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LOU DOBBS TONIGHT

More Salmonella News; Ex-Military Working with Defense Contractors; Ethnocentric Special Interests

Aired July 4, 2008 - 19:00   ET

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


KITTY PILGRIM, CNN ANCHOR: Tonight, the salmonella outbreak escalates. The federal government still has no idea what caused it.
Also, retired generals and admirals helping defense contractors produce weapons that don't work?

And is our national identity as Americans at risk, under siege from ethnocentric special interest groups?

We'll have all that and much more straight ahead tonight.

ANNOUNCER: This is a special Independence Day edition of LOU DOBBS TONIGHT. News, debate and opinion for Friday, July 4th. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening, everybody.

New evidence tonight that our economic crisis is worsening. And middle class Americans are suffering as never before. Americans are being hammered by skyrocketing gasoline prices. At the same time, a rising number of working men and women and their families are facing foreclosure.

Meanwhile, a $300 billion plan to help relieve the housing crisis is stalled in the Senate. President Bush is blaming lawmakers for the delay.

Ed Henry reports from the White House.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice over): This is the sound of silence. Tour buses are rolling up to Capitol Hill to see their government at work.

But the Democratic controlled Congress is not here. Gone for a week- long July 4th vacation. They left before they passed a long-awaited bill to rescue homeowners trapped in the mortgage crisis.

GERALD CONNOLLY (D), FAIRFAX CO. BOARD OF SUPERVISORS: As they're dithering at the federal level, thousands of homeowners have lost their homes.

It is critical that the government step in and try to stabilize the situation.

HENRY: Just about 20 miles from the capital in Fairfax, Virginia, grass grows wildly on foreclosed and now abandoned homes.

Gerald Connolly, a Democrat and chairman of the County Board of Supervisors, says in January a year ago, there were just 74 foreclosures here. A year later, this January, there were 1,400.

CONNOLLY: The situation is going to get worse before it gets better. People are hurting. People, you know, got stretched.

HENRY: So what's Washington doing? Not much.

After months of delay, Senate Democrats finally got a bill to the Senate floor last week. It would have given struggling homeowners new mortgages backed by the government if lenders would also make concessions. Then a Republican, Senator John Enson, stalled the bill by insisting it include unrelated renewable energy tax credits.

And then came the siren song of a July 4th vacation back home during an election year, as well as the predictable lashing from President Bush.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well, I think we can get us a bill. But it's going to require less politics and more focus on keeping our minds on who we need to help and that's the homeowner.

HENRY (on camera): The president did not mention that a Republican has blocked the housing bill, or that he himself has vowed to veto the final product unless Congress includes a federal housing administration reforms that he wants. In other words, there's been lots of finger-pointing, but not too much action so far.

Ed Henry, CNN, the White House.

(END VIDEOTAPE)

PILGRIM: President Bush's treasury secretary, Henry Paulson, admits that the economy is going through a rough period as he puts it. Now Paulson says we should expect even more foreclosures and continued falls in home prices.

Despite that, no one in the Bush administration is saying that the economy is in recession.

Well, this economy is by far the number one issue for voters. Senators McCain and Obama are trying hard to convince independent voters that they have the best plan to solve our economic crisis.

But the latest opinion polls indicate neither candidate has succeeded in winning over independent voters, yet.

Bill Schneider has the report.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice over): Independents hold the key to victory. Both contenders know it. SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I don't know if you would call it a maverick, but I certainly have issues that I think can attract independents.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: As important as it is for Democrats to be unified, it's also important that we reach out to independents.

SCHNEIDER: Who's got the edge with independents? Two new polls give the same answer -- neither candidate. "The Washington Post"/ABC News poll finds independents split. So does the CNN poll by the Opinion Research Corporation, 45 percent for Barack Obama, 45 percent for John McCain.

Independents, remember, have no brand name loyalties. Bizarre as it may sound, they actually look at the candidates and the issues and then make up their minds.

So what do they think of the candidates? Do they hate them both?

Actually, they like them both -- McCain somewhat more than Obama. On the issues, however, independents are not happy at all. 78 percent think the economy is lousy. 72 percent oppose the war in Iraq, which explains why independents are so down on the Republican Party.

Only 33 percent have a favorable opinion of Republicans, 53 percent like the Democrats. Big difference.

Obama is trying to sell change, which independents clearly want.

OBAMA: You're Democrats who are tired of being divided by you're also Republicans who no longer recognize the party that runs Washington, and independents who are hungry for change.

SCHNEIDER: If independents are so down on the Republicans, why do so many of them support McCain? Because most independents think McCain will be different from Bush. Otherwise, McCain wouldn't have a chance.

(END VIDEOTAPE)

SCHNEIDER: Why are independents divided? Because they can't make up their minds. They're too damned independent -- Kitty?

PILGRIM: Bill Schneider, thank you.

Well, the latest CNN opinion poll suggests McCain is trailing Obama among all voters. Now the CNN Opinion Research Corporation poll says Obama has 50 percent support, McCain, 45 percent in a two-way race.

