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Obama is Preparing for his Overseas Trip; McCain Criticizes Obama; McDonald's Franchise is Busted; Your Food Safety

Aired July 17, 2008 - 19:00   ET


LOU DOBBS, CNN ANCHOR: Wolf, thank you.
Tonight Senator Obama about to go to Iraq in an effort to prove he's tough enough to stand up for American interests. We'll have complete coverage. He's going to have a lot of company it appears.

And tonight troubling new evidence that financial institutions responsible for our mortgage crisis are preying on middle class Americans.

And tonight a victory for the federal government's efforts to enforce U.S. immigration laws. A McDonald's franchisee and two top executives pleading guilty to giving phony I.D.s to illegal aliens.

And tonight I'll have a few special words for former Vice President Al Gore and his refusal to support a plan that would help middle class Americans pay their gasoline bills. We'll have 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 Thursday, July 17th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

Senator Obama tonight preparing for his first visit to Iraq in two years, his visit part of a tour of Europe, the Middle East and for the first time Afghanistan. Obama trying to dispel doubts that he doesn't have the experience or the credentials to be commander-in- chief. Senator Obama will receive unprecedented support in his effort from liberal media elites in all likelihood from network television, newspapers and magazines, all three network anchors, Katie Couric, Brian Williams and Charlie Gibson have decided to travel with Senator Obama.

We have extensive coverage tonight and we begin with Candy Crowley in Washington, D.C. -- Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Lou, because Iraq presents a fundamental and deep difference between the two men who could be president, it is Obama's trip there and to Afghanistan that have gotten the most attention. But Obama has another trip as well, a five-country blitz which holds for him both promise and risk.


CROWLEY (voice-over): Barack Obama's European trip is the campaign trail via satellite. Pictures for the rhetoric back home.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: We will restore our moral standing in the world.

CROWLEY: From Jordan to Israel, to Germany, France and England, it is a postcard journey, images for the hesitant to show that this 46-year-old politician, a virtual unknown overseas can play a lead role on the international stage.

SEN. EVAN BAYH (D-IN), ARMED SERVICES COMMITTEE: The message to voters back home is that he is focused on being a strong, effective commander in chief. He's going to rehabilitate our image across the world, strengthen our alliances so that we can better protect the United States of America.

CROWLEY: In short, a trip to answer the question, does he seem tough enough to stand up for American interests and graceful enough to improve America's image, a potent issue on the Democratic campaign trail.

OBAMA: People are saying they love this country and they want their cherished values and ideals restored.

CROWLEY: Obama is looking for counter point images to this; angry street demonstrations that often come with President Bush's overseas travel. He's not there to push policy or promises, but unlike John McCain who's well known and well traveled overseas, for Obama, this is about first impressions, not just the ones he sends back home, but also the ones he leaves behind with European officials.

ROBIN OAKLEY, CNN EUROPEAN POLITICAL EDITOR: I mean people have been saying to me look, this guy's only been in national politics for three years, let alone international politics. We don't really know quite exactly what he's going to do.

CROWLEY: The Obama campaign banks on picture perfect. They'd be over the moon if Obama returns from his European trip with this kind of buzz.

OAKLEY: I was talking to a former British foreign secretary this week and he said it's like JFK and Camelot, he said it may not be justified, it may not be sensible, but that feeling is there.

CROWLEY: And they may be the biggest risk of this trip, all those great expectations.


CROWLEY: There are other risks. The trip comes amidst mortgage meltdowns and gas price explosions at home. He could look out of touch and the Europe card has to be played carefully for a domestic audience. Obama could look too cozy and it could fuel rather than doubt those commander-in-chief questions, Barack Obama could make a mistake. Lou?

DOBBS: Well this business of all Katie Couric, Brian Williams, Charlie Gibson traveling with this young senator to go on what is basically a campaign fact-finding tour. I mean this is sort of breathtaking. What is the reason for that? I mean explain that one to me.

CROWLEY: Well I think first of all it's that it is a happening if you will, if I can go back to the '70s or whenever that phrase came out...

DOBBS: It was earlier than that and it's the correct expression.


DOBBS: And it's the correct expression.


CROWLEY: But in fact, you know in Europe, they really are eagerly anticipating this. It is also because this is where Barack Obama is a blank slate and, listen, as you know, Obama makes great copy. So he brings with him a lot of press.

And I will tell you another difference is that certainly the European portion of Obama's trip is about campaigning, Iraq and Afghanistan are sort of a Pentagon deal, you can look at it as campaigning...


CROWLEY: ... but it's a whole different thing. Whereas when John McCain went overseas, it was part of his official so-called congressional delegation, so there's a huge difference between these two trips.

DOBBS: One CBS news executive quoted as saying the reason they're going, these three anchors is because Senator Obama hasn't been there before and they wouldn't go with Senator McCain because of course he's well traveled and experienced.

