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LOU DOBBS TONIGHT

New Team; Kennedy Shock; Ethics Question; Your Bailout at Work; Replacing Americans

Aired January 22, 2009 - 19:00   ET

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


LOU DOBBS, HOST: Thanks, Wolf. Tonight President Obama setting a new tone for U.S. national security saying moral values will be the bedrock of our foreign policy. But is the president putting political correctness ahead of national security?
Tonight startling new information on why Caroline Kennedy declared she's no longer interested in being appointed to the Senate seat vacated by the new secretary of state.

Also tonight, new evidence of the government's utter failure to manage the huge bailout of Wall Street. You won't believe what Merrill Lynch and its former CEO, John Thain, were doing as the company was demanding billions of dollars of your taxpayer money. We'll have that story, all of that, all the day's news and more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, January 22nd. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. President Obama today declared a new era of American leadership in the world. President Obama signed executive orders to close the prison for terrorists in Guantanamo Bay, and to prohibit torture by all American personnel.

Secretary of State Hillary Clinton said the Obama administration will place a new emphasis on diplomacy and our national security policy, and she said that diplomacy and development are the best long- term tools with which to secure this nation's future -- Jill Dougherty now reporting from the State Department.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We are thrilled to have you here.

JILL DOUGHERTY, CNN STATE DEPARTMENT CORRESPONDENT (voice-over): Rock star excitement hits the button-downed State Department as Hillary Clinton starts her first day as secretary. Telling staff America's new smart power policy needs smart people.

HILLARY RODHAM CLINTON, SECRETARY OF STATE: I want you to give me the best advice you can. I want you to understand there is nothing that I welcome more than a good debate. And the kind of dialogue that will make us better.

DOUGHERTY: Even President Obama showed up to welcome her, the message unmistakable, U.S. diplomacy, robust and relentless is back. BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: We can no longer afford drift and we can no longer afford delay. Nor can we seed ground to those who seek destruction.

DOUGHERTY: He wasted no time diving into the most volatile issues. And he let his secretary of state announce they're drafting two foreign policy heavyweights, former Senator George Mitchell as special envoy to the Middle East, and Ambassador Richard Holbrooke as special representative to Afghanistan and Pakistan.

(END VIDEOTAPE)

DOUGHERTY: And those two diplomats are planning to travel to those hot spots as soon as possible. A symbol and a signal President Obama says that the U.S. is ready to lead again. Lou?

DOBBS: Jill, thank you very much -- Jill Dougherty from the State Department.

New details tonight of why Caroline Kennedy, who had wanted to replace Hillary Clinton as the junior senator from New York, withdrew her name from consideration by Governor David Paterson; last night Caroline Kennedy cited personal reasons for her decision to withdraw from consideration.

It turns out those, quote unquote, "personal reasons" may be in fact connected to tax and housekeeper issues. No one, however, is talking in public about the specifics of those issues although reports are being filed. Meanwhile, the tax and housekeeper problems of Treasury Secretary-nominee Timothy Geithner did not prevent the Senate Finance Committee from voting to confirm him 18-5. One of his opponents, Senator Jon Kyl, said Geithner had not been candid with either him or the committee. The full Senate could vote on Geithner's confirmation tomorrow.

Well joining me now, two of the best political correspondents in this country, senior political correspondent Candy Crowley, and senior White House correspondent, Ed Henry. Candy, new details tonight about why Caroline Kennedy dropped her bid to be appointed to Hillary Clinton's former seat in the Senate, taxes and the nanny, again?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, you know, this is another chapter in bizarro world which started last night. I can tell you that there are news outlets up in New York reporting that that's part of why Caroline Kennedy wanted her name withdrawn from consideration for the U.S. Senate. But I can also tell you that people around Governor Paterson say, look, he never had any intention of appointing her.

I can tell you that people around Caroline Kennedy say it wasn't anything about a nanny or taxes. And in fact, in written statements, both camps have said, Paterson has said nothing came up that would disqualify anybody I'm looking at from taking the U.S. Senate job. And the Kennedy people put out a statement saying, "These were for purely personal reasons. And anything other than that is just a smear." So we are getting very, very different reports from these two camps. It's very clear there's a lot of harsh feelings between the two of them if not between the principals, certainly the people around them. We also know that Governor Paterson may end all of this tomorrow at a news conference where he finally selects the -- someone to sit in that Senate seat vacated by Hillary Clinton.

DOBBS: Yeah, serving notice tonight, the governor's staff that clarity is on the way on this issue apparently.

CROWLEY: Nice.

DOBBS: Ed, new questions tonight about another Obama nominee and potential conflicts of interest. A day after the president announced those new historic restrictions against lobbyists and trying to end that revolving door.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Yeah, you're right. I mean yesterday he specifically -- the president did say that anyone who's a lobbyist who comes into his administration cannot work on the specific issues that they lobbied on. So today at his first on-camera briefing with Robert Gibbs, the new press secretary, I asked him about the fact that William Lynn has been nominated to be the deputy defense secretary, number two at the Pentagon. He's a Raytheon lobbyist, has all kinds of business before the Pentagon. He doesn't seem to meet the standard that the president himself set. Here was what Robert Gibbs had to say about that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's a pretty big job. We're at war in two countries right now.