And now on the issue of patriotism, 90 percent of voters believe McCain is patriotic, compared with 73 percent who believe Obama is patriotic. Now this poll was taken before Obama's speech on patriotism on Monday.

And in that speech, Obama strongly defended his patriotism and his commitment to this country. Obama declaring that he will not stand idly by, as he put it, if his patriotism is questioned. And this after repeated questions and some quarters about whether Obama is patriotic enough to be president.

Candy Crowley reports.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice over): Independence, Missouri during Fourth of July week is a standard pick for politicians to show their patriotism.

Barack Obama went to defend his.

OBAMA: I found for the first time my patriotism challenged at times as a result of my own carelessness, more often as a result of the desire by some to score political points and raise fears and doubts about who I am and what I stand for.

CROWLEY: Part of it is his unusual name and upbringing with little resemblance to Ozzie and Harriet and a vicious anti-Obama whispered campaign on the Internet and elsewhere.

But a September picture showing Obama listening to the "Star Spangled Banner" without his hand over his heart, a carelessly worded answer when asked why he wasn't wearing a flag pin.

OBAMA: Instead I'm going to try to tell the American people what I believe will make this country great. And hopefully, that will be a testimony to my patriotism.

CROWLEY: And inflammatory criticism of the country by his former minister fuelled the fire of repeatedly debunk e-mail claims that he refused to pledge allegiance to the flag, that he was un-American.

It seeped into the grassroots. In April, a young woman asked how she could convince her father-in-law to vote for Obama.

UNIDENTIFIED FEMALE: He's been influenced by some of the spin by saluting the flag, that pin, you know, all of those things...

OBAMA: Right. Right.

UNIDENTIFIED FEMALE: ... that I've heard. I just wondered what you would say to him if he was here to show him where your heart is.

CROWLEY: And now he has a bigger stage to show where his heart is, where he came from.

OBAMA: I remember listening to my grandmother telling stories about her work on a bomber assembly line during World War II. I remember my grandfather handing me his dog tags from his time in Patton's Army and understanding that his defense of this country marked one of his greatest sources of pride. That's my idea of America.

CROWLEY: He has a biography ad about his American roots and values airing in 18 states and he has a video on his Web site to rebut the still circulating e-mails, and he is pushing back.

OBAMA: I will never question the patriotism of others in this campaign. And I will not stand idly by when I hear others question mine.

CROWLEY: But in politics, pictures are permanent and symbols seem like substance. In April, when a veteran gave him a flag pin, Barack Obama put it on. And he wore won in Independence, Missouri.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

PILGRIM: Senator Obama is also facing criticism over his position on gun rights and this after the Supreme Court ruled that Americans can own guns for self-defense. Now Obama supports both gun ownership and what he calls common sense gun control laws.

Senator McCain says the Supreme Court ruling is a great victory for gun rights.

Jessica Yellin has our report.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CORRESPONDENT (voice over): From John McCain, a whole hearted embrace of the Supreme Court's ruling supporting gun ownership.

MCCAIN: Obviously I'm very pleased about that decision. I had filed a brief along with 50 something other senators. Senator Obama had declined to do that.

YELLIN: Barack Obama is trying to thread the needle on guns in this interview with Bloomberg TV.

OBAMA: I believe that the Second Amendment means something, that it is an individual right. And that's what the Supreme Court held.

YELLIN: He says he believes in gun rights but also in gun laws.

OBAMA: There's still room for us to, I think, have some common sense gun laws that are also compatible with the Second Amendment.

YELLIN: It's a position a growing number of Democrats embrace as the party tries to expand its base to include rural and suburban voters who tend to oppose gun restriction.

According to the latest CNN polls, 67 percent of all Americans and 70 percent of independents believe the constitution guarantees a right to own a gun.

Both Al Gore and John Kerry fumbled by appearing too liberal or awkward on the issue.

In 2006, Democrats regained the Senate, in part, by running a new breed of pro-gun Democrats including senators Jim Webb, John Tester and Bob Casey.

One Democratic strategist says other candidates are learning from their example.

JIM KESSLER, THIRD WAY: Let's look at the reality. There are 280 million guns in private hands in America. That's enough guns for every man, woman and child over the age of 5 to have a gun.

I think it makes sense for anybody, whether it's a Democrat or a Republican, to speak to those folks that have a gun in their home.

YELLIN (on camera): Barack Obama will still have to overcome concerns about his now infamous gaffe about bitter, frustrated people who cling to their guns. But he's trying to push through that anxiety by focusing on the substance, on his position supporting gun rights but also gun laws.

Jessica Yellin, CNN, New York.

(END VIDEOTAPE)

PILGRIM: Still to come, the nationwide salmonella outbreak escalates. Government officials are baffled. We'll have the very latest on that.

And you won't believe communist China's aggressive efforts to spy on government computers in this country. We'll have a special report.

(COMMERCIAL BREAK)

PILGRIM: The Food and Drug Administration tonight is still searching for the source of a nationwide salmonella outbreak. Now initially, the agency linked the outbreak to contaminated tomatoes.

