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LOU DOBBS TONIGHT

Senators Obama and McCain Clash Over Wars in Iraq and Afghanistan; Mexico Drug Cartel Violence Crosses Over U.S. Border; Bush Administration Fails to Protect Working Americans

Aired July 15, 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: Thank you, Wolf.
Tonight Senators Obama and McCain facing off over the conduct in the wars in Iraq and Afghanistan, the two senators offering voters very different outlooks for how to win.

And tonight an issue the presidential candidates simply aren't talking about, the escalating violence from Mexican drug cartels now spreading across the border into the United States.

And tonight compelling new evidence the so-called Department of Labor is really nothing more than the Department of Cheap Labor. We'll have that special report on the Bush administration's failure to protect working men and women, all of that, all the day's news, and much more with an independent perspective straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Tuesday, July 15th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

Senator Obama today trying to convince skeptical voters that he would be a better commander in chief than Senator McCain. Obama declaring the war in Iraq has become what he called a dangerous distraction as he called for a new strategy to fight al Qaeda.

Senator McCain ridiculing Obama's speech, calling it naive and premature, McCain announcing a new plan to defeat radical Islamic terrorist in Afghanistan, saying he knows how to win wars.

We have extensive coverage tonight of both speeches, and we begin with Candy Crowley in Washington -- Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: You know Lou, there are a lot of differences between these two candidates, but there is probably no brighter red line than Iraq.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): The Iraq war, says Barack Obama, distracts from every threat the U.S. faces.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It should have been apparent to President Bush and Senator McCain the central front in the war on terror is not Iraq and it never was. And that's why the second goal of my new strategy will be taking the fight to al Qaeda in Afghanistan and Pakistan.

CROWLEY: Obama's foreign policy speech came as he prepares for an expected trip to the Middle East. After a couple of weeks of criticism that he was wavering on his plan to withdraw troops and as new numbers suggest he needs to power up his foreign policy pitch. An ABC/"Washington Post" poll found 72 percent of Americans think John McCain would be a good commander in chief for the military; 48 percent say that of Obama. And even though the vast majority of Americans are against the war, McCain has a marginal lead when respondents were asked who do they more trust to handle Iraq.

OBAMA: George Bush and John McCain don't have a strategy for success in Iraq. They have a strategy for staying in Iraq. They say we couldn't leave when violence was up, and they now say that we can't leave when violence is down.

CROWLEY: Continued reports that increased U.S. troop levels decreased violence have given McCain a chance to pressure Obama for refusing to change his position on withdrawal. Obama concedes the surge successes but focuses on broadening the discussion.

OBAMA: The greatest threat to that security lies in the tribal regions of Pakistan, where terrorists train and insurgents strike in Afghanistan. We cannot tolerate a terrorist sanctuary, and as president, I will not.

CROWLEY: The message he hopes to send, Barack Obama is willing to use U.S. military muscle if the time and place are right.

(END VIDEOTAPE)

CROWLEY: His battle also included a little word from the oval office when President Bush got into this fray, suggesting that, when Obama does visit Iraq, he listen to the commanders on the ground because, Bush said, he understands that sometimes politics drown out the voices of the commanders -- Lou.

DOBBS: Well, one of the things that is drowned out here is the meaning of not tolerating a terrorist sanctuary. Is Senator Obama saying preemptively that he would attack Pakistan?

CROWLEY: He has said before -- and he repeated again today -- that if Pakistan will not or cannot strike at al Qaeda members that are across the border in Pakistan, that he would strike, that he would go ahead and do that if he had intelligence to show that there was an al Qaeda nest there. He would go ahead and go in, or, obviously, he could launch some sort of aerial assault.

DOBBS: Broadening the war as a way in which to end it is, I think at best, a questionable strategy. What has been the reaction to that?

CROWLEY: Well, he has -- Barack Obama has always said the war was never in Iraq. It was always in Afghanistan. We're now seeing increased deaths there. We need to take some of the brigades out of Iraq and put them over in Afghanistan. Now, John McCain is now also saying, yes, we need to put more troops into Afghanistan. Afghanistan has always been a part of it. This is now kind of a change in emphasis from Obama. As you know, what's happened is that the surge has been somewhat successful in bringing the violence down in Iraq. That's kind of taking it off the front pages at least, and now Obama's trying to kind of switch that subject over to Afghanistan.

DOBBS: Yes, I think we can state without any qualification, rather than somewhat successful, I think, Candy that we can say it has been dramatically successful in reducing the number of American lives lost there. Extraordinarily so, I think, in the minds of most.

Candy, thank you very much -- Candy Crowley.

Well Senator McCain strongly criticized Senator Obama's speech. McCain declaring sending more troops to Afghanistan by itself is not enough to achieve victory. McCain presented a new strategy for Afghanistan based on the principles behind the surge in Iraq. Dana Bash has our report from Washington.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The next president will inherit a situation in Iraq...

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Experience is his calling card, and on a day both candidates talked national security, John McCain laid this down as a basic test.

MCCAIN: I know how to win wars.

BASH: He offered proof, a new proposal for Afghanistan, where violence has spiked.