HENRY: So he's a lobbyist and now he's going to be deputy defense secretary.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Right and if he ever leaves this administration, he'll never, as the president said, be able to lobby this administration as it relates to the work that he does for the length or entirety of that administration. Again, what the president did yesterday was institute the strongest ethical and transparency guidelines that any administration has lived under in the history of the country.

(END VIDEO CLIP)

HENRY: So you can see Robert Gibbs there did was attacking a lot of press secretaries as both parties do, which is basically focus on the part of the question they want to, which is that when he -- if William Lynn is confirmed, when he leaves the Obama administration, he can't lobby down the road. That wasn't really the question.

The question was he's already been a lobbyist and by Mr. Obama's standard he's not supposed to be coming in and working on the issues he's lobbied on. And I think it just shows how some of the campaign rhetoric is now meeting the reality of actually governing. And it's going to be a bit more difficult perhaps than they think sometimes when they lay out these tough standards.

DOBBS: Two quick observations I think that we can give Gibbs, at least a bit of a pat for a good try, but certainly a failure to respond fully and adequately to that question that you posed. Secondly, what happened to the waiver concept that seemed to be the panacea that was being offered up by this administration, that it would issue waivers where it found its ethics and standards on lobbying to be -- well, to be in trouble? It appears to be in trouble here. Is the waiver going to be adequate?

HENRY: They've talked about the possibility of a waiver in this case. That's meeting resistance, interestingly, from Democrats like Carl Levin, the chairman of the Armed Services Committee who has to approve this nomination. He said today basically this is raising more questions because of the standard that the president is setting.

He's not sure whether or not this nominee can be confirmed. Another option would be for him to start recusing himself from some issues that affect Raytheon. Another Democrat, Claire McCaskill, who is a supporter of Mr. Obama, said wait a second. That's not going to work either because you can't have someone in such a sensitive position recusing himself over everything that comes up over Raytheon. They've got billions of dollars worth of contracts. It shows how difficult this is going to be for them to navigate when they -- it takes such a tough stand and then bring in lobbyists to their administration, Lou.

DOBBS: It is going to be difficult. It's proving that early on. But there are some difficulties, some intricate, complex battles certainly worth having because of the worthiness of the cause. And this is certainly one of them. Thank you very much. Appreciate it. Ed, thank you very much. Candy, thank you very much.

Coming up here next, an appellate court hears arguments on a gun rights case that could affect gun owners everywhere in this country.

Also tonight Microsoft slashing thousands of jobs even as Microsoft tries to import even more cheap labor from overseas.

And new outrage over executive bonuses and outright greed at Merrill Lynch, as it demanded more from its purchaser, Bank of America, and billions of dollars more in taxpayer money for bonuses. We'll tell you what happened. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Former Merrill Lynch CEO John Thain today resigned from Bank of America amid new outrage over executive bonuses and taxpayer money. New disclosures tonight that Merrill Lynch paid out what could be billions of dollars in bonuses just days before its official acquisition by the Bank of America. At the same time as Bank of America was seeking another $20 billion of federal bailout money to do that deal with Merrill Lynch. Ines Ferre has our report.

(BEGIN VIDEOTAPE) INES FERRE, CNN CORRESPONDENT (voice-over): One of John Thain's last acts as CEO of Merrill Lynch was to allow bonuses for employees just days before relinquishing power to Bank of America. Bank of America won't confirm the amount of bonuses widely reported at three to $4 billion, but it confirmed the payment date had been moved up by Merrill to December 29th instead of January. And it was aware of the decision. Consumer groups say it doesn't look good.

RYAN ALEXANDER, TAXPAYERS FOR COMMON SENSE: It looks from the outside like the banking industry just doesn't understand the pain the American public is going through. They don't understand the outrage. And they don't understand that the outrage is directed at them. Wall Street doesn't need these kinds of actions making them look even more out of touch than they already did.

FERRE: During his time at Merrill, Thain was generously rewarded. When he joined at the end of 2007 he received a sign-on bonus of $15 million, a base salary of $750,000 and stocks and he requested a bonus at the end of last year of $10 million, but forfeited it after a public outcry. Executive compensation expert James Reda calculates that Thain stands to exit with almost $2 million.

JAMES REDA, JAMES REDA & ASSOCIATES: Bank of America has received billions of dollars of taxpayers' money. That puts them under pressure right there. They have to be very careful about their expenses. This is a situation where they don't have to pay more than $2 million. And there's no reason why they should.

FERRE: Bank of America won't reveal what Thain's exit compensation will be for a couple of days. Lawmakers like Congressman Cummings, say it should be nothing.