CROWLEY: Making a McCain point exactly.


DOBBS: Thank you very much. Candy Crowley.

Well blistering criticism tonight of Senator Obama and his national security policies from Senator McCain. McCain saying he finds it remarkable that Obama makes policy statements on Iraq before he even visits the country. McCain warned that our success in Iraq could be reversed if Senator Obama were to become president. Dana Bash has our report.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): This Kansas City town hall was billed as a chance to talk about problems close to home like the economy. But John McCain also made sure to tweak Barack Obama for his upcoming trip abroad.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I know that Senator Obama is going to Iraq. I was very interested that he articulated and announced his policies and approach to Iraq before he went.

BASH: Aides to McCain may not like it, but they know full well Obama's overseas trip will get a lot of coverage and the reality is McCain himself goaded Obama into it.

MCCAIN: Just now coming up on 900 days since he last visited Iraq, since before the surge. I hope that he goes as quickly as possible with or without me.

BASH: The Republican National Committee still has a running clock on its Web site. Now that Obama is going, it's (INAUDIBLE) time inside camp McCain, their central theme by announcing his war policies before leaving, Obama is embarking on a campaign swing not a fact- finding mission.

MCCAIN: I have been on a lot of trips around the world, usually at your expense, but I usually issue my policy statements when I get back.

BASH: And McCain aides are stepping up their push to highlight Obama's apparent shift in rhetoric on Iraq.

MCCAIN: My friends, flip-floppers all over the world are enraged.

BASH: Earlier this week, McCain declared Obama a flip-flopper for changing statements on the success of the surge. Now McCain's campaign made this eight-minute video aimed at illustrating Obama's contradictory statements on Iraq.

OBAMA: What I said is that we've got to make sure that we secure and execute the rebuilding and reconstruction process effectively and properly and I don't think we should have an artificial deadline when to do that.

BASH: That was 2004, Obama now calls for all combat troops out in 16 months.


BASH: The Obama campaign quickly responded with a lengthy statement suggesting Senator McCain has for the most part been in lock step with President Bush on the Iraq war and that McCain's position keeps troops there indefinitely. But notably the response did not address McCain's central charge. That over the years Obama's Iraq position has shifted with the politics of the moment. Lou.

DOBBS: Dana, thank you very much. Dana Bash.

Well, the liberal media's love affair with Senator Obama has at least in the minds of many turned into an outright obsession. As we reported, all three network anchors will be accompanying Senator Obama on his tour of Europe and the Middle East. Not a single network anchor traveled with Senator McCain on any of his foreign trips over recent months. Howard Kurtz, host of CNN's "RELIABLE SOURCES", has our report.





HOWARD KURTZ, HOST, CNN'S RELIABLE SOURCES (voice-over): The three broadcast network anchors will travel halfway around the world, lured by an offer of interviews with the candidate with Katie Couric, Brian Williams and Charlie Gibson each getting an exclusive on successive nights. That means CBS, NBC, and ABC evening newscasts will do exactly what the Obama camp wants, use their big megaphones to certify their trip as a major campaign event. The television chatter is already starting including on CNN which will also be all over the story.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Obama will shortly be headed for the Middle East and intends to show how much he knows about the threats the U.S. faces.

CHRYSTIA FREELAND, FINANCIAL TIMES: The economy is in bad shape, but I think that this trip by Obama is risky but brilliant.

KURTZ: Of course, it's always big news when a presumed presidential nominee travels abroad, right? Wrong. John McCain has taken three trips abroad to Europe, the Middle East, Canada, Colombia and Mexico in the last four months. No anchors tagged along. In fact some broadcasts and cable networks didn't even send correspondents on some of these trips.

The imbalance doesn't end there; Obama has received more than twice as much air time as McCain on a network evening newscast since last month, although more coverage doesn't always mean positive coverage. Obama who's on the cover of "Newsweek" again this week has been on "TIME" or "Newsweek's" cover a dozen times in the last three years, more than twice as often as McCain. And in some venues, Obama and his wife Michelle on the cover of "Us Weekly", Obama and his family on "Access Hollywood", it's not even close.


KURTZ: With Obama expected to draw big crowds in Europe next week, McCain may struggle just to stay in the headlines. Now journalists say much of this is driven by the novelty factor. Obama is a new player on the world stage while McCain has been making international trips for decades, but at what point does that become unfair? -- Lou?

DOBBS: Well you're the expert, you tell me. I have never in my career, Howard, seen networks, magazines, newspapers just throw aside any pretense of objectivity, they're in the tank as far as I'm concerned for Obama and they are trying to get deeper in that tank. What's your thought?

KURTZ: Well I started fulminating (ph) about this two or three weeks ago when Senator McCain went to Mexico and Colombia and several organizations including CNN did not even send a correspondent...

DOBBS: Right.