The outbreak has spread to 36 states and the District of Colombia and it has sickened nearly 1,000 people. And as we first reported two weeks ago, the FDA now is not even sure that tomatoes are actually the source of the outbreak.

Louise Schiavone has our report.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice over): The nation's $2.3 billion tomato industry is on the ropes as the Centers for Disease Control admits tomatoes are not the lone suspect in an as yet unremitting salmonella outbreak.

DR. ROBERT TAUXE, CENTERS FOR DISEASE CONTROL: The CDC has broadened its epidemiological investigation to be sure that the assessment encompasses food items that are commonly consumed with tomatoes.

SCHIAVONE: Sources say growers were enraged to hear from the FDA that tomatoes may not be the source of infection.

TOM NASSIF, WESTERN GROWERS ASSOCIATION: Taking an industry hostage, creating this much damage when the possibility now exists that tomatoes weren't implicated in the first place is very disturbing. And our growers and shippers are calling us and they're very angry.

SCHIAVONE: The FDA admits...

DAVID ACHESON, FOOD AND DRUG ADMINISTRATION: The pace of this investigation has been slow.

SCHIAVONE: A long stated explanation for this is that FDA funding has been insufficient for the technology, science and field work required.

But a congressional examination of FDA pay reveals that the funding shortage has not held down upper level agency salaries.

In 2007, Dr. David Acheson, the FDA food safety director, earned $221,824, paid as he has been for several years under a special exception for expert consultants.

Over a year-long period that ended in April, the FDA paid $35 million to top officials in incentives over and above their salaries. This as the industry they regulate is in a downward spiral.

JIM PREVOR, PERISHABLEPUNDIT.COM: We believe that the tomato supply chain lost about a quarter of a billion dollars. They have their jobs, they get their salaries whether they're right or wrong.

SCHIAVONE: In its own defense, the FDA tells CNN, quote, "The agency employs a very knowledgeable, experienced and highly educated staff that has to compete with the private sector to attract individuals of the highest caliber to meet the growing demands on its scientific and regulatory mission both here and abroad," end quote.

House Energy and Commerce subcommittee chairman Bart Stupak told CNN, quote, "These bonus are not going to the men and women in the field who FDA struggles to retain. They're going to top agency officials in Washington who presided over the agency, while an unprecedented number of Americans have been sickened by contaminated food and drugs."

Officials believe literally thousands of people in the United States have been sickened in the outbreak that started April 10th. Scientists say the U.S. no longer sets what the FDA itself has called the gold standard in research and tracking.

DR. NEIL FISHMAN, DIRECTOR, HEALTH CARE EPIDEMIOLOGY: I think that the European Union is ahead in tracking a lot of things that we currently are unable to track in the United States. I think it relates directly to the funding cuts that the FDA has had to deal with.

SCHIAVONE: The FDA concedes...

ACHESON: We've got to examine the whole traceability system. We've got to improve the process because the one that we're operating under right now is clearly not getting us an answer fast enough.

SCHIAVONE: But some growers are way ahead of the bureaucracy.

PAUL MASTRONARDI, MASTRONARDI PRODUCE: Each individual fruit, if it's sold in a bulk format, has a little PLU sticker on it and that label has certain information. We have country of origin information on that label. We also have grower code on there, so we'll know exactly which farm each piece of fruit came from if it went to a grocery shelf.

SCHIAVONE: Sunset brand produces millions of pounds of tomatoes yearly in greenhouses in Canada, the U.S. and Mexico. They have their own laboratory and food safety program.

JOE DARDEN, MASTRONARDI FOODS: We do product testing of the products as they enter our warehouses and also we do product testings as they leave our warehouses.

SCHIAVONE: It costs money but it also delivers customers.

They're not alone. In upstate New York, Minard Farms is waiting for half million bushel apple crop to come in. When it does, they'll label every apple that goes to market.

PHIL CORSO, GEN. MANAGER, MINARD FARMS: From that bar code, they could tell what marketing agent sold it to them and then from that market agent they can go all the way back to the farm where it was harvested. And we could bring it right back into the block, what orchard it came out of.

SCHIAVONE: The farm submits to several safety audits during the growing season.

(END VIDEOTAPE)

SCHIAVONE: Kitty, growers say they are taking steps that Congress and the regulators have not mandated for two reasons. First of all, consumers demand it. And secondly, they stand by their products.

PILGRIM: Now where is Congress in all of this, Louise?

SCHIAVONE: Well, Congress is taking a very close look at the FDA and CDC because of this and they're going to have yet another hearing of the House Energy and Commerce Committees oversight and investigations committee when they come back.

PILGRIM: All right. Thanks very much, Louise Schiavone.

Salmonella is the most common cause of food poisoning. 76 million Americans have food poisoning every year according to the Centers for Disease Control. 300,000 people are hospitalized, 5,000 Americans die each year from food borne illnesses.