REP. ELIJAH CUMMINGS (D), MARYLAND: I think Mr. Thain should thank his lucky stars if he's not investigated by the FBI or the SEC and should just walk away from this with zero in hand.

(END VIDEOTAPE)

FERRE: And last week the Treasury Department agreed to lend Bank of America another $20 billion as part of the TARP program. That's on top of the 25 billion it had already received. And Bank of America has announced that they will be laying off 35,000 employees over the next three years. Lou?

DOBBS: As they digest Merrill Lynch and Countrywide.

FERRE: Yeah.

DOBBS: And it should be pointed out, Ken Lewis, the CEO of Bank of America, decided to forgo his bonus for 2008. At the very same time, John Thain was demanding $10 million in bonus because he was so -- he thought himself so brilliant to have done the deal with B of A, which indeed he did get a very rich price for it. But only because the United States Treasury Department and the Federal Reserve were supporting Ken Lewis' acquisition of Merrill Lynch. It is one of the most outrageous examples of arrogance. And there are many on Wall Street. But John Thain, as Congressman Cummings put it, he should thank his lucky stars that he is not under more rigorous investigation.

FERRE: The Attorney General Cuomo is saying that he's going to be investigating the bonuses that were handed out on December 29th to employees.

DOBBS: There's another area of investigation here, too, that's appropriate. And I don't know whether it will ever be followed. But how in the world Hank Paulson, the treasury secretary, permitted the latitude that he did, not insisting upon the removal of CEOs and their senior staffs who were absolutely reckless in their management of these financial institutions, there certainly should be some accounting as well for that. It's just inexplicable. Thank you very much. Appreciate it.

FERRE: Thank you.

DOBBS: Well John Thain's resignation could save Bank of America and taxpayers millions of dollars, perhaps more given Mr. Thain's expensive tastes. Get ready, because you may have thought this era went out with, say, the early 2000's in the days of corporate corruption. Well, it turns out corporate corruption has more than one look.

For example, John Thain spent more than $1.2 million last year to do what? Why, of course, to decorate his office at Merrill Lynch. Thain hired high-profile designer Michael Smith for the job. Among the items purchased for John Thain's office, an $87,000 area rug, $68,000 for a 19th century credenza and $35,000 for a commode on four legs.

Designer Smith, by the way, is off to the White House. He was selected by the new first family to redesign the private family quarters. And of course, the government's finances aren't in much better shape than were Merrill Lynch's.

New outrage tonight over Microsoft's hiring and firing policies and its bias articulated so well by its founder Bill Gates in favor of foreign workers at the expense of Americans -- Microsoft today announcing its cutting 5,000 jobs. Just less than a year ago, Microsoft's Bill Gates told Congress there weren't enough qualified American engineers. And that it needed even more cheap foreign labor. Lisa Sylvester has our report.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): A fog hovered over the Microsoft campus in Redmond, Washington, as anxious employees worried about their fate. The company is giving 5,000 employees pink slips, 1,400 losing their jobs immediately, many of them among the U.S. work force.

UNIDENTIFIED MALE: I'm thrilled to be here. I'm hoping I'll still be here at the end of the day.

SYLVESTER: Job eliminations and R&D, marketing, sales, finance, legal, HR and IT. In a letter obtained by CNN, CEO Steve Ballmer told Microsoft's employees quote, "we believe these job eliminations are crucial to our ability to adjust the company's cost structure, so that we have the resources to drive future profitable growth"

Far cry from 10 months ago, Microsoft's Chairman Bill Gates told Congress repeatedly that he couldn't find enough qualified American workers. Again and again, Gates urged lawmakers to expand the number of foreign workers allowed in through the country's H-1B visa program.

BILL GATES, MICROSOFT CHAIRMAN: U.S. companies face a severe shortfall of scientists and engineers with expertise to develop the next generation of breakthroughs. You know we're expanding our employment in the United States at a very rapid rate. The only limit on that is this supply of engineers. We've been increasing our employment in the United States. And a limiting factor for us is how many of these great engineers that we can get here. And yes, that does cause a problem.

SYLVESTER: Senator Charles Grassley worries U.S. corporations are using the H-1B visa program to hire foreign and imported workers over Americans and paying them lower salaries. A study by the Center for Immigration Studies which wants stricter immigration policies found that 90 percent of the H1-B employers were paying computer programmers below the median U.S. wage for the occupation. Senator Grassley is now writing a letter to Gates demanding that as Microsoft scales back its labor force, the pain is not borne entirely by American workers.

SEN. CHARLES GRASSLEY (R), IOWA: In this case there's layoffs of what, 5,000 workers I believe. I want to know if they're laying off H-1B workers and what's incongruous about saying 18 months ago you needed more H-1B's and now you're laying off workers.

SYLVESTER: CNN contacted Microsoft to comment on the H-1B issue and Grassley's concerns, but a spokesperson said the company has no comment. For U.S. IT workers already facing global competition, the Microsoft announcement is more bad news says Wash Tech, a union for high tech workers.

