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LOU DOBBS TONIGHT

Tennessee Governor Seeks Solution to Long Democratic Primary Fight; Airlines Encounter Problems After Outsourcing Maintenance; Congressional Opposition Surfaces to Real ID

Aired March 27, 2008 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


LOU DOBBS, HOST: Senators Obama and Clinton locked in a long, bitter battle to win the Democratic nomination. You may have noticed. But the governor of Tennessee says that the fight could be a huge problem for the Democratic Party come November. Governor Bredesen joins me. He has a solution to the Democrats' problem.
And American Airlines canceling hundreds of flights today to review maintenance procedures. Could it be the airlines are cutting corners on safety in order to cut costs?

And three years after the Senate overwhelming passed Real ID, there's rising opposition to the plan. And some of those senators want their votes back. We'll be telling you about that. We'll have all of the day's news and much more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate, and opinion for Thursday, March 27th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. The controversy over Senator Obama's former pastor widens tonight. New allegations of anti-Israel remarks on the pastor's page in a church publication. The senator has continued throughout to stand by the reverend. And the controversy hasn't hurt the candidate at all in the polls. Jessica Yellin is on the campaign trail in Philadelphia, and has our report tonight -- Jessica.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Lou, it appears the latest polls show Barack Obama has survived the first crisis of his campaign and it appears he has come out just fine.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): For Senator Clinton, it's not over until it's over.

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: You know, we may be half way through the fourth quarter and we're trying to figure out exactly who is going to come out on top.

YELLIN: But if she were hoping her opponent might suffer a fourth-quarter collapse, no such luck. A new NBC/Wall Street Journal polls shows since the controversy over Obama's former pastor broke, Democratic support for Obama appears to have risen. He's statistically tied with Clinton. Voters we spoke with here in Philadelphia were not troubled by the Reverend Wright controversy. UNIDENTIFIED FEMALE: When I see how he handles the conflict and I see how he handles the difficulties, I think he's very -- I actually believe him.

UNIDENTIFIED MALE: I look at that as like something that's like kind of the far in the past, you know, and I'm looking at what is going on now more than anything.

YELLIN: This week, Obama himself is calling on the media and public to move beyond Wright's comments.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It spoke to some of the racial divisions that we have in this country and have tapped into some of those divisions. I hope people don't get distracted by that. I want a politics to get stuff done.

YELLIN: Still the drip, drip, drip of information about Reverend Wright continues. The latest, over the last year, the pastor's page from Wright's church bulletin has featured anti-Israel statements by an Arab activist saying Israel and South Africa worked on an ethnic bomb that kills black and Arabs, and that what Zionist Jews did to the Palestinians is worse than what the Nazis did to the Jews.

So far there is no clear evidence this kind of helps Clinton. In fact, in the last two weeks, Clinton's negatives have gone up, which suggests voters might blame her more for the negative tone of this campaign.

(END VIDEOTAPE)

YELLIN: Now, Lou, I spoke with a spokesperson at the Clinton campaign, who had a very different explanation for those negatives, he said the Barack Obama campaign has been savaging Senator Clinton and engaging in character assassination. He was eager to point out that those kinds of attacks are at odds with Obama's message of hope -- Lou.

DOBBS: An interesting perspective. Thank you very much, Jessica Yellin, from Philadelphia.

A new CNN/Opinion Research poll suggests the battle between Clinton and Obama could hurt Democratic chances in November. According to the poll, if Clinton were to be the nominee, one in six voters won't vote at all. And if Obama is the nominee, again, guess what? One in six of his supporters would rather sit out the election entirely.

You may recall last night, we reported a Gallup poll that suggested if Obama wins, more than one in four Clinton supporters would switch their allegiance to McCain. And if Clinton were to win, one in five Obama supporters would support John McCain.

This is a tight battle in all the worst ways in the Democratic Party. Senator Obama today blasted bailouts for Wall Street banks as he turned to economics. Obama and Clinton promising financial relief for American homeowners caught in our foreclosure crisis. And both candidates attacking Senator McCain's approach to this crisis.

Suzanne Malveaux has our report.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): All three candidates are vying to become economist-in-chief.

OBAMA: If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling often through no fault of their own.

CLINTON: We're trying to run today's economy on yesterday's infrastructure. And we're jeopardizing tomorrow's prosperity.

MALVEAUX: Democrats Hillary Clinton and Barack Obama presented competing proposals on how to fix the ailing economy. Obama, just a few blocks from Wall Street, called for greater government oversight to protect families from predatory lenders.

OBAMA: The American economy does not stand still, and neither should the rules that govern it. The evolution of industries often warrants regulatory reform.

MALVEAUX: Clinton kicking off a three-state tour from Raleigh, North Carolina, emphasized providing relief.

CLINTON: As president I will work to rein in the corporate special interests and to rebuild a prosperous and strong middle class.

MALVEAUX: Clinton's plan calls for a $30 billion bailout for states to help them buy properties in foreclosure and a 90-day moratorium on foreclosures. Obama's plan calls for a $30 billion economic stimulus package and greater government intervention.

Both Democrats attacked Republican John McCain for his approach which limits the government's role in stabilizing the market.

OBAMA: It amounts to little more than watching this crisis unfold.

CLINTON: It seems like if the phone were ringing, he would just let it ring and ring and ring.