KURTZ: ... let alone an anchor, because I knew that when the Obama overseas trip came up that everybody and his brother-in-law would be giving it this kind of coverage. I'm not saying it's all going to be favorable. But the sheer volume of it, and as you say, on magazines, in newspapers, at some point, the argument, the explanation, the rationale that well he's a newer story just doesn't hold water, we're supposed to be fair to both sides.

DOBBS: Yes, absolutely. At least, I'm an advocacy journalist, and proud of it. But the men and women of this craft who say they're -- especially the editors that you just mentioned, I mean I can't even imagine how they can sleep at night. And as I say, the CBS News executive who said that the reason they're all going is because he's never been before is just -- it's laughable at this point.

KURTZ: Well you know, Lou, some news executives and journalists tell me privately that one of the reasons that Obama is on all those magazine covers and entertainment shows and getting so much television news coverage is because he's good for ratings, he's good for circulation. The perception at least is that he's a bigger draw than McCain. Well that may be the case, but, again, we're not supposed to have our thumb on the scale.

DOBBS: Absolutely. Well, Howard, thank you very much -- Howard Kurtz, "Washington Post", host of CNN's "RELIABLE SOURCES". Thank you.

Up next here, the FDA has new information about the safety of tomatoes. After the biggest salmonella outbreak in years, we'll have the story, you're not going to believe what the FDA is saying at the same time they're saying it's OK to eat tomatoes.

And a legal victory in the battle to enforce U.S. immigration laws after a raid on a McDonald's franchisee. We'll have that special report and we'll tell you about a mighty big fine. We'll be right back.


DOBBS: A disturbing new development in the raging violence being carried out by Mexico's warring drug cartels, gunmen kidnapped the head of anti-kidnapping and organized crime investigations in the Mexican border state of Coahula (ph). The official was seized Monday as he was driving to the state capital. At least 450 law enforcement officers are among the more than 4,200 Mexican citizens killed in Mexico's drug cartel violence since December of 2006. Well, a victory tonight for federal immigration law enforcement officials and a blow to illegal employers of illegal aliens. Top executives at a McDonald's franchise pleading guilty to hiring illegal aliens and a string of other felonies, not only did the franchisee hire illegal aliens, it also gave them phony identification and other people's Social Security numbers. Casey Wian has our report.


CASEY WIAN, CNN CORRESPONDENT (voice-over): Last September Immigration and Customs Enforcement agents raided 11 McDonald's restaurants in Nevada arresting 58 illegal alien employees. But investigators didn't stop there, they pursued charges the McDonald's franchisee actually provided stolen identities including Social Security numbers to its workers. Wednesday McDonald's franchisee Mac Associates (ph) pleaded guilty to two felonies, conspiracy to encourage and induce an illegal alien's unlawful residence in the U.S. and aiding and abetting the same crime. Mac agreed to pay a $1 million fine while two executives each face up to five years in prison and a $250,000 fine.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: For those who say we don't prosecute employers, the record is absolutely to the contrary. I think we're almost at 100 employers in this fiscal year.

WIAN: ICE says about half of the workers arrested at the Nevada McDonald's have been deported. Pressure continues from advocates of expanded illegal alien rights for ICE to stop all worksite enforcement action.

CARDINAL ROGER MAHONY, LOS ANGELES ARCHDIOCESE: These are people working contributing to their own welfare, that of their families, the companies, the community, paying taxes and helping make this country strong.

WIAN: Mac Associates (ph) says it has taken the necessary steps to avoid a repeat of its crimes. McDonald's in a statement said "this was an isolated incident", adding it has strict policies requiring its franchisees to abide by all government hiring laws. But it does not require all franchisees to use E-Verify, the government's voluntary computerized worker verification system. Only 70,000 or fewer than one percent of U.S. businesses are enrolled.


WIAN: A Homeland Security Department plan requiring companies to fire workers with bogus Social Security numbers has been blocked by a California federal judge. Still Homeland Security says it will continue to raid more businesses and prosecute more employers -- Lou?

DOBBS: Well, we know that business people all across the country, the U.S. Chamber of Commerce certainly representing as it does big business, I'm sure that they want to encourage all employers to use E-Verify, because it's 99.5 percent effective and would stop so much of our illegal immigration crisis in this country. I can't imagine that McDonald's would hesitate now, particularly that they have run across this problem to demand that franchise owners use E- Verify and as a matter of policy, for example like AMC Theaters make certain of the residency and immigration status of their employees.

WIAN: You would think so, Lou, but all along, the business lobby, the courts, amnesty advocates, they're the ones who have been standing up and blocking these efforts by the Department of Homeland Security modest though that they may be at this time to actually enforce the law and hold employers accountable for knowingly and egregiously hiring illegal aliens and even going so far as in this case to help them get phony documents.