MCCAIN: And I'll turn around the war in Afghanistan just as we have turned around the war in Iraq with a comprehensive strategy for victory.

BASH: McCain was an early supporter of the military surge in Iraq, which he repeatedly tells voters is working. He said he would apply those lessons to Afghanistan, more troops and a better strategy for how to use them.

MCCAIN: A nationwide civil military campaign that is focused on providing security for the population. Today know such integrated plan exists. When I'm commander in chief, it will.

BASH: Specifically, McCain would send three more brigades to Afghanistan, called for a doubling of the Afghan Army to 160,000 troops, and said a unified military commander must be in charge of all forces there. But this was as much about slamming Barack Obama's war plans as presenting his own. Obama wants to take troops out of Iraq and send them to Afghanistan.

MCCAIN: Senator Obama will tell you we can't win in Afghanistan without losing in Iraq. In fact, he has it exactly backwards. It is precisely the success of the surge in Iraq that shows us the way to succeed in Afghanistan.

BASH: He mocked Obama for outlining his plan for Afghanistan before ever visiting the country.

MCCAIN: Fact-finding missions usually work best the other way around. First you assess the facts on the ground then you present a new strategy.

BASH (on camera): Later on his bus, McCain continued to hit Obama on his national security credentials. McCain reminded reporters that Obama is chairman of the Senate committee that oversees NATO, which has command in Afghanistan, but Obama has never held a hearing -- Lou.

(END VIDEOTAPE)

DOBBS: Nor has Senator Obama ever been to Afghanistan.

Dana, thank you very much.

Dana Bash from Washington.

Insurgents in Afghanistan killed another of our troops. The soldier was killed by a roadside bomb. Fifteen of our troops have now been killed in Afghanistan so far this month; nine of our troops killed during that attack on a combat outpost Sunday; 473 of our troops have been killed in Afghanistan since that war began; 2,204 of our troops have been wounded in Afghanistan; 1,380 of them seriously.

Violence in Afghanistan, as we've been reporting here, is escalating. More of our troops being killed in Afghanistan each month than Iraq. And today a top U.S. commander in Afghanistan told CNN that he urgently needs more troops and more armored vehicles.

Barbara Starr has our report.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In the remote mountains of eastern Afghanistan, new indications of just how bad things are this summer. CNN has learned that top U.S. military officials are considering whether to recommend Afghanistan should become as high a military priority as Iraq.

Until now, Iraq has always been the major combat arena. U.S. commanders in Afghanistan are asking for more troops to be sent within weeks. Until now, more troops were not expected until next year. In an exclusive interview with CNN, the U.S. military's operations chief in Afghanistan says he also needs more MRAP, mine-resistant armored vehicles.

BRIG. GEN. MARK MILLEY, DEPUTY CMDR., 101ST AIRBORNE DIVISION: Our estimate is, is that additional forces are needed during this fighting season. We've asked, you know, the folks back home to -- in the Pentagon, in the big Army and elsewhere, to produce and ship over more MRAPs.

STARR: Commanders say the threat is deeper than just a growing number of insurgents. The Taliban have more money and better organization.

UNIDENTIFIED MALE: They are exhibiting a better level of training and leadership than they have in previous years.

STARR: The general also says he's fairly sure he knows which insurgent leader was behind the attack that killed nine U.S. troops and that local Afghans know more than they're telling about how nearly 200 insurgents were able to assemble.

UNIDENTIFIED MALE: There's no doubt in my mind that the local villages had to know something was up, exactly who and when and how many, et cetera, that kind of stuff is probably unknown.

STARR: A senior U.S. military official says the most worrisome sign, those 200 insurgents may have crossed into Afghanistan from Pakistan undetected and unstopped.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

DOBBS: As Barbara just reported, our military commanders in Afghanistan now want more troops and within weeks. Senators Obama and McCain have both promised to send more troops to Afghanistan next year. Obama says he will deploy at least two additional combat brigades, some 7,000 troops.

McCain says he would deploy even more troops, three additional combat brigades, more than 10,000 of our troops. Those plans are not too different, however, from proposals that Defense Secretary Robert Gates is already considering, Secretary Gates preparing to send two more combat brigades to Afghanistan early next year.

A deadly bomb attack today in Iraq, in fact, the worst in weeks, two suicide bombers killed at least 28 Iraqis outside an Army recruiting station in Baquba, north of Baghdad. More than 60 people were wounded. Insurgents frequently targeted Army recruits who gather outside Army bases looking for jobs, and a separate suicide bomb attack in Mosul in northern Iraq killed nine people there.

Up next, more on the conduct of these wars in Iraq and Afghanistan, also tonight, a war that some say is as bad as the war in Iraq, the out of control drug cartel violence that is sweeping across Mexico into the United States.

And the Department of Labor proving again it is the Department of Cheap Labor, putting business interests ahead of the interests of working men and women. We'll have that special report and a great deal more. Stay with us. We're coming right back.