PRIYANKA JOSHI, WASH TECH: This is going to be a -- an extremely -- it's going to be an excruciating time for an IT employee who has a family to support for him to find another job, a job that pays well, a job that has benefits.

(END VIDEOTAPE)

SYLVESTER: Now this might be just the beginning of Microsoft's layoffs, not the end. The biggest concern financial analysts had on a morning conference call with Microsoft CEO Steve Ballmer was whether Microsoft was cutting enough jobs. Lou?

DOBBS: Yeah and I should reiterate that I've invited both Bill Gates, Steve Ballmer to join us on here on this broadcast to discuss this issue of hiring foreign workers and talking about the alleged shortage of American computer engineers and systems engineers and programmers. They have yet to respond or to accept that invitation, which remains I assure you vigorously wide open. Lisa, thank you very much. Lisa Sylvester.

Up next here, new questions about Mexico's brazen meddling in the case against former border patrol agents Ramos and Compean who remain in prison tonight, we'll have special coverage of this continuing miscarriage of justice and the intervention of the Mexican government in the Bush administration's policy making.

And our Second Amendment rights are under attack. The federal government's prosecution of one Wisconsin gun owner could have a nationwide impact. We'll have that story up next.

(COMMERCIAL BREAK)

DOBBS: A federal appellate court today heard the case of Wisconsin gun owner David Olofson. This is a case that could have national implications for millions of law-abiding gun owners all across this country. Olofson is now in federal prison convicted of illegally transferring a machine gun.

But the evidence clearly shows that the weapon in question was not a machine gun. And we have been reporting on this case throughout. It was a semiautomatic rifle that simply misfired. Bill Tucker has our report from Chicago.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Olofson's family showed up for the appeal. His mother, father, wife and kids came. They came in support of David Olofson who is serving a 30-month sentence in the federal penitentiary in Sand Stone (ph), Minnesota, a sentence he began serving last July.

DAVID OLOFSON, SR, DAVID OLOFSON'S FATHER: It's been extremely difficult. I know it's been extremely difficult for Candy and the kids and the rest of our extended family.

CANDY OLOFSON, DAVID OLOFSON'S WIFE: It's hard for Alex. He's the oldest. And I have him talking with a school counselor to make sure that things go OK and Isabella, I mean she you know she cries a little.

TUCKER: Olofson's in jail because a jury found him guilty of unlawful transfer of a machine gun. But he didn't own a machine gun. He owned a semiautomatic rifle known as an AR-15, a gun legally owned by thousands.

(on camera): The key issue in this case and the reason it's drawn so much attention to gun owners across America is the definition of what is a machine gun. The defense argues the Supreme Court has provided a definition, a definition that was not applied in David Olofson's first trial. (voice-over): Instead, the jury was instructed by the district court judge that any firearm by design or malfunction is a machine gun if it shoots more than one shot with one pull of the trigger.

UNIDENTIFIED MALE: That definition of a machine gun is contrary to fact, contrary to law, and in conflict with Supreme Court and this court's precedent that defines a machine gun as a firearm that shoots automatically more than one shot by a single function of the trigger until the trigger is released or the ammunition in the magazine is exhausted.

TUCKER: The defense admits the gun fired more than one bullet with a single pull of the trigger, but says that when it did, the gun jammed. The government argued that the broader definition used by the district court was correct.

UNIDENTIFIED MALE: The government's position is that the district court did not err when it declined to give an instruction defining the word automatically, to require the government to prove that with a single pull of the trigger a weapon fires repeatedly until the trigger is released or until the ammunition is exhausted.

TUCKER: But it's a distinction that greatly concerns gun owners, because if the government prevails, they say, any gun that misfires multiple rounds is no longer just a broken gun, it's also a machine gun which is illegal to own.

(END VIDEOTAPE)

TUCKER: And Lou, we'd like to remind our viewers, David Olofson is a veteran of the U.S. Army, honorably discharged. And up until the time of his conviction, he was serving as an Army Reservist. He's now about seven months into a 30-month prison sentence. And Lou, it could take months yet still before this court decides on whether his conviction should be overturned or not -- Lou.

DOBBS: Well I think we've got to be very clear, too, with our audience here. The reason we're following this story is that we have not been able to substantiate a single claim against this man that justifies his prosecution on any basis whatsoever. Alcohol, Tobacco and Firearms does a wonderful job, but there is every, every evidence in this case of prosecutorial zeal that does not in any way square up with the evidence of wrongdoing of character.

This is a man who is being maligned. And by the way, the principle organizations in this country, the National Rifle Association, I mean how many organizations have stood up to stand behind this man who is literally, and I will say it straightforwardly, in my judgment being railroaded in the state of Wisconsin.

TUCKER: The NRA, Lou, has been very reluctant to go near this case. They've been watching it from an arm's length. The one group that has stepped up and the group that's funding his legal defense is Gun Owners of America. And Larry Pratt (ph) over there with his group, down in Washington, D.C., second largest gun lobby in the United States, is funding this legal defense and standing behind Olofson in this case.