DOBBS: Yes, I think I can say facetiously I'm shocked that the Chamber of Commerce would not do that. It's a shame that there's no leadership. They've got a -- there's no real individual leadership aside from companies like AMC and a handful of others, and I want to give AMC credit, they mean business, they are a leader, they don't depend on the business roundtable or the U.S. Chamber of Commerce. They have real leadership. So many other companies in this country should have the same, follow the example. Thank you very much. Appreciate it, Casey. Casey Wian.

The fast food industry certainly backs so-called comprehensive immigration reform, which would have given amnesty to millions of illegal aliens. McDonald's is among the companies backing that plan and it's not certainly the only fast food chain supporting amnesty, the quote, "Essential Worker Immigration Coalition", end quote, is a group of trade associations strongly supporting comprehensive immigration reform legislation.

Among the more than 50 business groups that make up that coalition is the National Association of Chain Restaurants, its membership list includes McDonald's, Dunkin' Donuts, Burger King, Taco Bell and other familiar fast food names. By the way, the highest concentration of illegal alien employment in four industries, construction, leisure and hospitality, which of course are hotels and restaurants, and landscaping, in all four industries where the declaration is that they need cheap labor, well they have got it because in all four of those industries in which illegal aliens are concentrated for employment, their wages have declined over the past six years.

Up next, a stunning reversal from the FDA tonight after weeks of warnings about salmonella contaminated tomatoes. New evidence that the Food and Drug Administration leadership simply has no clue what it's doing. And race and politics, will race be a deciding factor in the contest for the White House? We'll have three unique perspectives and give you the view of two presidential candidates, we'll be right back.


DOBBS: Up next, former vice president Al Gore is back, completely ignoring the reality and the financial pain and burden of working men and women in this country. Is he an out of touch elitist? I'll have a few thoughts for him and you. We'll be right back.


DOBBS: Believe it or not the Food and Drug Administration today announcing it is OK, in its words, to eat tomatoes again. But three months into the salmonella outbreak the FDA still hasn't identified the source of the bacteria. The outbreak has sickened more than 1,200 people officially in the country, perhaps as many as 30 to 40,000. And by the way, intriguingly, the FDA says go ahead and eat those tomatoes, but it hasn't cleared tomatoes quite yet. Louise Schiavone has the report.


LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): All clear, all tomatoes sold anywhere in the United States as of today.

VOICE OF DR. DAVID ACHESON, FOOD AND DRUG ADMINISTRATION: "We are removing the tomato warning. As of today, FDA officials believe that consumers may now enjoy all types of fresh tomatoes available on the domestic market without concern of becoming infected with salmonella Saintpaul bacteria."

SCHIAVONE: Still not clear what caused the ongoing outbreak?

UNIDENTIFIED MALE: We still don't know where the original contamination point was and we're pursuing that as hard today as we were in the beginning.

SCHIAVONE: Confirmed cases are now up to 1,220, across 42 states, Washington, D.C. and Canada, 224 have been hospitalized. The latest confirmed case was seen July 4. Better than 50 percent of the cases are documented along the U.S.-Mexico border, although produce from Mexico so far has been cleared.

At the same time, however, the FDA says field staff is still investigating a specific packer in Mexico, even as the FDA maintains contact with edgy Mexican officials. The Mexican embassy telling LOU DOBBS TONIGHT, quote, "not a single case of this strain of salmonella has been registered in Mexico. Notwithstanding, Mexico is fully committed to the health of consumers in both of our countries and will continue to work hand in hand with U.S. authorities to ensure food safety."

The government's inability to explain the expanding outbreak has this influential senator suggesting it's time to take the F out of FDA and institute instead...

SEN. TOM HARKIN (D), AGRICULTURE CMTE. CHMN.: One single food safety entity that has jurisdiction over all food safety and they simply don't have the wherewithal to do it.

SCHIAVONE: The nation's tomato farmers are relieved.

TOM NASSIF, PRES., WESTERN GROWERS: We would have preferred however that it had not occurred, that there had not been speculation that it was tomatoes until they actually had evidence that it was the carrier. SCHIAVONE: But from farm to table, the industry could well lose a quarter of a billion dollars.


SCHIAVONE: So now, Lou, the focus of suspicion currently rests on jalapeno and serrano (ph) peppers, which are not approved for people with health issues and with the mystery still unsolved and the range of suspicion now touching on the key ingredients in salsa, Dr. Acheson tells CNN that the science quote, "has not indicated that the outbreak has been linked to commercially produced salsa" and as a result, Lou, they have not been to any places that commercially produce that product. Lou?

DOBBS: Is anyone in that agency's leadership capable of intelligent thought and action? First they said today it's OK to eat tomatoes at the same time acknowledging they don't know what the origin or source of it is, or at least they're not saying. Also they said they're not clearing tomatoes because there are still people sick and becoming sick, but it's slowed down. I mean it's almost impossible to make sense of what this agency is doing.