(COMMERCIAL BREAK) DOBBS: A devastating blow tonight to our middle class, another, and what's left of our automobile industry. General Motors today announcing a new round of severe cost-cutting after the slump in sales of trucks and gas-guzzling cars. General Motors will cut salary jobs and benefits, reduce production, and close some facilities in order to raise an extra $15 billion.

General Motors expects to lay off thousands more workers in addition to the 19,000 workers who have left over recent months. Other American car makers are also stepping up their cost-cutting efforts. Ford reducing the cost of its white-collar workforce by 15 percent, laying off about 2,000 people, and doing that by, the company intends, August 1st. Chrysler expected to cut as many as 10,000 more of its hourly workers and about 1,000 salaried workers.

New evidence tonight from a government watchdog that the Department of Labor just simply isn't doing its job of representing labor or protecting our work force. We have reported extensively here over the years that the Department of Labor favors easing visa regulations to bring in cheap foreign workers amongst other outrages. It now appears the Department of Labor, so-called, may simply be ignoring the needs of American working men and women all together.

Lisa Sylvester has our report.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Some employers are ripping off U.S. workers, and the Department of Labor ought to be doing more to protect them, that according to the Government Accountability Office. The GAO did a case study of 15 workers who were owed back pay or overtime. The Department of Labor either didn't investigate or dropped the cases because of a lack of resources.

GREG KUTZ, GOVT. ACCOUNTABILITY OFFICE: I can't tell you whether these cases are isolated or whether they're the tip of the iceberg. However, what is clear is that in several cases employers got away with labor law violations with no consequences.

SYLVESTER: In one case, an employer acknowledged that he didn't pay a night attendant who worked at a nursing home, simply saying he didn't have the money. The Department of Labor's Office of Wage and Hour Division accepted that explanation and dropped the case. The agency's acting administrator had a heated exchange during a Congressional hearing with Congressman George Miller.

ALEXANDER PASSANTINO, U.S. DEPT. OF LABOR: I think you underestimate the dedication of the career staff.

VOICE OF REP. GEORGE MILLER (D), CALIFORNIA: No, I don't underestimate. I'm trying to (INAUDIBLE) the standard. Don't hide behind the dedication. I assume they're dedicated. I'm trying to determine what the standard is so that people can get their complaints answered.

SYLVESTER: The Department of Labor responded to the GAO's findings by noting that since 2001 the agency has recovered $1.25 billion in back pay and overtime for nearly two million workers.

PASSANTINO: I do not believe that the 15 cases that were identified out of the 70,000 complaints in the last three years are indicative of the agency's performance.

SYLVESTER: The GAO report found that the number of wage enforcement actions against employers plummeted more than 30 percent from 47,000 actions in 1997 to 30,000 in 2007. It points out that in the same period the number of investigators dropped from 942 to 732.

(END VIDEOTAPE)

SYLVESTER: The acting administrator of the Wage and Hour Division at the Department of Labor says his office has asked for budget increases, requests that in recent years were denied. This year in the budget there is money for the agency to hire 75 more full- time employees, including more investigators -- Lou.

DOBBS: Did Chairman Miller let the representative of the Department of Labor get away with that nonsense given the fact that they've had so many of their inspectors cut and the number of actions taken has dropped by 30 percent as you reported?

SYLVESTER: Yes. This story is not over. They are just starting this investigation, and it was very clear that Representative Miller is not happy with these answers. He was not happy with the answers that he received today. And he wants to know what is going on. Why are these workers being cheated by these employers and being able to get away with it?

DOBBS: Well one of the reasons seems to be that is exactly the agenda of the Bush administration for the past seven and a half years. That's just one possibility, of course.

Lisa, thank you very much.

Lisa Sylvester from Washington.

Time now for some of your thoughts. Many of you have written in about our reporting on the Department of Cheap Labor.

James in Arizona writing to say: "The Department of Cheap Labor should be proud of the thousands of illegal construction workers that dominate the construction work force here in Phoenix, Arizona."

Yale in Louisiana said: "Labor Department Secretary Elaine Chao knows exactly who she is working for, corporate America. Lou, it's not too late to run."

Thank you for the thought.

And Thomas in New Hampshire: "Hi, Lou. I believe Secretary Chao needs to be on the payroll of the Mexican government, not ours."

Who's to say she's not already?

We'll have more of your thoughts later in the broadcast.

Up next, disturbing new details about Mexico's warring drug cartels extending their reach deep into the United States. We'll have that special report for you, and the Bush administration simply without any clue as to how to fix this economy. The crisis worsening for our struggling middle class. We'll have that report and a great deal more still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up next, Senator Obama says he doesn't like the controversial cover of "The New Yorker" magazine. We'll tell you what he's saying now. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: More deadly violence tonight in Mexico's raging drug wars and new concerns about the violence spreading through this country as Mexico's warring drug cartels extend operations into the United States.

Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): From a shootout between two rival drug cartels in Culiacan, capital of Mexico's Sinaloa state, to the assassination of a state police officer and subsequent hostage standoff in the tourist haven of Mazatlan. At least 21 people have been gunned down since Thursday in Sinaloa.

