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Lou Dobbs Tonight
Bush: Attacks on Coalition Forces in Iraq will not Shake U.S. Resolve
Aired July 01, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, July 1st, sitting in for Lou Dobbs Jan Hopkins.
JAN HOPKINS, CNN ANCHOR: Good evening, everyone.
President Bush today said the attacks on coalition forces in Iraq will not shake U.S. resolve. He said anyone who attacks U.S. troops will be met with direct and decisive force and there will be no return to tyranny in Iraq, Senior White House Correspondent John King reports.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): The president vowed to stay the course in Iraq and to destroy those responsible for attacking American troops.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: These groups believe they have found an opportunity to harm America, to shake our resolve in the war on terror, and to cause us to leave Iraq before freedom is fully established. They are wrong and they will not succeed.
KING: The president blamed three distinct sources for the attacks, Saddam Hussein loyalists hoping to regain power, indigenous Iraqi terrorist groups, and foreign fighters entering Iraq for the chance to attack Americans and cause political turmoil.
BUSH: The restoration of that country is critical to the defeat of terror, and radicalism throughout the Middle East with so much in the balance it comes as no surprise that freedom has enemies inside of Iraq.
KING: Six soldiers were wounded in fresh attacks Tuesday and 23 Americans have been killed by hostile fire since Mr. Bush declared major combat operations over two months ago.
The president's new assessment of the war effort was an effort to stop a skeptical shift in public opinion. More than four in ten Americans now say things in Iraq are going badly and nearly half say they are not confident that attacks on U.S. troops will stop.
BUSH: We will stay on the offensive against the enemy and all who attack our troops will be met with direct and decisive force.
KING: Mr. Bush used this reenlistment ceremony at the White House to claim significant progress in dismantling al Qaeda.
(on camera): But the dicey situation in Iraq is overshadowing any progress in the broader war against terrorism and administration officials who initially called these attacks isolated episodes now say there is an urgent effort underway to stop them - Jan.
HOPKINS: John, on another issue, the president is going to Africa next week. Has he made a decision on whether to send U.S. troops to Liberia to stop the civil war there?
KING: He has not made that decision, Jan, but it remains an open question. Administration officials say this president and the Pentagon are very reluctant to put U.S. troops on the ground in Liberia.
There are echoes of Somalia some say in this internal debate, but the president says his trip to Africa is proof the United States will stand by it as the democracy takes hold and a free market economy spread.
Many African nations, leaders at the United Nations saying this is a chance to prove it. The White House says nothing has been ruled out including the possibility of sending in troops but no decision just yet - Jan.
HOPKINS: John King at the White House thanks very much.
The top U.S. official in Iraq today gave a blunt assessment of the threat to coalition forces from Iraqi gunmen. Paul Bremer said the attacks have been carried out by professionals with military experience. Defense Secretary Donald Rumsfeld has a different view, calling the gunmen dead-enders.
Senior Pentagon Correspondent Jamie McIntyre joins us now. Jamie, what's the story?
JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Jan, the news out of Iraq today is much the same as in recent days. A U.S. military vehicle was attacked in Baghdad today by what one Pentagon official said was an improvised explosive device. Three U.S. soldiers were hurt. Their translator is missing.
Three soldiers were also hurt when a rocket-propelled grenade hit their truck on a road south of Baghdad and U.S. forces are on edge. Four Iraqi civilians were killed at checkpoints when the cars they were in failed to stop or follow proper procedures.
The U.S. authority in Iraq, Paul Bremer, insisted today that despite the violence conditions he said are improving and freedom is taking hold. The U.S. will continue to crack down, he says, on people who he said "have no desire to fit in.
(BEGIN VIDEO CLIP)
PAUL BREMER, U.S. CIVIL ADMINISTRATOR: We need to show the Iraqi people that we will not let a small remnant of die-hard opponents to freedom have their way in this country and harm the Iraqi people and harm the Iraqi people's well being.
(END VIDEO CLIP)
MCINTYRE: U.S. officials, like Bremer, believe the failures so far to capture or account for Saddam Hussein remains a big part of the problem allowing the enemies of the U.S. to pray on the fears of the people.
One example, Jan, is the head of Saddam Hussein's tribe who recently renounced Saddam was gunned down by unknown attackers Sunday in Tikrit. Whether intended or not, it sends a message that being an enemy of Saddam Hussein could be hazardous to your health so getting Saddam remains a top priority.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: They're not going to come back. That's for sure. They may be alive. They may be dead. We may find them sooner or later but the absence of closure has the effect I've described which is unhelpful.
(END VIDEO CLIP)
MCINTYRE: A big question now facing the Pentagon is whether to send more troops to Iraq. That may be a decision that will be based on the recommendation of the new U.S. Central Commander General John Abizaid who takes over on Monday, next Monday, a week from today, and he is due to make a recommendation to Secretary Rumsfeld about whether to send more troops.
Right now, the U.S. has about 146,000 plus 12,000 British troops and those other foreign troops, about 8,000, that have been pledged won't start showing up until late in the summer, the beginning of September - Jan.
HOPKINS: Jamie McIntyre at the Pentagon thanks.
The United States today punished about 50 countries for refusing to exempt U.S. troops from prosecution in the new International Criminal Court. The United States banned military aid to these countries because it fears the court could be used for politically motivated trials against U.S. citizens.
The list includes Colombia, one of the largest recipients of U.S. military aid. The United States has given Colombia $2 billion in recent years.
Also included on the list are six countries applying to join NATO, Bulgaria, Estonia, Latvia, Lithuania, Slovakia, and Slovenia, and several countries that do not receive aid at the moment, including Austria, Cyprus, Finland, Ireland, Sweden, and Switzerland.
Turning now to the economy and the newly-passed tax cut plan, as of today all U.S. businesses must begin taking out less money for taxes from workers' paychecks but the bigger economic impact could come later in the month when the federal government begins mailing out child tax credit checks by the millions.
Peter Viles has the story.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): How do you fight a sluggish economy? Washington is about to resort to one of the oldest tricks in the book. Later this month, the government is going to start mailing out checks by the millions, advance child tax credits. If you have kids and pay taxes, the government will send you $400 per child.
Beginning July 25th, the government will write more than a million of these checks a day for three weeks, total amount $13 billion. In addition, new income tax will return another $22 billion to taxpayers this year, and most economists expect that Americans this summer will do what they do best, go shopping.
JAMES GLASSMAN, ECONOMIST, J.P. MORGAN CHASE: I have every faith in the American consumer. When they get money they tend to spend it, particularly if they're feeling better about the outlook and it looks like the layoffs are slowing down. So, I think by the fall, we'll be seeing pretty decent consumer spending.
VILES: But how widespread and how lasting? Economists are divided on that issue.
MILTON EZRATI, ECONOMIST, LORD ABBETT: It's not going to rock the economy. We're talking in the federal level of about $35 billion to $40 billion in $10 trillion economy. I think the place that it's really going to have an impact is at the low end retailers. They're the ones who will see most of this spending.
VILES: Those who believe that these tax cuts will eventually create new jobs tend to focus on the long-term impact of reductions in taxes on dividends and capital gains.
NORBERT MICHEL, HERITAGE FOUNDATION: This is the most pro-growth tax cut we've had since Reagan. I think this is a great boon to capital investment and that's really where this is going to increase jobs.
(END VIDEOTAPE)
VILES: Now, there is an offset to some of this. While Washington is cutting taxes, many states are raising them, $8 billion in state tax increases over the past 12 months. That's effectively robbing this stimulus package of some of its power - Jan.
HOPKINS: But, Pete, over all is this going to be enough to get the economy really moving?
VILES: Well, this is the important thing. It doesn't have to be enough. We already have low interest rates. We already have huge deficit spending, which over time could be a problem, but in the short term should help the economy. This is the third thing now, a tax cut. Between the three of them, most economists believe we will have stronger growth in the second half.
HOPKINS: We're already in the second half.
VILES: Economists did predict the second half recovery last year and the year before.
HOPKINS: And we're already in the second half at this point.
VILES: We are today, yes.
HOPKINS: Yes, thanks, Pete Viles.
California today is beginning its third straight fiscal year without a budget. This year it's not alone. Several states are locked in steep budget disputes as the fiscal year begins.
Bruce Morton has that story.
(BEGIN VIDEOTAPE)
BRUCE MORTON, CNN CORRESPONDENT (voice-over): In Massachusetts, the governor signs the budget and vetoes $200 million in spending, in New Jersey, a late breakthrough, a tax on Atlantic City casinos. In California, no breakthrough, a state running entirely on borrowed money, angry legislators.
BRUCE MCPHERSON, (R), CALIFORNIA STATE SENATE: I'm disappointed. This is the most frustrating year of the ten that I've been in the legislature.
JENNY OROPEZA, (D), CALIFORNIA STATE HOUSE: It is really a failure of this legislature to do its duty.
MORTON: In Oregon, the legislature gave itself an extra 30 days to try to balance its budget. Connecticut is still wrestling. Three states have raised income taxes, five has increased sales taxes.
"USA Today" reports 46 states are borrowing record amounts. It's a firestorm of fiscal trouble for states around the country. What's gone wrong, less coming in from things like sales taxes, for one thing.
E.J. DIONNE, BROOKINGS INSTITUTION: So they were rolling in dough when the market was booming and they ran into particular trouble when the market went down. Also, a lot of states following in a sense what President Bush had been talking about made big commitments to more funding for education so they were stuck with these serious commitments to a good thing at a time when all the money was dropping out of the bottom of their coffers.
MORTON: States by and large have to balance their budgets. The federal government doesn't, it can run, is running big deficits. One way to help the states would be to revive a program President Richard Nixon started, revenue sharing, federal money going directly to the states. DIONNE: I have been surprised that there hasn't been more talk of how the federal government could come to the aid of the states with something like temporary revenue sharing or with more help directed through Homeland Security or by picking up some of the cost of Medicaid which is another big reason for these - for the states' difficulties.
MORTON: The states are getting $20 billion to help pay for Medicaid and other costs, part of that new tax cut, but the White House saying balancing budgets is a state job. The president's is improving the overall economy, so more of a helping hand from Washington? The states would love it but there's no sign the Bush administration is inclined to do more.
