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Lou Dobbs Tonight

Indonesia Bombing Kills 13; Wall Street Tumbles

Aired August 05, 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.


LOU DOBBS, CNN ANCHOR: Tonight, the voting has just ended. We'll soon know if the Episcopal Church has approved its first openly gay bishop. We'll have a live report.
A radical Islamist bombing in Indonesia: 13 people killed, 150 people, including two Americans, injured, a report from Jakarta.

Charitable foundations cheating: the biggest foundations combining overhead and their grant dollars. Congressman Harold Ford wants it stopped. He's our guest tonight.

And on Wall Street, the Dow fell 150 points. Christine Romans with the market.

And "The Forgotten War." Tonight: why we're losing the war on drugs at home.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, August 5. Here now, Lou Dobbs.

DOBBS: Good evening.

State officials in Alabama are handing out gas masks and air filters to thousands of residents in Anniston. That's where the Army plans to begin destroying Cold War-era chemical weapons as early as tomorrow. Environmental groups, however, have won a delay.

David Mattingly is live in Anniston, Alabama, and joins us now with the latest on this story -- David.

DAVID MATTINGLY, CNN CORRESPONDENT: Lou, the Army has been incinerating its chemical weapons for almost a decade now. But this is the first time they've had to try this in a heavily populated area.

That's why you see these people lined up in this hallway here. These are just a fraction of the thousands of residents from the Anniston, Alabama, area who have been coming to this center for special training and to get some special equipment. We're going to take you inside one of the classrooms. We're going to have to talk quietly here.

They've locked us out. We'll have to go to the other door.

We're going to go in the classroom here, where people are getting their training. You see, there is a special presentation that they get. And here is what everyone has been talking about, the gas masks. Everyone will get special training. People who live closest to the area will be taught how to use these, how to put them on in case of an emergency, so that they'll be able to protect themselves, even though officials say that those emergencies are very unlikely.

Also, people are getting safe room kits in which they're being given special room air filters to set up just in case there is an accident. There are 75,000 people in the immediate area of the Anniston Army depot where the weapons are being stored. But -- and this has been going on since the '60s. They've been storing the G.B., the S.X., the mustard agent. And they're so old that the Army says they're leaking, very dangerous stuff.

The Army says they're way more dangerous to keep these weapons in storage than it is to incinerate them. So they're about to launch a $1 billion, seven-year project to get rid of them. And in spite of the alarming appearance of a gas mask distribution, like you see here in Anniston, state officials say it is merely a precaution.

(BEGIN VIDEO CLIP)

GOV. BOB RILEY (R), ALABAMA: Through an abundance of caution, we want to make sure that this population center has every safety precaution that is necessary. We don't think that it will ever be necessary to use it. But to just be sure, that's the reason we distribute the gas masks and do the other things that we're doing here.

(END VIDEO CLIP)

MATTINGLY: And this is the final step in the distribution process, where everyone gets their special equipment and goes off home to go back about their lives, while this seven-year project is going on. It was supposed to start tomorrow, but the Army has agreed to delay that until a judge is able to hear a case regarding a temporary restraining order that's being requested. That will happen on Friday -- Lou.

DOBBS: And that judge in that case is Judge Penfield Jackson, who has already said that a day there or two delay certainly won't be material when dealing with an issue this profoundly that -- that could profoundly affect the community.

The community there, David, their reaction to this, just give us the sense of that.

MATTINGLY: Well, obviously, no one is happy about it. But everyone seems to be in general agreement that these weapons need to be gotten rid of. The fact that the incineration is going on, some people are a little upset about incineration in general and they oppose that technique.

They're also saying that there are other techniques available that they wish the Army would use. But this incinerator has been in the works now for quite some time. The Army has invested hundreds of millions of dollars into it. And it's a seven-year project that's going to get rid of all of the weapons here. And that's what the Army is trying to keep everyone focused on, the fact that these weapons will be out of this community in seven years time.

DOBBS: And this incineration has never taken place before in Anniston, however, has it?

MATTINGLY: Not in Anniston, but it has in two other locations, in Utah at an incinerator there and in the Pacific at the Johnston Atoll. The Army points to those locations as success stories, saying that, while there were some accidents and some releases, they were very minute and they were nothing that would have endangered the general population if they happened here -- Lou.

DOBBS: And the gas in question, so everyone is clear on this, is, in point of fact, from M-55 warheads. We're talking about, are we not, nerve agents?

MATTINGLY: We're talking about nerve gas, G.B., S.X., some of the worst things in the American arsenal when it comes to weapons of mass destruction. These are weapons that have never been used. And part of an international treaty, a decision is made that they should never be used. So that's why they're being gotten rid of.

DOBBS: And we'll soon learn, Judge Jackson to make his decision as early as Thursday.

David Mattingly reporting from Anniston, Alabama, thank you very much.

The worst wildfires in a half century continue to burn in Canada tonight. Three of those fires are burning around the town of Kamloops. The fires are so intense now, they can be seen from space. In all, there are more than 300 wildfires burning in British Columbia, where they've been burning for more than a week, destroying thousands of acres of forest.

Some better news in this country, where the weather is helping firefighters in the state of Montana. One of the three fires burning in Glacier National Park still covers nearly 25,000 acres, but high humidity and some light rain have helped the firefighters.

A different hemisphere, but a similar problem tonight in Europe, where nearly 90 wildfires are burning in Portugal. Those fires have killed at least 11 people. And the country is asking NATO now for firefighting equipment and assistance.

Mark Webster of ITV reports.

(BEGIN VIDEOTAPE)

MARK WEBSTER, ITV REPORTER (voice-over): Portugal is battling its most devastating forest fires for a decade, as strong wind fan the flames. The death toll has risen to 11, after two more bodies were found in charred woodland.

Over 2,000 firefighters attacking the blazes, many of which were apparently started by arsonists. In the town of Hadia (ph), houses were destroyed by the flames, leaving people with nothing. "The fire has destroyed everything," this woman says. "We don't have anything. We worked hard to get this. And now we have nothing."

Temperatures of 40 Celsius, more than 100 degrees Fahrenheit, means the fire spread with ferocious rapidity. The cooler weather overnight means they've made progress putting out some of the smaller fires.

Across the border in Spain, it's the same story. Firefighters, backed up by helicopters and planes, are fighting a losing battle to bring the flames under control. As the death toll rose to seven, hundreds of people were evacuated from the town of Avila to shelter in a local gym.

"We didn't know what to do," this resident said, whether to stay in the town or leave. There was smoke everywhere. There are fears, too, that, with an even hotter spell threatened, the situation will deteriorate further.

Mark Webster, ITV News.

(END VIDEOTAPE)

DOBBS: Those fires have been fueled by a blistering heat wave that's smothering most of Europe. Temperatures across the continent have hit the highest levels in decades. And there are no signs of relief from those high temperatures any time soon.

Paula Hancocks with the story from London.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): It's all very well if you're a tourist enjoying the sun in Britain, but, if you're a commuter, it's a nightmare. The heat is causing havoc with Britain's public transport system. Many trains have been traveling at half their usual speed over the last couple of days amid concerns that the tracks could buckle in the heat.

VICKY CANN, TRANSPORT 2000: Many passengers are going to be very, very frustrated today, as their journeys are going to be even hotter than they normally would or they are just going to be disrupted because trains have been canceled. Hearing of an excuse like this is not going to cut much ice with them.

HANCOCKS: Britain could challenge its record temperature this Wednesday. Germany is also approaching its record of 40 degrees centigrade hit back in 1983. While the children may enjoy it, animals in Frankfurt Zoo are seeking the shade. Some zoos are giving ice lollies with rosemary in to help cool down their tigers. And the Moscow Zoo gave its polar bears a special treat to keep cool, an artificial snow machine.

France's record of 44 degrees Celsius, hit in 1923, could be safe. But the temperature for the capital is currently a third higher than the norm.

UNIDENTIFIED MALE: It's OK if you're on holiday, but I would not like to be working in this weather.

HANCOCKS: Italy has been suffering blackouts for a few weeks, the heat affecting the cities the most.

UNIDENTIFIED MALE: It's not raining. Energy consumption (INAUDIBLE) A lot of people is using the air conditioning, which didn't happen so often in the past. Air conditioning is not so common in Italy as maybe in the United States.

HANCOCKS: Weather forecasters are predicting Europe's heat wave will last at least for the rest of the week.

Paula Hancocks, CNN.

(END VIDEOTAPE)

DOBBS: Turning to a developing story in this country, a crucial debate is under way tonight, with a vote to come very soon, a vote that could tear apart the Episcopal Church. That vote was to have ended at 6:00 Eastern tonight, but the debate is continuing. Church officials are now deciding whether Reverend Gene Robinson will become the church's first openly gay bishop.

Jeff Flock is in Minneapolis and has the latest for us -- Jeff.

JEFF FLOCK, CNN CHICAGO BUREAU CHIEF: Lou, you're absolutely right. It was to have been done by now, but the vote hasn't even begun.

They're debating, as you say, the fate of Gene Robinson, this man who would be the bishop of New Hampshire. I want to show you some pictures of him today, as he came for a brief time to this session, did not address the bishops at all. What they did is get a report on these allegations against him. The allegations are twofold: essentially, one, that he had connections to an organization that had a Web site that, if you click on that Web site and click on another Web site that it linked you to another Web site that it linked you to, you got a pornographic Web site, eventually.

They reached the conclusion today that bishop-elect Robinson had not had any connection with that organization since 1998 and had no responsibility for the Web site.

Second allegation: A man said that he had an inappropriate touch from bishop-elect Robinson back in the late 1990s. That was also investigated, and the determination made there that the man in fact was touched at a public event, but, essentially, bishop-elect Robinson put his hand on the man's shoulder as he responded to his question, at one point, putting a hand on the man's arm. Some might perhaps interpret that as that it made him feel uncomfortable, others perhaps not so.

Bishop Scruton of Massachusetts, Bishop Gordon Scruton, reached a conclusion, he said, after having interviewed the man.

(BEGIN VIDEO CLIP) BISHOP GORDON SCRUTON, DIOCESE OF WESTERN MASSACHUSETTS: I asked him again if he wished to proceed to file a written complaint. Again, he indicated that he had no desire to pursue the matter any further. He said he was thankful the church had taken this seriously and that he felt listened to. He also indicated that he was not seeking any personal attention or notoriety and regrets it has been taken this way by some.