One local paper called it a blood bath, and there's mounting evidence Mexico's drug cartels are spreading throughout the United States. The National Drug Intelligence Center reported this spring the cartels now operate in at least 195 U.S. cities. The report states that Mexican drug trafficking organizations are the most pervasive organizational threat to the United States.

They are active in every region of the country and dominate the illicit drug trade in every area except the northeast. Even there, the report says, the influence of Mexican cartels is spreading.

FRED BURTON, STRATFOR: Street violence in Los Angeles, Portland, Chicago, New York City or Washington, D.C., is directly attributable to the violence that's taking place in Mexico, meaning the cartels are working with criminal gangs inside the United States, and they're carrying out these violent murders and crimes on the streets of America.

WIAN: The Bush administration's drug czar calls Mexico and the United States quote, "equal partners" in the war on drug traffickers.

JOHN WALTERS, OFFICE OF NAT'L DRUG CONTROL POLICY: We have a shared objective of destroying these violent cartels and the violence, kidnapping, murder, drug trafficking, and other criminal acts by which they finance themselves, intimidate and destroy and threaten the lives of our citizens.

WIAN: Walters says progress has been made in reducing illegal drug consumption in the United States, and Mexican cocaine seizures have increased five-fold in the past year.

(END VIDEOTAPE)

WIAN: But Mexico's effort to fight cartels with 25,000 federal troops has so far only provoked more violence on both sides of the border. Now, Americans wanting to live in a state that has not been infiltrated by Mexican drug cartels, according to the government report, have two choices left, West Virginia and Vermont -- Lou.

DOBBS: Incredible, and yet this administration continues to resist efforts to maintain the National Guard on the border, to actually secure this border instead of play statistics games with the number of border patrol agents in place, that sort of thing. I mean, this is getting very, very dangerous.

WIAN: All of these problems could be easily solved by simply securing the border, Lou, and the administration has not done that.

DOBBS: And that does not even take into account the millions of young lives devastated, and in some cases, destroyed by the illegal drugs methamphetamine, cocaine, marijuana, and heroin, the principal source of which into this country is still Mexico.

Casey, thank you very much -- Casey Wian.

New developments tonight in a case that troubles many Americans, the death of border patrol agent Luis Aguilar. It is a story that we've been reporting very closely on this broadcast. Agent Aguilar was brutally run over and killed on the 19th of January, as he tried to stop suspected drug smugglers from fleeing back into Mexico.

Mexican police arrested a key suspect on an unrelated charge, and they kept him in custody for five months. But they released him last month. A Mexican embassy official said the United States didn't request extradition in time, until after the suspect, in fact, had been released.

Last week Congressman Brian Bilbray demanded an explanation from the Justice Department and the White House for their failure to pursue the case aggressively. The White House and the Justice Department today responded, confirming an investigation is under way but little else.

Congressman Bilbray said the White House and Justice Department responses are disappointing. Congressman Bilbray said they were quote, "bureaucratic and lack transparency. Unfortunately the American people seem to be getting more information from the Mexican embassy than they are from their own government. The family of Agent Aguilar deserves answers, and we won't let up until we get them."

Meanwhile, there's still no resolution to the gross miscarriage of justice against two former border patrol agents, Ramos and Compean. The two former agents are now serving long prison sentences for shooting and wounding an illegal alien drug smuggler that they were pursuing. The drug smuggler was given immunity to testify against the two former agents.

And while they were under immunity and being prosecuted by the U.S. attorney in Texas, he continued to smuggle drugs into the United States. Ramos and Compean's case is under appeal. Oral arguments were heard last December. Appellate attorneys for the agents had expected a decision long before now. And while the appellate court takes its time, now more than seven months, these two former border patrol agents have been in prison for 542 days.

That brings us to the subject of our poll tonight: Do you find it outrageous that the Bush administration refuses to give our border patrol agents the respect and support they deserve?

Yes or no. Cast your vote at loudobbs.com. We'd like to hear from you on this. We'll have the results upcoming.

Next here, more people becoming ill as the salmonella outbreak widens. What is the federal government doing about that? Well, we'll have an update on what has been a travesty so far. We'll have the latest for you.

And you won't believe what President Bush is now telling Americans who are worried about our weakening economy. Another example of what some say is a vacuum of leadership in Washington, D.C., created by both political parties. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: President Bush today said this country's financial system is, as he put it, basically sound. President Bush also said he's optimistic about our economy, and he blamed the media for "yelling recession." On Capitol Hill today, Federal Reserve Chairman Ben Bernanke -- well, he put himself in somewhat of a contrast to the president. He was warning that our economy faces numerous difficulties.

And as Carrie Lee now reports, those difficulties are expected to continue for some time.

(BEGIN VIDEOTAPE)

CARRIE LEE, CNN CORRESPONDENT (voice-over): President Bush tried to appease the American public today. He says the U.S. banking system and economy are not as bad off as they seem.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My hope is that people take a deep breath and realize that their deposits are protected by our government. I understand there's a lot of nervousness and the economy's growing. Productivity's high, trade's up, people are working. It's not as good as we'd like.

LEE: But in the Senate Banking Committee, the mood was down right hostile. The government's top money men were grilled over a plan to prop up mortgage giants Fannie Mae and Freddie Mac with unlimited funding. Some call it a blank check from taxpayers.