Food prices are expected to continue to rise in the months to come. Now this week the government reported that farmers will harvest 9 percent fewer acres of corn this year than last year.

The price of corn jumped in the month of June from $6 a bushel to $7.54 a bushel and those prices are not expected to fall any time soon. Coming up, a government watchdog finds huge cost overruns at the Pentagon and critics of the system say they know why. We'll have a special report.

And new concerns about this nation's vulnerability to cyber hacking by communist China. We'll have that story. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: A new government report found cost overruns on more than 70 new weapons systems for the Pentagon. This is costing taxpayers tens of billions of dollars and critics say one reason could be the large number of former military officials that end up working for the defense contractors.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice over): A Government Accountability Office report found that in 2006 alone, more than 2,400 senior DOD officials, including generals and admirals, left the government to work for private defense contractors. Of those, more than 400 DOD officials had new jobs that could have involved work on defense contracts awarded by their former offices.

The Project on Government Oversights says it creates an appearance of a conflict of interest.

SCOTT AMEY, PROJECT ON GOVT. OVERSIGHT: When you have issues of the revolving door or contracts that have been handed out or steered to a specific contractor because of who they know in the government rather than what they know, that makes the public question the integrity of our government.

SYLVESTER: Senator Bernie Sanders blames the revolving door as one reason taxpayers paid nearly $300 billion in cost overruns for military weapons systems.

SEN. BERNIE SANDERS (I), VERMONT: We want to make sure that taxpayers get the value for what they are spending. And I think the time is long overdue for the Congress to take a very, very hard look at the waste and fraud that's taking place within the Department of Defense.

SYLVESTER: A DOD official told CNN that Pentagon officials are not prohibited from working for defense contractors and that just working for a contractor doesn't mean there's an automatic conflict of interest.

But in one high profile case, Air Force official Darlene Druin went to jail for accepting jobs at Boeing for herself and family members while she was working on a $20 billion deal with the company.

(END VIDEOTAPE)

SYLVESTER: Now by law, top Pentagon officials who work for the private defense sector cannot lobby their old offices for one to two years depending on their government position.

Senator Bernie Sanders has offered legislation to make the revolving door more transparent. Right now former DOD officials are supposed to self-report their employment. The GAO found several problems with compliance -- Kitty?

PILGRIM: Thanks very much, Lisa Sylvester. Thank you.

Americans don't think very highly of lobbyists as a group. Now according to the recent Gallup ratings, ethics and honesty in different professions, lobbyists rank below lawyers, below car salesmen, even Congress. And we know Congress is facing its lowest approval ratings ever.

New details tonight about communist China's apparent attempt to hack into U.S. government computer systems. Now there are widening concerns both inside and outside government that this nation's computer infrastructure is vulnerable and wide open to potentially devastating attacks.

(BEGIN VIDEOTAPE)

PILGRIM (voice over): The Commerce Department will not confirm or deny whether the Chinese government hacked into Commerce Secretary Gutierrez's computer on his trip in December. And repeated calls to the Chinese embassy have not been returned.

But the White House today commenting.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: We know that they are looking into the matter over there and for security reasons we don't comment on particular matters that are being investigated.

PILGRIM: Howard Schmidt, former special adviser for cyber security for the White House, says the Commerce Department should know better.

HOWARD SCHMIDT, FMR. W.H. CYBER SEC. ADVISER: Back in the year 2001, the Department of Commerce was the one that's helped drive the whole issue to make sure we were doing a better job on cyber security. You know, so when you start looking at government officials, if indeed this is true, to be traveling and have their data subjected without taking the basic precautions, it's really embarrassing.

PILGRIM: U.S. government agencies have known for years that the Chinese government monitors foreign visitors. The U.S. State Department warned U.S. visitors to the Olympics in China saying, quote, "All hotel rooms and offices are considered to be subject to on-site or remote technical monitoring at all times. Hotel rooms, residences and offices may be accessed at any time without the occupant's consent or knowledge."

Many private businessmen do not carry a laptop or personal digital device when traveling in China.

PROF. STEVEN BELLOVIN, COLUMBIA UNIVERSITY: There is a lot of cyber espionage going on. You need to be careful. If you have products, technology, whatever, that are of interest to foreign governments, you need to be very careful.

PILGRIM: The Pentagon, State Department and Commerce have all reported intrusions by outside hackers thought to be from China. And private business is also a target.

This year, Hanjuan Jin, an employee of a major technology company, was stopped at O'Hare International Airport with 1,000 documents and a one-way ticket to Beijing. She is currently free on bail awaiting trial. And Chi Mak was recently sentenced to 24 years in prison for exporting sensitive military technology to China.

(END VIDEOTAPE)

PILGRIM: Most government agencies have rules about not carrying classified information overseas and computers are sanitized when they're brought back into the United States to prevent any security problems.

Well, China poses the single greatest intelligence threat to this country, according to multiple government sources. Now there are more than 3,500 Chinese front companies operating in this company and those front companies are specifically targeting sensitive American intelligence.