Bruce Morton, CNN, Washington.
(END VIDEOTAPE)
HOPKINS: Still ahead tonight, capitalism and democracy, our series of special reports in conjunction with "The Economist" magazine. Tonight, truth about trade, how free trade affects the U.S. economy, Francis Fukuyama is a professor of international studies at Johns Hopkins University and he'll be our special guest.
Israelis and Palestinians move closer to peace. Mike Hanna is in Jerusalem. He'll have that report.
(COMMERCIAL BREAK)
HOPKINS: The job market may finally be stabilizing. According to a new report, the number of layoffs announced by American companies in June was down 13 percent from levels in May. That's according to the latest research from job placement firm Challenger, Gray & Christmas.
But before you get too excited, economists still expect a jump in overall unemployment when the Labor Department delivers the monthly job number on Thursday.
The late day rally on Wall Street today, the Dow recovered from a 114 point loss. It closed up 55.5 points. The Nasdaq was up more than 17 and the S&P 500 added nearly eight.
Susan Lisovicz is here with more on today's surprising comeback - Susan (UNINTELLIGIBLE).
SUSAN LISOVICZ, CNN CORRESPONDENT: It was remarkable and surprising, caught a lot of people by surprise, Jan, but the third quarter certainly didn't begin on a bullish note.
Investors were disappointed on a report about manufacturing which contracted for a fourth straight month while construction, one of the economy's hottest sectors, declined nearly two percent but some traders say the selling was overdone, and by mid afternoon sentiment had changed in part because of the dismissal of an investors' lawsuit against Merrill Lynch that analysts say may have implications for other financial institutions.
Starbucks gained three percent on an upgrade based on strong sales. Zale surged nearly 15 percent and hit a new 52-week high on word it is buying back nearly 20 percent of its outstanding stock.
Aetna added nearly five percent on an upgrade, and Dow component Boeing edged up on a jet order from discount airline AirTran. But AMR, another big player in transports, lost ground on word that American Airlines will discontinue some non-staffed routes and cut unprofitable routes as well.
General Electric turned down on a negative earnings forecast from J.P. Morgan, and investors had no appetite for Cheesecake Factory today. Its shares shed five percent on a downgrade based on a weak sales forecast.
Jan, Wall Street also saw an initial public offering today, Axis Capital debuted today, the third IPO in less than a week. That's a bullish sign all by itself, but, of course, Jan, the dramatic turnaround to the upside another bullish sign of course.
HOPKINS: And was it a good initial public offering?
LISOVICZ: Yes, it was because first of all it was priced at $22, which was above the projected range and it closed at $25.50 and we have another IPO tomorrow.
HOPKINS: Oh, wow.
LISOVICZ: Yes.
HOPKINS: Amazing, changes, thanks Susan.
Still ahead tonight, cutting the fat literally, the surprising announcement about plans to make some of your favorite brands healthier, Bill Tucker will have that report.
And then, many of you wrote in about sending U.S. troops to Liberia. We'll share some of your e-mails.
And, tracing the disappearance of college basketball player Patrick Dennehy, all leads point to murder. We will have the story.
(COMMERCIAL BREAK)
HOPKINS: Let's take a look at what you have to say. Many of you wrote in about the U.N. Secretary-General Kofi Annan's suggestion of sending U.S. troops to Liberia.
Charlene Daniel of Phoenix, Arizona wrote: "I believe it would be totally irresponsible for the president to even consider sending troops to Liberia. We can not solve all the world's problems and in the process of trying to do so we will bankrupt America."
Barbara James of Tustin, California said: "Apparently Kofi Annan just doesn't get it. He and the U.N. do nothing to help us in Iraq and now he expects the U.S. to send troops to Liberia. He needs a visit from the reality fairy!"
And, Ulrica Watson of Burlington, New Jersey said: "If the Iraqi people had an opportunity to be liberated from a tyrant leader, why not the Liberian people?"
Chad Wilson of Orangevale, California wrote about the proposed federal changes that would eliminate overtime for more than eight million Americans. "What good is it going to do to cut overtime pay for working class people, other than to increase the salaries of the already overpaid CEOs?"
And, Lou from Louisville said: "If President Bush wants to see the economy and the stock market recovery, he should put a limit on CEO's salaries and compensation rather than doing away with the overtime of eight million middle class Americans."
And, Joseph Benham of Kerrville, Texas wrote: "I applaud your enthusiasm for the no call registry. Rather than calling them telemarketers, how about telepests? And, e-pests for those who swamp our computers with spam." Not a bad suggestion.
We love hearing from you. Please send us your thoughts at LouDobbs@cnn.com.
The largest food maker in the country says it wants to help curb obesity. Today, Kraft announced it will reduce portion sizes on some of its products and take steps to make them more nutritional. The move comes as the food industry increasingly finds itself a target of lawsuits.
Bill Tucker has the story.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): Is fat the next tobacco? Is the company that owns one of the world's largest cigarette makers and one of the world's biggest food producers worried? Maybe, all they will say for sure is that they're worried about obesity.
The company didn't hold a single news conference, didn't make a single executive available for comment as they put out an announcement of global initiatives to fight obesity.
To do that, Kraft will stop increasing single portion sizes, provide more nutritional information on labels, the company will cut the fat and sugar content, and it will fund educational programs to help kids make better food choices. Also out, Kraft marketing and in- school vending machines.
DR. JONATHAN WAITMAN, NY WEILL CORNELL MEDICAL CTR.: I think that this is definitely somewhat paternalistic that the industry is taking responsibility and influencing what children eat, but we've gone the other path and what we have is more obese children and more children with diabetes, so something has to change. TUCKER: Nutritionists like the promises but have a wait-and-see attitude. If the guidelines sound familiar, they are. Just take a look at the global tobacco settlement where cigarette companies agreed to stop marketing to children and fund educational programs about choices. Some in the legal community are wondering if the move by Kraft is also an attempt to get out in front of any lawsuits over obesity.
JACK COFFEE, COLUMBIA UNIVERSITY: One of the oldest doctrines in the American common law is that if a plaintiff is also negligent along with the defendant then his contributory negligence bars any recovery. In other words, if you're both at fault, neither can recover from the other.
TUCKER: In other words, you can't say we didn't tell you.
(END VIDEOTAPE)
TUCKER: But perhaps this is being too cynical. Kraft's own voluntary deadline is to start implementing the changes at the start of next year and to complete the initiatives over a two to three-year period - Jan.
HOPKINS: Is Kraft the only company that's doing this?
TUCKER: Kraft is the only one that's made these kind of major initiative announcements. McDonald's recently, for example, has started to make some changes. They added salad to its menu. Recently, they actually had a nice quarter due in part they say to the salads on the menu.
HOPKINS: Sounds kind of hard to believe but that's what they say.
TUCKER: Far be it for me to be cynical about the lawsuit though.
HOPKINS: Thanks, Bill.
That brings us to tonight's poll. "Why do you think Kraft foods made changes to its products, consumer demand, health concerns, fear of lawsuits, or to increase profits?" Cast your vote at cnn.com/lou and we'll bring you the preliminary results later in the program.
We also have the final results of yesterday's poll. "What do you think of U.N. Secretary-General Kofi Annan's suggestion to send U.S. troops to Liberia?" Eighteen percent of you said brilliant, 29 percent said reasonable, and 53 percent said idiotic.
Still to come, progress along the road to peace in the Middle East, major concessions from both sides, Mike Hanna reports from Jerusalem.
And, former defense secretary and regular contributor to this program, William Cohen, will join us.
Then, the truth about trade in our special with "The Economist" magazine on capitalism and democracy tonight the cost of free trade.
(COMMERCIAL BREAK)
HOPKINS: Across America tonight, thousands of homes along the Gulf Coast are without power following Tropical Storm Bill. The storm dumped 12 inches of rain in parts of Louisiana, Mississippi, and Alabama. Forecasters say that it will continue to weaken as it moves towards the northeast.
A federal appeals court has ruled that a statue of the Ten Commandments must be removed from an Alabama Supreme Court building. The court upheld a lower court ruling that the two and a half ton monument violates the separation of church and state. Alabama's highest judge, Roy Moore (ph) had the statue installed two years ago.
And, accused immigrant smuggling kingpin has pleaded not guilty in federal court. Chen Chui Ping (ph) allegedly helped plan the Golden Venture smuggling operation in which ten Chinese immigrants were killed. The freighter was carrying 300 illegal immigrants when it ran aground in New York ten years ago. Ten of the passengers drowned.
Police in Texas say they found no sign of missing basketball player Patrick Dennehy in a field where an informant said he was shot. Dennehy has been missing for three weeks. Police are questioning some of his teammates in the case.
Gary Tuchman is live in Waco, Texas. He joins us with the latest - Gary.
GARY TUCHMAN, CNN CORRESPONDENT: Jan, hello to you. A Texas law enforcement source tells CNN that a former Baylor University basketball teammate of Patrick Dennehy is "a primary person of interest" in this very sad and mysterious missing person case.
Dennehy has now been missing for three weeks. Yesterday, a legal affidavit was released that says that that former teammate, his name is Carlton Dotson, shot and killed Dennehy, told his cousin that, who then told an informant who then told police.
Now, that's all very sketchy information and it's not evidence. It was on an affidavit that police wrote up simply to get permission from a judge to search computer records.
However, police are very angry that it was released to the news media. They say this thing is commonly done, that scenarios and theories are put on paper but it is not evidence. Nevertheless, they do say that this man is a primary person of interest but they say there are other persons of interest also.
On the affidavit, it was said that this basketball player was shot and killed in a field north of Waco, Texas, and police have now searched that 50-acre area.
(BEGIN VIDEO CLIP) STEVE ANDERSON, WACO POLICE DEPARTMENT: We had received information of a location north of Waco. The exact location I don't have. It was that Mr. Dennehy was at that location and we've checked. We still have not found Mr. Dennehy.
(END VIDEO CLIP)
TUCHMAN: Carlton Dotson lives in the town of Hurlock, Maryland. That's east of Washington, D.C. across the Chesapeake Bay on the eastern shore of Maryland. He is nowhere to be seen right now. It's not clear where he is, although it is believed he's in Maryland. Outside his house no police activity whatsoever. The police chief in Hurlock, Maryland, says no special precautions are being taken.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Essentially, tell us what Hurlock Police have been involved in and have you been contacted by Texas authorities, what's going on?