(END VIDEO CLIP)

FLOCK: Now, Lou, this vote will be under way by the time your newscast ends tonight. Another hour will go past before they have a result.

And one final note, not that we know how this is going to come out, but the opposition to Bishop Robinson has already made plans for what they plan to do if in fact he's confirmed. They're essentially going to walk out of the convention, go across the street to the Lutheran church and have prayer and perhaps meet with reporters over there. I don't know if that's a metaphor for what's to come with this church, these Episcopalians walking out to the Lutheran church, but perhaps we'll see.

That's the latest from Minneapolis -- back to you.

DOBBS: Jeff Flock, there have been those assembled there who have said that they'll split away from the Episcopal Church if indeed an openly gay bishop is approved by church officials.

FLOCK: And, of course, there were those who said they would split away from the church when they decided to ordain women. And most of those folks came back to the church. So some people think that is the way it will go. But no doubt, there are people that are very upset with this prospect.

DOBBS: Thank you very much, Jeff.

Suspected radical Islamic terrorists today blew up a huge car bomb outside a Marriott hotel in Jakarta, Indonesia; 14 people were killed in the explosion; 150 people were wounded, two of them Americans. There is speculation the bombing is related to last year's attack on a Bali nightclub; 200 people were killed in that terrorist bombing. Police say today's bomb contained some of the same chemicals as the nightclub bomb.

Atika Shubert reports from Jakarta.

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN CORRESPONDENT (voice-over): Indonesia, a target again, this time the J.W. Marriott, an American luxury hotel catering to Indonesia's wealthy elite and international executives.

The attack happened at 12:30 in the afternoon, right in the middle of a busy lunch hour. Police say a car laden with explosives pulled up to the lobby entrance as though to drop off passengers. Instead, it detonated, unleashing a wave of destruction.

"I was just coming back to work when it happened," this woman told us. "I was inside when I heard this huge explosion. I rushed out and saw smoke everywhere. People were lying on the ground unconscious and injured."

Dozens of wounded were rushed to hospitals, many in critical condition, several with severe burns over 90 percent of their bodies. Doctors warn that the death toll is likely to rise. No one has claimed responsibility for the blast. Police have yet to name any suspects. Forensics teams are still sifting through the wreckage for clues.

But for many here, the attack was all too familiar, a frightening repeat of last year's nightclub bombings in Indonesia's resort island of Bali. More than 200 died that night. Police then blamed the Jemaah Islamiyah, an al Qaeda-linked terror network that has sworn to carry out the jihad, or holy war, against Westerners and others they consider to be enemies of Islam.

The timing of the Marriott attack may be significant, just two days before judges handed down the first verdict in the trial of a confessed Bali bomber suspected of being a member of Jemaah Islamiyah. And less than a month after authorities uncovered a huge cache of explosives stashed away by the group, police warned then that Jemaah Islamiyah was planning more attacks and that a number of explosives were yet to be recovered. Investigators say they fear Jemaah Islamiyah may have struck again.

Indonesia's president, Megawati Sukarnoputri, visited the site straight from an emergency Cabinet meeting, attempting to bring some calm to a city on edge.

(on camera): Jakarta is bracing for the possibility of more terrorist attacks. Police are on high alert throughout the city and the country and they warn that the people who carried out today's attack are still at large. People here are frightened that what happened in Jakarta today could happen again.

Atika Shubert, CNN, Jakarta.

(END VIDEOTAPE)

DOBBS: Coming up next: Israel is building a wall to divide the West Bank. Tonight, the White House is weighing its response. Dana Bash will report live from Crawford, Texas.

And American troops hunt international terrorists in Iraq. Defense Secretary Donald Rumsfeld today spoke about the threat from al Qaeda in Iraq and around the world. Pentagon correspondent Barbara Starr will report.

And "The Forgotten War." Tonight, in our series of special reports this week, a war the United States is losing, without question, the war on drugs. Bill Tucker will report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Liberian President Charles Taylor may not, after all, accept an offer to go into exile in Nigeria. Nigerian authorities now say Taylor will leave Liberia only if he is granted immunity from charges of war crimes. Nigerian peacekeeping troops continued to arrive in Liberia today. They are supported by U.S. warships and Marines waiting off the Liberian coast.

A U.S. civilian contractor today was killed in Iraq when a bomb exploded underneath his truck near Tikrit. His name hasn't been released, pending notification of his next of kin. He is the first American to be killed in Iraq since Friday.

Defense Secretary Donald Rumsfeld today responded to questions about al Qaeda terrorists in Iraq and other countries.

Pentagon correspondent Barbara Starr joins me now with the story -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, a lot of discussion at the Pentagon today about whether the al Qaeda is again raising its head, of course, in a week now when we've seen that bombing in Indonesia that may be tied to an al Qaeda-related group, when we've seen the tape from Ayman Al-Zawahri, a close associate of Osama bin Laden, and when indeed Defense Secretary Donald Rumsfeld said today it is still the belief of the U.S. intelligence community that there have been and continue to be al Qaeda-related groups inside Iraq, possibly behind some of the attacks on U.S. soldiers.

Now, the Pentagon estimated, quite interestingly, that perhaps 500 al Qaeda members have now been seized on the Pakistan side of the border, near Afghanistan, the area where everyone does believe that Osama bin Laden may be hiding out, if indeed he is still alive. But what about the rest of the al Qaeda organization? Well, intelligence officials, of course, now confirming that they do believe there are a handful of senior al Qaeda members inside Iran, that Iran says they have detained these people.

But it's not terribly clear whether Iran is really stopping them from their activities. One of the key people the U.S. watching there is a man named Saif Al-Adel, a top al Qaeda leader. This man is someone close to bin Laden in the past, someone believed to be a top planner, who may still be operating from Iran, Defense Secretary Donald Rumsfeld today acknowledging a lot of discouragement about whether the U.S. will ever get these people from the Iranians.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: To the extent that they're, in one way or another, not being allowed to function and operate out of there, that's better. To the extent they would be handed over to us, it would be excellent. The chances of that happening apparently are about zero.

(END VIDEO CLIP)

STARR: We also asked the secretary how he views all of these tapes, these audiotapes that keep turning up every few days. He said he wasn't really terribly concerned about those. He views those as promotional and recruiting tools by these organizations. And, fundamentally, he said not terribly important -- Lou.

DOBBS: Not terribly important, perhaps, Barbara, but they do reflect strongly on the fact that Osama bin Laden and Saddam Hussein remain at large, unaccounted for. What is Rumsfeld's reaction to that?

STARR: Well, on the question of Saddam, now, his view is, they are getting close, but he is very cautious. He says they'll get -- they'll get him when they get him.

The question that the Pentagon knows it's going to have to answer in the days ahead is how many days military officials will be able to say they are tightening the noose. That's been going on for several days now. So they are hopeful that some of the intelligence they're getting about Saddam will lead them to him quite soon. They believe they are getting close to the people who virtually stand right next to him, the people who are actually protecting him. They want to take away that last layer. They think they'll get him then.

On the question of bin Laden, there are no easy answers, Lou. We asked about that today. We were told they're still looking for him, but they had nothing new to report.

DOBBS: Barbara, thank you very much -- Barbara Starr from the Pentagon.

The White House today strongly condemned the terrorist bombing in Indonesia. The White House called the explosion a deplorable attack on innocent civilians. President Bush is also focusing on the Middle East. He's considering how to respond if Israel continues to build a wall between Israelis and Palestinians in the West Bank.

White House correspondent Dana Bash reports from near the president's ranch in Crawford, Texas.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Israelis say constructing a fence through the West Bank is essential for their security. The president calls the structure unhelpful.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think the wall is a problem.

BASH: And now administration sources are making known, there are active internal discussions about reducing $9 billion in Israeli loan guarantees to show U.S. displeasure. White House officials insist, however, no decision has been made.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We have expressed our concerns to the Israelis about the fence.

BASH: In a White House meeting late last month, National Security Adviser Condoleezza Rice urged Israel to halt construction of the fence, citing Palestinian concerns. Prime Minister Sharon refused to stop construction, but agreed to rethink its route.

ARIEL SHARON, ISRAELI PRIME MINISTER: The security fence will continue to be built, with every effort to minimize the infringement on the daily life of the Palestinian population.

BASH: Loan guarantees to Israel have been in dispute before. The president's father held up $10 billion in loan guarantees in the early '90s because of clashes with Israel over settlements, marking a low point in U.S.-Israel relations.

This President Bush has enjoyed good relations with Israel and its prime minister, particularly on issues of security. The fence has proven a key test to that relationship, as Mr. Bush pushes the road map for peace. While some in the administration suggest the threat of withholding money could pressure Israeli, others call the public discussion premature and even unhelpful.

MCCLELLAN: We'll continue to talk directly with the Israelis. The president committed to an open dialogue on this issue, as well as many other issues.

(END VIDEOTAPE)

BASH: And some administration critics are calling any threat of cutting off aid to Israel a heavy-handed tactic. And, Lou, this issue could come up tonight here in Crawford, because Secretary of State Colin Powell arrived here just a few hours ago for meetings with the president at his ranch -- Lou.

DOBBS: Dana, thank you very much -- Dana Bash reporting live from near Crawford, Texas.

That brings us to the question of our poll tonight. Should the United States cut aid to Israel if Israel continues to build that wall? Yes, no or maybe? Cast your vote at CNN.com/Lou. We'll have the results later in the show.

The final results of yesterday's poll, the question, should the United States be doing more to win the war on drugs? Twenty-five percent of you said yes; 71 percent said no; 4 percent said maybe.

Turning now to stocks, discouraging news from the Labor Department sent Wall Street tumbling today. The Dow fell almost 150 points. The Nasdaq down 40. The S&P down 17.

Christine Romans is here with what turned out to be a slaughter.

CHRISTINE ROMANS, CNN CORRESPONDENT: It really did.

And the selling really kicked in, in the last 20 minutes or half- hour or so of trading today. And the markets ended near their lows of the session, made it the worst drop, Lou, for the Dow since May 19. Now, investors shrugged off a strong service sector report and focused on higher interest rates and signs of rising layoffs. Challenger, Gray & Christmas reported layoff announcements rose 43 percent in July from June, more than 85,000 more job cuts planned by companies.

You usually don't see that kind of job cutting in July. Also, Ralph Acampora at Prudential says the internals of this market, Lou, are tired. Almost as many stocks hit 52-week lows today as new highs. That's a far cry from the triple-digit new highs we saw in early June. General Electric was the most active Big Board stock, down 2 percent on news it's going to beef up its consumer lending business in a $5 billion deal with Aegon.