HENRY PAULSON, TREASURY SECRETARY: What I'm looking to do is the same thing you are, senator, to minimize the cost of to that taxpayer. And I think the surest way to do that is --

SEN. JIM BUNNING (R), KENTUCKY: Secretary Paulson, I know you're very sincere in your proposal.

PAULSON: Yes.

BUNNING: But come January, you will be gone, and we have to be responsible --

LEE: Federal Reserve Chairman Ben Bernanke gave his gloomiest testimony since taking office in 2006.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: It's the continued uncertainty about house prices and housing activity which is creating financial stress, is affecting consumer wealth and consumer expectations, and is causing stress we're seeing in the economy.

LEE: Bernanke says the drag will last through the end of the year. The Central Bank started raising interest rates last fall to spur growth, but those hikes ended last month because of increased inflation. Soaring food and gas costs have pushed wholesale prices up over 9 percent in the past year. Add six months of job losses, the plunging stock market and the weak dollar at an all-time low against the euro. That lets foreign investors snap up iconic U.S. properties at bargain prices.

(END VIDEOTAPE)

LEE: Like other major banks, Lehman Brothers is reportedly looking for capital from foreign sources, possibly Korea, and the company's not commenting on a report today that its chief may take the bank private.

Also, we know, Lou, Citigroup took billions from investors in Kuwait and Singapore some months ago, just like other banks. So a rather sad state of our economy if the Federal Reserve and if all these banking heads can't come together, if money's not accessible here, and our banks are going to other sources outside the country.

DOBBS: There's no question that Ben Bernanke, the Fed chairman, in my view -- and it is only my view -- has done an outstanding job. The administration, Henry Paulson, very late to respond. And at the same time, we still do not have legislation out of the Senate and the House to rescue those -- to provide a rescue, a bailout, if you will, for 2.5 million middle class homeowners in this country who are facing foreclosure.

It is outrageous that they're look at this in purely institutional terms. I understand the dilemma, but the fact is that is taxpayer money, and it should be going to people who are most in need of it. Still Henry Paulson seems to only understand Wall Street and that perspective rather than the far more human perspective. Thank you very much, Carrie -- Carrie Lee.

Despite the Bush administration's repeated efforts to reassure the public about the state of our economy, an overwhelming number of Americans now have a negative view of economic conditions. A new Gallup poll released today finds 81 percent of Americans have a negative view of the economy, up dramatically from January, when 61 percent said they had a negative view.

The major reason for concern is, of course, record energy prices. Gasoline prices remain at an all-time high, $4.11 for a gallon of regular unleaded. That's $1.05 more than a year ago. Forty states and the District of Columbia now have gasoline prices of more than $4 a gallon. The most expensive gas in the nation is in Alaska at $4.64 a gallon. The cheapest gasoline is in South Carolina, $3.91 a gallon.

Today crude oil prices did fall, down $6.44 to $138 a barrel, the second largest one-day decline in history, second only to the $10.56 decline in January of 1991 at the start of the Gulf War.

And I want to say that we said that was the most dramatic impact on the economy. The fact is that probably housing, losing $2 trillion of its value, has also been arguably an even more profound impact -- has had a more profound impact on our economy and our middle class.

Well voters say the economy is the most important issue in this election right now. In response, Senators McCain and Obama today began talking about their respective plans for this economy, for jobs and energy policy. But even after the election in November, it would be years before those plans would have any impact on the quality of life for American families.

Bill Schneider has our report.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): The news on the economy is fast moving, and mostly down, confidence in banks down, the stock market down, housing prices down. Politicians are struggling to keep up.

BUSH: I think the system basically is sound. I truly do. And I understand there's a lot of nervousness.

SCHNEIDER: The candidates talk about going after wrongdoers.

OBAMA: Predatory, unscrupulous lending, checked neither by a sense of corporate ethics or a vigilant government.

MCCAIN: Speculators and lenders who contributed to this mess.

SCHNEIDER: Barack Obama has a long-term energy plan.

OBAMA: I will invest $150 billion over the next 10 years, $15 billion a year, to put America on the path of true energy security.

SCHNEIDER: John McCain has a short-term plan, but the payoff may take a while.

MCCAIN: We should be drilling right now in places that are off our shores.

SCHNEIDER: The economy seems to be spinning out of control. The candidates are hard-pressed just to keep up. Obama added an event today to talk about how, if he's elected, the government will work with the auto industry to turn it in a new direction.

OBAMA: Rebuilding our manufacturing base and our auto industry and working with the auto companies to make sure that we're creating the fuel-efficient cars.

(END VIDEOTAPE)

SCHNEIDER: Voters often behave as if the president is commander in chief of the economy. But he's not. Nobody is. The economy's too big and too complex. And, in turbulent times like these, that's a little scary -- Lou.

DOBBS: And I think even more scary is the lack of leadership on the part of either business or Wall Street or certainly in government or from the campaign trail, these two seeking the presidency of the United States. This country right now is in a woeful, woeful position when it comes to the necessary leadership to lead the country out of this crisis, isn't it?