CHRIS FLYNN, HURLOCK, MARYLAND POLICE: As of this point, we have not been contacted by anyone, Waco Police Department or any other law enforcement agency.
(END VIDEO CLIP)
TUCHMAN: Dotson was interviewed by police last week. Police are not releasing any information about what was said during that interview, but once again we have to emphasize the fact that this was on the affidavit does not mean that this informant was telling the truth.
We also want to tell you one more thing before we go. Patrick Dennehy's girlfriend, Jessica De La Rosa, she lives in New Mexico, has released a statement. The statement reads as such: "Losing hope is not an option. We have God in our court. We are still trying to find him." Jan, back to you.
HOPKINS: The Israeli and Palestinian Prime Ministers today jointly declared their commitment to peace. Their words were matched by action. Israel started preparations to withdraw from Bethlehem. An Israeli official said that Palestinian leader Yasser Arafat will be aloud to travel to Gaza from the west bank. Mike Hanna reports from Jerusalem.
(BEGIN VIDEOTAPE)
MIKE HANNA, CNN CORRESPONDENT, CNN (voice-over): This is the moment that which the road map is formally launched. Statement s made in public by both prime ministers translated into Hebrew and Arabic. Committing themselves to the achievement of peace within the structure of the US backed plan.
MAHMOUD ABBAS, PALESTINIAN PRIME MINISTER, (through translator): Our conflict review is a political conflict. We will end it through (UNINTELLIGIBLE) enemies (ph). We have no enmity (ph) with the people of Israel. And we have no interest in the continued conflict with you.
ARIEL SHARON, ISRAELI PRIME MINISTER, (through translator): I have no doubt that the picture being shown here today to the people in Israel to the Palestinian people, and to the entire world, is a picture of hope and optimism.
HANNA: A month ago the leaders met in Alkobo (ph), Jordan, together with the president of the United States. Public statements made on that day too. But made clear then not the joint commitment that would signal the formal beginning of the implementation of the road map.
Since then, an initial upsurge in violence. And attempt of Israeli assassination of the militant leader. Followed by a Palestinian suicide bomb attack, and further Israeli military actions. More than 50 people killed in a week of incessant conflict made all the more bitter by the faint hopes that had been raised at Alkobo.
But then George W. Bush made good the promise that he made. That he would in his words, "ride herd" (ph) on both sides to ensure that they kept this new attempt to share the Holy land in peace on track.
Despite sporadic incidence, of all to familiar violence, the conflict's process of disengagement continued, and the formal implementation of the much-discussed road map got under way. As two prime ministers shook hands and smiled on a sunny Jerusalem day.
Mike Hanna, CNN, Jerusalem.
(END VIDEOTAPE)
HOPKINS: The relaunch of the road map is a diplomatic victory for the United States, but success is still far from assured. Joining us now is William Cohen, former defense secretary, and regular contributor to this broadcast.
Bill, are we really on the road to peace this time?
WILLIAM COHEN, FORMER SECRETARY OF DEFENSE: Well I think we're starting down the road to peace. I think we have to be careful here, and not get caught up in what has been described as irrational exuberance in another context. This road has some very deep pothole that we have to expect we'll encounter in the days and months to come.
There are groups in the Palestinian camps so to speak and who (ph) do not want to see a Palestinian state that would live side by side in peace with Israel. There are groups of Israelis who do not want to see a Palestinian state and are dedicated to the opposition of that. And there are groups here in the United States who also don't want to see a Palestinian state.
So what we have to do is to continue to push for those substantial majorities who do want peace. Palestinians who need sovereignty, dignity, opportunity, and the Israelis who need security and a commitment on the part of the Palestinians that they are going to work and live with the Israelis in peace. So a long way to go, but this is very encouraging.
HOPKINS: What happens if there are attacks? What's the response that needs to be made at that point?
COHEN: A call for restraint on both sides. As I indicated, there are elements of the Hamas (ph) and other groups, who are committed to Israel's destruction. We have to persuade the majority of the Palestinians not to support Hamas and other groups. How do you do that? You empower Mahmoud Abbas. You empower him by showing there is progress to be made, that there is a hope for Palestinians to enjoy peace and prosperity in the future.
And so step by step as the Palestinians see that there is a pay off at the end of this process, you undermine the support for the Hamas and the other radical Extremists. Similarly, on the Israeli side, they have to show restraint as well. And that means illuminating some of those outposts (ph), freezing the settlements in preparation for illuminating many of those settlements. That has to be part of it in terms of this mutual step-by-step process down this road map that's been laid out by President Bush and others.
HOPKINS: And the president has to remain engaged in the process, isn't that critical?
COHEN: There is virtually no way the president can walk away from this situation. If anything he'll have to continue to intensify it. I think he's indicated he's prepared to do that, but to walk away at this point, I think would certainly lead to a dissolution of the process itself with more and more violence on both sides. And I think that President Bush will not do that. I think he is committed, and must stay committed.
HOPKINS: Now another issue, something that the president is considering right now. Whether to send US troops to Liberia. Do you think that US troops should be involved in Liberia?
COHEN: I would be very reluctant to send troops to Liberia right now. We have troops -- peace-keeping troops in Bosnia, Kosovo, in Afghanistan. We're now in Iraq. I think that we are in danger of certainly over-stressing those troops. I had a similar request the time when East Timor (ph) had gained it's independence, and our friends the Australians had requested the United States take a lead role in the peace keeping mission.
And I indicated that time, as much as I was supportive of the people who had been supporting the United States for so many wars that we've had to confront the Australians, that they needed to take the leadership. That we could support communications, we could support transportation, and lead in some way to the support element of that matter. But we could not afford to extend our forces under those circumstances.
Secondly, there's something called the African Crisis Response Initiative. Something that was erased during the Clinton administration. Namely to train other African nations in peacekeeping missions. So that they can play the key role and leadership role in peacekeeping throughout the African continent.
So I think that other countries, France might be a country that had a long history of involvement in Africa. Perhaps the French and others could join other European nations who have not been involved in the mission in Iraq. Perhaps they can take a lead role for peacekeeping in Liberia. But I think at this point to call upon the United States, and our forces which are really overstretched, and quite fatigued with all of the missions that we are required to carry out would be a mistake.
HOPKINS: Thanks. Bill Cohen, former defense secretary. That brings us to tonight's quote on the attacks against coalition forces in Iraq. "The coalition will succeed in it's goal to establish real freedom and democracy in Iraq. Make no mistake about it. We will succeed, and until these individuals realize that, they will remain in our sights." That's from the U.S. civil administrator in Iraq, Paul Bremer.
(COMMERCIAL BREAK)
HOPKINS: Tonight in the second part of our series "Capitalism & Democracy," in conjunction with "The Economist" magazine, we examine the truth about trade. Despite increased free trade, global poverty is still rampant. The United States trade deficits (ph) are still rising, and jobs are disappearing from Boston to Mexico City. Now even white-collar jobs are moving to China and India. Lou Dobbs has the story.
(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): When you meet Sarwan Aggarwal, the complexity and confounding forces of free trade in the 21st Century are quickly apparent. Born in India, educated in The United States, he became a citizen and eventually landed his dream job with NorTel Networks. But not for long.
SARWAN AGGARWAL, SOFTWARE ENGINEER: When I got into NorTel, we were trying to outsource one of our products to Delhi Branch. Many of the jobs being outsourced from here are going to India.
DOBBS: After months of unemployment, Sarwan even considered going home to India.
AGGARWAL: People in India were getting hired, and they were looking for software people. And they were paying about $10,000 a year.
DOBBS: Peruvian economist Hernando De Soto believes in the power of free trade. He says situations like Sarwan's are sadly part of the price of globalization.
HERNANDO DE SOTO, ECONOMIST: This is what globalization is all about. We are redistributing ourselves, and all nations are suffering as a result of it. This is the industrial revolution. And it hasn't stopped. And we're learning to live on a larger scale. And the products will go to where costs are lower. BILL EMMOTT, EDITOR-IN-CHIEF, "THE ECONOMIST": But that doesn't mean that you have to do it over night. You have to handle the speed. Because what trade brings is change. Disruptive change. And change alienates people.
DE SOTO: But overall, overall the bottom line is favorable. More people are living better than ever before.
DOBBS: The Institute for International Economics cites expanding trade, and estimates that in the last two decades, the percentage of people living in poverty around the world has declined from 56 percent to 23 percent. But for American workers, the job migration -- because of trade is raising new concerns. As the disappearing job titles are moving up the corporate ladder.
THEA LEE, ASST. DIR. FOR INT'L ECONOMICS, AFL-CIO: This trend of outsourcing that started with manufacturing, and is now moved to IT and high tech services, is very troubling.
DOBBS: Forrester Research predicts that the United States will lose another 3.3 million service sector jobs by 2015.
LEE: The ultimate victim is the entire American economy. Because of we don't have a strong middle-class, strong working class here in The United States; we're not going to have a strong consumer economy. It's really as simple as that.
DOBBS: But arguments that companies will always follow after the lowest wage have not always proven true. In 1980, wages in northern European countries like France and Germany were more than four times higher than in southern countries like Portugal and Spain. But as the European Union loosened trade restrictions, jobs didn't flood south. Instead incomes have doubled in Europe since 1985. The gap in income between north and south has narrowed by almost a third.
EMMOTT: There's been no race to the bottom in Europe, where the lowest wage rates were available in Ireland and Italy for example, and Spain. And yet liberalization of trade within Europe has actually leveled wages up. As people have invested in their human capital, got more educated, demanded high wages, and the factories have become more sophisticated.
DOBBS: In Massachusetts, former IT worker Leland Webber isn't feeling the benefits of free trade. A year-and0a-half ago he was laid of from his $95,000 a year job.
LELAND WEBBER, FORMER SOFTWARE ENGINEER: My income from wages last year was probably somewhere between, about approximately $6000. I've done a little bit of substitute teaching, but that really doesn't bring in much money.