(END VIDEOTAPE)

MALVEAUX: Well, John McCain's campaign put out a statement in response to the criticism, saying that: "I believes of government is to help the truly needy. Reforms should focus on improving transparency and accountability in our capital markets. What is not necessary is a multi-billion dollar bailout for big banks and speculators, as senators Clinton and Obama have proposed."

So that is what McCain is coming back with today.

DOBBS: And the extraordinarily disappointing part of all of this back and forth amongst those three candidates, the Republican and two Democrats, is that not one of them will have any influence over this crisis because they could not possibly be in office in time to do so.

MALVEAUX: The only thing they can do now is propose legislation and hope that somebody essentially will go and support it.

DOBBS: And I think we have to be honest. We shouldn't hold our breath on the legislation they would introduce. Not one of those three senators has succeeded in economic legislation in his or her term in the Senate. Thank you very much, Suzanne Malveaux.

MALVEAUX: Thanks, Lou.

DOBBS: A new controversy over another Obama supporter tonight. The governor of Puerto Rico today indicted in a -- it's a bad, bad year for governors, apparently. A campaign fraud investigation in Puerto Rico, and Governor Anibal Acevedo-Vila faces 19 counts, including conspiracy and wire fraud charges. Twelve others also indicted.

Acevedo is a Democratic superdelegate pledged to Senator Obama. Now you've talked to the campaigns, sometimes they'll argue about whether they should be called superdelegates. It amuses us to call them superdelegates, because that's what they are. If the governor in Puerto Rico does leave office, he would no longer be a superdelegate.

Turning now to the war in Iraq, the State Department today warned personnel at the U.S. embassy in Baghdad to remain inside. Mortar attacks in Baghdad's heavily protected Green Zone this week killing two Americans. A night curfew has been imposed in Baghdad over days of clashes between government troops and Shia extremists. President Bush today praised the Iraqi government's offensive against those extremists in both Baghdad and Basra.

Ed Henry reports from the White House.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): Another day of chaos in Basra. Shia militiamen sabotaging an oil pipeline as the Iraqi military's attempt to regain control of the southern port city has stalled.

Meanwhile, at the National Museum of the Air Force in Dayton, President Bush continued to tout progress from the surge, trying to make the case the violence in Basra is actually building on that success.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Prime Minister Maliki's bold decision, and it was a bold decision, to go after the illegal groups in Basra shows his leadership. It also shows the progress the Iraqi security forces have made during the surge.

HENRY: But the president also seemed to be prepping the American people for a spike in violence as the Mehdi Army of Muqtada al-Sadr pushes back against the Iraqi forces. BUSH: This operation is going to take some time to complete. And the enemy will try to fill the TV screens with violence. But the ultimate result will be this, terrorists and extremists in Iraq will know they have no place in a free and democratic society.

HENRY: Another possible result, the new violence could spark an unraveling of the cease fire with the Mehdi Army that had stabilized the situation on the ground. Nevertheless, the president focused on economic and political gains made by the Iraqis, even using a sports anecdote he heard from General Ray Odierno, the former number two commander in Iraq who just returned home.

BUSH: He flew over Baghdad 15 months ago and he couldn't see a single soccer game. On his final flight last month he counted more than 180.

It is a sign that the surge is working and civil society is beginning to grow. It is a sign normalcy is returning back to Iraq.

(END OF VIDEOTAPE)

HENRY: Just as interesting is what the president is not saying, he's not talking about bringing home more U.S. troops later this year. With the violence increasing, not just in Basra, but in Baghdad as well, it's going to be harder and harder for the president to bring home a large number of U.S. troops before he leaves office -- Lou.

DOBBS: Ed, thank you very much. Ed Henry, from the White House.

One of our soldiers was killed today by insurgents in Iraq, 31 of our troops have been killed so far this month, 4,004 have been killed since the war began, 29,496 of our troops have been wounded, 13,189 of them seriously.

Up next here, more on the presidential campaign. Three of the nation's leading political analysts will join me.

And there's rising opposition to the U.S. Air Force decision to outsource that lucrative tanker contract to a European consortium that builds the Airbus. Christine Romans will have our report -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, 35 billion taxpayer dollars are at stake here, and critics say so is national security, Lou.

DOBBS: Look forward to it. Thanks, Christine.

Also, new concerns that U.S. airlines are cutting corners on aircraft maintenance. Outsourcing maintenance, are they putting the flying public at risk?

We'll have that story and rising opposition to the Real ID program. Now a key senator is leading the charge. He wants a redo. Redos are getting popular. We'll see if we get one. We'll have a special report, stay with us, we're coming right back. (COMMERCIAL BREAK)

DOBBS: The chairman of Bear Stearns, James Cayne, sold his stake in the investment bank just a day after J.P. Morgan raised its offer for the failing bank from $2 a share to $10 a share. Cayne sold 5.6 million shares of Bear Stearns and he got back about $60 million. Cayne stepping down as Bear Stearns chief executive back in January after two of the company's hedge funds had collapsed because of heavy exposure to our mortgage crisis.

American and Delta, two of the country's largest airlines, canceling hundreds more flights today. Those airlines are in the midst of reviewing maintenance procedures. The FAA ordering a check of all U.S. airlines' maintenance records. This, of course, raising a lot of questions about whether American Airlines are putting profits ahead of passenger safety.

Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Delta, American, United, Southwest, all experiencing a renewed focus on maintenance. It comes in the wake of a Federal Aviation Administration's inspection of Southwest Airlines and a resulting $10 million fine.

It was an inspection that the FAA gave Southwest full warning that it would be conducting, prompting the airline to disclose that some of its aircraft had been flying with cracks in the fuselage.

One pilot who was also a chief financial analyst looking at the industry, says airlines are under tremendous financial pressure.

VAUGHN CORDLE, AIRLINEFORECASTS: The airlines who, historically, for 20 years on average, paid 61 cents a gallon, prior to 2003, are now, today, playing $3.20 a gallon.

TUCKER: He estimates that it will cost the airlines $38 billion in jet fuel costs alone this year. It is that sort of financial pressure which labor groups say makes outsourcing the maintenance of planes overseas so attractive, because labor costs there are lower.

It is a trend that the labor unions call disturbing.

LESLIE MILLER, INTL. BROTHERHOOD OF TEAMSTERS: Mechanics who work on planes in South Korea or China, they don't need to have to get FAA certificates. If you worked on a plane in the United States, you have to have an FAA certificate.

TUCKER: Ironically, Southwest Airlines had been planning to outsource a large piece of its maintenance to El Salvador prior to the discovery of problems and the resulting fine. The airlines continue to insist that flying is safe.

(END VIDEOTAPE) TUCKERS: Now groups critical of the FAA say they believe the regulator has too cozy a relationship with the industry. The agency responds by pointing out that the latest wave of inspections is, in fact, in response to FAA reviews of maintenance records. And it should be noted that the number of FAA inspectors has in fact risen 25 percent in the last six years, Lou, while the number of flights have declined 10 percent. So it's a little bit contrary to what we have seen at other regulatory agencies. We are seeing an increase in spending.

DOBBS: Yes. And I think overall everyone has to understand the FAA is -- it's one of those exceptions to the rule in the case of the federal government. It's an overburdened regulatory agency, but one doing its job against immense challenges.

But what -- the real question, and it's not being discussed of course by this White House, by Congress, it's not being discussed by these presidential candidates. We have to make the determination in this country as to whether or not the airline industry will remain unregulated.

They're not making money. They're incapable of making money without government assistance. So we may have to make a determination at some point about what this airline industry is going to look like, what we're going to tolerate, whether it will continue to be a growing mass transit -- form of mass transit, because that is what it has become.

And there has been no adjustment in the economic realities, the political reality, and certainly the economic reality.

TUCKER: True.

DOBBS: Thank you very much, Bill Tucker.

The U.S. Air Force -- speaking of economic realities and politics, the U.S. Air Force and Northrop Grumman tonight are fighting Boeing's protest of that $35 billion to $40 billion Air Force tanker contract. The Air Force chose to outsource the contract, and our national security, to the European company that owns Airbus, instead of Boeing.

Christine Romans has our report.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): The dogfight over a lucrative Air Force contract won't be decided until at least June 19th. That's when the Government Accountability Office rules whether the Air Force acted properly rejecting Boeing and hiring a European company and its U.S. partner to build 179 aerial refueling tankers.

WINSLOW WHEELER, CENTER FOR DEFENSE INFORMATION: The GAO decision on this is going to be key. Boeing is going to have a weak case if GAO does not go their way. ROMANS: Thirty-five billion taxpayer dollars are at stake. And that's not all. Senator Maria Cantwell has Boeing operations in her state. She wants GAO to consider "operating costs, the national security impact of the high cost of fuel, and the need to maintain critical skills vital to national security when making its procurement decisions."

The Air Force chose a tanker based on the Airbus A330 made by EADS. The tail, fuselage and wings will be built in Europe, then assembled in Alabama. EADS's partner, Northrop Grumman, will handle the military outfitting of the plane.

Boeing is on the P.R. offensive, blasting the Air Force process as "flawed by countless irregularities." It says the larger Airbus plane will use more fuel and could cost billions more for larger hangars and runways.

The Air Force said the contract is lawful and Airbus is the better plane no matter where it is made. Air Force Secretary Michael Wynne was recently grilled about the outsourcing of American defense production.

MICHAEL WYNNE, AIR FORCE SECRETARY: As you know, the presidential helicopter is in fact an international offering. The CSAR (ph) has international offerings. The C-27 is an international offering.

ROMANS: Mine-resistant vehicles are being air-lifted from South Carolina to Iraq by Russian airplanes.

(END VIDEOTAPE)

ROMANS: He says because that is the most efficient way to do it. Now that outsourced Marine One project, however, has not been efficient. The president's new helicopter fleet is behind schedule, vastly over-budget, the cost has nearly doubled in three years. And in fact, that whole project is under review -- Lou.

DOBBS: Well, and now this is under review. And the question I think that is very -- to me it is intriguing, that we are witnessing two of the few remaining -- defense and aerospace companies, Northrop Grumman and Boeing, put into position where they are competing against each other instead of driving this economy, and doing so to the benefit of Airbus and EADS -- the consortium that builds Airbus.

You know, you have to work long and hard to come up with an architecture like that would be so befuddling, so negative to the American interests. It's ridiculous.