Costco fell 19 percent. It warned because of higher health care costs. Cisco fell 2 percent ahead of its earnings report. And after the bell, Cisco said profit rose, but its sales fell 3 percent. Now, 85 percent of the S&P 500 companies have reported, Lou. Earnings up almost 9 percent, revenue up about 7 percent from a year ago.

DOBBS: So strong results so far.

ROMANS: So far.

DOBBS: And we're almost through.

ROMANS: Almost done.

DOBBS: And dividends?

ROMANS: Dividends; 44 companies in the S&P 500 raised their dividends in July. You usually see that happen in the beginning of the year and the end of the year. Today, we heard from Waste Management and Hershey, both of them raising their dividends.

DOBBS: Christine Romans, thank you.

ROMANS: You're welcome.

DOBBS: Continuing; Kobe Bryant goes to court. Gary Tuchman will have a live report for us on the latest charges, the frenzy surrounding the case, all live from Colorado.

And "The Forgotten War," the war on drugs. Tonight, in our series of special reports: how the United States is losing the war. Bill Tucker will report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up next: Governor Gray Davis is fighting to save his job and his political hide. And he may be doing it without the support of the Democratic Party. Senior political analyst Bill Schneider will have that live story for us from California next.

(COMMERCIAL BREAK) DOBBS: NBA superstar Kobe Bryant makes his first appearance in court tomorrow on felony sexual assault charges. The judge in that case ruled late yesterday that television cameras will be allowed inside the courtroom. But the judge has yet to decide on whether to unseal critical documents.

Gary Tuchman joins us now with a live report from Eagle, Colorado -- Gary.

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Lou, hello to you.

Virtually no on the record information has been released in this case, and that's just the way the district attorney and defense attorneys like it. But the news media have asked the judge in this case to release some of the case files, saying it's public record.

And that judge in this case, Frederick Gannett, tells us that he will make a decision on that, but probably not until the week of August 18. He says first he'll preside over the initial hearing tomorrow. Then he'll take a week of vacation. And then Judge Gannett says he'll work on deciding whether public information should be made available.

Now Judge Gannett tells us this hearing tomorrow, this initial court hearing for Kobe Bryant, will probably only last five or 10 minutes. One would find it hard to believe that this many lawyers involved in anything could be that quick. But he says it will be quick. It's a procedural hearing. He says Kobe Bryant will likely not even talk, will not issue a plea of any kind, will be told what his rights are, what the charges are, and then a date will likely be set for a preliminary hearing, which will be very important, because during that preliminary hearing, prosecutors will be obliged to publicly say what some of their evidence is and the judge will then determine if there is probable cause for this case to continue.

Now, Judge Gannett's a very interesting guy. He tells us that he's a basketball fan. Not an NBA fan necessarily, but a recreational basketball fan. He says he played for many years. But he says he's had seven knee surgeries, so he's kind of given up the game and is now just golfing here in Colorado.

We do want to tell you, inside this courthouse, the courtroom where this hearing will be, is very small. Only 68 seats for spectators. And of those 68 seats, only 22 will be available for the news media. We're expecting hundreds of members of the news media to be here. So obviously not all will be able to go inside. So they've actually set up an overflow tent next to the courthouse with TV sets, where most of the journalists , who will watch it on TV, just like you viewers out there.

Lou, back to you.

DOBBS: Gary, thank you very much. Gary Tuchman reporting live from Eagle, Colorado. And Gary, as you say, we will be covering the hearing live here on CNN scheduled to begin at 6:00 Eastern. We will also be talking with CNN legal analyst Jeffrey Toobin to assess case and we'll be talking with a number of experts about what all of the fascination with Kobe Bryant and this case suggests about our society and our culture here tomorrow night.

Tonight's quote is a somewhat cynical view of the Kobe Bryant scandal. It is not inspirational but it is certainly, as they say, worth thinking about. "From a business perspective, it's great for the NBA. It's reality television. People love train-wreck television and you hate to admit it, but that's the truth. That's the reality today." That from the owner of the Dallas Mavericks, Mark Cuban.

Coming up next here, going color blind in California. Casey Wian reports on a controversial proposal that has to do with race, reporting and politics.

And it is the race of his lifetime for Governor Gray Davis. He could be fighting it without the support of many of his fellow Democrats. Our senior political analyst Bill Schneider will join us from Los Angeles next.

(COMMERCIAL BREAK)

DOBBS: This week, we are reporting on "The Forgotten War," the war against drugs.

Secretary of State Colin Powell has recommended that the United States resume its backing of anti-drug flights over Colombia. Reuters quotes unnamed administration officials who say President Bush is likely to approve the recommendation.

Those flights were halted two years ago after an aircraft carrying a U.S. missionary was shot down in Peru. It had been mistaken for a drug running plane.

Last night here, we reported on efforts to control the international supply of drugs before they enter this country. Tonight, we report on what's being done to stop drugs produced in this country as we continue our series of special reports, "The Forgotten War."

Bill -- Bill Tucker has the report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNNfn CORRESPONDENT (voice-over): The United States is losing the war on drugs. Even if the country succeeded in cutting off the flow of all illegal drugs from outside the country tomorrow, there would still be a growing drug problem in America.

Marijuana use is rising. According to the latest statistics, more than 9 percent used marijuana at least once in 2001. That is up 8 percent from a year earlier. Domestically grown marijuana sells for anywhere from $1,000 to $4,000 per pound, according to the Drug Enforcement Agency.

SCOTT BURNS, DFO OF NATL. DRUG CONTROL POLICY: This is not the marijuana of 20 years ago. This is not 1 percent ditch weed. This is 8 to 15 percent THC-level marijuana with as high as 30 percent.

TUCKER: Mobile methamphetamine labs are producing a readily supply of cheaply and easily made meth to meet a growing demand. Abuse of narcotic prescription pain relievers also on the rise, with nearly 4 percent of the population admitting they have misused prescription narcotic drugs.

The National Drug Intelligence Center estimates that 28.5 million Americans used an illicit drug in 2001. The war is being waged and lost. But few will admit it.

TIMOTHY LYNCH, CATO INSTITUTE: There is this political dynamic in Washington, D.C. where no politician wants to get the blame for having supported a policy that is not working. Unlike in the private sector where if something is not working, a business firm will quickly go out of business, in Washington, D.C., if something is not working, the idea is to throw more money at the problem. And that's what we've seen in Washington for the past 10 to 15 years.

TUCKER: The cost is staggering. The federal government spends $1 billion a month to fight the war on drugs, but users spend more, six times more, almost $6 billion a month to buy drugs.

The Substance Abuse and Mental Health Services Administration puts the cost to the economy and to lives at roughly $284 billion. But that's just the financial side of the ledger.

DR. H. WESLEY CLARK, CTR. FOR SUBSTANCE ABUSE TREATMENT: When you see people give up careers because of drugs, when you see mothers abandon their children because of drugs, when you see doctors and lawyers and engineers walk away from their careers because of drugs, then that gives you the -- shall we say, more up-close and personal story.

(END VIDEOTAPE)

TUCKER: Which is why some argue that the focus of the war on drugs should be targeted more on care and treatment if we are to make meaningful progress in solving the national drug problem, Lou.

DOBBS: Now there seemed to be a lot of ideas and a lot of experts. Meanwhile, we're losing the war and losing it badly. Bill Tucker, thank you very much.

TUCKER: Thank you.

DOBBS: Tomorrow we continue the series of special reports on "The Forgotten War." We report on the efforts to reduce the demand for drugs in this country. We'll be joined by former national drug control director, William Bennett.

Next, big foundations using a loophole to combine their expenses and their grant dollars. Peter Viles will report. Congressman Harold Ford of Tennessee wants to stop this and encourage more charitable giving. He's our guest next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A movement is under way on Capitol Hill to make private foundations give more of their money to charity. In a moment, I'll be talking with Congressman Harold Ford. He is among those leading this effort.

But first, that proposal could pop billions of dollars into charities right away, at a time of great need. Peter Viles has the report.

(BEGIN VIDEOTAPE)

PETER VILES, CNNfn CORRESPONDENT (voice-over): Between a soft economy and corporate belt-tightening, America's charities are being squeezed. And now Congress is debating a surprisingly simple solution. Why not use the tax code to shake more money out of big foundations? Current IRS rules require non-profit, non-operating foundations to spend 5 percent of their assets every year. But not all of it has to go to charities. They can count their own overhead, including salaries, toward the 5 percent.

Enter, Congressman Harold Ford of Tennessee and Roy Blunt of Missouri. Their proposal would require that all 5 percent go to charity. The estimated impact, at least $3 billion a year in new giving to charities.

SLOAN WIESEN, NATIONAL COMMITTEE FOR RESPONSIVE PHILANTHROPY: It would provide billions of dollars in new grant money annually to charities that are in need. At the same time, it would allow foundations to sustain themselves for the long haul, and it would encourage greater foundation efficiency. So on the whole, we believe that it's a very sensible proposal.

VILES: A common sense idea which in Washington means that there is strong opposition to it.

DOT RIDINGS, COUNCIL ON FOUNDATIONS: That assumes that the only thing that foundations do is give away money. And indeed, a lot of things are not only equivalent to money but much more highly prized by a lot of charities, such as bringing them together to talk about best practices, any communication that a foundation does with the public, the oversight, the evaluation, bringing grantees together to talk about their best practices and learn from each other. All those things are administrative expenses.

(END VIDEOTAPE)

VILES: No one is telling the foundations that they have to lower the salaries or fees they pay to their directors and trustees. Just that those expenses shouldn't count toward meeting their minimum charitable activities -- Lou.

DOBBS: And the largest charities, the largest foundations in this country are the greatest offenders. VILES: Sure.

DOBBS: On combining overhead and grant dollars.

VILES: Sure. The Ford Foundation, a $9 billion foundation, the government says you need to give away roughly half a billion every year. Almost $100 million of that, almost $100 million of that is overhead.

DOBBS: It's really every institution, the first cause becomes perpetuating itself, I guess. Peter Viles, thank you very much.

Well, joining me now is one of the two men in Congress who are leading the fight to help a few people out and to straighten out the reasoning amongst some foundations. We're joined now by Congressman Harold Ford of Tennessee, joins us from New Orleans tonight.