Cyber attacks against U.S. military networks soared 55 percent last year. The Pentagon now reports 3 million cyber attacks every day. That's 3 million attacks every single day.

New evidence of a threat to our national identity from special interest groups. We'll have more on that.

Also, the new G.I. bill. The director of a leading veterans group tells us what the new law means for this country's veterans. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: An alarming new report finds the United States is in danger of losing its national identity. The study warns that identity politics and the influence of social ethnocentric special interest groups are overwhelming our common identity as Americans. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): The report is titled "E Pluribus Unum," from many one. It warns that we are becoming the opposite, from one, many.

It is the work of the Bradley Project, a nonprofit group based in Wisconsin, dedicated to what it calls America's national identity. Its survey of 2,400 Americans contains some troubling findings.

PROF. JIM CEASER, UNIVERSITY OF VIRGINIA: There's apprehension, too, about the debt of current division with 80 percent of Americans registering concern about the amount of division between ethnic and cultural groups in the United States.

TUCKER: Sixty three percent of Americans believe our identity is weakening. Twenty four percent believe we're so divided that a common identity not possible. The report lays the blame on our failure to teach and understand our own history, noting America is not a nation founded on a common ethnicity but an idea. And ideas must be actively carried forward noting, "Knowing what America stands for is not a genetic inheritance. It must be learned both by the next generation and by those who come to this country."

To nurture and develop our sense of ourselves as Americans, the report makes a series of recommendations, because as the study's authors make clear, many Americans are historically illiterate pointing in one example to a question to a survey of fifth graders.

JAMES REES, EXEC. DIR., MOUNT VERNON: Only seven of 100 could explain why the date of July 4, 1776 is a significant one.

TUCKER: The loss of our identity is not merely an academic issue, note the authors, national identity, citizenship is the seat of governance. And we seem to be a nation torn between nationality and globalization.

Bill Tucker, CNN, New York.

(END VIDEOTAPE)

PILGRIM: The Bradley project also warns that the next generation of Americans will know less than their parents about founding ideals. But the news was not all bad, 84 percent still believe in a unique American identity. You can find more information about the Bradley project at bradleyproject.org.

President Bush this week signed a new war funding bill and it including a new G.I. Bill, a bill the president opposed. Now, that new law sets aside $63 billion over the next 10 years in increased college aid for our men and women in uniform. Patrick Campbell is legislative director of Iraq and Afghanistan Veterans of America and a combat medic with the Washington, D.C. National Guard and a beneficiary of G.I. benefits. I asked him what the passage of this new bill will mean for veterans.

(BEGIN VIDEOTAPE)

PATRICK CAMPBELL, IRAQ AFGHANISTAN VETS OF AMERICA: Basically it means future generations of veterans won't have to graduate with crushing student loan debt like I have. I mean, I owe over $100,000 in student loans and that's going to affect with the type of jobs I can take and future generations are going to be able to go to school like we promised them and you know, they served their country and they can go to any school they want fully covered.

PILGRIM: You know, a lot of kids enlist because they think they'll get education benefits. Where are we shortchanging our men and women in uniform? CAMPBELL: I mean, we're basically telling them, you serve your country, you can go to community college. Now we're renewing the social contract that we made with our, you know, World War II and Korean veterans and we're saying: you serve, you want to go to any school, any public school in the country, you can do it and this is a promise that we're going to field for generations. You know, in World War II and we made this promise and got the greatest generation. Now, we're going to be the next greatest generation.

PILGRIM: This is an investment in the youth of this country and the promising youth of this country that did great did service for their county. Let me play for you a sound bite of what President Bush said.

(BEGIN VIDEO CLIP)

GEORGE W BUSH, PRESIDENT OF THE UNITED STATES: ...legislation will make it easier for our troops to transfer unused education benefits to their spouses and children. It will help us to recruit and reward the best military on the face of the earth. Will help us to meet our responsibilities to those who support our troops every day, America's great military families.

(END VIDEO CLIP)

PILGRIM: This, as you mentioned, will cover the cost of a four-year public college education. There's a lot of pushback on this, and certainly some members of Congress, including Senator John McCain, were resisting this. Why do you think that was?

CAMPBELL: You know, I can't speak for John McCain, but I know that there are a lot of people who are worried about the price, they were worried that this might have an effect on retention. But the truth of the matter is, there are servicemen and women all over this country sitting in tents and Humvees dreaming bigger dreams now because of this G.I. Bill.

And you know, to be honest, today, I'm just excited we got it done. It's been a year-and-a-half battle and everyone came together when it came time to sing the bill, the president signed the bill. Over 510 congressmen voted for it, so this is a banner day for veterans.

PILGRIM: You know, you worked very hard to get this done. What swayed the opposition, in your mind?

CAMPBELL: I think, you know, when you start reading the writing on the walls and you have overwhelming bipartisan votes in the Senate and the House, you think it's better to get on the train than to stand in front of it.

PILGRIM: That's certainly true. In your mind, does this help? What are the real benefits that were not immediately obvious to us, that will help the kids get their education that they need?