SCHIAVONE: Lou, it's just shocking. A couple of days ago, the FDA gave us a statement and said, we're not about to clear tomatoes because we don't want to have this outbreak still ongoing and have to then recall the tomatoes that we have cleared. Now today and you know the pressure has been fantastic on the FDA, people from Mexico are here appealing to the U.S. government to clean the slate so they can sell their product.

The Florida growers are up in arms, growers everywhere are up in arms and they have been really bringing pressure to bear on officials in this government. So today, they basically cried uncle, although they would tell you that they feel that it's now safe to eat these peppers, these tomatoes rather, because the shelf life from April to now of course is nonexistent and so on. But it's just a jumbled investigation and a jumbled message.

DOBBS: Then why are people continuing to become sick?

SCHIAVONE: That's exactly right. That's the mystery and there are no answers.

DOBBS: And what -- and who is -- who do they believe they have a duty to, the American people, the Western Growers Association, or the government of Mexico? This is absolutely outrageous.

SCHIAVONE: Well for the record, Dr. Acheson said to me today that it was a decision based on the interest of the American people, it was not a trade decision. That's what they're saying.

DOBBS: That's what they said, fine. I cannot imagine why anyone in their right mind would eat a tomato given the ambiguity, the ambivalence, the contradiction and the inconsistency of everything they have said and done throughout this process, can you?

SCHIAVONE: Well for myself, Lou, I'm still doing tomatoes. But you know the -- but the point is, they just don't know, so I mean...

DOBBS: Well let's put it this way.

SCHIAVONE: ... you're really at the point where you don't know what you're supposed to eat.

DOBBS: Well if you're eating tomatoes, Louise...

SCHIAVONE: It can't possibly be everything.

DOBBS: ... we're going to keep one camera on you.


DOBBS: Louise Schiavone. Thanks a lot. We appreciate it.

Time now for some of your thoughts. Ruth in California saying "Lou, the McDonald's franchisee who supplied illegal alien workers with false identification should hear from people like me. I spent eight years clearing my record and my credit rating following identity theft. Thanks for all you do."

Well, Charles in West Virginia: "Lou, these two candidates are largely why I registered as Independent one day after the West Virginia primary. Thank you for your reporting."

And Kevin in Oregon: "Lou, we all see our two presumptive partisan presidential candidates speaking to many groups, La Raza, NAACP, et cetera. I belong to a group too called the American citizens. How about these candidates start speaking about our concerns and needs? Keep up the great work."

Oh, man wouldn't it be nice if they would just deal with that one community, one nation? Probably too much to ask. We'll have more of your thoughts here later in the broadcast.

Former Vice President Al Gore tonight refusing to acknowledge the truth about our worsening energy crisis. It is the truth that certainly is inconvenient to him and to other members of the country's for the most part left wing elite orthodoxy as they luxuriate in that ideological belief system. But the reality is something quite different. Skyrocketing fuel and gasoline costs, this is a crisis for our middle class, for working men and women and their family. And in my opinion, in my opinion only, Mr. Gore, I believe you should start thinking about the fact that we need every solution possible brought to bear to deal with our energy crisis. Gore today came up with what by any measure is a truly absurd proposal to solve this nation's energy crisis. Just listen.


AL GORE, FORMER VICE PRESIDENT: Today, I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon free sources within 10 years. It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for oil 10 years from now in areas that should be protected.


DOBBS: Listen to that tumultuous applause to that statement which on its face is an absurdity. You heard correctly. Al Gore does not want any offshore oil drilling. He does not want us to expend every effort, every innovative initiative possible to deal with this energy crisis.

And at the same time, he talks about the need for generating power from renewable energy sources without saying what those renewable energy sources are. What in the world is Al Gore thinking? There is an environmental orthodoxy in this country that is losing it's grip. It is time now for Al Gore and his left wing orthodox friends in Congress such as Senator Harry Reid and Speaker Nancy Pelosi to start lifting, trying to ease the pain and the burden of working men and women and their families in this country.

This is not some abstract discussion about environmental issues or conservation. Congress, the presidential candidate, Barack Obama, presumptive presidential nominee of the Democratic Party, Al Gore, all should immediately agree to develop our offshore crude oil and natural gas reserves.

And we should remember who came up with the idea of lifting the ban on offshore drilling. It's a man by the way who's not the agent of change, that's Senator Barack Obama. It's the one the liberals say is too old to be in the White House. He's 71-years-old and he's a war hero, but Senator John McCain who sometimes can't remember that Czechoslovakia is now the Czech Republic and Slovakia.

By the way, a new CNN/Opinion Research Corporation poll shows almost three quarters of all Americans support drilling offshore for crude oil and natural gas.

Let's take a poll tonight. The question is, do you believe it's time for Barack Obama, Al Gore, Harry Reid and Nancy Pelosi to acknowledge that offshore oil drilling is part of the solution to our skyrocketing energy prices? Yes or no, vote at We'll have the results here later.