REP. HAROLD FORD (D), TENNESSEE: Thanks for having me on, Mr. Dobbs.

DOBBS: This is a remarkable proposal, as Peter Viles reported, first because it looks like it would work, it has some considerable support, and because it is so reasonable and needed at this particular point. You're getting a lot of flak from the foundations themselves. How are you going to resolve it?

FORD: You know, it has a very simple intent. I think your story explained it. It's all an effort to try to get charities to give more to charitable causes. The 5 percent payout is probably a reasonable number, in the suggested charities across the country, particularly when we know that over the last 20 years, charities have earned -- I should say foundations have earned some 7.5 if not a little higher yield on their investments. To ask that 5 percent of those payments go to charities and charitable causes at a time in which Americans' willingness to give is high but their ability to give has been impacted by a slowed economy. I think it's a smart proposal and one that I hope we can, once we explain it fully, will enjoy broad support in the Congress.

DOBBS: Give us your sense of that support within Congress itself right now, Congressman.

FORD: I think many of my colleagues are undergoing a -- I should say, receiving a turn (ph) of criticism from good foundations and good people across the nation, particularly those who run these foundations. But upon second look, I think all of them come to realize that this is really a reasonable and sensible proposal that won't put anyone out of business that's operating efficiently at this point.

There is no doubt there is components of this bill that will improve efficiency and accountability, and demand it in a lot ways from foundations. It's important to note that the vast majority of foundations are not opposing this. The vast majority support it, because there are three or four other components to this bill that actually would increase giving from those who are able to give $250 or as an individual, you get an above the line deduction, and those $500, couples will get the same kind of deduction.

So you'll see an increase in giving and you'll see an increase on the part of seeing improved capacity on the part of foundations to make a difference in homes and neighborhoods and communities all across this nation.

DOBBS: Congressman, how do you respond to the Council of Foundations speaking for many foundations who do oppose your legislation, saying that they give expertise, that it's very important for their institutions, their foundations to be around, because they're showering benevolence and best practices upon the world?

FORD: In a lot of ways, they're doing -- accomplishing a lot of those things. But nothing in this bill would stop it. Every study we've seen from the Council on Foundations, from the National Committee for Responsive Philanthropy, have all shown that over the last 25 years many of these foundations have earned an addition of 7.5 percent return on their investments. This is just a 5 percent guarantee that your payout will go to charitable -- or I should say charitable causes, and we've learned that on average, foundations spend less than .5 percent on overhead. So 5 percent plus .5 percent -- we in Congress aren't great at math, but I know that's less than the 7.5 percent return they're getting on their investment.

I think this is easily achievable by many of our foundations, and I might add, there is a real willingness on our part, and I think I speak safely for my good friend Roy Blunt who is at home recovering, God bless you, and I hope you recover soon, my friend, to work with all of our friends in the philanthropy community, to try to make this thing work, and more importantly, to try to help the kids and the seniors and those who are suffering from illnesses receive the great vital services that many foundations across this country are providing.

DOBBS: We extend our best wishes along with yours to Congressman Blunt, the majority whip in the House, who is the co-sponsor of this legislation with you. And Congressman, I want to just say, we appreciate you taking the time and creating a little provocative thought for those foundations to chew over.

FORD: You said $3 billion. It's really $4.3 billion, our estimates show, that this will free up right away for charitable causes all across the country.

DOBBS: We took the lower of the estimates that we had from a number of sources, Congressman. We're perfectly willing to...

FORD: I'm a Democrat. We take the highest number oftentimes.

DOBBS: Congressman, we thank you very much.

FORD: Thank you.

DOBBS: Congressman Harold Ford.

Tonight's thought on the value of a vote. "To make democracy work, we must be a nation of participants, not simply observers. One who does not vote has no right to complain." That is from my very favorite western author, Louis L'Amour.

A reminder now to vote in tonight poll. The question -- should United States cut aid to Israel if Israel continues to build the wall against the wishes of the Bush administration? Yes, no, or maybe. Cast your vote at cnn.com/lou.

We'll have the results later in the show.

Coming up next, the color of politics. A controversial proposition in California calls for race not to be considered. Casey Wian will have that story for us from Los Angeles, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Californians are certainly not strangers to controversial ballot measures, and this fall, they have a beauty. In addition to the recall of Governor Gray Davis, this proposal would prevent California from collecting any racial data on its citizens. Imagine that.

Casey Wian, with the story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Proposition 54 would stop California state and local agencies from asking people to check little boxes identifying their racial or ethnic background. And would prevent the use of racial data in public education contracting or employment. It allows race to be used in medical research and to identify criminal suspects. Supporters of the racial privacy initiative say it would move the state a step closer to a color blind society. They're led by, Ward Connerly, the California University regent who in 1996 successfully backed proposition 209 prohibiting state sponsored affirmative action. So far, polls show likely voters favor the initiative by 50 percent to 29 percent. Though 21 percent are undecided.

MARK DICAMILLO, DIRECTOR, THE FIELD POLL: Whites are clearly the most supportive. They're behind it by greater than a 2 to 1 margin. But the subjects to watch will be the ethnic minority voters, the Latinos and blacks and Asians in this early poll were about evenly divided on the measure.

WIAN: Opponents such as Governor Gray Davis and the ACLU are having trouble swaying voters. Groups such as the Mexican-American legal defense and education fund call the initiative misleading and a barrier to minority assistance programs.

VICTOR VIRAMONTES, MALFDEF: You think that when your race becomes private or people don't know about it, then you're going to be subject to less discrimination. And so, that's a superficial appeal. We've got to explain to the voters this is about restricting information, doesn't do anything to end discrimination, and in many ways might hide it so we wouldn't know how well third graders are learning to read or graduation rates across different races.

(END VIDEOTAPE)

WIAN: Despite warnings the proposition would harm minority interests, it's been largely overshadowed by the recall facing Governor Davis. Only 25 percent of likely voters are familiar with the measure. Proposition 54 is likely to be helped by the recall campaign against Gray Davis. Voters who want Davis out of office also tend to support the racial privacy initiative. And they're the ones expected to turn out in relatively big numbers this October -- Lou.

DOBBS: Californians with a lot to consider this fall. Thank you very much, Casey Wian from Los Angeles.

Well, Governor Gray Davis has more problems than just angry voters. Now his own party is beginning to bail on him. Bill Schneider joins us now from Los Angeles and has the story for us -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Lou, welcome to the circus. People from California are waiting until the Saturday deadline with great anticipation to see who is going to run for governor in addition to Gray Davis whose recall is the first question on the ballot. In particular, they're waiting to hear from three important candidates. Arnold Schwarzenegger says tomorrow he'll make his decision known. He's going to issue a written statement and then he's going to appear on the "Jay Leno Show."

If he does not run, which is what expected at this point, his good Friend, Richard Reardon, the moderate Republican former mayor of Los Angeles says he may get into the race. The biggest of the big feet to drop in this race would be Dianne Feinstein. A lot of Democrats are nervous they bet -- the Democrats are betting everything on the Gray Davis recall. They're saying that they're going to stand behind Gray Davis and support his retention as governor. Some Democrats are saying, wait a minute. What if the voters vote to recall him? There is no Democrat on the ballot to replace him. So a lot of Democrats are beginning to say, we should have a good Democrat on that ballot, and they're trying to urge Dianne Feinstein, the senator from California, a moderate Democrat, very popular, most popular politician in California to run to save the Democratic party.

DOBBS: Senator Barbara Boxer, Bill, has said outright, if it looks like he's behind in the polls, the Democrats ought to step in with new candidates.

SCHNEIDER: That's what they're talking about right now. The question is will the Democrats break ranks. They're looking carefully at the polls. Particularly if Richard Reardon decides to get in, he very tough contender. A lot of Democrats will vote for him because he's a moderate Republican. And then if he gets in, I think this we may see Democrats begin to break ranks. If that happens, Gray Davis will be toast.

Bill Schneider from Los Angeles tonight, thank you.

Still ahead here the preliminary results of "Tonight's Poll." Your e-mails on our special report, "The Forgotten War."

And, the possibility of the Episcopal church accepting an openly gay bishop. Next.

(COMMERCIAL BREAK)

DOBBS: Coming up, we've had an overwhelming response to our series of special reports on the forgotten war, the war on drugs that we're losing. We'll share some of your thoughts when we continue. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The preliminary results of tonight's poll, the question, should the United States cut off aid to Israel if Israel continues to build the wall? Sixty-nine percent of you said, yes, 29 percent say, no, 1 percent says, maybe.

Taking a look at some your thoughts, many of you wrote in about our series of special reports on the war on drugs. What we're calling forgotten war. Nearly all of you say we are losing the war on drugs and losing badly. And that's what the evidence shows as well.

William Harvey Hunter of Arden, North Carolina wrote, "I think the government should quit doing what it's doing and start doing what it takes to bring drug use and traffic under control. Namely, legalize it and tax it."

Todd Outlaw of Houston said, "Each time I hear that our government has declared a war on drugs I have to laugh. Our government can't even keep the drugs out of our prisons. You know, the big building with the high fences, barbed-wires, and armed guards."

Toni Boutwell of South Carolina said, "The drug war is a lost cause. The demand is here and every time the government tries to close one door, three others open. We waste too much money, time and lives trying to stop the unstoppable."

Matthew Harris of value Valparaiso, Indiana, says, "We would be better off spending our money on drug treatment and protecting our borders than spending money in foreign countries. How can we rationalize $12 billion per year to fight drug use and not afford a prescription drug plan for our seniors?"

Jim Hiigel of Hermiston, Oregon says, "The DEA has claimed progress in the war on drugs every year for 30 years. Maybe they could give my dog pointers on finally catching his tail."

Many of you also concerned about the debate over the first openly gay bishop in the Episcopal church.

Dick Doner wrote, "I have been a church-attending Episcopalian for 65 years and can state categorically that if a priest was in an open sexual relationship with a person of the opposite sex, outside of marriage, he or she would not even be considered as a candidate for bishop."

Carol Madison of Windsor, Colorado, said, "I'm a heterosexual lady who's been happily married for 19 years and appalled by this last minute assassination of a good man by a creep who's looking for his 15 seconds of fame."

We thank you for your thoughts. We always love hearing from you. E-mail us at loudobbs@cnn.com.

That's our show for tonight. Thanks for being with us.

Tomorrow in our series of special reports, "The Forgotten War." We look at why too many Americans just can't say no to drugs. And the man behind the "Just Say No" campaign, William Bennett, joins us.