DOBBS: Webber hopes to land a full time job teaching. His likely salary only $35,000. Despite unemployment, the need to retrain himself at a huge salary cut, Leland Webber still supports free trade.
WEBBER: We can't simply shut ourselves off from the rest of the world. All that's going to do is make the rest of the world rich and us poor.
DE SOTO: Americans are going to maintain competitor advantages in many fields. They (ph) may just be fields of change. It's the capacity to adapt quickly which will keep them I think at the top for now an awful long time. They don't really need, they don't really need that (ph) protection.
DOBBES: But despite free trade's attraction in (ph) theory, others see a darker reality that is now unfolding.
LEE: We have to wonder what the logical consequence of the outsourcing of the service sector in the high tech jobs is. And what is the future of work in The United States? If we're going to lose our high tech skilled, highly educated jobs in addition to the factory jobs that we started to lose a few decades ago.
(END VIDEOTAPE)
HOPKINS: Joining me now to talk more about free trade is Professor and author Francis Fukuyama. He is author of a best selling book "The End of History and the Last Man." He's dean of faculty, and professor of International Political economy at John Hopkins University.
Professor, it seems as if from this story, and what we've been hearing on this broadcast, that perhaps trade is working for the big picture, it's working for the world. But it may not be working so well for a lot of workers in this country. How do you refute that?
FRANCIS FUKUYAMA, PAUL H. NITZE, SCHOOL OF ADVANCED INT'L STUDIES: Oh, I don't think you can refute it. It's clear that the benefits from free trade that they teach you in economics 101 is an aggregate benefit to this society as a whole. So on the whole there will be more winners than losers. So that for everybody that loses a job and has to take a lower salary, you get lower priced products at Wal-Mart and places that are sourcing from China and low-cost manufacturers.
But net, there is a benefit to this society. But clearly for example, low skilled workers in the Unites States and increasingly some service sector and more highly skilled workers are losers from this.
HOPKINS: So how do you respond? As a worker?
FUKUYAMA: Well, I think that the -- first of all, this is a process that's going on as a result of technological change. In fact, more of the job loss is driven by advancing technology then by exposure to trade. Trade simply accelerates that. So people are going to constantly have to be moving up the job ladder. And in fact, that's what's happened historically over time. I mean, in 19th Century, majority of Americans were farmers. It's not efficient for us to be big agricultural producers, or producers of shoes or textiles by and large.
And so those industries have been replaced by ones that require different sorts of skills, and even the technology jobs that were referred to as being lost, are still being replaced by other things that require for example the skill of systems integration, or other you know very complex services. And so there are always new opportunities I think that are opening up in the global economy.
HOPKINS: The winners I would suspect are places like China. Should we hope that the Chinese get richer and this will kind of help the situation?
FUKUYAMA: Well, I think that the historical pattern has been that as countries evolve up the food chain, they do things like add worker protections. One of the long-term consequences of economic development is democracy. And this has happened in Taiwan, it has happened in South Korea, it's happened in you know, quite a lot of other places in Asia.
And with democracy comes greater worker rights, social welfare system, their (ph) labor gets cheaper. The South Korean wage bill exploded in the 1980s as they achieved developed country status. And I think that in the long run, this is going to happen to China, and it's going to make their labor less you know, in a way competitive. But they're also going to be moving up into more highly skilled kinds of occupations.
HOPKINS: Is this going to be a political issue in the presidential campaign do you think? Because it is effecting so many people?
FUKUYAMA: Well, I don't think that globalization in the near term is -- it's only a small part. I mean right now we're still in the you know, recovering from the last recession. And so you'll have these cyclical problems and we're either going to be out of them or still in them at the time of the next election. And I think that will be the central issue. The globalization component I think will be a longer-term factor. But probably not one that will be singled out in you know the next electoral cycle I'd suggest.
HOPKINS: Professor Francis Fukuyama thanks for joining us.
FUKUYAMA: Thank you.
HOPKINS: And tonight's thought on the value of work. Far and away the best price that life offers us is the chance to work hard at work worth doing. That is from America's 26th president Theodore Roosevelt. When we return, "In Business," that's mainly business school. Student's would like to be in business. But it's not so easy these days. Bruce Willison is the dean of UCLA (ph) business school, and he'll join us and tell us what's going on.
"The Terminator" is back in theaters, and Arnold Schwarzenegger is on a public relations blitz. But will the PR trail turn into a campaign trail? We'll look at that.
(COMMERCIAL BREAK)
HOPKINS: Business school across the country have been feeling the effects of the economic slow down. They've seen a decline in applications. And the weak jobs market is making it harder for business school graduates to find jobs. Joining us now is Bruce Willison, he's dean of the Anderson school of business at UCLA.
Graduation's over. How many of your student have jobs at this point?
BRUCE WILLISON, DEAN ANDERSON SCHOOL, UCLA: Well at graduation, it ended up being about 80 percent of our students had jobs, or had taken themselves out of the market to either travel before pursuing other jobs but it actually picked up quite a bit in the last couple of months before graduation.
HOPKINS: So it's sign that the economy is improving.
WILLISON: You know, I think there was some just in time hiring that was done. And I think that is a positive sign. Along with the number of other things that we're seeing in the economy.
HOPKINS: What kind of jobs are the students taking? Are they different from a couple of years ago?
WILLISON: Well they're clearly different. There aren't nearly as many of the investment banking consulting jobs. So I think students had to be a lot more ingenious, and work a lot harder to find jobs. But we found the entertainment sector proved to be strong at the end. Health care came along. And the financial sector in areas outside of investment banking improved.
HOPKINS: Applications are down. Is that because students don't want to get into business with all the scandals et cetera?
WILLISON: No Jan I don't think that really is it. I think what typically happens in a recession, like all of us prospective students kind of look in the rear view mirror, and they say for now two years, MBA's have come out, and they haven't had three or four offers. They've had a hard time finding jobs. And so students will say I think I better stay where I am whether than taking a chance, and risking not having a job coming out.
Which is really to bad. Because I think at this time, it's a good time to be going to school. Your investment is actually pretty low right now in terms of opportunity costs.
HOPKINS: Now in terms of the education of the students that are coming out of business school. Are you putting more emphasis on ethics and corporate governments and CEO compensation and the things that we talk about a lot?
WILLISON: Sure. The level of awareness on all of those issues is much, much higher than ever before. And we've actually added electives on ethics. But I think the real key is that you can't teach these 28 29 tear old young women and men morals. But you can teach them about the ethical dimensions of the issues that they'll face as managers. Dimensions that come up in financial considerations, marketing considerations, human resources type issues (ph). HOPKINS: So do you have ethics courses?
WILLISON: Yes, we have ethics electives. But the key is in our core disciplines to ensure that the faculty are leading discussions about ethical dimensions of issues in accounting, and finance marketing et cetera.
HOPKINS: Bruce Willison, the dean of the Anderson School at UCLA. Thanks very much.
WILLISON: Thank you.
HOPKINS: When we come back will the Terminator run for governor of California? senior political analyst Bill Schneider will have that story next.
(COMMERCIAL BREAK)
HOPKINS: Finally tonight, it could take The Terminator to save California from political self-destruction. But Arnold Schwarzenegger isn't taking to the campaign trail just yet. As senior political analyst Bill Schneider reports. Schwarzenegger has managed to master some trademark political moves.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): It's a big day here in Hollywood. Everyone has turned out to celebrate the inauguration of a new Terminator. Now what do we know about the Terminators politics? Check out his campaign ad. I mean his movie.
California faces budget destruction. The Terminator is coming to save the day.
Arnold Schwarzenegger: My mission is to protect you.
SCHNEIDER: What's the Terminator got that ordinary politicians don't have? He's bloodless, cold, impersonal...
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
ARNOLD SCHWARZENEGGER, ACTOR: The (UNINTELLIGIBLE) is irrelevant. I am a machine.
(END VIDEO CLIP)
SCHNEIDER: Not so different from California's current governor, Gray Davis. But the Terminator knows how to get things done.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I'll drive.
(END VIDEO CLIP)
SCHNEIDER: He's independent. (BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I'm not programmed to follow your orders.
(END VIDEO CLIP)
SCHNEIDER: And he's incapable of betrayal.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I cannot.
(END VIDEO CLIP)
SCHNEIDER: The star has this to say.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: Terminator is like the perfect role for me.
(END VIDEO CLIP)
SCHNEIDER: How about governor?
UNIDENTIFIED MALE: Mr. Arnold Schwarzenegger! The Terminator yes!
SCHNEIDER: When he brought the Terminator to Camp Pendleton last week, for a special showing to the troops, Arnold Schwarzenegger was greeted like a rock star. He seems to have the campaign theme down pretty well. But is he running for governor? He sure sounds like he is.
SCHWARZENEGGER: You will see some incredible special effects. Incredible special effects. As a matter of fact, we haven't seen special effects like that since the last California state budget.
SCHNEIDER: Or maybe not. He's sending a copy of the movie to the president.
SCHWARZENEGGER: President Bush required (ph) that (ph) this (ph) be seen in the White House. Because this is the only place he's going to find weapons of mass destruction, is in Terminator three.
SCHNEIDER: Republicans aren't supposed to say that. Yes, but the Terminator can say anything he wants. Does he have the financial savvy to save the state? His supporters say he does.
JAMIE LEE CURTIS: This is an incredibly smart man, and an incredibly savvy businessman.
SCHNEIDER: What can he do to save the state? Maybe the same thing he did to save the picture when they were about to shoot a crucial scene, and the producers faced a budget crunch.
SCHWARZENEGGER: I loved the scene. I was looking forward to it. And a week before the set -- well we actually laid (ph) the shooting then, and there's not enough money available for this. And all this. So I said well how much does it cost? They said 1.4 million dollars. And so I paid for it.
SCHNEIDER (on-camera): There is one question everyone here is asking. Will the Terminator come to California's rescue? They may have to wait for the sequel. The Governator.
Bill Schneider, CNN Los Angeles.
(END VIDEOTAPE)
HOPKINS: That's our program for tonight. Thanks for joining us. For all of here, good night from New York. LIVE FROM THE HEADLINES with Anderson Cooper is next.
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U.S. Resolve>
Aired July 1, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, July 1st, sitting in for Lou Dobbs Jan Hopkins.