SCHNEIDER: I do -- I agree. I think that people see the candidates trying to catch up with events, are rushing out with press conferences to deal with the latest news, trying to build up confidence. But producing plans that don't really have a lot to say to ordinary Americans. This crisis is very real, particularly the gasoline crisis.

I just heard on the news today some of the repercussions. Public transportation is becoming overcrowded. There's no room left on the trains. People are riding motorcycles and motorcycle accidents are up. The airline industry, the auto industry, the repercussions are just enormous and it's impacting most average Americans' lifestyle.

DOBBS: And average Americans, that's why we created the country is for average Americans. And for these two presidential candidates not to be focusing on what, what can be done in the way of leadership both economically and politically and governmentally is pitiful, in my judgment. I'm glad we agree on that, Bill.

Bill Schneider, thank you very much. It's a shame. Thank you, sir.

Up next, what Senator Obama is saying now about that "New Yorker" magazine satire of the senator and his wife. We'll have the story.

And who is protecting our food, our food supply, our food system? Why the FDA can't or won't find the source of the salmonella outbreak. We'll have that special report and much more still ahead.

Stay with us. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: For more on what radio listeners are saying about our economy, what's going on in the news, I'm joined by my favorite talk show radio hosts. In Philadelphia, Dom Giordano, WPHT.

Good to have you with us, Dom.

DOM GIORDANO, WPHT RADIO: Thanks Lou, very much.

DOBBS: In Cincinnati, Joe Madison, XM Radio. He's in Cincinnati covering and attending the NAACP convention.

Thank you, Joe, for being here.

JOE MADISON, XM RADIO: Thank you for having me.

DOBBS: Here in our New York studios, Mark Simone, WABC.

Mark, good to see you.

MARK SIMONE, WABC RADIO: Good to be here.

DOBBS: Well let's start with what is going on? This race, this race, Dom, is just tighter than a tick as they say in Texas. And it's supposed to be a blowout. What's going on?

GIORDANO: Well, Lou, the only thing I can tell you is John McCain has found a new strategy to close the gap. One gaff a day. Have Phil Gramm out there, have these other people out there saying wild things and it seems to close the gap with Barack Obama. It seems to me.

DOBBS: You tell me how that works because Phil Gramm said one of the most ignorant things that he could have said.

GIORDANO: Exactly. And yet John McCain is surging or closing on Barack Obama. I know all campaigns, Lou, are cyclical, but it seems to me that Americans still have doubts about Obama because John McCain is not running a good campaign.

DOBBS: Mark, the idea that these two are this close, here's a 71-year-old man, the national media has no, no hesitation at all in talking about how old he is. And basically have dismissed him. Talked about Senator Obama's engaging charisma, the excitement that attends his candidacy, and statistically they're in a dead heat. I mean, I do not understand what's going on here. Is the national media this out of touch with the political realities?

SIMONE: Aren't they always? Obama is an exciting, dazzling speaker, but there may come a point where people realize he might be all hat and no cattle. You know, as the economy --

DOBBS: We're getting a lot of Texas expressions in here tonight. I like that. SIMONE: I'm catching it from you. You know, a bad economy, you might want to change. A real bad economy, crisis stage, you might want somebody with 25 years of experience in Washington.

DOBBS: Well I sure as heck don't want somebody who's saying he doesn't understand the economy, for crying out loud. And I sure as heck don't want a guy who has Phil Gramm as his senior economic adviser talking about this thing is a mental recession. I mean, you're scaring the dickens out of me. I got a choice, Obama and McCain. Either way, I'm scared.

SIMONE: Neither of these guys understand the economy. It's who they're going to turn to. I have a little faith in Phil Gramm -- he's got --

DOBBS: Mark, come on.

SIMONE: He's got the bedside manner of Leona Helmsley.

DOBBS: I think he may also have - I won't even say what I think of his brain and his judgment, but I take your point.

SIMONE: Either one of these guys is going to be a doing a lot of delegating and it might be the guy with 25 years in Washington.

DOBBS: You're scaring me again. You have not reassured me, at all. Joe Madison, you were just talking about speechifying.

MADISON: You want me to reassure you?

DOBBS: I'm looking to somebody. I listen to Senator Obama fresh from his pandering to Hispanic organizations, LULAC and La Raza. By the way, Senator Obama has decided to give Spanish lessons even though he doesn't speak Spanish and his own children have not learned Spanish. He wants you and me to have our children, all Americans have their children learn Spanish. He's trying to explain that "la raza" means "the people" instead of "the race." I hope he did better at the NAACP.

MADISON: Well, I'm not going to get - at least he didn't -- we didn't have to worry about Ebonics. I'm not going to get into the language thing because I got to tell you, I told my children, I don't care what foreign language you learn, but learn one. At least be able to learn --

DOBBS: My four children, they know -- they speak Spanish.

MADISON: Yes. I was going to say good. And I'm glad the world now knows that because, see, a lot of people think that none of your children learned a foreign language. So you've told the world they do need to be bilingual.