Up next, big banks finding new ways to prey on middle class Americans and those aspiring to our middle class who are reeling from our housing prices and soaring gasoline and fuel prices. We'll be telling you what's really going on in Iraq and Afghanistan as Senator Obama and a whole bunch of media gets ready to go out and visit those countries. One of the world's leading authorities on Iraq, Afghanistan and the Middle East joins me, Fouad Ajami. We'll be right back.


DOBBS: Welcome back. More and more of our middle class families are relying on their credit cards to pay for the most basic household expenses. Now, some banks and credit card companies are penalizing those very card holders who are trying to save money and act responsibly. Kitty Pilgrim reports tonight on the latest abusive tactics by those credit card companies.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Credit card use is soaring. In the month of May alone, Americans put another $8 billion on credit cards and card usage was up by 7 percent. Some banks are now scanning credit card statements, looking for certain purchases they believe are associated with financial distress.

RED GILLEN, CELENET CONSULTING: There is increasing debt. The banks are realizing this and they're increased provisions for credit losses that I think are a result of people moving out of home equity loans and into their basically into their credit cards to finance their purchases.

PILGRIM: Some credit card companies are now setting up codes for purchases they see as potentially troubling. Experts say suddenly using a credit card to pay for food, utilities or even doctor's bills may raise red flags at the bank.

ROBERT MANNING, ROCHESTER INST. TECH: There was a very well discussed case of a consumer who purchased retread tires and had his line of credit reduced because the credit card company felt that he was facing financial distress substituting new tires with retread tires and was one step away from defaulting on his credit card.

PILGRIM: When banks see those indicators, it can trigger lower lines of credit or higher interest rates for future borrowing. Consumer Federation of America says that is wrong.

TRAVIS PLUNKETT, CONSUMER FED. OF AMERICA: Creditors should rely on information about whether consumers pay their bills on time, what their credit history is, to make determinations about their credit worthiness, not whether they have recently used their credit card at a doctor's office or at a hospital.

PILGRIM: Many banks will not reveal why their credit practices are made.


PILGRIM: Now some defend the practice, saying banks that are burned by the mortgage lending and they have to protect themselves from bad credit risks. Personal bankruptcies are expected to double this year and the consumer is now viewed as a credit risk no matter how good they have been about paying their bills on time, Lou.

DOBBS: Unbelievable. As banks are reporting what profits they have, those outrageously high rates and fees that they're putting on their credit card consumers.

PILGRIM: Yes, the people we talked today say that the most blatant cases of this come from the small credit card companies, but you're seeing it in the banking sector also.

DOBBS: Unbelievable. There should be no discussion, this is just a travesty, it should be stopped, ended, done with, period. Thank you very much, Kitty, an amazing story.

Well, the Senate Subcommittee on Investigations today released a scathing report that accuses two foreign banks of helping wealthy Americans dodge taxes. The Senate report accuses Swiss bank UBS and LGT Bank of Liechtenstein of helping wealthy Americans evade billions of dollars in taxes, leaving hard-working middle class families of course to shoulder the tax burden.

Senator Carl Levin led that investigations. He said these "tax haven banks are engaged in economic warfare against the United States and the honest, hard working American taxpayer is losing."

Now Senator Levin had I think a very, very interesting idea. Senator Levin and his colleague Senator Norm Coleman are calling for top penalties on those tax-saving banks, including barring those banks from doing business with American financial institutions.

Now that seems like a straight forward response. And this isn't by the way the first time UBS has been at the enter of public controversy. Back in 1998, ten years ago, UBS and Credit Suisse agreed to a $1.25 billion settlement in a class action lawsuit filed by the families of Holocaust victims. The bank prevented tens of thousands of Holocaust victims and their families from accessing dormant World War II era accounts.

And in 2000, UBS admitted exploiting prisoners of Nazi concentration camps during World War II. UBS confirmed it owned a factory where Nazi officers forced hundreds of Auschwitz prisoners to work.

UBS of course was in the news last when it's vice chairman said that we have become a nation of whiners. That's right, Phil Gramm.


PHIL GRAMM, VICE CHAIRMAN, UBS: You've heard of a mental depression. This is a mental recession. We have slowly become a nation of whiners.


DOBBS: Well, I'm not whining and I hope the former senator won't whine when we point out that he championed the 1999 deregulation of financial firms which some economists say contributed to our credit and mortgage crises.

After retiring from the Senate in 2002, Phil Gramm became a lobbyist for UBS's investment banking division. Phil Gramm is now economic advisor to of course, Senator John McCain. No whining Senator, no whining.

Up next, Senator Obama heads to Iraq and Afghanistan. It's just a little field trip. He's going to take a look at what's going on there. One of the nation's leading experts on the Middle East, Professor Fouad Ajami joins me here to tell us what the senator might expect, he and his media entourage. And race and the presidential campaign. How critical is the issue of race in November? I'll be talking with three authorities on the issue of race and politics here next. Stay with us, we're coming right back.