CAMPBELL: One of the things about the old G.I. Bill is it paid you monthly. This will pay tuition up front, so there are no obstacles for a veteran to just come home from Iraq or Afghanistan and go straight to school.

The second is that for veterans -- for service members who stay in, they are going to be able to transfer this to their husbands, wives and children. So, this is not just going to affect the 1.7 million veterans, but this is going to effect generations to come. And I encourage all people who are looking at this new G.I. Bill to go to gibill2008.org for more information, because there's a lot of great components in this G.I. Bill that you just need to read about.

PILGRIM: And those thinking who are thinking of signing up, they have an assurance of educational benefits, correct?

CAMPBELL: Right, I mean, the good thing about this G.I. Bill is everyone will see an increase, everyone will get more benefits. As long as -- you know, even the people who didn't serve post 9/11, they're going to see an increase, so this is a win-win for everyone.

PILGRIM: Well, congratulations on your victory and we wish the best to everyone taking advantage of this, education is everything for these kids. Patrick Campbell, thank you very much for your time.

CAMPBELL: Thank you.

(END VIDEOTAPE)

PILGRIM: Up next, a bold challenge to presidential candidates and every elected official. We'll talk to the author of a new important book "A Government Ill Executed." And Pulitzer Prize winner, David K. Johnson says our government has become a servant of the richest Americans and he'll join us.

(COMMERCIAL BREAK)

DOBBS: Joining me now is Professor Paul Light, author of the book, "A Government Ill Executed." There it is, a terrific read, and we recommend it highly.

When Professor Light was here last on this broadcast, we talked about this dysfunctional federal government and the role of lobbyists in preventing its effective and efficient execution. I challenged at that time the presidential candidates to take action, to resolve the issue of lobbying, at least within the executive branch. And here is what professor light had to say at the time.

(BEGIN VIDEOTAPE)

PROF. PAUL LIGHT, AUTHOR, "A GOVERNMENT ILL EXECUTED": Get Obama and McCain to join hands right now, and introduce an amendment to the 1978 ethics act. Make it law. Why not reach across the...

DOBBS: They could show leadership, couldn't they?

LIGHT: They absolutely could.

DOBBS: All right. Paul Light is joining me in this challenge, Senators. Let's do it, how about it? Well Paul, we know how about it. They told me to go to hell, they told you to go to hell, they're telling the American people to go to hell.

LIGHT: Well, they're just not saying much of anything. They've got so many promises to make that they really don't want to talk about how to deliver, I'm afraid.

DOBBS: They don't want to talk about it. These guys are -- you know, John McCain wants to present him as a man, a legislature of reform. Senator Obama wants to talk all this blather about being an agent of change. Neither one of them has the guts to talk about a single change in the role of lobbyists in their administrations. How sick to your stomach does that make you?

LIGHT: You know, they're both sitting U.S. senators and...

DOBBS: Well, there's one problem.

LIGHT: Well, but they're the first two senators to run against each other in dozens of presidential elections. They could do something right now. And the fact that they're not doing anything is outrageous.

DOBBS: Why is it that the national media, the press corps, these political parties, they're really branding organizations, fundraising organizations more than political parties, but nonetheless -- the Republicans and the Democrats -- why is there no drive within them to change the way Washington works, the way administrations work, the way Congress works?

LIGHT: Well, if you take away all of the special interest people who are going to work for McCain or Obama, you'd have an empty administration. Washington thrives on this kind of activity.

DOBBS: So, you're saying that the revolving door between government and lobbyists, spending almost $3 billion last year in Washington, crowding out the American people, "The People," that they simply could not function because no one has such a high and lofty ambition as to serve their nation without thinking about the revolving door and being paid off on the other end of that -- of that journey in a lobbying firm?

LIGHT: I'll bet you right now that two-thirds of every appointee in the next administration will have a zip code inside the beltway, that's just the way it is.

DOBBS: Paul, come back soon. We'll be talking.

LIGHT: We'll keep pushing.

DOBBS: You got it. Government ill executed indeed. If they could get to that level, it would be progress.

Thank you very much, Paul.

(END VIDEOTAPE)

PILGRIM: The amount of money lobbyists spend buying influence in Washington has doubled in the last 10 years. In 1998, corporations, unions and other groups spent $1.4 billion lobbying Congress and federal agencies. In 2007, those special interests spent more than $2.8 billion.

Now, the biggest spender when it comes to buying influence in Washington, who else, but the U.S. Chamber of Commerce. In the last 10 years, they spent $380 million on lobbying, that more than twice the nearest competitor, the American Medical Association.

We have time now for some of your thoughts and Butch in Illinois wrote to us: "Lou, I am a 63-year-old lifelong Democrat who today picked up his wife and his 19-year-old granddaughter and signed up Independent. three more Independents to vote. Thank you Lou for being the eyes and ears for the people of America."

Maryland in Pennsylvania: "Good day to you, Lou. I'm 76 years of age and was a "lifelong" Democrat. Well, I just changed my political party affiliation to Independent. Thanks for keeping the public well in formed."