JAN HOPKINS, CNN ANCHOR: Good evening, everyone.
President Bush today said the attacks on coalition forces in Iraq will not shake U.S. resolve. He said anyone who attacks U.S. troops will be met with direct and decisive force and there will be no return to tyranny in Iraq, Senior White House Correspondent John King reports.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): The president vowed to stay the course in Iraq and to destroy those responsible for attacking American troops.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: These groups believe they have found an opportunity to harm America, to shake our resolve in the war on terror, and to cause us to leave Iraq before freedom is fully established. They are wrong and they will not succeed.
KING: The president blamed three distinct sources for the attacks, Saddam Hussein loyalists hoping to regain power, indigenous Iraqi terrorist groups, and foreign fighters entering Iraq for the chance to attack Americans and cause political turmoil.
BUSH: The restoration of that country is critical to the defeat of terror, and radicalism throughout the Middle East with so much in the balance it comes as no surprise that freedom has enemies inside of Iraq.
KING: Six soldiers were wounded in fresh attacks Tuesday and 23 Americans have been killed by hostile fire since Mr. Bush declared major combat operations over two months ago.
The president's new assessment of the war effort was an effort to stop a skeptical shift in public opinion. More than four in ten Americans now say things in Iraq are going badly and nearly half say they are not confident that attacks on U.S. troops will stop.
BUSH: We will stay on the offensive against the enemy and all who attack our troops will be met with direct and decisive force.
KING: Mr. Bush used this reenlistment ceremony at the White House to claim significant progress in dismantling al Qaeda.
(on camera): But the dicey situation in Iraq is overshadowing any progress in the broader war against terrorism and administration officials who initially called these attacks isolated episodes now say there is an urgent effort underway to stop them - Jan.
HOPKINS: John, on another issue, the president is going to Africa next week. Has he made a decision on whether to send U.S. troops to Liberia to stop the civil war there?
KING: He has not made that decision, Jan, but it remains an open question. Administration officials say this president and the Pentagon are very reluctant to put U.S. troops on the ground in Liberia.
There are echoes of Somalia some say in this internal debate, but the president says his trip to Africa is proof the United States will stand by it as the democracy takes hold and a free market economy spread.
Many African nations, leaders at the United Nations saying this is a chance to prove it. The White House says nothing has been ruled out including the possibility of sending in troops but no decision just yet - Jan.
HOPKINS: John King at the White House thanks very much.
The top U.S. official in Iraq today gave a blunt assessment of the threat to coalition forces from Iraqi gunmen. Paul Bremer said the attacks have been carried out by professionals with military experience. Defense Secretary Donald Rumsfeld has a different view, calling the gunmen dead-enders.
Senior Pentagon Correspondent Jamie McIntyre joins us now. Jamie, what's the story?
JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Jan, the news out of Iraq today is much the same as in recent days. A U.S. military vehicle was attacked in Baghdad today by what one Pentagon official said was an improvised explosive device. Three U.S. soldiers were hurt. Their translator is missing.
Three soldiers were also hurt when a rocket-propelled grenade hit their truck on a road south of Baghdad and U.S. forces are on edge. Four Iraqi civilians were killed at checkpoints when the cars they were in failed to stop or follow proper procedures.
The U.S. authority in Iraq, Paul Bremer, insisted today that despite the violence conditions he said are improving and freedom is taking hold. The U.S. will continue to crack down, he says, on people who he said "have no desire to fit in.
(BEGIN VIDEO CLIP)
PAUL BREMER, U.S. CIVIL ADMINISTRATOR: We need to show the Iraqi people that we will not let a small remnant of die-hard opponents to freedom have their way in this country and harm the Iraqi people and harm the Iraqi people's well being.
(END VIDEO CLIP)
MCINTYRE: U.S. officials, like Bremer, believe the failures so far to capture or account for Saddam Hussein remains a big part of the problem allowing the enemies of the U.S. to pray on the fears of the people.
One example, Jan, is the head of Saddam Hussein's tribe who recently renounced Saddam was gunned down by unknown attackers Sunday in Tikrit. Whether intended or not, it sends a message that being an enemy of Saddam Hussein could be hazardous to your health so getting Saddam remains a top priority.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: They're not going to come back. That's for sure. They may be alive. They may be dead. We may find them sooner or later but the absence of closure has the effect I've described which is unhelpful.
(END VIDEO CLIP)
MCINTYRE: A big question now facing the Pentagon is whether to send more troops to Iraq. That may be a decision that will be based on the recommendation of the new U.S. Central Commander General John Abizaid who takes over on Monday, next Monday, a week from today, and he is due to make a recommendation to Secretary Rumsfeld about whether to send more troops.
Right now, the U.S. has about 146,000 plus 12,000 British troops and those other foreign troops, about 8,000, that have been pledged won't start showing up until late in the summer, the beginning of September - Jan.
HOPKINS: Jamie McIntyre at the Pentagon thanks.
The United States today punished about 50 countries for refusing to exempt U.S. troops from prosecution in the new International Criminal Court. The United States banned military aid to these countries because it fears the court could be used for politically motivated trials against U.S. citizens.
The list includes Colombia, one of the largest recipients of U.S. military aid. The United States has given Colombia $2 billion in recent years.
Also included on the list are six countries applying to join NATO, Bulgaria, Estonia, Latvia, Lithuania, Slovakia, and Slovenia, and several countries that do not receive aid at the moment, including Austria, Cyprus, Finland, Ireland, Sweden, and Switzerland.
Turning now to the economy and the newly-passed tax cut plan, as of today all U.S. businesses must begin taking out less money for taxes from workers' paychecks but the bigger economic impact could come later in the month when the federal government begins mailing out child tax credit checks by the millions.
Peter Viles has the story.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): How do you fight a sluggish economy? Washington is about to resort to one of the oldest tricks in the book. Later this month, the government is going to start mailing out checks by the millions, advance child tax credits. If you have kids and pay taxes, the government will send you $400 per child.
Beginning July 25th, the government will write more than a million of these checks a day for three weeks, total amount $13 billion. In addition, new income tax will return another $22 billion to taxpayers this year, and most economists expect that Americans this summer will do what they do best, go shopping.
JAMES GLASSMAN, ECONOMIST, J.P. MORGAN CHASE: I have every faith in the American consumer. When they get money they tend to spend it, particularly if they're feeling better about the outlook and it looks like the layoffs are slowing down. So, I think by the fall, we'll be seeing pretty decent consumer spending.
VILES: But how widespread and how lasting? Economists are divided on that issue.
MILTON EZRATI, ECONOMIST, LORD ABBETT: It's not going to rock the economy. We're talking in the federal level of about $35 billion to $40 billion in $10 trillion economy. I think the place that it's really going to have an impact is at the low end retailers. They're the ones who will see most of this spending.
VILES: Those who believe that these tax cuts will eventually create new jobs tend to focus on the long-term impact of reductions in taxes on dividends and capital gains.
NORBERT MICHEL, HERITAGE FOUNDATION: This is the most pro-growth tax cut we've had since Reagan. I think this is a great boon to capital investment and that's really where this is going to increase jobs.
(END VIDEOTAPE)
VILES: Now, there is an offset to some of this. While Washington is cutting taxes, many states are raising them, $8 billion in state tax increases over the past 12 months. That's effectively robbing this stimulus package of some of its power - Jan.
HOPKINS: But, Pete, over all is this going to be enough to get the economy really moving?
VILES: Well, this is the important thing. It doesn't have to be enough. We already have low interest rates. We already have huge deficit spending, which over time could be a problem, but in the short term should help the economy. This is the third thing now, a tax cut. Between the three of them, most economists believe we will have stronger growth in the second half.
HOPKINS: We're already in the second half.
VILES: Economists did predict the second half recovery last year and the year before.
HOPKINS: And we're already in the second half at this point.
VILES: We are today, yes.
HOPKINS: Yes, thanks, Pete Viles.
California today is beginning its third straight fiscal year without a budget. This year it's not alone. Several states are locked in steep budget disputes as the fiscal year begins.
Bruce Morton has that story.
(BEGIN VIDEOTAPE)
BRUCE MORTON, CNN CORRESPONDENT (voice-over): In Massachusetts, the governor signs the budget and vetoes $200 million in spending, in New Jersey, a late breakthrough, a tax on Atlantic City casinos. In California, no breakthrough, a state running entirely on borrowed money, angry legislators.
BRUCE MCPHERSON, (R), CALIFORNIA STATE SENATE: I'm disappointed. This is the most frustrating year of the ten that I've been in the legislature.
JENNY OROPEZA, (D), CALIFORNIA STATE HOUSE: It is really a failure of this legislature to do its duty.
MORTON: In Oregon, the legislature gave itself an extra 30 days to try to balance its budget. Connecticut is still wrestling. Three states have raised income taxes, five has increased sales taxes.
"USA Today" reports 46 states are borrowing record amounts. It's a firestorm of fiscal trouble for states around the country. What's gone wrong, less coming in from things like sales taxes, for one thing.
E.J. DIONNE, BROOKINGS INSTITUTION: So they were rolling in dough when the market was booming and they ran into particular trouble when the market went down. Also, a lot of states following in a sense what President Bush had been talking about made big commitments to more funding for education so they were stuck with these serious commitments to a good thing at a time when all the money was dropping out of the bottom of their coffers.
MORTON: States by and large have to balance their budgets. The federal government doesn't, it can run, is running big deficits. One way to help the states would be to revive a program President Richard Nixon started, revenue sharing, federal money going directly to the states. DIONNE: I have been surprised that there hasn't been more talk of how the federal government could come to the aid of the states with something like temporary revenue sharing or with more help directed through Homeland Security or by picking up some of the cost of Medicaid which is another big reason for these - for the states' difficulties.
MORTON: The states are getting $20 billion to help pay for Medicaid and other costs, part of that new tax cut, but the White House saying balancing budgets is a state job. The president's is improving the overall economy, so more of a helping hand from Washington? The states would love it but there's no sign the Bush administration is inclined to do more.
Bruce Morton, CNN, Washington.