For all of here, good night from New York.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired August 5, 2003 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Tonight, the voting has just ended. We'll soon know if the Episcopal Church has approved its first openly gay bishop. We'll have a live report.
A radical Islamist bombing in Indonesia: 13 people killed, 150 people, including two Americans, injured, a report from Jakarta.

Charitable foundations cheating: the biggest foundations combining overhead and their grant dollars. Congressman Harold Ford wants it stopped. He's our guest tonight.

And on Wall Street, the Dow fell 150 points. Christine Romans with the market.

And "The Forgotten War." Tonight: why we're losing the war on drugs at home.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, August 5. Here now, Lou Dobbs.

DOBBS: Good evening.

State officials in Alabama are handing out gas masks and air filters to thousands of residents in Anniston. That's where the Army plans to begin destroying Cold War-era chemical weapons as early as tomorrow. Environmental groups, however, have won a delay.

David Mattingly is live in Anniston, Alabama, and joins us now with the latest on this story -- David.

DAVID MATTINGLY, CNN CORRESPONDENT: Lou, the Army has been incinerating its chemical weapons for almost a decade now. But this is the first time they've had to try this in a heavily populated area.

That's why you see these people lined up in this hallway here. These are just a fraction of the thousands of residents from the Anniston, Alabama, area who have been coming to this center for special training and to get some special equipment. We're going to take you inside one of the classrooms. We're going to have to talk quietly here.

They've locked us out. We'll have to go to the other door.

We're going to go in the classroom here, where people are getting their training. You see, there is a special presentation that they get. And here is what everyone has been talking about, the gas masks. Everyone will get special training. People who live closest to the area will be taught how to use these, how to put them on in case of an emergency, so that they'll be able to protect themselves, even though officials say that those emergencies are very unlikely.

Also, people are getting safe room kits in which they're being given special room air filters to set up just in case there is an accident. There are 75,000 people in the immediate area of the Anniston Army depot where the weapons are being stored. But -- and this has been going on since the '60s. They've been storing the G.B., the S.X., the mustard agent. And they're so old that the Army says they're leaking, very dangerous stuff.

The Army says they're way more dangerous to keep these weapons in storage than it is to incinerate them. So they're about to launch a $1 billion, seven-year project to get rid of them. And in spite of the alarming appearance of a gas mask distribution, like you see here in Anniston, state officials say it is merely a precaution.

(BEGIN VIDEO CLIP)

GOV. BOB RILEY (R), ALABAMA: Through an abundance of caution, we want to make sure that this population center has every safety precaution that is necessary. We don't think that it will ever be necessary to use it. But to just be sure, that's the reason we distribute the gas masks and do the other things that we're doing here.

(END VIDEO CLIP)

MATTINGLY: And this is the final step in the distribution process, where everyone gets their special equipment and goes off home to go back about their lives, while this seven-year project is going on. It was supposed to start tomorrow, but the Army has agreed to delay that until a judge is able to hear a case regarding a temporary restraining order that's being requested. That will happen on Friday -- Lou.

DOBBS: And that judge in that case is Judge Penfield Jackson, who has already said that a day there or two delay certainly won't be material when dealing with an issue this profoundly that -- that could profoundly affect the community.

The community there, David, their reaction to this, just give us the sense of that.

MATTINGLY: Well, obviously, no one is happy about it. But everyone seems to be in general agreement that these weapons need to be gotten rid of. The fact that the incineration is going on, some people are a little upset about incineration in general and they oppose that technique.

They're also saying that there are other techniques available that they wish the Army would use. But this incinerator has been in the works now for quite some time. The Army has invested hundreds of millions of dollars into it. And it's a seven-year project that's going to get rid of all of the weapons here. And that's what the Army is trying to keep everyone focused on, the fact that these weapons will be out of this community in seven years time.

DOBBS: And this incineration has never taken place before in Anniston, however, has it?

MATTINGLY: Not in Anniston, but it has in two other locations, in Utah at an incinerator there and in the Pacific at the Johnston Atoll. The Army points to those locations as success stories, saying that, while there were some accidents and some releases, they were very minute and they were nothing that would have endangered the general population if they happened here -- Lou.

DOBBS: And the gas in question, so everyone is clear on this, is, in point of fact, from M-55 warheads. We're talking about, are we not, nerve agents?

MATTINGLY: We're talking about nerve gas, G.B., S.X., some of the worst things in the American arsenal when it comes to weapons of mass destruction. These are weapons that have never been used. And part of an international treaty, a decision is made that they should never be used. So that's why they're being gotten rid of.

DOBBS: And we'll soon learn, Judge Jackson to make his decision as early as Thursday.

David Mattingly reporting from Anniston, Alabama, thank you very much.

The worst wildfires in a half century continue to burn in Canada tonight. Three of those fires are burning around the town of Kamloops. The fires are so intense now, they can be seen from space. In all, there are more than 300 wildfires burning in British Columbia, where they've been burning for more than a week, destroying thousands of acres of forest.

Some better news in this country, where the weather is helping firefighters in the state of Montana. One of the three fires burning in Glacier National Park still covers nearly 25,000 acres, but high humidity and some light rain have helped the firefighters.

A different hemisphere, but a similar problem tonight in Europe, where nearly 90 wildfires are burning in Portugal. Those fires have killed at least 11 people. And the country is asking NATO now for firefighting equipment and assistance.

Mark Webster of ITV reports.

(BEGIN VIDEOTAPE)

MARK WEBSTER, ITV REPORTER (voice-over): Portugal is battling its most devastating forest fires for a decade, as strong wind fan the flames. The death toll has risen to 11, after two more bodies were found in charred woodland.

Over 2,000 firefighters attacking the blazes, many of which were apparently started by arsonists. In the town of Hadia (ph), houses were destroyed by the flames, leaving people with nothing. "The fire has destroyed everything," this woman says. "We don't have anything. We worked hard to get this. And now we have nothing."

Temperatures of 40 Celsius, more than 100 degrees Fahrenheit, means the fire spread with ferocious rapidity. The cooler weather overnight means they've made progress putting out some of the smaller fires.

Across the border in Spain, it's the same story. Firefighters, backed up by helicopters and planes, are fighting a losing battle to bring the flames under control. As the death toll rose to seven, hundreds of people were evacuated from the town of Avila to shelter in a local gym.

"We didn't know what to do," this resident said, whether to stay in the town or leave. There was smoke everywhere. There are fears, too, that, with an even hotter spell threatened, the situation will deteriorate further.

Mark Webster, ITV News.

(END VIDEOTAPE)

DOBBS: Those fires have been fueled by a blistering heat wave that's smothering most of Europe. Temperatures across the continent have hit the highest levels in decades. And there are no signs of relief from those high temperatures any time soon.

Paula Hancocks with the story from London.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): It's all very well if you're a tourist enjoying the sun in Britain, but, if you're a commuter, it's a nightmare. The heat is causing havoc with Britain's public transport system. Many trains have been traveling at half their usual speed over the last couple of days amid concerns that the tracks could buckle in the heat.

VICKY CANN, TRANSPORT 2000: Many passengers are going to be very, very frustrated today, as their journeys are going to be even hotter than they normally would or they are just going to be disrupted because trains have been canceled. Hearing of an excuse like this is not going to cut much ice with them.

HANCOCKS: Britain could challenge its record temperature this Wednesday. Germany is also approaching its record of 40 degrees centigrade hit back in 1983. While the children may enjoy it, animals in Frankfurt Zoo are seeking the shade. Some zoos are giving ice lollies with rosemary in to help cool down their tigers. And the Moscow Zoo gave its polar bears a special treat to keep cool, an artificial snow machine.

France's record of 44 degrees Celsius, hit in 1923, could be safe. But the temperature for the capital is currently a third higher than the norm.

UNIDENTIFIED MALE: It's OK if you're on holiday, but I would not like to be working in this weather.

HANCOCKS: Italy has been suffering blackouts for a few weeks, the heat affecting the cities the most.

UNIDENTIFIED MALE: It's not raining. Energy consumption (INAUDIBLE) A lot of people is using the air conditioning, which didn't happen so often in the past. Air conditioning is not so common in Italy as maybe in the United States.

HANCOCKS: Weather forecasters are predicting Europe's heat wave will last at least for the rest of the week.

Paula Hancocks, CNN.

(END VIDEOTAPE)

DOBBS: Turning to a developing story in this country, a crucial debate is under way tonight, with a vote to come very soon, a vote that could tear apart the Episcopal Church. That vote was to have ended at 6:00 Eastern tonight, but the debate is continuing. Church officials are now deciding whether Reverend Gene Robinson will become the church's first openly gay bishop.

Jeff Flock is in Minneapolis and has the latest for us -- Jeff.

JEFF FLOCK, CNN CHICAGO BUREAU CHIEF: Lou, you're absolutely right. It was to have been done by now, but the vote hasn't even begun.

They're debating, as you say, the fate of Gene Robinson, this man who would be the bishop of New Hampshire. I want to show you some pictures of him today, as he came for a brief time to this session, did not address the bishops at all. What they did is get a report on these allegations against him. The allegations are twofold: essentially, one, that he had connections to an organization that had a Web site that, if you click on that Web site and click on another Web site that it linked you to another Web site that it linked you to, you got a pornographic Web site, eventually.

They reached the conclusion today that bishop-elect Robinson had not had any connection with that organization since 1998 and had no responsibility for the Web site.

Second allegation: A man said that he had an inappropriate touch from bishop-elect Robinson back in the late 1990s. That was also investigated, and the determination made there that the man in fact was touched at a public event, but, essentially, bishop-elect Robinson put his hand on the man's shoulder as he responded to his question, at one point, putting a hand on the man's arm. Some might perhaps interpret that as that it made him feel uncomfortable, others perhaps not so.

Bishop Scruton of Massachusetts, Bishop Gordon Scruton, reached a conclusion, he said, after having interviewed the man.

(BEGIN VIDEO CLIP) BISHOP GORDON SCRUTON, DIOCESE OF WESTERN MASSACHUSETTS: I asked him again if he wished to proceed to file a written complaint. Again, he indicated that he had no desire to pursue the matter any further. He said he was thankful the church had taken this seriously and that he felt listened to. He also indicated that he was not seeking any personal attention or notoriety and regrets it has been taken this way by some.

(END VIDEO CLIP)

FLOCK: Now, Lou, this vote will be under way by the time your newscast ends tonight. Another hour will go past before they have a result.