John in Connecticut wrote: "My wife and I decided to be Independent several years ago. As a nation owe can no longer tolerate the political venue of dependency from captive choice financed by big money. Thanks for the honest journalism which gives us a hope for the future. Keep up the good work."

We love hearing from you. E-mail us at loudobbs.com.

Coming up, does the government exist solely for the benefit of the nation's wealthiest citizens? David K. Johnson, the author of "Free Lunch" thinks so and sat down with Lou for a spirited conversation.

And some well-deserved help for our troops as they make the transition from civilian life. General David Grange will join us, here, Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

DOBBS: My next guest says the government is the servant of the rich. David Cay Johnson author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You with the Bill."

Pulitzer Prize winning journalist, former reporter to the "New York Times," good guy, good to have you with us.

DAVID CAY JOHNSON, NEW YORK TIMES: Thank you for having me, Lou.

DOBBS: It's a terrific book. You argue that the government is the servant of the rich. How did this happen?

JOHNSON: Well, the campaign finance reform system. We have something I call the political donor class. Literally, if you were a congressman, your day would be spent talking to the representatives of wealthy people in large corporations about their problems, you wouldn't have a minute to think about the problems of the middle- class, the poor, even the upper middle-class.

DOBBS: Well, and I'd also be spending most of my time explaining why I was using profanities with the rest of the members of congress throughout the day.

JOHNSON: Not that that's unheard of.

DOBBS: No. But you say in 1975 -- I thought this was fascinating -- Washington lobbyists collected less than $100 million in lobbying fees; by 2006 $2.5 billion, approaching now $3 billion. What's going on?

JOHNSON: There's -- the number of lobbyists in Washington -- all the things you do in the war on the middle-class, about all of the jobs that are disappearing and being lost, well guess what, Washington lobbyists more than doubled in numbers from 2000 to 2007. There are now more than 35,000. And the reason is simple. It is easier to mine gold from the public treasury than to earn it in the marketplace.

So, there are whole industries, I tell about in "Free Lunch," that derive all their profits from hidden subsidies and from taxes that you pay that never get to the government that are diverted to the Walton family, the richest family in America, to Warren Buffett, to all sorts of individuals and large corporations through programs we know very little about.

DOBBS: We would never want to deny the Walton family or Warren Buffett any kind of advantage in this economy, would we?

JOHNSON: Well, I think they you want your people to earn their money in the marketplace, not getting it by forcing me or you to pay a tax.

DOBBS: Absolutely.

JOHNSON: That goes to them.

DOBBS: One of the most disturbing chapters in your book, Chinese magnetism; detailing how the U.S. government allowed the sale of magnet technology, a critical component of national defense. The Chinese have now a monopoly on these magnets needed for smart bombs, ladies and gentlemen. We use them from time to time in this government. Here's what you wrote: "Not only is the technical knowledge largely gone, but America's only neodymium mine shut down in 1996. And 85 percent of our planet's known stores of neodymium are now in one country." Guess what country?

JOHNSON: China.

DOBBS: China. What? How stupid are we?

JOHNSON: The Chinese military has a strategy of buying commercial interests and through fronts, the Chinese military and the daughters of Deng Xiaoping, who at the time the supreme commander of that country, were involved in these deals.

The Clinton administration allowed the deals on the condition the technology remain in America. The Bush administration allowed its removal. And why? Apparently so that General Motors could get a deal to build a factory to build automobiles or trucks.

This is craziness. This is -- this is not free trade, this is not efficiently organizing the world's assets. This is craziness.

DOBBS: This is selling out the United States. Point-blank.

JOHNSON: Yes, it certainly is. I am shocked that we have not had congressional investigations into this, that we haven't had questions about whether there were criminal acts committed. This is a very serious matter and we know about this one. How many other ones are there going on?

DOBBS: You said President Bush. Which one was it again?

JOHNSON: President Clinton allowed the deal and President Bush allowed the removal of the technology from the United States. And when you ask the White House about this and Senator Bayh has asked them, I've asked them; they're answer is, "We're taking care of your safety, we know what we're doing." That's all they'll say.

DOBBS: Well, I guarantee you this, I can't think of an example that they can hold up where they could honestly claim with any evidence that they know what they're doing. I mean, it's extraordinary.

And I love the fact that you point out, correctly, so this is not a partisan issue, that people don't in any way get distracted by that. This goes back to Clinton. It goes back to this Bush. It goes back frankly to...

JOHNSON: These are bipartisan problems that are Washington and to what has happened to our government and how estranged it's become for most Americans.

DOBBS: Unbelievable. It's just incredible and I'd like -- when we say it's a partisan problem, as you document in your book, "Free Lunch," it's our problem, the American people's problem.

JOHNSON: It sure is.

DOBBS: This nation's problem.

David as always, good to have you here. Another great, great piece of work in "Free Lunch." We thank you very much.