DOBBS: Well, our compliments to them, our accommodation, our gratitude. But the people of Wisconsin, the people of this nation have got to understand this is the kind of prosecution that is precisely what is prohibited by our Second Amendment. And the zeal being displayed here by the United States Justice Department, by the Alcohol, Tobacco and Firearms, and frankly, being permitted by the court system, is wrong. And it is absolutely wrong to go after this man who's honorably served and has been serving up until to the point of this conviction, his country. This is ignorance. This is an assault on his liberty and all our rights.

TUCKER: And Lou, the central question we keep asking over and over again was this was a broken AR-15. Why didn't the government go to him and say fix this gun or surrender it. And that's obviously not what they did.

DOBBS: There is a great deal of explaining necessary here. And so far, we have not seen a single politician step forward with the guts to start demanding answers.

And that should concern everyone just as much as the assault on our Second Amendment rights in this country.

Let's hope that justice is done for Mr. Olofson and quickly. Thank you very much. Bill Tucker.

Up next, more on why Caroline Kennedy apparently decided she's no longer interested in being appointed to the Senate seat vacated by the new secretary of state. Some of my favorite political analysts join me here next.

And CNN has learned the electrocution death of one of our soldiers in Iraq once called an accident is now being described as negligent homicide. It's taken awhile, but some people are waking up.

And rising anger at Mexico's government and its outright meddling in the affairs of the United States, and its role in a gross miscarriage of justice against two former border patrol agents. We'll have that story next.

(COMMERCIAL BREAK)

DOBBS: Rising anger tonight over Mexico's government's outright meddling in U.S. affairs. The government of Mexico blasted the commutation of the prison sentences of former Border Patrol Agents Ramos and Compean. They've within in prison since January of 2007 for shooting and wounding a Mexican illegal alien drug smuggler who was given immunity to testify against those agents. Casey Wian now reports on the government of Mexico's outright intervention and meddling.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): The government of Mexico has been involved in the case of former U.S. Border Patrol Agents Ignacio Ramos and Jose Compean from the beginning. The agents shot and wounded Mexican illegal alien Oswaldo Aldreti-Davila in February of 2004 after he abandoned this van filled with more than 700 pounds of marijuana.

Davila escaped across the Rio Grande. Weeks later, a friend of his family contacted the Border Patrol. And the U.S. Department of Homeland Security began an investigation that led to the convictions of Ramos and Compean. They were sentenced to 11 and 12 years in prison. Chief prosecutor has repeatedly denied the Mexican government influenced the case.

DOBBS: The Mexican Consulate contacted who?

JOHNNY SUTTON, U.S. ATTORNEY: The Mexican Consulate wrote the standard letter they always write in these cases.

DOBBS: You sure it is a standard letter?

SUTTON: I don't know. The letter was sent to the Homeland Security. But I can tell you that this case originated like any other case that we try in El Paso.

WIAN: Mexican authorities located Davila who was initially reluctant to cooperate with U.S. Homeland Security investigators.

Eventually the U.S. Justice Department offered Davila medical care and immunity from prosecution to testify against Ramos and Compean. Prosecutors said he was unarmed when shot. In July 2007, a House Foreign Affairs Subcommittee held hearings on Mexico's role in the case. The Departments of Homeland Security and Justice declined to appear. The State Department sent two deputy assistant secretaries who were unable to provide definitive answers.

REP. BILL DELAHUNT, (D) MA: Are you aware of any other U.S. government agencies' communications with the Mexican government?

GREG STARR, U.S. STATE DEPARTMENT: There were not notes exchange, that's correct.

CHARLES SHAPIRO, U.S. STATE DEPARTMENT: I mean, I've seen them because I've pulled them out of the case file. And your staff sent me stuff. Other folks have sent me stuff. In fact, I've seen communications between the Mexican Consul in El Paso, and if I'm not mistaken, Border Patrol.

STARR: Correct.

SHAPIRO: Where they asked to have consular access to this individual.

WIAN: After former President Bush commuted the sentences of Ramos and Compean Monday, Mexico's deputy secretary for foreign relations Carlos Rico said, "It send a message of impunity." Rico added his government lobbied to keep the agents in prison. But the efforts of what he called anti-immigrant groups had more influence.

UNIDENTIFIED MALE: It's clearly unfounded. And it really demonstrates the ignorance of American justice.

WIAN: The National Border Patrol Council said in a statement while it is "not surprised in the least by the admission of the Mexican government that it lobbied long and hard for the prosecution of Border Patrol Agents Ignacio Ramos and Jose Compean and against clemency for them, it is sickened by the fact that our own government acceded to those outrageous demands."

(END VIDEOTAPE)

WIAN (on camera): The Border Patrol union also called on President Obama and Congress to immediately begin an investigation. The Mexican Embassy did not respond to our request for a comment. Lou?