DOBBS: Joe, you know how I feel about half the world that things like that, they're so ignorant I'm not going to worry about what they think. MADISON: Let me tell you, this man, after listening to your report today, I mean, there is such a lack of leadership. The polls are too -- it's too early to worry about the polls, I really honestly think so. We haven't even had our first debate.

DOBBS: I'm not worried about them. I'm amazed by them.

MADISON: But the point, it's early. I mean, it is really early.

DOBBS: It's summer. It's early. I've got it.

GIORDANO: Joe, tell me how John McCain though, it's amazing to me -- my listeners are anti-McCain even though they're relatively conservative, and yet Barack Obama can't pull away. If I were Obama, I'd be saying what the heck is going on here?

MADISON: And here's what I think it's getting down to. It's a question of which one do you trust? And the American people have not made up their minds yet. And that's really what it's boiling down to.

DOBBS: It's impossible I suppose to say none of the above here, is that right, Joe?

MADISON: No. And right now that may be the answer with a lot of the people in the middle. And we're talking Independents here. We're not talking about party loyalists. Now, if you'd have asked yesterday after the NAACP who do you trust, clearly Obama would have probably got one of those Lou Dobbs poll results. I mean, it would have been --

DOBBS: Easy, Joe. Come on.

MADISON: I mean that with respect.

DOBBS: That's "la gente" speaking, the people. That's not us speaking.

MADISON: That's what I'm saying, and that's what you would have gotten if people who heard him and they're going to be excited. But the majority of the people in this country are worried more about their pocketbooks right now than they are about either one of these men going to the White House, and they don't know who to trust to do anything.

SIMONE: Yes, but if it gets off change and goes to trust, that's going to help McCain in the end. I mean, he's someone people have known for decades. He's an American hero. In the end, they'll go with him over a newcomer with a small resume.

MADISON: Well, but if McCain keeps having surrogates like Phil Gramm, that trust will go right out the window.

DOBBS: Let's turn to this economy. I still am struck by the fact, Dom, that there has been so little reaction to the fact we're talking about the biggest bailout in the federal government in its history, bailing out Freddie Mac and Fannie Mae, the home mortgage market, making it pretty clear that this government is not going to permit failure at all. That's how much trouble we're in. What is the reaction? Is there any reaction amongst your listeners?

GIORDANO: No, Lou, there's no reaction because yesterday we talked about the drilling, we talked about oil prices and all that.

DOBBS: Are they in favor of drilling?

GIORDANO: Absolutely, Lou. But they can't get to Fannie Mae and things like this -- and I didn't even talk about it that much -- because the other more visceral, the pump, things that your poll and your reporters tonight talked about. Those things are hitting them more. This is a little bit esoteric to them at this point.

DOBBS: Joe Madison?

MADISON: We need leadership. We need individual leadership. I'm telling you, not group leadership, but some of the real pros in business, some of the real main people need to step up to the table.

DOBBS: Joe, the only people speaking right now for business, where we used to have great business leaders to public service, we don't have business leaders anymore. We just have business groups, the Chamber of Commerce, the business roundtable, CEOs, afraid to say anything.

MADISON: And we don't have political leaders. We have got parties. And that's why leaders in the party need to put the label aside and get real.

SIMONE: And you're forgetting the biggest bailout is still coming. Hillary Clinton wants that debt paid off.

DOBBS: He just had to go there, didn't he? He just had to go there.

Mark Simone, thank you very much.

Joe Madison, thank you, partner.

Dom Giordano, thank you, sir.

Appreciate it, gentlemen.

GIORDANO: Thanks Lou, very much.

Up next, a reminder to join me on the radio for the "Lou Dobbs Show" tomorrow. My guests will include Ken Walsh, chief White House correspondent "U.S. News & World Report," John Fund, "Wall Street Journal." Go to loudobbsradio.com to get your local listings on the radio.

Up next at the top of the hour, in fact, the "ELECTION CENTER" with Campbell Brown.

Campbell, tell us all about it. CAMPBELL BROWN, CNN ANCHOR: Well Lou, things are getting pretty hot and heavy right now between Barack Obama and John McCain, with McCain saying Obama's latest take on the troop surge in Iraq should enrage flip floppers everywhere. As always, we're going to have the real story, people in their own words, no bias, no bull. We're also going to look at how a John McCain presidency could cause problem for his wife's beer business. We'll explain that at the top of the hour, Lou.

DOBBS: Did you say no bias, no bull?

BROWN: That's it.

DOBBS: OK.

BROWN: It's our goal, Lou.

DOBBS: I love it. I love it.

BROWN: I thought you might.

DOBBS: We'll see you at the top of the hour.

BROWN: All right.

DOBBS: Up next, is Mexico meddling in the U.S. government's investigation of one of the country's large el (ph) salmonella outbreaks? What is the U.S. government doing anyway?

And President Bush admits the war in Afghanistan isn't going as well as the war in Iraq. I'll be talking to one of the country's leading military analysts, General David Grange joins me.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: More than 1,100 cases of salmonella cases now reported across 42 states and the District of Columbia. But almost three months since this outbreak began, health officials still have not identified the source of the salmonella contamination.