(END VIDEOTAPE)
HOPKINS: Still ahead tonight, capitalism and democracy, our series of special reports in conjunction with "The Economist" magazine. Tonight, truth about trade, how free trade affects the U.S. economy, Francis Fukuyama is a professor of international studies at Johns Hopkins University and he'll be our special guest.
Israelis and Palestinians move closer to peace. Mike Hanna is in Jerusalem. He'll have that report.
(COMMERCIAL BREAK)
HOPKINS: The job market may finally be stabilizing. According to a new report, the number of layoffs announced by American companies in June was down 13 percent from levels in May. That's according to the latest research from job placement firm Challenger, Gray & Christmas.
But before you get too excited, economists still expect a jump in overall unemployment when the Labor Department delivers the monthly job number on Thursday.
The late day rally on Wall Street today, the Dow recovered from a 114 point loss. It closed up 55.5 points. The Nasdaq was up more than 17 and the S&P 500 added nearly eight.
Susan Lisovicz is here with more on today's surprising comeback - Susan (UNINTELLIGIBLE).
SUSAN LISOVICZ, CNN CORRESPONDENT: It was remarkable and surprising, caught a lot of people by surprise, Jan, but the third quarter certainly didn't begin on a bullish note.
Investors were disappointed on a report about manufacturing which contracted for a fourth straight month while construction, one of the economy's hottest sectors, declined nearly two percent but some traders say the selling was overdone, and by mid afternoon sentiment had changed in part because of the dismissal of an investors' lawsuit against Merrill Lynch that analysts say may have implications for other financial institutions.
Starbucks gained three percent on an upgrade based on strong sales. Zale surged nearly 15 percent and hit a new 52-week high on word it is buying back nearly 20 percent of its outstanding stock.
Aetna added nearly five percent on an upgrade, and Dow component Boeing edged up on a jet order from discount airline AirTran. But AMR, another big player in transports, lost ground on word that American Airlines will discontinue some non-staffed routes and cut unprofitable routes as well.
General Electric turned down on a negative earnings forecast from J.P. Morgan, and investors had no appetite for Cheesecake Factory today. Its shares shed five percent on a downgrade based on a weak sales forecast.
Jan, Wall Street also saw an initial public offering today, Axis Capital debuted today, the third IPO in less than a week. That's a bullish sign all by itself, but, of course, Jan, the dramatic turnaround to the upside another bullish sign of course.
HOPKINS: And was it a good initial public offering?
LISOVICZ: Yes, it was because first of all it was priced at $22, which was above the projected range and it closed at $25.50 and we have another IPO tomorrow.
HOPKINS: Oh, wow.
LISOVICZ: Yes.
HOPKINS: Amazing, changes, thanks Susan.
Still ahead tonight, cutting the fat literally, the surprising announcement about plans to make some of your favorite brands healthier, Bill Tucker will have that report.
And then, many of you wrote in about sending U.S. troops to Liberia. We'll share some of your e-mails.
And, tracing the disappearance of college basketball player Patrick Dennehy, all leads point to murder. We will have the story.
(COMMERCIAL BREAK)
HOPKINS: Let's take a look at what you have to say. Many of you wrote in about the U.N. Secretary-General Kofi Annan's suggestion of sending U.S. troops to Liberia.
Charlene Daniel of Phoenix, Arizona wrote: "I believe it would be totally irresponsible for the president to even consider sending troops to Liberia. We can not solve all the world's problems and in the process of trying to do so we will bankrupt America."
Barbara James of Tustin, California said: "Apparently Kofi Annan just doesn't get it. He and the U.N. do nothing to help us in Iraq and now he expects the U.S. to send troops to Liberia. He needs a visit from the reality fairy!"
And, Ulrica Watson of Burlington, New Jersey said: "If the Iraqi people had an opportunity to be liberated from a tyrant leader, why not the Liberian people?"
Chad Wilson of Orangevale, California wrote about the proposed federal changes that would eliminate overtime for more than eight million Americans. "What good is it going to do to cut overtime pay for working class people, other than to increase the salaries of the already overpaid CEOs?"
And, Lou from Louisville said: "If President Bush wants to see the economy and the stock market recovery, he should put a limit on CEO's salaries and compensation rather than doing away with the overtime of eight million middle class Americans."
And, Joseph Benham of Kerrville, Texas wrote: "I applaud your enthusiasm for the no call registry. Rather than calling them telemarketers, how about telepests? And, e-pests for those who swamp our computers with spam." Not a bad suggestion.
We love hearing from you. Please send us your thoughts at LouDobbs@cnn.com.
The largest food maker in the country says it wants to help curb obesity. Today, Kraft announced it will reduce portion sizes on some of its products and take steps to make them more nutritional. The move comes as the food industry increasingly finds itself a target of lawsuits.
Bill Tucker has the story.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): Is fat the next tobacco? Is the company that owns one of the world's largest cigarette makers and one of the world's biggest food producers worried? Maybe, all they will say for sure is that they're worried about obesity.
The company didn't hold a single news conference, didn't make a single executive available for comment as they put out an announcement of global initiatives to fight obesity.
To do that, Kraft will stop increasing single portion sizes, provide more nutritional information on labels, the company will cut the fat and sugar content, and it will fund educational programs to help kids make better food choices. Also out, Kraft marketing and in- school vending machines.
DR. JONATHAN WAITMAN, NY WEILL CORNELL MEDICAL CTR.: I think that this is definitely somewhat paternalistic that the industry is taking responsibility and influencing what children eat, but we've gone the other path and what we have is more obese children and more children with diabetes, so something has to change. TUCKER: Nutritionists like the promises but have a wait-and-see attitude. If the guidelines sound familiar, they are. Just take a look at the global tobacco settlement where cigarette companies agreed to stop marketing to children and fund educational programs about choices. Some in the legal community are wondering if the move by Kraft is also an attempt to get out in front of any lawsuits over obesity.
JACK COFFEE, COLUMBIA UNIVERSITY: One of the oldest doctrines in the American common law is that if a plaintiff is also negligent along with the defendant then his contributory negligence bars any recovery. In other words, if you're both at fault, neither can recover from the other.
TUCKER: In other words, you can't say we didn't tell you.
(END VIDEOTAPE)
TUCKER: But perhaps this is being too cynical. Kraft's own voluntary deadline is to start implementing the changes at the start of next year and to complete the initiatives over a two to three-year period - Jan.
HOPKINS: Is Kraft the only company that's doing this?
TUCKER: Kraft is the only one that's made these kind of major initiative announcements. McDonald's recently, for example, has started to make some changes. They added salad to its menu. Recently, they actually had a nice quarter due in part they say to the salads on the menu.
HOPKINS: Sounds kind of hard to believe but that's what they say.
TUCKER: Far be it for me to be cynical about the lawsuit though.
HOPKINS: Thanks, Bill.
That brings us to tonight's poll. "Why do you think Kraft foods made changes to its products, consumer demand, health concerns, fear of lawsuits, or to increase profits?" Cast your vote at cnn.com/lou and we'll bring you the preliminary results later in the program.
We also have the final results of yesterday's poll. "What do you think of U.N. Secretary-General Kofi Annan's suggestion to send U.S. troops to Liberia?" Eighteen percent of you said brilliant, 29 percent said reasonable, and 53 percent said idiotic.
Still to come, progress along the road to peace in the Middle East, major concessions from both sides, Mike Hanna reports from Jerusalem.
And, former defense secretary and regular contributor to this program, William Cohen, will join us.
Then, the truth about trade in our special with "The Economist" magazine on capitalism and democracy tonight the cost of free trade.
(COMMERCIAL BREAK)
HOPKINS: Across America tonight, thousands of homes along the Gulf Coast are without power following Tropical Storm Bill. The storm dumped 12 inches of rain in parts of Louisiana, Mississippi, and Alabama. Forecasters say that it will continue to weaken as it moves towards the northeast.
A federal appeals court has ruled that a statue of the Ten Commandments must be removed from an Alabama Supreme Court building. The court upheld a lower court ruling that the two and a half ton monument violates the separation of church and state. Alabama's highest judge, Roy Moore (ph) had the statue installed two years ago.
And, accused immigrant smuggling kingpin has pleaded not guilty in federal court. Chen Chui Ping (ph) allegedly helped plan the Golden Venture smuggling operation in which ten Chinese immigrants were killed. The freighter was carrying 300 illegal immigrants when it ran aground in New York ten years ago. Ten of the passengers drowned.
Police in Texas say they found no sign of missing basketball player Patrick Dennehy in a field where an informant said he was shot. Dennehy has been missing for three weeks. Police are questioning some of his teammates in the case.
Gary Tuchman is live in Waco, Texas. He joins us with the latest - Gary.
GARY TUCHMAN, CNN CORRESPONDENT: Jan, hello to you. A Texas law enforcement source tells CNN that a former Baylor University basketball teammate of Patrick Dennehy is "a primary person of interest" in this very sad and mysterious missing person case.
Dennehy has now been missing for three weeks. Yesterday, a legal affidavit was released that says that that former teammate, his name is Carlton Dotson, shot and killed Dennehy, told his cousin that, who then told an informant who then told police.
Now, that's all very sketchy information and it's not evidence. It was on an affidavit that police wrote up simply to get permission from a judge to search computer records.
However, police are very angry that it was released to the news media. They say this thing is commonly done, that scenarios and theories are put on paper but it is not evidence. Nevertheless, they do say that this man is a primary person of interest but they say there are other persons of interest also.
On the affidavit, it was said that this basketball player was shot and killed in a field north of Waco, Texas, and police have now searched that 50-acre area.
(BEGIN VIDEO CLIP) STEVE ANDERSON, WACO POLICE DEPARTMENT: We had received information of a location north of Waco. The exact location I don't have. It was that Mr. Dennehy was at that location and we've checked. We still have not found Mr. Dennehy.
(END VIDEO CLIP)
TUCHMAN: Carlton Dotson lives in the town of Hurlock, Maryland. That's east of Washington, D.C. across the Chesapeake Bay on the eastern shore of Maryland. He is nowhere to be seen right now. It's not clear where he is, although it is believed he's in Maryland. Outside his house no police activity whatsoever. The police chief in Hurlock, Maryland, says no special precautions are being taken.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Essentially, tell us what Hurlock Police have been involved in and have you been contacted by Texas authorities, what's going on?