(END VIDEOTAPE)

PILGRIM: Still ahead, a new initiative to help our military veterans make a smoother transition to civilian life. General David grange will join me here. Also, please join Lou on the radio Monday through Friday on THE LOU DOBBS SHOW, go to loudobbsradio.com to find the local listings for THE LOU DOBBS SHOW on the radio.

(COMMERCIAL BREAK)

Major League Baseball and the McCormick Foundation are launching a welcome back veterans campaign. Now, it's an initiative to raise money and provide job opportunities for our service men and women returning to civilian life. CNN military analyst General David Grange is also the CEO of the McCormick Foundation and he joins me now.

General Grange, tell us a little bit about this program. What does it do?

RETIRED GENERAL DAVID GRANGE, CNN MILITARY ANALYST: Well, the program focuses on injuries that are not totally fulfilled by our nation and it's because of the increase in awareness of traumatic brain injury and post-traumatic stress disorder. It also focuses on families in duress as a result of those injuries, integrating military members back into society, after they return from combat, with job placement and awareness of just how to go about getting a job. And the main thing, I think, is just raising the awareness of the American citizens about these issues.

PILGRIM: You know, I would like to play a comment from Staff Sergeant Meghan Meade to discuss her experience of the program. Let's listen for a second.

(BEGIN VIDEO CLIP)

STAFF SGNT MEGHAN MEADE, U.S. ARMY: You knew you had this air around you. People were nervous to talk to you, they didn't know what to say, or how to act and you knew you looked different, you knew you acted different. It was so good to see people, and it was so good to be back in the United States and realize that a lot had changed, but that you were back home and this is where you should be. And that was a good feeling.

(END VIDEO CLIP)

PILGRIM: You know, General Grange, when you listen to someone like Meghan talking about feeling so apart from the society that she served so honorably. Are we in, with this program, perhaps doing some of the jobs that the government should be doing?

GRANGE: I think that we're really complementary to the Department of Defense and Veterans Affairs. They're doing a lot. Do they have the capacity to meet the need? No, they do not. It's not just Iraq and Afghanistan, I mean, we're not going to turn around any veterans because they say, well, hey, I'm a veteran from the Korean War. Well, I'm sorry, we can't help you. It helps all veterans. But, the awareness really is the recent conflicts that this has really come to the forefront and we're complementary from the private sector to government efforts. PILGRIM: You know, I'd like to also tell our viewers about the participation of Major League Baseball, and Commissioner Bud Selig recognized the important role that this program can play. And let me read a comment that he recently said.

"For generations, baseball has undertaken patriotic activities to acknowledge veterans and current members of the military who serve and have served our country. Together, we can help these brave men and women make a successful transition to civilian life."

Tell us a little bit about these stars and stripes baseball caps and how everyone can participate in this program.

GRANGE: Sure. This is, you know, baseball is a perfect vehicle, a perfect partner to do something like this. Their outreach to the American citizenry is quite extensive. Baseball caps are just one item. All teams will be wearing a blue cap. All teams -- the letter insignia on the cap is red, white and blue. They're working in unity for this effort on July 4th, 5th and 6th. And we're partnering with them for that effort in order to display this patriotism, this American game.

And again, the synergy we're getting from the partners to include -- there's others involved, business partners involved, there are some hospitals involved, like (INAUDIBLE) Cornell, Stanford, University of Michigan. This is quite a group of private sector entities to help fulfill this mission, this nation's responsibility.

PILGRIM: I know you have some marquee names also putting their effort, actor Tom Hanks is contributing to this effort. And the McCormick Foundation is matching the first $4 million raised by the initiative. Let's put up the Web site so that people can know where to go. And make their contributions if they'd like to. And it's right there.

And you can also do it on our Web site, loudobbs.com. And in the end, tell me what you hope to accomplish, how many people you might reach with this program, if it goes well. Are there targets on that, General Grange?

GRANGE: What we're doing right now is we're coordinating very closely with Veterans Affairs, Department of Defense, private hospitals, veterans hospitals, to find out where the gaps are, where the seams are, where the unmet needs are. Some of these injuries, and again, we're focused on these mental injuries I mentioned before, traumatic brain injury and post-traumatic stress disorder, in particular, because that is where the shortfall is. It's a shortfall because we're more aware of these injuries today in combat than we were in the past.

And then there's a stigma about saying that some of the soldiers, sailors, marines, saying that they have these injuries. So this effort is going to focus on that, as you know, it could be up to 30,000 that maybe have some type of injuries like this. We don't know exactly. We'll find out. Through the efforts. This is ongoing, through 2008, and 2009 at least. And we're going to put out a first round of grants to agencies that support these efforts. Probably around October of 2008.

PILGRIM: Wonderful program. A very worthy, worthy place to put efforts if you are interested in helping our troops. Thanks for explaining it to us. General David Grange, thank you.

GRANGE: My pleasure.

PILGRIM: Thanks for being with us tonight. Please join us tomorrow. For all of us here, happy Independence Day. Good night from New York. A CNN special report "Out of Gas" starts right now with Frank Sesno.