitor, in this case, Boeing, but they don't apply to Airbus.

DOBBS: Right.

DICKS: I mean -- and so they -- we have created a monster that's got to be changed. The last three major contracts all went to foreign companies. And I'm really worried. Now here's the other thing I'm worried about, Lou. How do we bring parts, a tail from Spain, the fuselage from Britain...

DOBBS: Right. Then assemble it like an erector set in Mobil, Alabama.

DICKS: Right. And then put it together in a plant that doesn't exist with a crew that doesn't exist. Northrop Grumman tried to do (INAUDIBLE) down in Louisiana and it was a complete flop.

DOBBS: Right. But you know, the folks down in Mobil, Alabam, Northrop Grumman is saying, you know what? You may give it ultimately after this 100-day review by the GAO, you may give it to Boeing but Boeing just going outsource 60 percent of it to China.

DICKS: Wait. I'm told, and this is what they have told us from the start on this particular plane, Lou, it's the A-767. It's 85 percent American.

DOBBS: Right.

DICKS: Built in this country. That's pretty good in this global market that we're competing in.

DOBBS: Yes. And it's about time we started getting our heads on straight about what constitutes national defense and whether or not that's going to be important to this country in the years ahead. We hope so.

DICKS: And Lou...

DOBBS: Norm Dicks, we thank you. I'm sorry, go ahead.

DICKS: Can I say one final thing? They didn't look at industrial base, they didn't look at national security. They didn't look at any of these major issues including subsidy, we got to start over.

DOBBS: Yes, to do all of that, of course, we've got to have some leadership. And...

DICKS: Some judgment, as you said.

DOBBS: You got it.

Congressman Norm Dicks, good to have you here.

DICKS: Thank you, Lou.

DOBBS: And good luck.

The Democratic Party is in disarray. The party fighting about how to do a do-over in Florida and Michigan. Basically the Democratic Party apparently is just quite content to disenfranchise hundreds of thousands of their voters. I'll be talking to two of the country's leading political scientist about what is utter madness in these presidential political views.

Stay with us, we're coming right back.

(COMMERCIAL BREAK)

DOBBS: Well, as an independent populist, I enjoy watching the Democrats and Republicans figure out how to proceed. The Democratic Party tonight is in -- well, they're divided on a lot of things and a lot of approaches in the race for the White House, including just how to resolve that dispute over whether or not the people in Florida and Michigan actually should have the opportunity to vote.

My guests tonight say superdelegates were created to resolve just this kind of party infighting.

Thomas Mann and Norman Ornstein are the co-authors of the book, "Broken Branch: How Congress is Failing America and How to Get It Back on Track." Thomas Mann, a senior fellow with the Brookings Institution, Norman Ornstein, a residence scholar at the American Enterprise Institute.

We are delighted that you both could join us. Let me start with you, Thomas.

This business of the Democratic Party not seemingly committed to enfranchising those they've disenfranchised in Michigan and Florida. What do you make of it?

THOMAS MANN, CO-AUTHOR, "BROKEN BRANCH: Well, Lou, the problem is the Michigan Democrats, a group of them, decided they wanted to blow off the present system with Iowa and New Hampshire dominating, so they tried to get that schedule changed, they couldn't do it, so they went ahead and moved their primary election up in the schedule, against the Democratic Party rules figuring the party may deny them any seating at the convention as a consequence.

In Florida, it was different. It was the Republicans who were in charged of the whole government and they wanted to be in the spotlight apart from Super, Super Tuesday. So both of them broke the party rules. And now...

DOBBS: Oh, my goodness, it sounds terrible.

MANN: But listen, only Hillary Clinton was on the ballot in Michigan. They didn't have a real election there? And all of the candidates pledged not to campaign.

DOBBS: Senator Clinton thinks they did.

MANN: Well, I bet she does. At the time she said, this is meaningless. So I won't campaign there.

DOBBS: So now that Howard Dean, the chairman of the Democratic Party, has had his little imperious, is he fit, Norman, can we now all be adults and the Democratic leadership come together and actually enfranchise, if you will, the voters of Michigan and Florida?

NORMAN ORNSTEIN, CO-AUTHOR, "BROKEN BRANCH": No. You're asking way too much, Lou.

DOBBS: I'm sorry.

ORNSTEIN: No, actually, nobody anticipated at all that it would come this. In fact, we thought there was a real chance the Republican Party would go to the convention with no resolution. The Democrats will resolve it and then they come around and figure something out that would punish Florida and Michigan for their apostasy but still let them in.