And one final note, not that we know how this is going to come out, but the opposition to Bishop Robinson has already made plans for what they plan to do if in fact he's confirmed. They're essentially going to walk out of the convention, go across the street to the Lutheran church and have prayer and perhaps meet with reporters over there. I don't know if that's a metaphor for what's to come with this church, these Episcopalians walking out to the Lutheran church, but perhaps we'll see.

That's the latest from Minneapolis -- back to you.

DOBBS: Jeff Flock, there have been those assembled there who have said that they'll split away from the Episcopal Church if indeed an openly gay bishop is approved by church officials.

FLOCK: And, of course, there were those who said they would split away from the church when they decided to ordain women. And most of those folks came back to the church. So some people think that is the way it will go. But no doubt, there are people that are very upset with this prospect.

DOBBS: Thank you very much, Jeff.

Suspected radical Islamic terrorists today blew up a huge car bomb outside a Marriott hotel in Jakarta, Indonesia; 14 people were killed in the explosion; 150 people were wounded, two of them Americans. There is speculation the bombing is related to last year's attack on a Bali nightclub; 200 people were killed in that terrorist bombing. Police say today's bomb contained some of the same chemicals as the nightclub bomb.

Atika Shubert reports from Jakarta.

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN CORRESPONDENT (voice-over): Indonesia, a target again, this time the J.W. Marriott, an American luxury hotel catering to Indonesia's wealthy elite and international executives.

The attack happened at 12:30 in the afternoon, right in the middle of a busy lunch hour. Police say a car laden with explosives pulled up to the lobby entrance as though to drop off passengers. Instead, it detonated, unleashing a wave of destruction.

"I was just coming back to work when it happened," this woman told us. "I was inside when I heard this huge explosion. I rushed out and saw smoke everywhere. People were lying on the ground unconscious and injured."

Dozens of wounded were rushed to hospitals, many in critical condition, several with severe burns over 90 percent of their bodies. Doctors warn that the death toll is likely to rise. No one has claimed responsibility for the blast. Police have yet to name any suspects. Forensics teams are still sifting through the wreckage for clues.

But for many here, the attack was all too familiar, a frightening repeat of last year's nightclub bombings in Indonesia's resort island of Bali. More than 200 died that night. Police then blamed the Jemaah Islamiyah, an al Qaeda-linked terror network that has sworn to carry out the jihad, or holy war, against Westerners and others they consider to be enemies of Islam.

The timing of the Marriott attack may be significant, just two days before judges handed down the first verdict in the trial of a confessed Bali bomber suspected of being a member of Jemaah Islamiyah. And less than a month after authorities uncovered a huge cache of explosives stashed away by the group, police warned then that Jemaah Islamiyah was planning more attacks and that a number of explosives were yet to be recovered. Investigators say they fear Jemaah Islamiyah may have struck again.

Indonesia's president, Megawati Sukarnoputri, visited the site straight from an emergency Cabinet meeting, attempting to bring some calm to a city on edge.

(on camera): Jakarta is bracing for the possibility of more terrorist attacks. Police are on high alert throughout the city and the country and they warn that the people who carried out today's attack are still at large. People here are frightened that what happened in Jakarta today could happen again.

Atika Shubert, CNN, Jakarta.

(END VIDEOTAPE)

DOBBS: Coming up next: Israel is building a wall to divide the West Bank. Tonight, the White House is weighing its response. Dana Bash will report live from Crawford, Texas.

And American troops hunt international terrorists in Iraq. Defense Secretary Donald Rumsfeld today spoke about the threat from al Qaeda in Iraq and around the world. Pentagon correspondent Barbara Starr will report.

And "The Forgotten War." Tonight, in our series of special reports this week, a war the United States is losing, without question, the war on drugs. Bill Tucker will report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Liberian President Charles Taylor may not, after all, accept an offer to go into exile in Nigeria. Nigerian authorities now say Taylor will leave Liberia only if he is granted immunity from charges of war crimes. Nigerian peacekeeping troops continued to arrive in Liberia today. They are supported by U.S. warships and Marines waiting off the Liberian coast.

A U.S. civilian contractor today was killed in Iraq when a bomb exploded underneath his truck near Tikrit. His name hasn't been released, pending notification of his next of kin. He is the first American to be killed in Iraq since Friday.

Defense Secretary Donald Rumsfeld today responded to questions about al Qaeda terrorists in Iraq and other countries.

Pentagon correspondent Barbara Starr joins me now with the story -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, a lot of discussion at the Pentagon today about whether the al Qaeda is again raising its head, of course, in a week now when we've seen that bombing in Indonesia that may be tied to an al Qaeda-related group, when we've seen the tape from Ayman Al-Zawahri, a close associate of Osama bin Laden, and when indeed Defense Secretary Donald Rumsfeld said today it is still the belief of the U.S. intelligence community that there have been and continue to be al Qaeda-related groups inside Iraq, possibly behind some of the attacks on U.S. soldiers.

Now, the Pentagon estimated, quite interestingly, that perhaps 500 al Qaeda members have now been seized on the Pakistan side of the border, near Afghanistan, the area where everyone does believe that Osama bin Laden may be hiding out, if indeed he is still alive. But what about the rest of the al Qaeda organization? Well, intelligence officials, of course, now confirming that they do believe there are a handful of senior al Qaeda members inside Iran, that Iran says they have detained these people.

But it's not terribly clear whether Iran is really stopping them from their activities. One of the key people the U.S. watching there is a man named Saif Al-Adel, a top al Qaeda leader. This man is someone close to bin Laden in the past, someone believed to be a top planner, who may still be operating from Iran, Defense Secretary Donald Rumsfeld today acknowledging a lot of discouragement about whether the U.S. will ever get these people from the Iranians.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: To the extent that they're, in one way or another, not being allowed to function and operate out of there, that's better. To the extent they would be handed over to us, it would be excellent. The chances of that happening apparently are about zero.

(END VIDEO CLIP)

STARR: We also asked the secretary how he views all of these tapes, these audiotapes that keep turning up every few days. He said he wasn't really terribly concerned about those. He views those as promotional and recruiting tools by these organizations. And, fundamentally, he said not terribly important -- Lou.

DOBBS: Not terribly important, perhaps, Barbara, but they do reflect strongly on the fact that Osama bin Laden and Saddam Hussein remain at large, unaccounted for. What is Rumsfeld's reaction to that?

STARR: Well, on the question of Saddam, now, his view is, they are getting close, but he is very cautious. He says they'll get -- they'll get him when they get him.

The question that the Pentagon knows it's going to have to answer in the days ahead is how many days military officials will be able to say they are tightening the noose. That's been going on for several days now. So they are hopeful that some of the intelligence they're getting about Saddam will lead them to him quite soon. They believe they are getting close to the people who virtually stand right next to him, the people who are actually protecting him. They want to take away that last layer. They think they'll get him then.

On the question of bin Laden, there are no easy answers, Lou. We asked about that today. We were told they're still looking for him, but they had nothing new to report.

DOBBS: Barbara, thank you very much -- Barbara Starr from the Pentagon.

The White House today strongly condemned the terrorist bombing in Indonesia. The White House called the explosion a deplorable attack on innocent civilians. President Bush is also focusing on the Middle East. He's considering how to respond if Israel continues to build a wall between Israelis and Palestinians in the West Bank.

White House correspondent Dana Bash reports from near the president's ranch in Crawford, Texas.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): Israelis say constructing a fence through the West Bank is essential for their security. The president calls the structure unhelpful.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think the wall is a problem.

BASH: And now administration sources are making known, there are active internal discussions about reducing $9 billion in Israeli loan guarantees to show U.S. displeasure. White House officials insist, however, no decision has been made.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We have expressed our concerns to the Israelis about the fence.

BASH: In a White House meeting late last month, National Security Adviser Condoleezza Rice urged Israel to halt construction of the fence, citing Palestinian concerns. Prime Minister Sharon refused to stop construction, but agreed to rethink its route.

ARIEL SHARON, ISRAELI PRIME MINISTER: The security fence will continue to be built, with every effort to minimize the infringement on the daily life of the Palestinian population.

BASH: Loan guarantees to Israel have been in dispute before. The president's father held up $10 billion in loan guarantees in the early '90s because of clashes with Israel over settlements, marking a low point in U.S.-Israel relations.

This President Bush has enjoyed good relations with Israel and its prime minister, particularly on issues of security. The fence has proven a key test to that relationship, as Mr. Bush pushes the road map for peace. While some in the administration suggest the threat of withholding money could pressure Israeli, others call the public discussion premature and even unhelpful.

MCCLELLAN: We'll continue to talk directly with the Israelis. The president committed to an open dialogue on this issue, as well as many other issues.

(END VIDEOTAPE)

BASH: And some administration critics are calling any threat of cutting off aid to Israel a heavy-handed tactic. And, Lou, this issue could come up tonight here in Crawford, because Secretary of State Colin Powell arrived here just a few hours ago for meetings with the president at his ranch -- Lou.

DOBBS: Dana, thank you very much -- Dana Bash reporting live from near Crawford, Texas.

That brings us to the question of our poll tonight. Should the United States cut aid to Israel if Israel continues to build that wall? Yes, no or maybe? Cast your vote at CNN.com/Lou. We'll have the results later in the show.

The final results of yesterday's poll, the question, should the United States be doing more to win the war on drugs? Twenty-five percent of you said yes; 71 percent said no; 4 percent said maybe.

Turning now to stocks, discouraging news from the Labor Department sent Wall Street tumbling today. The Dow fell almost 150 points. The Nasdaq down 40. The S&P down 17.

Christine Romans is here with what turned out to be a slaughter.

CHRISTINE ROMANS, CNN CORRESPONDENT: It really did.

And the selling really kicked in, in the last 20 minutes or half- hour or so of trading today. And the markets ended near their lows of the session, made it the worst drop, Lou, for the Dow since May 19. Now, investors shrugged off a strong service sector report and focused on higher interest rates and signs of rising layoffs. Challenger, Gray & Christmas reported layoff announcements rose 43 percent in July from June, more than 85,000 more job cuts planned by companies.

You usually don't see that kind of job cutting in July. Also, Ralph Acampora at Prudential says the internals of this market, Lou, are tired. Almost as many stocks hit 52-week lows today as new highs. That's a far cry from the triple-digit new highs we saw in early June. General Electric was the most active Big Board stock, down 2 percent on news it's going to beef up its consumer lending business in a $5 billion deal with Aegon.