DOBBS: Well, Senator Obama is about to make his first visit as a presidential candidate to Afghanistan and he will be making his second to Iraq. Fouad Ajami is professor of Middle East studies at Johns Hopkins University and the author of "The Foreigner's Gift: The Americans, the Arabs and the Iraqis in Iraq."

Professor Ajami joins me here now. Good to have you with us.


DOBBS: I have to say, it is to me at once ironic, absurd and laughable, that all three of the network anchors are going with Senator Obama. It's going to -- it was supposed to be a secret for security reasons. It looks like they're no longer worrying about that.

AJAMI: Anchors away, it's show time and I think they're just following him to Baghdad because it will be a big story. You know, it's a huge media story. And I think we just -- you know, you have to discount the hype of this.

DOBBS: OK, I'm going to discount it. I'm going to discount the fact that all - I mean what's the point if all three are there? Where's the differentiation? Is there going to be a different take on how much they love Senator Obama? What can they possibly -- let me rephrase. I have already let them become part of the story. What can Senator Obama possibly learn with this entourage with media and nonsense going on?

AJAMI: Well, it's a photo op. In fact, when these people go to Iraq, they don't really see Iraq. They see the Green Zone, they see the American military. It's good, they can spend some time with Prime Minister Maliki. They have no idea what he's up against. He has very little idea of what they're up to. And he speaks no English, they speak no Arabic, of such things are wonderful imperial relations made.

DOBBS: What you're describing is a very, very -- it's unsettling and again, it's so absurd that it drives one to laughter, rather than tears one hopes.

AJAMI: But it's very important I think on the serious side for Senator Obama now. Senator Obama has, if you will, his own plan. For example, Senator Obama says that he heard Prime Minister Maliki talking about the timetable for an American withdrawal. He took him at his word. He believes him. So we think when in fact the last thing that Prime Minister Maliki wants to see is an American withdrawal. So it will be good for Senator Obama for go and take stock.

DOBBS: Well, he said he's going to refine things. One hopes that he will not do what Senator McCain did at one point, talk about how one can walk with ease through the marketplace in Baghdad as Blackhawk helicopters. He didn't mention at the time hovering above him and he's surrounding by security contractors.

AJAMI: I plead guilty, I have made such tours of Iraq with helicopters overhead with generals.

DOBBS: Real progress here, the real issue is that progress sufficient, sustainable and what is the likely impact? Because the Democrats have in point of fact put themselves in a difficult position because they have been banking implicitly on failure in Iraq and at least if not success, it appears the United States right now at least has moved to a stalemate position.

AJAMI: You're exactly right. We have talked about this on this show many times before. The Democrats, whether they will it or not, whether they say it or not, whether they own up to it or not are really invested in the story of American failure in Iraq.

But Iraq doesn't seem to be the failure it is. So in fact now people have switched their attention. And what they have begun to say, look, the success of Iraq is bought at the expense of a great failure in Afghanistan.

DOBBS: And that will be the next, if you will, surge, I guess, or withdrawal or stalemate.

AJAMI: And there is of course the move of the commanding general who brought these results in Iraq. General Petraeus is now head of CENTCOM. He is going to be overseeing the American efforts not only in Iraq, but Afghanistan as well.

DOBBS: And General Petraeus, I think the record should show, on this very broadcast, Professor Fouad Ajami said David Petraeus is the man to get it done at this point.

AJAMI: I am a total fan of the man, so nothing new there.

DOBBS: Fouad Ajami, thank you very much.

AJAMI: Thank you very much.

DOBBS: We appreciate it as always, professor.

Up next, the role of race in this election. We'll be telling you what Independent minded voters are thinking, need to know and we'll even show you some disturbing evidence of, that may conflict with, well, prevailing orthodoxies at viewpoint. Stay with us anyway.


CAMPBELL BROWN, CNN ANCHOR: I'm Campbell Brown. Here's what's coming up on "THE ELECTION CENTER." Tonight, a congresswoman demands on investigation into why innocent people's names are ending up on the terror watch list. Well that turns flying into an airline security nightmare. One name that just landed on the list is that of CNN investigative correspondent Drew Griffin. He's not a terrorist, so why is he on the list?

Also, Barack Obama's world travels and a proposed tribute to the late Jessie Helms causes an uproar. We're going to have all that just ahead. Lou Dobbs continues in just a few minutes.


DOBBS: Well, how important is the issue of race in this presidential election? It is a question that we cannot seem to avoid.

Joining me now are Carol Swain. She's CNN contributor, professor of Vanderbilt University Law School. Carol served as an adviser to Mike Huckabee's presidential campaign, editor of "Debating Immigration." CNN contributor Joe Madison, XM radio, great to have you with us. And Professor Richard Thompson Ford, Stanford University Law School. Richard is author of the book "The Race Card." Thank you all for being here.