ROMANS: One of the things that critics keep pointing out as well is that you have got the Air Force potentially paying $35 billion to a European company at the same time the United States is suing in front of the WTO for unfair trade subsidies according to the U.S. So you have got this kind of "Alice in Wonderland" experience going on with trade in this case. DOBBS: Michael Wynne, the Air Force secretary, well-regarded, well-respected, this administration has some businesspeople in it, that's why it makes it difficult for me to say, you people need to extract your head from the dark places you're keeping them, because you really need to wake up to the realities, both economic, political and militarily.

This is just an insane idea on any level. And for the president of the United States to continue to permit this to proceed, I mean, show some courage, some leadership, some direction. That is the role of Congress, that is the role of this president. And to sit here just saying, you know, this is the way it's going to be, it is -- it's almost -- it's fatalistic, but it's nihilistic as well, at least when it comes to American interests.

ROMANS: June 19th, we'll get the GAO decision. And a lot of people say that will be the important kind of decision for the next step in all of this.

DOBBS: What I love also is one of our viewers wrote in here. I always say how smart the audience of this broadcast is. And I really mean it. He wrote in and suggested that -- with some background of course in military and in defense and aerospace manufacturing. He said, well, you know, what we could do if we really wanted to be smart about it would be use those used 767s which would save us a small fortune on the whole thing and retrofit them for tanker aircraft. No one seems to want to even consider that in Washington, D.C. I wonder why not?

Christine, thank you very much. Christine Romans.

That brings us to our poll. The subject is, do you think the Pentagon needs a full review of the potential national security implications of outsourcing defense contracts -- and our national security, he might add? Yes or no, cast your vote at loudobbs.com. We'll have the results here later.

And the CEO of the nation's largest phone company says he can't find enough skilled American workers to fill 5,000 customer service jobs, that according to numerous reports. AT&T promising to return those jobs to the United States from India where they have outsourced.

Citing a high school dropout rate of 50 percent in some communities, AT&T's CEO, Randall Stephenson, said: "If I had a business that half the product we turned out was defective or you couldn't put into the marketplace, I would shut that business down.

Now we called AT&T for further comment on those statements about the most highly workforce in the world. We didn't get a response if time for this broadcast. But I want to say this, AT&T, I definitely don't agree with what you're CEO is saying, but it's nice to hear a CEO speak up.

He didn't hide behind the Business Roundtable, he didn't hide behind the Chamber of Commerce, he stood up like a man and actually said what he was thinking. And he's welcome on this broadcast to discuss it at any time. Good for you, AT&T, you've got a real CEO, I think the son of a gun is a leader. Congratulations.

Up next, is the nasty Democratic race for president tearing that party apart? I'll be talking with the governor of Tennessee and a superdelegate to boot.

And more lawmakers rebelling against the very same anti-terrorism laws they helped pass. We'll have that special report, it could only come one place, of course, Washington, D.C.

(COMMERCIAL BREAK)

DOBBS: How times and sentiments change. Three years ago, the United States Senate passed Real ID Act overwhelmingly, you can't get more overwhelming, in fact, 100-0. The law mandates national standards for driver's licenses throughout the country. But now one of the Senate's top Republicans is having second thoughts and is in fact leading a revolt to convince his colleagues to repeal Real ID altogether.

Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The Senate's number three Republican is developing an assault on the federal government program to make driver's licenses a more reliable ID.

SEN. LAMAR ALEXANDER , TENNESSEE: And as a former governor, I hate nothing more than an unfunded federal mandate where somebody in Washington comes up with a big idea, makes it a law and then sends the bill to the governors.

SCHIAVONE: Senator Lamar Alexander of Tennessee was in the Senate when the Real ID Act passed unanimously three years ago. A spokesman says the senator supported the measure because it was attached to a larger bill containing funds for the war in Iraq.

The sponsor of the measure in the House, Wisconsin's James Sensenbrenner, says that states resisting the Real ID guidelines are just whining about it to get more money out of the federal government.

REP. JAMES SENSENBRENNER , WISCONSIN: I think that my colleagues in both houses recognize that the 9/11 Commission was right when they identified the fact that the 19 hijackers had as many as 63 driver's licenses between them issued by five states. That was a loophole exploited to our peril.

SCHIAVONE: States have until next Monday to ask the Department of Homeland Security for an extension in implementing the law. All but two states, South Carolina and Maine, have done so. In fact, Maine's legislature literally ordered the state not to comply, citing cost and privacy concerns, 16 other states have taken similar actions.

DHS says that just doesn't make sense.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: The idea that we should have poor forms of identification that are easily forged and tampered with strikes me as a really bizarre argument.

(END VIDEOTAPE)

SCHIAVONE: Lou, the Department of Homeland Security says that holders of licenses from states that don't express an intention to comply will not be able to use those driver's licenses for travel ID checks -- Lou.

DOBBS: And they won't be able to go into federal buildings, either, where ID is required.

SCHIAVONE: Or nuclear plants.

DOBBS: Right. Well, unless -- not many of us are going to have much need to do that, we hope. But the idea that this is an unfunded mandate, I can almost sympathize with that -- as a matter of fact, I can sympathize with it. It seems to me that if it is mandated by federal law, it should be funded by federal law. And it's not that much money in the scheme of things. It's easy to say that these days since we're spending so much federal money.

SCHIAVONE: Well, the federal government did give the states some money, but the argument is that these states should be interested themselves in having secure IDs because it keeps their own roads safe.