DOBBS: Now, talk about impunity. The fact that the deputy foreign minister would have the impunity to make such a statement, and that the government should conduct itself, the government of Mexico, conduct itself -- I mean, this is truly ignorance. But the ignorance is such a mild degree of ignorance as compared to that of the Bush administration, through its Departments of Justice, its Department of Homeland Security, that I mean, it is absolutely unimaginable that George W. Bush, the president of the United States, and his administration, tolerated such interference.

WIAN: The key question that we'd really like to get answered, Lou, is when did this admitted lobbying by the Mexican government begin. Did it just start once the agents got into prison and border security activists and others were calling for their release? Did it start at the very beginning? They're not answering those questions now, Lou. Perhaps it's going to take the subpoena power of someone in Congress to find out the answers from the U.S. side.

DOBBS: Congressman Delahunt has done his level best, as have a number of congressmen, trying to get some answers. And the fact is they've been stone walled by their own party, their own government and the Bush administration has much to answer for.

I appreciate that George Bush commuted the sentences of these two agents. But man, are there still important questions to be answered here. And they are answers that the American people deserve. Thank you very much, Casey. Casey Wian.

We'd like to know what you think about all of this. Our poll question tonight is, straightforward, do you believe there should be a full investigation of the Bush administration for allowing the government of Mexico to meddle in the case of former Border Patrol Agents Ramos and Compean? Yes or no. Cast your vote at loudobbs.com. We'll have the results here later.

Joining me now with more, four congressman who fought hard and who continue to fight to clear the names of Ramos and Compean, Congressman Ted Poe and Congressman Walter Jones join us, as does Congressman John Culberson and Congressman Dana Rohrabacher. It's good to have you all here. Thank you very much. I've got to say, put it this way. The fact that a government official of Mexico has admitted their intrusion into the affairs of the United States government in this case, working against the processes of both the investigation, prosecution, and ultimately pardon or commutation of sentences, how do each of you feel? I want to start with you Congressman Rohrabacher.

REP. DANA ROHRABACHER, (R) CA: Well, take a look at the answer Mr. Sutton gave you. People should look at the clip that you just presented to the public. When you asked him specifically about the Mexican government's involvement, the answer he gave you was a lie.

Now, technically if you studied the words, maybe those words can be construed as being true. But in reality, they were put together to create a false impression that the Mexican government wasn't involved.

Mr. Sutton, this is the way they prosecuted these two Border Patrol agents from day one. It's been a lie from day one. The Mexican government has been involved. We need to know the details.

And why is the Mexican government involved? Hey, remember, they have troubles with the drug cartel influencing government down there. So their government that influences our government to prosecute the Border Patrol agents when they stop a drug dealer? There's a lot of questions that need to be answered.

DOBBS: Congressman Culberson and Congressman Poe, both of you signed on for the letter for the Texas congressional delegation asking for the commutation of these agents. What are your thoughts tonight, and the way it appears tonight that the Bush administration acceded to the government of Mexico in very important affairs of its own citizens?

REP. JOHN CULBERSON, (R) TX: Lou, I can tell you, I serve on the Appropriations Subcommittee with responsibility for funding the Department of Justice and Homeland Security, and I intend to vigorously pursue this through my subcommittee. I'm going to make sure we get these questions answered. We know, for example, as Judge Poe will tell you, that a deputy sheriff in South Texas was prosecuted at the request of the Mexican government.

We now know Ramos and Compean were persecuted, prosecuted, hounded because of the Mexican government. It is unacceptable. It is outrageous for any foreign nation to be able to direct the prosecution of our own law enforcement officers. Lou, I'm not going to stand for it and I'm going to get answers.

DOBBS: Congressman Poe?

REP. TED POE, (R) TX: We've always thought the Mexican government was involved in this case ever since the U.S. Attorney's office made the back room deal with the drug dealer. I thought that they made a backroom deal with the Mexican government at the same time. It looks like that all throughout this case.

We certainly want to find out their involvement. You know, frankly, I don't care what the Mexican government thinks about cases that are prosecuted in the United States. They should have no impact on our justice system, of all things, influencing our courts on who ought to be prosecuted, and who shouldn't be.

So we're going to investigate it, serve on the Judiciary Committee. We'll look into the involvement and the lobbying of the Mexican government.

DOBBS: And Congressman Jones, just your thoughts here tonight? I mean, the idea that the Bush administration had so little principles, so little guts and so little regard for the rights and the well-being of two of its citizens serving the nation in uniform, protecting our border, I mean, your thoughts here tonight?

REP. WALTER JONES, (R) NC: Yes, sir. Lou, I'm going to tell you, to the question you asked the American people, I will give you my answer, yes, they should be investigated. And I believe sincerely that the Congress has the responsibility to look into any relationship that the past administration has with Mexico, or any other country to the detriment of the American people. And in this case, I would say to the Mexican government, keep your drug dealers in Mexico, and let us take care of our border agents.

DOBBS: All right. Thank you very much. Congressman, I appreciate it. We're out of time. I hope you'll come back as we continue to explore this case.