Costco fell 19 percent. It warned because of higher health care costs. Cisco fell 2 percent ahead of its earnings report. And after the bell, Cisco said profit rose, but its sales fell 3 percent. Now, 85 percent of the S&P 500 companies have reported, Lou. Earnings up almost 9 percent, revenue up about 7 percent from a year ago.

DOBBS: So strong results so far.

ROMANS: So far.

DOBBS: And we're almost through.

ROMANS: Almost done.

DOBBS: And dividends?

ROMANS: Dividends; 44 companies in the S&P 500 raised their dividends in July. You usually see that happen in the beginning of the year and the end of the year. Today, we heard from Waste Management and Hershey, both of them raising their dividends.

DOBBS: Christine Romans, thank you.

ROMANS: You're welcome.

DOBBS: Continuing; Kobe Bryant goes to court. Gary Tuchman will have a live report for us on the latest charges, the frenzy surrounding the case, all live from Colorado.

And "The Forgotten War," the war on drugs. Tonight, in our series of special reports: how the United States is losing the war. Bill Tucker will report.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up next: Governor Gray Davis is fighting to save his job and his political hide. And he may be doing it without the support of the Democratic Party. Senior political analyst Bill Schneider will have that live story for us from California next.

(COMMERCIAL BREAK) DOBBS: NBA superstar Kobe Bryant makes his first appearance in court tomorrow on felony sexual assault charges. The judge in that case ruled late yesterday that television cameras will be allowed inside the courtroom. But the judge has yet to decide on whether to unseal critical documents.

Gary Tuchman joins us now with a live report from Eagle, Colorado -- Gary.

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Lou, hello to you.

Virtually no on the record information has been released in this case, and that's just the way the district attorney and defense attorneys like it. But the news media have asked the judge in this case to release some of the case files, saying it's public record.

And that judge in this case, Frederick Gannett, tells us that he will make a decision on that, but probably not until the week of August 18. He says first he'll preside over the initial hearing tomorrow. Then he'll take a week of vacation. And then Judge Gannett says he'll work on deciding whether public information should be made available.

Now Judge Gannett tells us this hearing tomorrow, this initial court hearing for Kobe Bryant, will probably only last five or 10 minutes. One would find it hard to believe that this many lawyers involved in anything could be that quick. But he says it will be quick. It's a procedural hearing. He says Kobe Bryant will likely not even talk, will not issue a plea of any kind, will be told what his rights are, what the charges are, and then a date will likely be set for a preliminary hearing, which will be very important, because during that preliminary hearing, prosecutors will be obliged to publicly say what some of their evidence is and the judge will then determine if there is probable cause for this case to continue.

Now, Judge Gannett's a very interesting guy. He tells us that he's a basketball fan. Not an NBA fan necessarily, but a recreational basketball fan. He says he played for many years. But he says he's had seven knee surgeries, so he's kind of given up the game and is now just golfing here in Colorado.

We do want to tell you, inside this courthouse, the courtroom where this hearing will be, is very small. Only 68 seats for spectators. And of those 68 seats, only 22 will be available for the news media. We're expecting hundreds of members of the news media to be here. So obviously not all will be able to go inside. So they've actually set up an overflow tent next to the courthouse with TV sets, where most of the journalists , who will watch it on TV, just like you viewers out there.

Lou, back to you.

DOBBS: Gary, thank you very much. Gary Tuchman reporting live from Eagle, Colorado. And Gary, as you say, we will be covering the hearing live here on CNN scheduled to begin at 6:00 Eastern. We will also be talking with CNN legal analyst Jeffrey Toobin to assess case and we'll be talking with a number of experts about what all of the fascination with Kobe Bryant and this case suggests about our society and our culture here tomorrow night.

Tonight's quote is a somewhat cynical view of the Kobe Bryant scandal. It is not inspirational but it is certainly, as they say, worth thinking about. "From a business perspective, it's great for the NBA. It's reality television. People love train-wreck television and you hate to admit it, but that's the truth. That's the reality today." That from the owner of the Dallas Mavericks, Mark Cuban.

Coming up next here, going color blind in California. Casey Wian reports on a controversial proposal that has to do with race, reporting and politics.

And it is the race of his lifetime for Governor Gray Davis. He could be fighting it without the support of many of his fellow Democrats. Our senior political analyst Bill Schneider will join us from Los Angeles next.

(COMMERCIAL BREAK)

DOBBS: This week, we are reporting on "The Forgotten War," the war against drugs.

Secretary of State Colin Powell has recommended that the United States resume its backing of anti-drug flights over Colombia. Reuters quotes unnamed administration officials who say President Bush is likely to approve the recommendation.

Those flights were halted two years ago after an aircraft carrying a U.S. missionary was shot down in Peru. It had been mistaken for a drug running plane.

Last night here, we reported on efforts to control the international supply of drugs before they enter this country. Tonight, we report on what's being done to stop drugs produced in this country as we continue our series of special reports, "The Forgotten War."

Bill -- Bill Tucker has the report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNNfn CORRESPONDENT (voice-over): The United States is losing the war on drugs. Even if the country succeeded in cutting off the flow of all illegal drugs from outside the country tomorrow, there would still be a growing drug problem in America.

Marijuana use is rising. According to the latest statistics, more than 9 percent used marijuana at least once in 2001. That is up 8 percent from a year earlier. Domestically grown marijuana sells for anywhere from $1,000 to $4,000 per pound, according to the Drug Enforcement Agency.

SCOTT BURNS, DFO OF NATL. DRUG CONTROL POLICY: This is not the marijuana of 20 years ago. This is not 1 percent ditch weed. This is 8 to 15 percent THC-level marijuana with as high as 30 percent.

TUCKER: Mobile methamphetamine labs are producing a readily supply of cheaply and easily made meth to meet a growing demand. Abuse of narcotic prescription pain relievers also on the rise, with nearly 4 percent of the population admitting they have misused prescription narcotic drugs.

The National Drug Intelligence Center estimates that 28.5 million Americans used an illicit drug in 2001. The war is being waged and lost. But few will admit it.

TIMOTHY LYNCH, CATO INSTITUTE: There is this political dynamic in Washington, D.C. where no politician wants to get the blame for having supported a policy that is not working. Unlike in the private sector where if something is not working, a business firm will quickly go out of business, in Washington, D.C., if something is not working, the idea is to throw more money at the problem. And that's what we've seen in Washington for the past 10 to 15 years.

TUCKER: The cost is staggering. The federal government spends $1 billion a month to fight the war on drugs, but users spend more, six times more, almost $6 billion a month to buy drugs.

The Substance Abuse and Mental Health Services Administration puts the cost to the economy and to lives at roughly $284 billion. But that's just the financial side of the ledger.

DR. H. WESLEY CLARK, CTR. FOR SUBSTANCE ABUSE TREATMENT: When you see people give up careers because of drugs, when you see mothers abandon their children because of drugs, when you see doctors and lawyers and engineers walk away from their careers because of drugs, then that gives you the -- shall we say, more up-close and personal story.

(END VIDEOTAPE)

TUCKER: Which is why some argue that the focus of the war on drugs should be targeted more on care and treatment if we are to make meaningful progress in solving the national drug problem, Lou.

DOBBS: Now there seemed to be a lot of ideas and a lot of experts. Meanwhile, we're losing the war and losing it badly. Bill Tucker, thank you very much.

TUCKER: Thank you.

DOBBS: Tomorrow we continue the series of special reports on "The Forgotten War." We report on the efforts to reduce the demand for drugs in this country. We'll be joined by former national drug control director, William Bennett.

Next, big foundations using a loophole to combine their expenses and their grant dollars. Peter Viles will report. Congressman Harold Ford of Tennessee wants to stop this and encourage more charitable giving. He's our guest next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A movement is under way on Capitol Hill to make private foundations give more of their money to charity. In a moment, I'll be talking with Congressman Harold Ford. He is among those leading this effort.

But first, that proposal could pop billions of dollars into charities right away, at a time of great need. Peter Viles has the report.

(BEGIN VIDEOTAPE)

PETER VILES, CNNfn CORRESPONDENT (voice-over): Between a soft economy and corporate belt-tightening, America's charities are being squeezed. And now Congress is debating a surprisingly simple solution. Why not use the tax code to shake more money out of big foundations? Current IRS rules require non-profit, non-operating foundations to spend 5 percent of their assets every year. But not all of it has to go to charities. They can count their own overhead, including salaries, toward the 5 percent.

Enter, Congressman Harold Ford of Tennessee and Roy Blunt of Missouri. Their proposal would require that all 5 percent go to charity. The estimated impact, at least $3 billion a year in new giving to charities.

SLOAN WIESEN, NATIONAL COMMITTEE FOR RESPONSIVE PHILANTHROPY: It would provide billions of dollars in new grant money annually to charities that are in need. At the same time, it would allow foundations to sustain themselves for the long haul, and it would encourage greater foundation efficiency. So on the whole, we believe that it's a very sensible proposal.

VILES: A common sense idea which in Washington means that there is strong opposition to it.

DOT RIDINGS, COUNCIL ON FOUNDATIONS: That assumes that the only thing that foundations do is give away money. And indeed, a lot of things are not only equivalent to money but much more highly prized by a lot of charities, such as bringing them together to talk about best practices, any communication that a foundation does with the public, the oversight, the evaluation, bringing grantees together to talk about their best practices and learn from each other. All those things are administrative expenses.

(END VIDEOTAPE)

VILES: No one is telling the foundations that they have to lower the salaries or fees they pay to their directors and trustees. Just that those expenses shouldn't count toward meeting their minimum charitable activities -- Lou.

DOBBS: And the largest charities, the largest foundations in this country are the greatest offenders. VILES: Sure.

DOBBS: On combining overhead and grant dollars.

VILES: Sure. The Ford Foundation, a $9 billion foundation, the government says you need to give away roughly half a billion every year. Almost $100 million of that, almost $100 million of that is overhead.

DOBBS: It's really every institution, the first cause becomes perpetuating itself, I guess. Peter Viles, thank you very much.

Well, joining me now is one of the two men in Congress who are leading the fight to help a few people out and to straighten out the reasoning amongst some foundations. We're joined now by Congressman Harold Ford of Tennessee, joins us from New Orleans tonight.

REP. HAROLD FORD (D), TENNESSEE: Thanks for having me on, Mr. Dobbs.