Louise Schiavone has the very latest for us.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): 1,167 cases of salmonella Saint Paul are now reported by the Centers for Disease Control. At least 220 people have been hospitalized. And it may have contributed to the deaths of two men in Texas who had been critically ill before the infection.

JAYDEE HANSON, CENTER FOR FOOD SAFETY: The Food and Drug Administration has a system that is good when the biggest vegetable that we ate was ketchup. But it is inadequate now. In the early '70s, they did many more inspections, 50,000 a year. Now, we're doing about 10,000 a year.

SCHIAVONE: Jalapeno and serrano peppers and cilantro are now on the list of salmonella suspects, but nothing has been taken off the list. The FDA telling LOU DOBBS TONIGHT, "The last thing FDA wants to do with this investigation going on and people still getting sick is to lift an advisory on tomatoes and then have to take it back."

Tomato growers everywhere are now pushing back. Health and agriculture officials from Mexico are due in Washington this week to meet with FDA officials in an effort to clear their products from any association with the outbreak. Meanwhile, the CDC map of the outbreak with cases ranging from early April to the Fourth of July reveals the hardest hit states are those on the Mexican border and Illinois. Only two cases have been recorded in Florida, where many counties are not yet clear.

REGGIE BROWN, FLORIDA TOMATO EXCHANGE: And it certainly is beginning to be high time for our industry to be let loose from this investigation so we can proceed to produce tomatoes for America.

SCHIAVONE: Florida Tomato Growers Exchange officials also plan to visit the FDA soon with a request similar to Mexico's.

(END VIDEOTAPE)

SCHIAVONE: Lou, with the government now having cast a broad net, growers of other products fear they like tomato growers could also be in for big losses. Said one major domestic grower of peppers, quote, "I wish that until they actually found a contaminated pepper or tomato, they would have been more careful" -- Lou.

DOBBS: Absolutely utterly and completely ridiculous, unconscionable, the incompetence is raging, it's unbelievable. Thanks for keeping us up to date. We will continue to press on.

Thank you very much, Louise, great reporting.

Up next, why the war in Afghanistan is such a tough fight. I'll be talking with General David Grange about what's going on both in Afghanistan and Iraq and what could be next.

(COMMERCIAL BREAK)

DOBBS: President Bush today acknowledging the war in Afghanistan is going less well than the war in Iraq. The president's conclusion coming days after insurgents killed nine of our troops Sunday on a single attack on a remote base in eastern Afghanistan. Joining me now, LOU DOBBS TONIGHT military analyst General David Grange.

Good to have you with us in New York.

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

DOBBS: General, what is happening in Afghanistan? And there's been the request for more MRAPs, the mine resistant armored vehicles, for more troops, as many as two brigades. What is happening? GRANGE: Well, obviously the Taliban have regrouped. And what you have here is a lack of resources on the ground, not just military, but other elements of power -- economic, informational, diplomatic. And the Taliban have retrained in the sanctuaries, they have infiltrated in. They have supported the people in certain areas, and they are starting an offensive. And they are taking advantage of the gaps and seams that are there because of lack of U.S. and NATO support.

DOBBS: Do you agree with Senator Obama, that we should be carrying out operations into Pakistan to go after the sanctuaries?

GRANGE: Well, how are we going to do that? I mean, if it's going to be to go in with thousands of troops, which is what it would take to wipe those out, that would be another war. I agree with going on with covert action, with special operations and with strikes. But without Pakistan totally behind it, which they won't be right now, no.

DOBBS: In Iraq, an incredible success story in the last several months. Is that sustainable? Is it, is David Petraeus or his commanders, anymore confident today in the sustainability of the success than 90 days ago?

GRANGE: I think they are very confident. And it is sustainable. Just needs to maintain the momentum. Again, glory is fleeting. And as you saw today, there were a couple of bombings and emergence could happen there, a strong enemy presence, a break in between the factions. So we have to keep an eye on it, keep up the pressure. But they are very confident right now.

DOBBS: And do you think we're going to see an acceleration, as has been discussed, widely, the reduction in troops in Iraq accelerating?

GRANGE: There's nothing that commanders, the Department of Defense wants more than to bring some of those units home. And so I think at this fall, you'll see that, unless, of course, conditions change. And strategy has to adapt to what is found on the ground, and as it adapts, whether it be in Afghanistan or Iraq, then they'll make the call then, obviously.

DOBBS: General David Grange, as always, good to see you.

GRANGE: My pleasure. Thank you.

DOBBS: Well, the poll results tonight, overwhelming, 98 percent of you find it outrageous that the Bush administration is refusing to give our border patrol agents the respect and the support they deserve.

Time now for a few of your thoughts.

Cynthia in Nevada: "Help me, Lou. I cannot vote for either one of these idiots. I've given it my best shot and listened and studied and I just can't do it. What now?" And Michael in California: "When will the federal government point the fingers at themselves from all this country's woes? Let's see: illegals, housing, trade, the energy crisis, there's still no cuts at the top. But who pays the check? We do. They all need to go."

You are exactly right.

We thank you for being with us. For all of us here, good night from New York.

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

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