Joe, let me start with you, if I may. You spent some grueling hours at the NAACP Convention. You got to watch Senator Obama, Senator McCain. Your thoughts?

JOE MADISON, XM RADIO: Well, it was arm waving, foot stomping reception for Senator Obama. I was a little disappointed in the national media's reporting of it, because in a 24, 26-minute speech he really talked a lot about public policy, but they focused and honed in on, about a five-minute discussion about personal responsibility.

Senator McCain's emphasis was on education, but he went after public education in a way that left a lot of people wondering what the results would be if he became president. And he received a polite, warm reception. He got a standing ovation at the end. So the bottom line is, there's a distinct difference between the two, and I can't wait until the debates start, Lou.

DOBBS: Professor Ford, your thoughts on these two? We have a race that by every measure of every poll is a statistical dead heat. McCain's not supposed to be in this thing, and Obama's supposed to be blowing everybody away and it just isn't happening, at least to this point.

RICHARD THOMPSON FORD, STANFORD UNIVERSITY: Yes, well, I think as far as the NAACP speeches go, there were no big surprises there. The theme of personal responsibility that Barack Obama touched on is a theme he's touched on before. And McCain, on the other hand, in his discussion of vouchers, found a conservative issue that is likely to resonate with a lot of black voters. I think frustration over failing schools is a serious issue in the black community and that's a take that a lot of people will appreciate.

DOBBS: Jesse Jackson, an icon of the civil rights era, a "leader" of the black community, his remarks about wanting to remove part of Jesse Jackson's lower anatomy, the reaction - did he effectively move himself to the sidelines in the political discussion in this country? CAROL SWAIN, VANDERBILT UNIVERSITY: Well he was already on the sidelines, and I think that, I'm a little bit sympathetic with him, not the fact that he made his comments, not publicly, you know, for consumption, but the fact that his reservation seems to be connected with the fact that Senator Obama -- those comments about personal responsibility, they seem more geared towards the white community than the black community. And if he had been out there behind Bill Cosby, talk about those issues all along, I think they would have been easier to swallow.

MADISON: But I -- sorry to interrupt.

SWAIN: As far as his NAACP speech, I think that a bolder speech would have talked about some of the racial preferences, and the fact that America is getting so diverse that now, may be the time to move towards class-based affirmative action. He could have spoken about the high abortion rate in the black community. There are so many other issues that would have been really bold. He played it very safe, and black men are always an easy target.

MADISON: Well, he didn't play it safe. I was there. He talked about real serious economic issues on employment. These are the kind of --

SWAIN: I read the speech.

MADISON: Well, I heard the speech, and so the nuances and what you read and what I saw and heard may be entirely different, but I say to you, and anyone else, that this thing about personal responsibility, I mean, what do we think? You know, Jesse Jackson has been talking about all these years. I am not defending what Jesse has said and done, but when you start talking about up with hope, and this is a 30-year-old discussion. This goes on in the black community, Carol, and you know this, every Sunday we talk about personal responsibility.

DOBBS: Joe, in all fairness we're talking about, in the context of this presidential race, and right now, Jesse Jackson, I think you would be among the first to admit is a net negative for Senator Barack Obama.

MADISON: Oh, Jesse Jackson -- wait a minute, Jesse Jackson probably did Obama a favor in the sense that he's now way on the sidelines, and that makes it a lot easier for him to stay on message.

You know something --

MADISON: That's what's really going on. So no, I'm not defending Jesse because the first thing I asked him, what the living daylights, I didn't use that word --

DOBBS: We understand.

MADISON: But what were you thinking?

DOBBS: Richard? THOMPSON FORD: I think Jesse Jackson and some of the civil rights establishment are nervous about Barack Obama. They are concerned that in a sense, Obama's campaign stands for a new approach to dealing with issues of racial justice, less confrontational approach, that in some ways Obama is or seems to be interested in moving past what you might call the politics of grievance, and I think a lot of people find that threatening, and Jesse Jackson's comments reflected that.

DOBBS: Professor Swain, you got the last word.

SWAIN: I wish that Senator Obama had dealt with the fact that maybe black men would be more responsible if they had jobs and some of them are being displaced by illegal immigration. He is not dealing with the violence between blacks and Hispanics, as well as the jobs.

MADISON: We agree on that.

DOBBS: Professor Swain, thank you very much. Joe Madison, thank you. Professor Thompson, thank you, Professor Richard Thompson Ford, thank you.

And tonight's poll results, 67 percent of you say it's time for Barack Obama, Al Gore, Harry Reid and Nancy Pelosi to acknowledge that offshore oil drilling is a part of the solution to skyrocketing energy prices, conforming pretty closely to the overall CNN poll. Thanks for being with us tonight. For all of us here, good night from New York. "THE ELECTION CENTER" and Campbell Brown begin right now. Campbell?