Now we've got a real dilemma on our hands, because Mrs. Clinton wants the delegates that she's gained in Florida where neither campaigned, wants the delegates in Michigan where she was on the ballot and nobody else was, and figures that might put her over the top. That's not going to work, it's not fair. The candidates can't agree with that.

DOBBS: I would agree with that. But there isn't a person watching or listening to Thomas Mann and Norman Ornstein who say, and they're saying these are two of the most brilliant political scientists in the country. But can't in any way this be resolved fairly, intelligently?

ORNSTEIN: It can be resolved. And I think the way to resolve it is that you give them half the delegates the way the Republicans did, but in effect, you find a formula where you give Mrs. Clinton some bonus for Florida, for having actually prevailed there. But then you divide the rest of the delegates according to the national popular vote cast for two of them. That's the way to resolve it.

MANN: The other alternative is to try to do over the elections. Hold new primaries. Here's the problem. It would have to be done by the political parties because the state governments say they won't do it, they won't finance it. It would have to be by mail-in ballots to keep the costs down to, say, only $10 million.

Do you know -- Michigan has no experience. In Florida, the voter fraud associated with absentee ballots is dreadful.

DOBBS: You realized what you're saying here, Thomas, is that we're too stupid to do it right in this country.

MANN: No, it just takes time. Elections are hard to administer and if you take out of the system, the people who were hired and trained to do it and say you party people, you know, we could, in our effort to solve a problem, we could create a much bigger problem where no one has any faith in the actual results.

DOBBS: In the high schools of Michigan and Florida, I would like this to happen. This would say Obama, this would say Clinton. You'll hold it up like this. Everybody makes a little box, put them on these cards, we get them distributed. We send them over to the registrar's office and say let's have an election. It's a simple binary choice. Clinton, Obama. One or the other.

ORNSTEIN: You know, but it's easy enough to create the ballot, who gets the ballot? How do you distribute the ballots? Who counts the ballot? How long do you take to do it? And...

MANN: You know they didn't fill out by the registered voters.

DOBBS: OK. OK. You've convinced it.

MANN: The superdelegates.

DOBBS: Let's disenfranchise the voters of Michigan and Florida. You've actually convinced me. Now the superdelegates get to decide this. Before the convention or during?

MANN: What they are going to do is take a look at the end of the primary season on June 3 and see what the voters have said. In the primaries and caucuses, with or without Michigan, if there is a clear leader, they are going to move overwhelmingly toward that Obama or Clinton and they will have a choice. They will have a nominee before the convention.

DOBBS: But for crying out loud, a leader is not across the threshold in terms of delegates which is required for the nomination.

ORSNTEIN: Every one of this superdelegates wants this resolved as early as possible. We want it to go to the convention, obviously, because it would be the greatest thing that we've seen has it been since 1952 that...

DOBBS: You accuse me unfairly. It would be the last thing I would look for.

ORSNTEIN: Of course. And you know, every pundit and journalist in America says a little prayer every night that that will happen. The problem that they've got is, much as they want to resolve it, unless there's somebody clearly ahead in elected delegates and popular votes at the end of this process, it's going to be hard to resolve it.

And you can't just leave Michigan and Florida until June. If you are going to do some kind of an election it takes months to prepare for it. It's a very tough problem.

MANN: Believe it or not, Lou, I really just think having elected and party officials there as a kind of safety valve to save the party from disaster -- remember what underlies this is that we have an incredibly unprecedented close campaign.

DOBBS: If I'm a Democratic voter in Michigan and Florida, and the Democratic Party disenfranchises me, I say, to heck with you; I'm going to vote for -- Senator McCain or I'm not going to vote at all. And I'm going to say --

(CROSSTALK)

ORNSTEIN: They've got to do something that brings in delegates from Michigan and Florida. And the only practical way to do this, given the problems with mail-in election, the cost of a regular contest, are to find some formula that gives some kind of balance here. And it's doable; it's just very, very hard in a party that is now at loggerheads with itself.

DOBBS: The Democrats are singing the George W. Bush refrain. It's hard, it's hard work.

Thank you very much, Norm Ornstein --

ORNSTEIN: You bet.

DOBBS: -- It's good to have you with us.

Thomas Mann thank you, sir. Appreciate it.

The results of our poll tonight -- 98 percent of you say Congress should bring back usury laws and limit credit card interest rates. And to the two percent who work for credit card companies, or actually manage them, we thank you very voting, as well.

Thanks for being with us tonight. Join us here tomorrow, we'll be broadcasting from Washington, D.C. Senator Jeff Sessions will be among my guests.

For all of us here, we thank you for watching. Good night from New York.

The "ELECTION CENTER" with Campbell Brown begins right now.

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