DOBBS: Yes. I think that a lot of these states -- I mean, you know, for example, you mentioned Maine, I mean, they'd just as soon give driver's licenses away to illegal aliens. They're not really too concerned about national security. They're not too concerned about the national interest or doing the right thing. There are some pretty expedient governor's offices out there.

SCHIAVONE: Well, they say they're trying to step up to the requirements that the federal government thinks are attractive. And in fact, DHS is still talking tonight about it.

DOBBS: Well, they ought to talk to them about it, because every one of the governors who hasn't got the sense to do what is best for his or her citizens and do what's best at the same time for national security and the national interest, they're a bunch of just weaselly (ph), measle (ph)-mouthed son of a guns anyway.

SCHIAVONE: Well, one of their spokesmen asked me if you were going to say something about their governor.

DOBBS: Well, I guess, you know, if it fits, there it is. But I hope not. I hope we're talking about a thoughtful, patriotic, concerned public servant who will do the right thing for all citizens in this country. Louise, how is that? Do you think the governor would appreciate that better?

SCHIAVONE: I think that they like that better than being called an idiot outright.

DOBBS: Well, I hope that they won't deserve such an exclamation or definition. Thank you very much, Louise Schiavone. SCHIAVONE: Thanks, Lou.

DOBBS: Time for some of "Your Thoughts." Thousands of you e- mailing us after last night's report about, ah man, our State Department's decision to outsource passport production.

Renee in North Dakota wrote in to say: "Why in the world would we outsource something so important as our safety and not hire American citizens to fill the needs of this department? Is this administration totally nuts?" I don't think it's totally nuts.

And Sandi in Ohio writes: "Isn't anything made in American anymore? It seems the only thing made in America is jobs for other countries. Lou, keep up the fight, it seems you're the only one on our side, for sure our government isn't."

And Mary in Colorado says: "Outsourcing our airplane contracts, passports, jobs, et cetera, what's next? Our money-printing mints? How about outsourcing this administration?" I love some of the ideas that we get. As a matter of act, I love most of the ideas that we hear about from you.

We'll have more of "Your Thoughts" later in this broadcast. Each of you whose e-mail is read here receives a copy of my book, "Independent's Day."

And please join me on the radio Monday through Friday for the "Lou Dobbs Show" on the radio, our new three-hour radio broadcast. Go to loudobbs.com to find your local listings for the "Lou Dobbs Show" on the radio.

Up next, the Teflon candidate from accusations of plagiarism to his pastor's anti-American, some say racist comments. Boy oh boy, nothing seems to be sticking to one of the candidates.

And a warning for the Democratic Party from one of their own. We'll be joined by Tennessee's governor, Phil Bredesen. He has an idea to save his party from itself. And he'll be my guest here next. Stay with us, we're coming right back.

(COMMERCIAL BREAK)

DOBBS: Well, I suppose this year in a contest for the Democratic presidential nomination, I'll start with one of my guest's other titles, he's a Democratic superdelegate. And he says the Democratic Party has a serious problem and he has some solutions to offer up.

He is also the governor of the state of Tennessee, Phil Bredesen proposes a superdelegate primary in June where the 795 Democratic superdelegates would be casting their vote one way or another and decide their party's nominee. Governor Phil Bredesen is an undeclared superdelegate, and joins me now from Nashville.

Governor, good to have you with us.

GOV. PHIL BREDESEN (D), TENNESSEE: It's great being here, Lou. Thank you.

DOBBS: Well, you know, I keep thinking about you being undeclared in the state of Tennessee, and another governor, Bill Richardson, in a state in which Senator Clinton won the primary, he decided to support Obama. I mean, the Democratic Party has got a few problems this year, don't you?

BREDESEN: Yes. I think that when this whole superdelegate thing was invented, you know, a generation ago, no one quite foresaw it turning out this way. And I guess what I want our party to do is just take it off autopilot here. We've got a problem and the party has got to step in and find some way to resolve it.

I've put one idea on the table. There certainly are others.

DOBBS: Well, Governor, your plan calls for a superdelegate primary in June. Just exactly how would that work?

BREDESEN: Well, the thought simply is that if it really does come down to superdelegates, and it's kind of looking like that's what's going happen, even though that is what nobody wants, it's really important, I think, to get us all on the record in June rather than waiting until August. We're all creatures of deadlines and we like to wait until the last possible moment.

But it's so difficult for the party, and I think so damaging to our prospects in the fall to keep this thing going on through the summer. I think we can bring to it closure, call the superdelegates together. Let the candidates present to them. Find out where they are and determine at least morally who is the nominee. And let's get on with the process of healing the obvious wounds in our party and running a presidential campaign.

DOBBS: Why haven't we heard this idea from the Democratic National Committee? Why are we in a situation in this country in which the Democratic Party basically has disenfranchised, because -- for whatever reason, whether it be because the leadership of the parties in both Michigan and Florida violated the rules, certainly the voters didn't, of the states that are now disenfranchised.

What in the world is going on with your Democratic National Committee or national leadership?

BREDESEN: I don't know. And I'm certainly not criticizing them. I think to bring this thing to closure, it really has only the DNC, only the Democratic Party, it has the standing and the moral force to do it. You know, I think there's a tendency to sort of hope that there will be some seismic event or these things will fix themselves.

But you know, hope is not a strategy. And I think we need to be planning for the alternative that maybe we have two candidates who both think they can get the nomination in June and plan to spend the summer explaining why the other one is not the right candidate. That can't be helpful to the party.