CHRIS FLYNN, HURLOCK, MARYLAND POLICE: As of this point, we have not been contacted by anyone, Waco Police Department or any other law enforcement agency.
(END VIDEO CLIP)
TUCHMAN: Dotson was interviewed by police last week. Police are not releasing any information about what was said during that interview, but once again we have to emphasize the fact that this was on the affidavit does not mean that this informant was telling the truth.
We also want to tell you one more thing before we go. Patrick Dennehy's girlfriend, Jessica De La Rosa, she lives in New Mexico, has released a statement. The statement reads as such: "Losing hope is not an option. We have God in our court. We are still trying to find him." Jan, back to you.
HOPKINS: The Israeli and Palestinian Prime Ministers today jointly declared their commitment to peace. Their words were matched by action. Israel started preparations to withdraw from Bethlehem. An Israeli official said that Palestinian leader Yasser Arafat will be aloud to travel to Gaza from the west bank. Mike Hanna reports from Jerusalem.
(BEGIN VIDEOTAPE)
MIKE HANNA, CNN CORRESPONDENT, CNN (voice-over): This is the moment that which the road map is formally launched. Statement s made in public by both prime ministers translated into Hebrew and Arabic. Committing themselves to the achievement of peace within the structure of the US backed plan.
MAHMOUD ABBAS, PALESTINIAN PRIME MINISTER, (through translator): Our conflict review is a political conflict. We will end it through (UNINTELLIGIBLE) enemies (ph). We have no enmity (ph) with the people of Israel. And we have no interest in the continued conflict with you.
ARIEL SHARON, ISRAELI PRIME MINISTER, (through translator): I have no doubt that the picture being shown here today to the people in Israel to the Palestinian people, and to the entire world, is a picture of hope and optimism.
HANNA: A month ago the leaders met in Alkobo (ph), Jordan, together with the president of the United States. Public statements made on that day too. But made clear then not the joint commitment that would signal the formal beginning of the implementation of the road map.
Since then, an initial upsurge in violence. And attempt of Israeli assassination of the militant leader. Followed by a Palestinian suicide bomb attack, and further Israeli military actions. More than 50 people killed in a week of incessant conflict made all the more bitter by the faint hopes that had been raised at Alkobo.
But then George W. Bush made good the promise that he made. That he would in his words, "ride herd" (ph) on both sides to ensure that they kept this new attempt to share the Holy land in peace on track.
Despite sporadic incidence, of all to familiar violence, the conflict's process of disengagement continued, and the formal implementation of the much-discussed road map got under way. As two prime ministers shook hands and smiled on a sunny Jerusalem day.
Mike Hanna, CNN, Jerusalem.
(END VIDEOTAPE)
HOPKINS: The relaunch of the road map is a diplomatic victory for the United States, but success is still far from assured. Joining us now is William Cohen, former defense secretary, and regular contributor to this broadcast.
Bill, are we really on the road to peace this time?
WILLIAM COHEN, FORMER SECRETARY OF DEFENSE: Well I think we're starting down the road to peace. I think we have to be careful here, and not get caught up in what has been described as irrational exuberance in another context. This road has some very deep pothole that we have to expect we'll encounter in the days and months to come.
There are groups in the Palestinian camps so to speak and who (ph) do not want to see a Palestinian state that would live side by side in peace with Israel. There are groups of Israelis who do not want to see a Palestinian state and are dedicated to the opposition of that. And there are groups here in the United States who also don't want to see a Palestinian state.
So what we have to do is to continue to push for those substantial majorities who do want peace. Palestinians who need sovereignty, dignity, opportunity, and the Israelis who need security and a commitment on the part of the Palestinians that they are going to work and live with the Israelis in peace. So a long way to go, but this is very encouraging.
HOPKINS: What happens if there are attacks? What's the response that needs to be made at that point?
COHEN: A call for restraint on both sides. As I indicated, there are elements of the Hamas (ph) and other groups, who are committed to Israel's destruction. We have to persuade the majority of the Palestinians not to support Hamas and other groups. How do you do that? You empower Mahmoud Abbas. You empower him by showing there is progress to be made, that there is a hope for Palestinians to enjoy peace and prosperity in the future.
And so step by step as the Palestinians see that there is a pay off at the end of this process, you undermine the support for the Hamas and the other radical Extremists. Similarly, on the Israeli side, they have to show restraint as well. And that means illuminating some of those outposts (ph), freezing the settlements in preparation for illuminating many of those settlements. That has to be part of it in terms of this mutual step-by-step process down this road map that's been laid out by President Bush and others.
HOPKINS: And the president has to remain engaged in the process, isn't that critical?
COHEN: There is virtually no way the president can walk away from this situation. If anything he'll have to continue to intensify it. I think he's indicated he's prepared to do that, but to walk away at this point, I think would certainly lead to a dissolution of the process itself with more and more violence on both sides. And I think that President Bush will not do that. I think he is committed, and must stay committed.
HOPKINS: Now another issue, something that the president is considering right now. Whether to send US troops to Liberia. Do you think that US troops should be involved in Liberia?
COHEN: I would be very reluctant to send troops to Liberia right now. We have troops -- peace-keeping troops in Bosnia, Kosovo, in Afghanistan. We're now in Iraq. I think that we are in danger of certainly over-stressing those troops. I had a similar request the time when East Timor (ph) had gained it's independence, and our friends the Australians had requested the United States take a lead role in the peace keeping mission.
And I indicated that time, as much as I was supportive of the people who had been supporting the United States for so many wars that we've had to confront the Australians, that they needed to take the leadership. That we could support communications, we could support transportation, and lead in some way to the support element of that matter. But we could not afford to extend our forces under those circumstances.
Secondly, there's something called the African Crisis Response Initiative. Something that was erased during the Clinton administration. Namely to train other African nations in peacekeeping missions. So that they can play the key role and leadership role in peacekeeping throughout the African continent.
So I think that other countries, France might be a country that had a long history of involvement in Africa. Perhaps the French and others could join other European nations who have not been involved in the mission in Iraq. Perhaps they can take a lead role for peacekeeping in Liberia. But I think at this point to call upon the United States, and our forces which are really overstretched, and quite fatigued with all of the missions that we are required to carry out would be a mistake.
HOPKINS: Thanks. Bill Cohen, former defense secretary. That brings us to tonight's quote on the attacks against coalition forces in Iraq. "The coalition will succeed in it's goal to establish real freedom and democracy in Iraq. Make no mistake about it. We will succeed, and until these individuals realize that, they will remain in our sights." That's from the U.S. civil administrator in Iraq, Paul Bremer.
(COMMERCIAL BREAK)
HOPKINS: Tonight in the second part of our series "Capitalism & Democracy," in conjunction with "The Economist" magazine, we examine the truth about trade. Despite increased free trade, global poverty is still rampant. The United States trade deficits (ph) are still rising, and jobs are disappearing from Boston to Mexico City. Now even white-collar jobs are moving to China and India. Lou Dobbs has the story.
(BEGIN VIDEOTAPE)
LOU DOBBS, CNN ANCHOR (voice-over): When you meet Sarwan Aggarwal, the complexity and confounding forces of free trade in the 21st Century are quickly apparent. Born in India, educated in The United States, he became a citizen and eventually landed his dream job with NorTel Networks. But not for long.
SARWAN AGGARWAL, SOFTWARE ENGINEER: When I got into NorTel, we were trying to outsource one of our products to Delhi Branch. Many of the jobs being outsourced from here are going to India.
DOBBS: After months of unemployment, Sarwan even considered going home to India.
AGGARWAL: People in India were getting hired, and they were looking for software people. And they were paying about $10,000 a year.
DOBBS: Peruvian economist Hernando De Soto believes in the power of free trade. He says situations like Sarwan's are sadly part of the price of globalization.
HERNANDO DE SOTO, ECONOMIST: This is what globalization is all about. We are redistributing ourselves, and all nations are suffering as a result of it. This is the industrial revolution. And it hasn't stopped. And we're learning to live on a larger scale. And the products will go to where costs are lower. BILL EMMOTT, EDITOR-IN-CHIEF, "THE ECONOMIST": But that doesn't mean that you have to do it over night. You have to handle the speed. Because what trade brings is change. Disruptive change. And change alienates people.
DE SOTO: But overall, overall the bottom line is favorable. More people are living better than ever before.
DOBBS: The Institute for International Economics cites expanding trade, and estimates that in the last two decades, the percentage of people living in poverty around the world has declined from 56 percent to 23 percent. But for American workers, the job migration -- because of trade is raising new concerns. As the disappearing job titles are moving up the corporate ladder.
THEA LEE, ASST. DIR. FOR INT'L ECONOMICS, AFL-CIO: This trend of outsourcing that started with manufacturing, and is now moved to IT and high tech services, is very troubling.
DOBBS: Forrester Research predicts that the United States will lose another 3.3 million service sector jobs by 2015.
LEE: The ultimate victim is the entire American economy. Because of we don't have a strong middle-class, strong working class here in The United States; we're not going to have a strong consumer economy. It's really as simple as that.
DOBBS: But arguments that companies will always follow after the lowest wage have not always proven true. In 1980, wages in northern European countries like France and Germany were more than four times higher than in southern countries like Portugal and Spain. But as the European Union loosened trade restrictions, jobs didn't flood south. Instead incomes have doubled in Europe since 1985. The gap in income between north and south has narrowed by almost a third.
EMMOTT: There's been no race to the bottom in Europe, where the lowest wage rates were available in Ireland and Italy for example, and Spain. And yet liberalization of trade within Europe has actually leveled wages up. As people have invested in their human capital, got more educated, demanded high wages, and the factories have become more sophisticated.
DOBBS: In Massachusetts, former IT worker Leland Webber isn't feeling the benefits of free trade. A year-and0a-half ago he was laid of from his $95,000 a year job.
LELAND WEBBER, FORMER SOFTWARE ENGINEER: My income from wages last year was probably somewhere between, about approximately $6000. I've done a little bit of substitute teaching, but that really doesn't bring in much money.
DOBBS: Webber hopes to land a full time job teaching. His likely salary only $35,000. Despite unemployment, the need to retrain himself at a huge salary cut, Leland Webber still supports free trade.