DOBBS: This is a remarkable proposal, as Peter Viles reported, first because it looks like it would work, it has some considerable support, and because it is so reasonable and needed at this particular point. You're getting a lot of flak from the foundations themselves. How are you going to resolve it?

FORD: You know, it has a very simple intent. I think your story explained it. It's all an effort to try to get charities to give more to charitable causes. The 5 percent payout is probably a reasonable number, in the suggested charities across the country, particularly when we know that over the last 20 years, charities have earned -- I should say foundations have earned some 7.5 if not a little higher yield on their investments. To ask that 5 percent of those payments go to charities and charitable causes at a time in which Americans' willingness to give is high but their ability to give has been impacted by a slowed economy. I think it's a smart proposal and one that I hope we can, once we explain it fully, will enjoy broad support in the Congress.

DOBBS: Give us your sense of that support within Congress itself right now, Congressman.

FORD: I think many of my colleagues are undergoing a -- I should say, receiving a turn (ph) of criticism from good foundations and good people across the nation, particularly those who run these foundations. But upon second look, I think all of them come to realize that this is really a reasonable and sensible proposal that won't put anyone out of business that's operating efficiently at this point.

There is no doubt there is components of this bill that will improve efficiency and accountability, and demand it in a lot ways from foundations. It's important to note that the vast majority of foundations are not opposing this. The vast majority support it, because there are three or four other components to this bill that actually would increase giving from those who are able to give $250 or as an individual, you get an above the line deduction, and those $500, couples will get the same kind of deduction.

So you'll see an increase in giving and you'll see an increase on the part of seeing improved capacity on the part of foundations to make a difference in homes and neighborhoods and communities all across this nation.

DOBBS: Congressman, how do you respond to the Council of Foundations speaking for many foundations who do oppose your legislation, saying that they give expertise, that it's very important for their institutions, their foundations to be around, because they're showering benevolence and best practices upon the world?

FORD: In a lot of ways, they're doing -- accomplishing a lot of those things. But nothing in this bill would stop it. Every study we've seen from the Council on Foundations, from the National Committee for Responsive Philanthropy, have all shown that over the last 25 years many of these foundations have earned an addition of 7.5 percent return on their investments. This is just a 5 percent guarantee that your payout will go to charitable -- or I should say charitable causes, and we've learned that on average, foundations spend less than .5 percent on overhead. So 5 percent plus .5 percent -- we in Congress aren't great at math, but I know that's less than the 7.5 percent return they're getting on their investment.

I think this is easily achievable by many of our foundations, and I might add, there is a real willingness on our part, and I think I speak safely for my good friend Roy Blunt who is at home recovering, God bless you, and I hope you recover soon, my friend, to work with all of our friends in the philanthropy community, to try to make this thing work, and more importantly, to try to help the kids and the seniors and those who are suffering from illnesses receive the great vital services that many foundations across this country are providing.

DOBBS: We extend our best wishes along with yours to Congressman Blunt, the majority whip in the House, who is the co-sponsor of this legislation with you. And Congressman, I want to just say, we appreciate you taking the time and creating a little provocative thought for those foundations to chew over.

FORD: You said $3 billion. It's really $4.3 billion, our estimates show, that this will free up right away for charitable causes all across the country.

DOBBS: We took the lower of the estimates that we had from a number of sources, Congressman. We're perfectly willing to...

FORD: I'm a Democrat. We take the highest number oftentimes.

DOBBS: Congressman, we thank you very much.

FORD: Thank you.

DOBBS: Congressman Harold Ford.

Tonight's thought on the value of a vote. "To make democracy work, we must be a nation of participants, not simply observers. One who does not vote has no right to complain." That is from my very favorite western author, Louis L'Amour.

A reminder now to vote in tonight poll. The question -- should United States cut aid to Israel if Israel continues to build the wall against the wishes of the Bush administration? Yes, no, or maybe. Cast your vote at cnn.com/lou.

We'll have the results later in the show.

Coming up next, the color of politics. A controversial proposition in California calls for race not to be considered. Casey Wian will have that story for us from Los Angeles, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Californians are certainly not strangers to controversial ballot measures, and this fall, they have a beauty. In addition to the recall of Governor Gray Davis, this proposal would prevent California from collecting any racial data on its citizens. Imagine that.

Casey Wian, with the story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Proposition 54 would stop California state and local agencies from asking people to check little boxes identifying their racial or ethnic background. And would prevent the use of racial data in public education contracting or employment. It allows race to be used in medical research and to identify criminal suspects. Supporters of the racial privacy initiative say it would move the state a step closer to a color blind society. They're led by, Ward Connerly, the California University regent who in 1996 successfully backed proposition 209 prohibiting state sponsored affirmative action. So far, polls show likely voters favor the initiative by 50 percent to 29 percent. Though 21 percent are undecided.

MARK DICAMILLO, DIRECTOR, THE FIELD POLL: Whites are clearly the most supportive. They're behind it by greater than a 2 to 1 margin. But the subjects to watch will be the ethnic minority voters, the Latinos and blacks and Asians in this early poll were about evenly divided on the measure.

WIAN: Opponents such as Governor Gray Davis and the ACLU are having trouble swaying voters. Groups such as the Mexican-American legal defense and education fund call the initiative misleading and a barrier to minority assistance programs.

VICTOR VIRAMONTES, MALFDEF: You think that when your race becomes private or people don't know about it, then you're going to be subject to less discrimination. And so, that's a superficial appeal. We've got to explain to the voters this is about restricting information, doesn't do anything to end discrimination, and in many ways might hide it so we wouldn't know how well third graders are learning to read or graduation rates across different races.

(END VIDEOTAPE)

WIAN: Despite warnings the proposition would harm minority interests, it's been largely overshadowed by the recall facing Governor Davis. Only 25 percent of likely voters are familiar with the measure. Proposition 54 is likely to be helped by the recall campaign against Gray Davis. Voters who want Davis out of office also tend to support the racial privacy initiative. And they're the ones expected to turn out in relatively big numbers this October -- Lou.

DOBBS: Californians with a lot to consider this fall. Thank you very much, Casey Wian from Los Angeles.

Well, Governor Gray Davis has more problems than just angry voters. Now his own party is beginning to bail on him. Bill Schneider joins us now from Los Angeles and has the story for us -- Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, Lou, welcome to the circus. People from California are waiting until the Saturday deadline with great anticipation to see who is going to run for governor in addition to Gray Davis whose recall is the first question on the ballot. In particular, they're waiting to hear from three important candidates. Arnold Schwarzenegger says tomorrow he'll make his decision known. He's going to issue a written statement and then he's going to appear on the "Jay Leno Show."

If he does not run, which is what expected at this point, his good Friend, Richard Reardon, the moderate Republican former mayor of Los Angeles says he may get into the race. The biggest of the big feet to drop in this race would be Dianne Feinstein. A lot of Democrats are nervous they bet -- the Democrats are betting everything on the Gray Davis recall. They're saying that they're going to stand behind Gray Davis and support his retention as governor. Some Democrats are saying, wait a minute. What if the voters vote to recall him? There is no Democrat on the ballot to replace him. So a lot of Democrats are beginning to say, we should have a good Democrat on that ballot, and they're trying to urge Dianne Feinstein, the senator from California, a moderate Democrat, very popular, most popular politician in California to run to save the Democratic party.

DOBBS: Senator Barbara Boxer, Bill, has said outright, if it looks like he's behind in the polls, the Democrats ought to step in with new candidates.

SCHNEIDER: That's what they're talking about right now. The question is will the Democrats break ranks. They're looking carefully at the polls. Particularly if Richard Reardon decides to get in, he very tough contender. A lot of Democrats will vote for him because he's a moderate Republican. And then if he gets in, I think this we may see Democrats begin to break ranks. If that happens, Gray Davis will be toast.

Bill Schneider from Los Angeles tonight, thank you.

Still ahead here the preliminary results of "Tonight's Poll." Your e-mails on our special report, "The Forgotten War."

And, the possibility of the Episcopal church accepting an openly gay bishop. Next.

(COMMERCIAL BREAK)

DOBBS: Coming up, we've had an overwhelming response to our series of special reports on the forgotten war, the war on drugs that we're losing. We'll share some of your thoughts when we continue. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The preliminary results of tonight's poll, the question, should the United States cut off aid to Israel if Israel continues to build the wall? Sixty-nine percent of you said, yes, 29 percent say, no, 1 percent says, maybe.

Taking a look at some your thoughts, many of you wrote in about our series of special reports on the war on drugs. What we're calling forgotten war. Nearly all of you say we are losing the war on drugs and losing badly. And that's what the evidence shows as well.

William Harvey Hunter of Arden, North Carolina wrote, "I think the government should quit doing what it's doing and start doing what it takes to bring drug use and traffic under control. Namely, legalize it and tax it."

Todd Outlaw of Houston said, "Each time I hear that our government has declared a war on drugs I have to laugh. Our government can't even keep the drugs out of our prisons. You know, the big building with the high fences, barbed-wires, and armed guards."

Toni Boutwell of South Carolina said, "The drug war is a lost cause. The demand is here and every time the government tries to close one door, three others open. We waste too much money, time and lives trying to stop the unstoppable."

Matthew Harris of value Valparaiso, Indiana, says, "We would be better off spending our money on drug treatment and protecting our borders than spending money in foreign countries. How can we rationalize $12 billion per year to fight drug use and not afford a prescription drug plan for our seniors?"

Jim Hiigel of Hermiston, Oregon says, "The DEA has claimed progress in the war on drugs every year for 30 years. Maybe they could give my dog pointers on finally catching his tail."

Many of you also concerned about the debate over the first openly gay bishop in the Episcopal church.

Dick Doner wrote, "I have been a church-attending Episcopalian for 65 years and can state categorically that if a priest was in an open sexual relationship with a person of the opposite sex, outside of marriage, he or she would not even be considered as a candidate for bishop."

Carol Madison of Windsor, Colorado, said, "I'm a heterosexual lady who's been happily married for 19 years and appalled by this last minute assassination of a good man by a creep who's looking for his 15 seconds of fame."

We thank you for your thoughts. We always love hearing from you. E-mail us at loudobbs@cnn.com.

That's our show for tonight. Thanks for being with us.

Tomorrow in our series of special reports, "The Forgotten War." We look at why too many Americans just can't say no to drugs. And the man behind the "Just Say No" campaign, William Bennett, joins us.

For all of here, good night from New York.

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