DOBBS: Not helpful to the party. The polls show, as you now, that a sixth of the delegates -- excuse me, a sixth of those who say they will vote for Senator Obama or for Senator Clinton will not go into that general election and vote for any candidate if their candidate is not the nominee.

Twenty percent of each of these candidates, both Obama and Clinton, their supporters say they will vote for McCain. I mean, this looks like a windfall of a huge, huge proportion for Senator John McCain.

BREDESEN: Yes. You know, I don't think in the end that those numbers will be anywhere near that large. There are a lot of people who are upset now who, if we can get this thing solved in some way, will come back to the fold. But even if it's 2 or 3 percent, it's a huge problem. These modern races for president are close, they're certainly going to be close in Tennessee, and 2 or 3 percent can make the difference.

DOBBS: Governor Phil Bredesen, we thank you very much.

BREDESEN: Thanks.

DOBBS: And it's nice to have somebody out there doing some original thinking, even if it's in politics.

BREDESEN: Thank you. Thank you.

DOBBS: Thank you very much, Governor.

Up next, three of the best political analysts in the country join me. They'll tell us what the Democratic Party should do for sure.

And violent clashes continuing in both Baghdad and Basra. We'll be talking with one of the country's most decorated former general, General David Grange joins us to analyze what's happening now in the surge. Stay with us, we're coming right back.

(COMMERCIAL BREAK)

DOBBS: More deadly clashes in Iraq, fighting continuing in the port city of Basra between government forces and Shia militia. An American soldier, two American workers killed in Baghdad as violence escalated there. Iraq's government has imposed a curfew in Baghdad and U.S. embassy staff told to remain inside. Joining me now for more on the violence that is rising in Iraq, our military analyst, retired General David Grange.

General, good to have you with us.

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Thank you, Lou.

DOBBS: The surge appears to be working and the next thing we know, we are watching a real, real conflict escalate in Basra in particular. What do you make of it?

GRANGE: Well, I think you're right. I think it's Basra in particular. There are three things that are making the surge successful. Obviously the 30,000-plus G.I.s who were added to the mix. The Anbar province sheikhs that have agreed to collaborate with us against al Qaeda. And then the ceasefire by al-Sadr with his Mehdi Army. And now with Maliki doing the attack with the Iraqi military down in the Basra area, that is starting to cause some obviously conflict between the Shia militias. And that could break this down somewhat.

DOBBS: And we still have more than a day left in the ultimatum from al-Maliki to Muqtada al-Sadr. The reality is, that militia needs to be cleaned up for there to be any promise of lasting stability in Iraq in the minds of many observers. Do you agree?

GRANGE: I do agree, because otherwise it's just a facade that you have reached some type of a successful peace throughout the country. The militias cannot -- and the criminal gangs, any influence from Iran, cannot continue to do what they want down in Basra -- down in the southern Iraqi area. It must be confronted some time.

DOBBS: And President Bush today spoke at the Air Force Museum, as you know, in Ohio. He said the surge continues to show positive results. Let's listen to what he said.

GRANGE: Well, I throughout most of Iraq, that is...

(BEGIN VIDEO CLIP)

BUSH: On the security side, the surge has brought important gains which I discussed in detail last week in a speech at the Pentagon. In Baghdad, we've worked with Iraqi security forces to greatly diminish the sectarian violence and civilian deaths. We've broken the grip of al Qaeda on the capital.

(END VIDEO CLIP)

DOBBS: General, do you agree with the president that we have broken the grip of al Qaeda on the capital?

GRANGE: I think of al Qaeda, yes. But the momentum must be kept up, because they'll come back, any crack or seam that's available. And situations like you have down in Basra will cause them to react somewhere else. You'll get second or third order effects. And any of these things that start to break down, Anbar province, Basra, or in Baghdad itself.

DOBBS: And hence, no drawdown of American forces.

GRANGE: I'm sorry, Lou?

DOBBS: And hence no drawdown in American forces.

GRANGE: Well, that's exactly right. I mean, why would you send them home just because you want to send them home in July? If conditions are not right, there will be failure. So this is a big deal.

DOBBS: General David Grange, thank you, sir. GRANGE: My pleasure.

DOBBS: A reminder to vote in our poll. The question is, do you think the Pentagon needs a pull review of the potential national security implications of outsourcing defense contracts and national security? Yes or no, cast your vote at loudobbs.com. We'll have the results coming up here in a few minutes.

Up next, the Teflon candidate, is he? Senator Obama dodging controversy. And we'll have that story. While the Democratic Party divides, the battle over superdelegates rages and campaigns pitted against party leaders as well as one another. What a fun time for the Democratic Party. Stay with us, we'll be right back.

(COMMERCIAL BREAK)

DOBBS: ... homeowners in a foreclosure crisis largely driven by subprime by lenders. Meanwhile, the leading presidential candidates, all of them, I should say at the outset, have benefited from the top issuers of those subprime loans. According to the Center for Responsive Politics, each candidate received donations from the largest subprime lenders and their employees. This includes companies such as Countrywide, Lehman Brothers, Goldman Sachs, Citigroup.