WEBBER: We can't simply shut ourselves off from the rest of the world. All that's going to do is make the rest of the world rich and us poor.
DE SOTO: Americans are going to maintain competitor advantages in many fields. They (ph) may just be fields of change. It's the capacity to adapt quickly which will keep them I think at the top for now an awful long time. They don't really need, they don't really need that (ph) protection.
DOBBES: But despite free trade's attraction in (ph) theory, others see a darker reality that is now unfolding.
LEE: We have to wonder what the logical consequence of the outsourcing of the service sector in the high tech jobs is. And what is the future of work in The United States? If we're going to lose our high tech skilled, highly educated jobs in addition to the factory jobs that we started to lose a few decades ago.
(END VIDEOTAPE)
HOPKINS: Joining me now to talk more about free trade is Professor and author Francis Fukuyama. He is author of a best selling book "The End of History and the Last Man." He's dean of faculty, and professor of International Political economy at John Hopkins University.
Professor, it seems as if from this story, and what we've been hearing on this broadcast, that perhaps trade is working for the big picture, it's working for the world. But it may not be working so well for a lot of workers in this country. How do you refute that?
FRANCIS FUKUYAMA, PAUL H. NITZE, SCHOOL OF ADVANCED INT'L STUDIES: Oh, I don't think you can refute it. It's clear that the benefits from free trade that they teach you in economics 101 is an aggregate benefit to this society as a whole. So on the whole there will be more winners than losers. So that for everybody that loses a job and has to take a lower salary, you get lower priced products at Wal-Mart and places that are sourcing from China and low-cost manufacturers.
But net, there is a benefit to this society. But clearly for example, low skilled workers in the Unites States and increasingly some service sector and more highly skilled workers are losers from this.
HOPKINS: So how do you respond? As a worker?
FUKUYAMA: Well, I think that the -- first of all, this is a process that's going on as a result of technological change. In fact, more of the job loss is driven by advancing technology then by exposure to trade. Trade simply accelerates that. So people are going to constantly have to be moving up the job ladder. And in fact, that's what's happened historically over time. I mean, in 19th Century, majority of Americans were farmers. It's not efficient for us to be big agricultural producers, or producers of shoes or textiles by and large.
And so those industries have been replaced by ones that require different sorts of skills, and even the technology jobs that were referred to as being lost, are still being replaced by other things that require for example the skill of systems integration, or other you know very complex services. And so there are always new opportunities I think that are opening up in the global economy.
HOPKINS: The winners I would suspect are places like China. Should we hope that the Chinese get richer and this will kind of help the situation?
FUKUYAMA: Well, I think that the historical pattern has been that as countries evolve up the food chain, they do things like add worker protections. One of the long-term consequences of economic development is democracy. And this has happened in Taiwan, it has happened in South Korea, it's happened in you know, quite a lot of other places in Asia.
And with democracy comes greater worker rights, social welfare system, their (ph) labor gets cheaper. The South Korean wage bill exploded in the 1980s as they achieved developed country status. And I think that in the long run, this is going to happen to China, and it's going to make their labor less you know, in a way competitive. But they're also going to be moving up into more highly skilled kinds of occupations.
HOPKINS: Is this going to be a political issue in the presidential campaign do you think? Because it is effecting so many people?
FUKUYAMA: Well, I don't think that globalization in the near term is -- it's only a small part. I mean right now we're still in the you know, recovering from the last recession. And so you'll have these cyclical problems and we're either going to be out of them or still in them at the time of the next election. And I think that will be the central issue. The globalization component I think will be a longer-term factor. But probably not one that will be singled out in you know the next electoral cycle I'd suggest.
HOPKINS: Professor Francis Fukuyama thanks for joining us.
FUKUYAMA: Thank you.
HOPKINS: And tonight's thought on the value of work. Far and away the best price that life offers us is the chance to work hard at work worth doing. That is from America's 26th president Theodore Roosevelt. When we return, "In Business," that's mainly business school. Student's would like to be in business. But it's not so easy these days. Bruce Willison is the dean of UCLA (ph) business school, and he'll join us and tell us what's going on.
"The Terminator" is back in theaters, and Arnold Schwarzenegger is on a public relations blitz. But will the PR trail turn into a campaign trail? We'll look at that.
(COMMERCIAL BREAK)
HOPKINS: Business school across the country have been feeling the effects of the economic slow down. They've seen a decline in applications. And the weak jobs market is making it harder for business school graduates to find jobs. Joining us now is Bruce Willison, he's dean of the Anderson school of business at UCLA.
Graduation's over. How many of your student have jobs at this point?
BRUCE WILLISON, DEAN ANDERSON SCHOOL, UCLA: Well at graduation, it ended up being about 80 percent of our students had jobs, or had taken themselves out of the market to either travel before pursuing other jobs but it actually picked up quite a bit in the last couple of months before graduation.
HOPKINS: So it's sign that the economy is improving.
WILLISON: You know, I think there was some just in time hiring that was done. And I think that is a positive sign. Along with the number of other things that we're seeing in the economy.
HOPKINS: What kind of jobs are the students taking? Are they different from a couple of years ago?
WILLISON: Well they're clearly different. There aren't nearly as many of the investment banking consulting jobs. So I think students had to be a lot more ingenious, and work a lot harder to find jobs. But we found the entertainment sector proved to be strong at the end. Health care came along. And the financial sector in areas outside of investment banking improved.
HOPKINS: Applications are down. Is that because students don't want to get into business with all the scandals et cetera?
WILLISON: No Jan I don't think that really is it. I think what typically happens in a recession, like all of us prospective students kind of look in the rear view mirror, and they say for now two years, MBA's have come out, and they haven't had three or four offers. They've had a hard time finding jobs. And so students will say I think I better stay where I am whether than taking a chance, and risking not having a job coming out.
Which is really to bad. Because I think at this time, it's a good time to be going to school. Your investment is actually pretty low right now in terms of opportunity costs.
HOPKINS: Now in terms of the education of the students that are coming out of business school. Are you putting more emphasis on ethics and corporate governments and CEO compensation and the things that we talk about a lot?
WILLISON: Sure. The level of awareness on all of those issues is much, much higher than ever before. And we've actually added electives on ethics. But I think the real key is that you can't teach these 28 29 tear old young women and men morals. But you can teach them about the ethical dimensions of the issues that they'll face as managers. Dimensions that come up in financial considerations, marketing considerations, human resources type issues (ph). HOPKINS: So do you have ethics courses?
WILLISON: Yes, we have ethics electives. But the key is in our core disciplines to ensure that the faculty are leading discussions about ethical dimensions of issues in accounting, and finance marketing et cetera.
HOPKINS: Bruce Willison, the dean of the Anderson School at UCLA. Thanks very much.
WILLISON: Thank you.
HOPKINS: When we come back will the Terminator run for governor of California? senior political analyst Bill Schneider will have that story next.
(COMMERCIAL BREAK)
HOPKINS: Finally tonight, it could take The Terminator to save California from political self-destruction. But Arnold Schwarzenegger isn't taking to the campaign trail just yet. As senior political analyst Bill Schneider reports. Schwarzenegger has managed to master some trademark political moves.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST (voice-over): It's a big day here in Hollywood. Everyone has turned out to celebrate the inauguration of a new Terminator. Now what do we know about the Terminators politics? Check out his campaign ad. I mean his movie.
California faces budget destruction. The Terminator is coming to save the day.
Arnold Schwarzenegger: My mission is to protect you.
SCHNEIDER: What's the Terminator got that ordinary politicians don't have? He's bloodless, cold, impersonal...
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
ARNOLD SCHWARZENEGGER, ACTOR: The (UNINTELLIGIBLE) is irrelevant. I am a machine.
(END VIDEO CLIP)
SCHNEIDER: Not so different from California's current governor, Gray Davis. But the Terminator knows how to get things done.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I'll drive.
(END VIDEO CLIP)
SCHNEIDER: He's independent. (BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I'm not programmed to follow your orders.
(END VIDEO CLIP)
SCHNEIDER: And he's incapable of betrayal.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: I cannot.
(END VIDEO CLIP)
SCHNEIDER: The star has this to say.
(BEGIN VIDEO CLIP FROM "T3: RISE OF THE MACHINES")
SCHWARZENEGGER: Terminator is like the perfect role for me.
(END VIDEO CLIP)
SCHNEIDER: How about governor?
UNIDENTIFIED MALE: Mr. Arnold Schwarzenegger! The Terminator yes!
SCHNEIDER: When he brought the Terminator to Camp Pendleton last week, for a special showing to the troops, Arnold Schwarzenegger was greeted like a rock star. He seems to have the campaign theme down pretty well. But is he running for governor? He sure sounds like he is.
SCHWARZENEGGER: You will see some incredible special effects. Incredible special effects. As a matter of fact, we haven't seen special effects like that since the last California state budget.
SCHNEIDER: Or maybe not. He's sending a copy of the movie to the president.
SCHWARZENEGGER: President Bush required (ph) that (ph) this (ph) be seen in the White House. Because this is the only place he's going to find weapons of mass destruction, is in Terminator three.
SCHNEIDER: Republicans aren't supposed to say that. Yes, but the Terminator can say anything he wants. Does he have the financial savvy to save the state? His supporters say he does.
JAMIE LEE CURTIS: This is an incredibly smart man, and an incredibly savvy businessman.
SCHNEIDER: What can he do to save the state? Maybe the same thing he did to save the picture when they were about to shoot a crucial scene, and the producers faced a budget crunch.
SCHWARZENEGGER: I loved the scene. I was looking forward to it. And a week before the set -- well we actually laid (ph) the shooting then, and there's not enough money available for this. And all this. So I said well how much does it cost? They said 1.4 million dollars. And so I paid for it.
SCHNEIDER (on-camera): There is one question everyone here is asking. Will the Terminator come to California's rescue? They may have to wait for the sequel. The Governator.
Bill Schneider, CNN Los Angeles.
(END VIDEOTAPE)
HOPKINS: That's our program for tonight. Thanks for joining us. For all of here, good night from New York. LIVE FROM THE HEADLINES with Anderson Cooper is next.
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