UNIDENTIFIED MALE: Lou? Thank you for your leadership to make this possible.

UNIDENTIFIED MALE: Thank you, Lou.

DOBBS: Thank you so much.

UNIDENTIFIED MALE: Thank you, Lou.

UNIDENTIFIED MALE: Thank you, Lou.

DOBBS: We have breaking news tonight on a story that LOU DOBBS TONIGHT first reported to you nearly one years ago. Soldiers in Iraq being electrocuted. Not on the battlefield, but on their own bases. Because of faulty electrical work allegedly performed by KBR, the largest U.S. contractor in Iraq. CNN has now learned what investigators first believed was an accident is now called negligent homicide. That is according to U.S. Army investigators. Our special investigations unit correspondent Abbi Boudreau has the latest for us.

Abbi?

ABBI BOUDREAU, CNN CORRESPONDENT: Lou, according to an e-mail from the U.S. Army Criminal Investigation Division, two KBR supervisors and KBR itself are now being blamed by the investigator for the death of Ryan Mesa (ph), the highly decorated 24 year old Green Beret was electrocuted on his U.S. base in Iraq last January.

Reports show Mesa was taking a shower in his own bathroom when he was electrocuted. Later reports identify there had been problems with the electrical wiring and grounding in his building, and that KBR had been notified. Work orders involving shoddy electrical conditions months before Mesa's death. Now according to the CID e-mail we obtained, the Army investigator assigned to the case said she believes there's quote, "credible information that KBR's negligence led to Mesa's death."

Now the investigator says she believes that KBR failed to assure work was done by qualified electricians and plumbers. The e-mail went on to say that it's apparent to investigators that KBR's fixes were only temporary and not done to ensure future problems would not happen. According to the CID investigator, the manner of death in the sergeant's case has been changed from accidental to negligent homicide.

It's important to note the charges have not been filed yet. In order for charges to be brought, the case must be reviewed by lawyers at the Army's criminal investigation headquarters in Virginia.

Now we did talk to a KBR spokesperson who said the company cannot comment on the report since it hasn't seen it yet. KBR says there's no evidence that KBR was responsible for Sergeant Mesa's death. And Lou, remember, Pentagon officials say Mesa's death is just one of at least 18 electrocutions since 2003. Many due to faulty wiring and improper grounding. Not all are being blamed on KBR. Lou?

DOBBS: Abbi, we thank you very much. Appreciate it very much.

Abbi Boudreau.

Coming up here next, will public figures ever learn Caroline Kennedy's bid to be appointed to the Senate may have been derailed in part by some problems with the household employee. And taxes as well. Sound familiar?

And President Obama retakes the oath of office. But what's missing from this photograph? We'll be talking about that and much more with our political analysts here next. We're coming right back.

(COMMERCIAL BREAK)

DOBBS: I'm joined now by three of the best political analysts in the country. And one of the - no, the very best military analysts in the country.

James Taranto. He is editor of opinionjournal.com. Democratic strategist, CNN contributor, Robert Zimmerman. Fresh from the inaugural festivities. In Washington, DC, senior political correspondent for politico.com, Jeanne Cummings. Jeanne, great to have you with his.

And from Chicago tonight, our military analyst General David Grange. General, great to have you with us.

BRIG. GEN. DAVID GRANGE, U.S. ARMY (RET): Thank you. DOBBS: Let me turn first to - Robert as you said for some time, Governor Paterson of New York was not decided on Caroline Kennedy. What do you make of these latest developments?

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: I think it's safe to say, Lou, that her dropping out has been as chaotic as her rollout has been. And that's the only consistency we see in this entire process.

Obviously I take her at her word she's leaving for personal reasons, the race. But the point here simply is, politically, it became very, very clear that she was not -- not only was she not rallying support and building support but there was a grass roots rebellion developing against her.

DOBBS: You say you take her for -- at her word. Jeanne Cummings, it turns out, apparently, according to the reports of "The New York Times," others, politico.com, you know, the staff, the friends, the family of Senator Ted Kennedy are not pleased that his health was used at least in part as a cover or an excuse for her withdrawal. What do you make of all of this?

JEANNE CUMMINGS, POLITICO.COM: I'm not quite sure what to make of the whole thing. And I don't blame Senator Kennedy for being unhappy about being dragged into the mess. I mean, we are to take her at her word. I'm not sure what she has said. I don't understand ...

ZIMMERMAN: Jeanne, that was the problem from the very beginning.

CUMMINGS: I agree with you completely.

ZIMMERMAN: That was the problem from the very beginning. The reasons you don't understand what she says, is she hasn't articulated a reason to hold the office of a vision to seek the office. And that produced a political response.

The problem is that political pundits, unfortunately, were driving the story, because they talk to each other. But we don't choose senators in cocktail parties or by making the cover of celebrity magazines.

DOBBS: At least not all of them.

CUMMINGS: I think there was a little more to it than that. I think the power of the Kennedy name. There was thinking she could raise the money, there would be some instant popularity for us.