Senator Clinton leading with more than $1.6 million, followed by Senator Obama, $1.5 million. Senator McCain, what in the world is he doing? I mean, that's lousy, $560,000? I mean, hardly worth noticing. Come on, McCain, get in the game. Joining me now: Keith Richburg, he is the bureau chief here in New York for The Washington Post; Errol Louis, columnist, New York Daily News, and LOU DOBBS TONIGHT contributor; and Democratic strategist Julie Roginsky.

Good to have you with us.

JULIE ROGINSKY, DEMOCRATIC STRATEGIST: Thank you.

Well, let's start with you. What in the world are we doing with these candidates -- I mean, what is McCain doing? Is he not even trying to get Wall Street money here?

ROGINSKY: I'm not sure. He's trying to get some money with Mitt Romney out West right now. But I don't know how well he is succeeding there too. I love this "Kumbaya" moment they're having.

But I think, look, money follows people that think they're going to win. And he doesn't look like a winner right now to people on Wall Street.

DOBBS: He looks, as a matter of fact, pathetic. I mean, I know you're a Democratic strategist, but I can't help but agree. I mean, either that or he looks principled, which would say it is?

ROGINSKY: Well, principled would mean zero dollars from Wall Street. Half a million dollars means he just couldn't raise more. So that's a little tough to say he's principled.

DOBBS: Errol, what do you think?

ERROL LOUIS, NEW YORK DAILY NEWS: Well, it's true that the Republicans are having problems. And they're having problems with both their national committees, their congressional committees, and of course, the McCain campaign. You would think that if there was some real sentiment that he could pull this off, there would be money flowing in not just from Wall Street but from everywhere.

But he's still doing not much better than that shoestring that he was on when he had to sort live off the fat of the land in New Hampshire and restart his campaign after blowing out...

(CROSSTALK)

DOBBS: And that episode is going to be written about I think for quite some time. Whether Democrat or Republican, people have to admire what he was able to pull off. Julie was referring to a Kumbaya moment between Romney and McCain. Kumbaya is not the first thing you think of when you think of presidential politics here lately. What's going on?

KEITH RICHBURG, THE WASHINGTON POST: Well, on the Democratic side, it looks like they're getting ready to do that circular firing squad, really just chew each other up here. I mean, it's just absolutely incredible. And you're starting to hear more and more calls from people saying, you know, this has got to end at some point, like your last guest, the governor saying, you know, we've got...

DOBBS: Governor Phil Bredesen of Tennessee.

RICHBURG: Absolutely.

DOBBS: What do you think of his idea, a superdelegate primary? We can't enfranchise voters of Michigan and Florida, but we'll re- enfranchise the superdelegates.

RICHBURG: Well, you know, because -- you know, after that last primary in Puerto Rico in June, nothing else is going to change between June and the convention, so they might as well just go ahead, look at where you are at that point, look at where the pledged delegates are, and just decide it.

DOBBS: And one thing has changed, Puerto Rico's governor now -- is now charged with corruption, conspiracy. It's a bad, bad time for governors in this country, isn't it?

LOUIS: Well, it kind of offsets the lack of -- or the loss of superdelegate Eliot Spitzer, who was a Clinton supporter. Now we've got an Obama supporter who explodes before our eyes.

DOBBS: That's right. The governor of Puerto Rico is supporting Senator Obama. You know, both campaigns suggesting to us they're not really superdelegates, so we didn't really lose that, they're just unpledged -- I mean, the games that are being played with these campaigns, it's tiresome as best.

ROGINSKY: Yes. But I love the governor of Tennessee's idea. I think it's great.

DOBBS: Yes, so...

ROGINSKY: Yes, let's get it done, let's get it on the table now before we get to August so that whoever the nominee is going to be can actually get a head start in campaigning against McCain, not against the circular firing squad.

DOBBS: The circular firing squad is defined in the polls that we're seeing. As I mentioned earlier on the broadcast, one-sixth of Obama supporters, one-sixth of Clinton supporters saying they're going to just step out of this contest altogether. They're not going to vote in November if their candidate is not the nominee.

Twenty percent of each candidate's supporters replying at least in our poll that they will support McCain rather than the opponent of their candidate. I mean, this is tough stuff.

ROGINSKY: I don't believe it. You know, it's early days and I think people's I think people's passions are very heated up right now, as they were for the Republicans back in February before their nomination was decided. But I think people are going to coalesce. There's no way Democrats are going to stay home this November after the last eight years. We're so hungry to get this White House back that I cannot envision one Democrat saying, I'm just going to stay home and not do anything this November.

DOBBS: Do you agree?

LOUIS: Yes, those same polls, and Senator Clinton keeps pointing to this number, show that 62 percent want every vote to be counted. They want the 10 remaining contests to play themselves out. And Senator Clinton has said...

DOBBS: But not Michigan and Florida?

LOUIS: Not necessarily. You know, but what she has said -- and the other number she keeps bringing up is that in June of 1992 was when Bill Clinton finally cinched the nomination. And he was running third behind the sitting president, George Bush, and Ross Perot.

So she says with some justification that miracles can happen. Miracles can happen to Clintons. And that she is not going to be rushed by anybody, to force anybody's hand. She's going to wait until June and see what happens.

DOBBS: How shocking, surprising. I love the fact that the -- was it the Rasmussen poll, I believe, showed that 22 percent of the supporters of each, Obama and Clinton, thought that the other should be -- there it is, should withdraw from the race.

Do you think this is a close race? Do you think passions are running high?