DOBBS: Jeanne, she was dropping in the polls as this progressed.

CUMMINGS: Exactly.

ZIMMERMAN: So obviously to the credit of the voters in New York, they were looking to the issues and we have a lot of qualified candidates coming forward. She was not measuring up.

JAMES TARANTO, OPINIONJOURNAL.COM: The voters weren't going to have a say in this because it is an appointment for the remainder of the Senate term. We have now had these two circuses ...

DOBBS: First in Illinois.

TARANTO: First in Illinois and now here. I love this, as one who writes about absurdity in politics. I'm having a great time with this.

But from the standpoint of good government, I think they should do it in some states like Oregon and Massachusetts where there is no gubernatorial appointment and there is just a special election when there is a Senate vacancy.

DOBBS: I want to turn -- Let me, very quickly. Andrew Cuomo, the very popular attorney general, this has to advance his cause. Whose causes is advanced in this - it's a peculiar thing to say - in this race for an appointment?

ZIMMERMAN: Obviously Andrew Cuomo is an exemplary candidate. He certainly has the credentials and would do a brilliant job. The challenge he faces under New York State law, the state legislator chooses his replacement. Not all of the legislators are chosen from "Star Search" which makes people a little nervous.

DOBBS: There is one name that I have advanced from the outset and I think would be magnificent. Shirley Ann Jackson. The president of Rensselaer Polytechnic Institute. She has never shown any interest in politics, she is just a brilliant, accomplished, wonderful human being. Would that disqualify her?

ZIMMERMAN: She would be an extraordinary public servant. To my knowledge, she has not expressed interest in the position. One of the finalists being talked about ...

DOBBS: Maybe that should be a requisite if you express interest, you should be disqualified.

ZIMMERMAN: One of the finalists, Kirsten Gillibrand who is being talked about as a finalist is already being threatened with a primary challenge from Congresswoman Carolyn McCarthy.

DOBBS: Real quick. I want to turn to General Grange. Today the president, the secretary of state appointed Richard Holbrooke to be the special envoy to Pakistan, to Afghanistan. To George Mitchell to be our special Mid-East envoy. Your reaction, general?

GRANGE: Well, I mean, I have worked for, served under in the military when Secretary Holbrooke was in that position in the Balkans. And I didn't agree with all of his decisions at that time but the mission was a success and still ongoing and I hope that he does better than last time.

DOBBS: James, your thoughts?

TARANTO: Well, I think it's a thankless task for former Senator Mitchell. It's probably -- I don't think the Middle East is ripe for a negotiated settlement right now, so I think it's a waste of his talents.

DOBBS: Turning to talents, the president, two and a half days into the administration, you would think listening to some folks on the right and left for that matter, that we were two and a half years into the administration. We'll be right back with what seems to be eager critics and we think friends. We'll be right back.

(COMMERCIAL BREAK)

CAMPBELL BROWN, CNN HOST: I'm Campbell Brown.

In just a few minutes, we'll take a NO BIAS, NO BULL look at how President Obama is undoing several Bush administration policies, many Bush administration policies. Also, we're zeroing in on his new order to close Guantanamo Bay prison. Will it make America safer or let terrorists go free as some people say?

We'll also have the very latest on Caroline Kennedy. Tonight, so many inside stories about why she gave up her effort to become a U.S. senator. She's actually scolding people for mud slinging. LOU DOBBS TONIGHT back, right after this.

(COMMERCIAL BREAK)

DOBBS: President Obama, executive order on lobbyists, trying to stop the revolving door, it looks good to me.

ZIMMERMAN: It's about the closest we've seen to meeting the Dobbs challenge in national government in our history. I think it's a great breakthrough, and I think it really shows he's keeping true to his word by opening up our government and ethics reform.

DOBBS: Ending torture as any part of policy in the American government.

TARANTO: Well, there is an out in the executive order he signed in which the CIA may be able to use harsher methods than the Army Field Manual allowed for. I don't approve of that direction but I applaud Obama for not moving too rashly.

DOBBS: And General Grange? General Grange?

GRANGE: Yes, I'm sorry. I can't hear you Lou.

DOBBS: The executive order against torture by the president? Do you support that?

GRANGE: Well, I do -- we could take the moral high ground and say we do not torture, and I agree with that. There is going to be situations where leaders have to make a judgment call at certain times on certain information that may affect the outcome of the mission and that's something commanders do on the spot and live the consequences.

DOBBS: Jeanne Cummings, pretty good two and a half days, wouldn't you say?

CUMMINGS: I would say this is government turning on a pivot. It's a big change.

DOBBS: Thank you very much, all of you. Appreciate it, we're out of time.

Tonight's poll results. Ninety two percent of you want a full investigation of the Bush administration for allowing Mexico to meddle in the affairs of the United States in the case of Ramos and Compean.

Thanks for being with us tonight. CAMPBELL BROWN, NO BIAS, NO BULL starts right now. Campbell?

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