RICHBURG: I think they are high. You know, I am going disagree slightly here because I think it's true that most of Clinton's supporters would probably be very happy with Obama. I don't know if that's going be true the other way around if it looks like the superdelegates took this from Obama. I think that's going to be...

(CROSSTALK)

DOBBS: Well, you're -- now see, that's not fair, you're (INAUDIBLE) a variable that wasn't there for the polling question

(LAUGHTER)

DOBBS: We'll poll on that next week.

RICHBURG: Yes. That's going to be really tricky.

DOBBS: I can't wait to see how that question worded. Superdelegates steal nomination from (INAUDIBLE). We'll be back with our panel in just a moment. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We're back with Keith Richburg of The Washington Post; Errol Louis of The New York Daily News; Julie Roginsky, a Democratic strategist and does not have a -- I can say this, I think, correctly, you don't have a dog yet in the Democratic hunt.

ROGINSKY: I just want a nominee.

DOBBS: And then she'll have a dog in the race.

ROGINSKY: Yes, whoever.

DOBBS: Well, the issue of Jeremiah Wright, the senator's long- term pastor, he himself, comes after two-and-half days in the Virgin Islands with a long weekend, as his people put it, a vacation -- long vacation.

RICHBURG: Getting away from Easter services in Chicago.

DOBBS: Exactly. And Senator Obama brings up Reverend Wright again himself. What -- and now we have this new controversy suggesting that Reverend Wright was associated with some anti-Israel comments.

What in the world is going on?

RICHBURG: You know, I think he would love to sort of put this behind him and maybe even focus attention on that, you know, lovely eloquent speech he gave on race relations. But you know, this latest controversy with these writings, you anti-Israeli, some slurs against Italians in there, I mean, it comes at a bad...

DOBBS: I left out that part.

RICHBURG: It comes at a bad time for him because the polls show that he had kind of weathered this storm. He had gotten past it, you know, most people thought he handled it very well. And the conversation was moving on. He talked about economics today. He wanted the conversation -- the headline today to be strictly on his economic plan.

DOBBS: I haven't noticed all of the candidates. If you want to dominate the headlines, if you want to drive the agenda, probably talking about dismal boring economics without specifics is not the way to get it done.

(LAUGHTER)

DOBBS: Errol?

LOUIS: Well, I think there -- it's unclear, we've seen some early polls suggesting that the Jeremiah Wright flap so far has not hurt him. There's a theory that it will hurt him in the general, but that for the primary it's -- people have absorbed it, people aren't all that concerned, people have decided that, you know, you've got some degrees of separation.

I mean, if at this point candidate Obama has to be held responsible for the people who wrote for the publication that his former pastor controlled, you know, we're going to find ourselves so far afield that there will be no discussion of issues.

DOBBS: We are far -- let the record stand and (INAUDIBLE). We are far afield in this race. I mean, we have to -- I think. Julie, I mean, don't we have to (INAUDIBLE), these candidates, there is not much separating these people except the controversies they can embroil themselves in.

ROGINSKY: You're absolutely right. You know, if I were -- I'm going to give some unsolicited advice to Barack Obama now. If I were him, I would do a speech on Israel tomorrow, because the Jewish community is such an important part of the Democratic base, not just in the primary, but going into the general. You do not want anybody in the Jewish community doubting his commitment to Israel. And that's a very, very important thing for him to get out in front about, especially because of Reverend Wright.

DOBBS: In fairness to Senator Obama, he has reiterated, in the last debate, as a matter of fact, that commitment. You don't think that's adequate?

ROGINSKY: I think -- after these comments, I think this is something that the Jewish community is extraordinarily sensitive about. I think McCain has been very good on Israel. And I think if he wants to keep that as part of the Democratic base, he has got to get very much out front on it.

DOBBS: Do you think that Senator McCain has a stronger relationship with the Jewish community in this country?

LOUIS: I'd be surprised...

(CROSSTALK)

DOBBS: As we immerse ourselves -- as we just simply dive into group and identity politics in this country.

LOUIS: Well, I was going so say, I would be surprised, just because -- you know, because the Jewish community is part of the Democratic base. And, you know, it -- irrespective of where they are on the income scale, there's an immense amount of loyalty to the Democratic Party going back for generations. I haven't seen anything in the McCain camp that is going to necessarily dislodge that.

ROGINSKY: But Bush did capture a larger share of the Jewish vote in 2004 than he had previously because Jews perceived him as being very strong on Israel and sort of being a big supporter. That's something Obama has to make sure doesn't happen with McCain.

DOBBS: Keith, you get the last word.

RICHBURG: I agree with that, I would say, because McCain is saying we have got to stay in Iraq until the war is won, people who want to support Israel are saying, hey, that's the position we like as opposed to candidates saying, we're going to pull out of there.

DOBBS: That creates an immense difficulty for the Democratic candidate, irrespective of who that candidate is, that nominee. Thank you very much, Julie. Good to have you with us. Errol, thank you. Keith, thanks.

The results of our poll, 98 percent of you say the Pentagon needs a full review of the potential national security implications of all outsourcing of defense contracts.

We thank you for being with us tonight. Please join us here tomorrow. For all of us, thanks for watching. Good night from New York. The "ELECTION CENTER" with Campbell Brown begins right now -- Campbell.

CAMPBELL BROWN, CNN ANCHOR: Thanks, Lou.

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