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Lou Dobbs Tonight

White House Feud?; Rush Limbaugh Admits Painkiller Addiction; Condoleezza Rice To Head Rebuilding Of Iraq

Aired October 10, 2003 - 18:00   ET

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

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


ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, October 10. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.

Tonight, uncompromising words from Vice President Dick Cheney, the vice president resolute in his defense of the war against Saddam Hussein and radical Islamists. This latest salvo in the administration's escalating public relations offensive, however, does very little to disguise what appears to be a significant rift in the president's national security team.

At issue, reports on fundamental disagreements between Secretary of Defense Donald Rumsfeld and National Security Adviser Condoleezza Rice. Their differences are provoking speculation about Secretary Rumsfeld's future in the administration.

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

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, on a week when the White House wanted to get control of the Iraq problem, it appears there was nothing but problems, a week full of political infighting throughout the administration, and, as you say, today, a story in one of the New York papers indicating that President Bush is unhappy his national security team.

Now, true or not, that's not the kind of news that White House likes to see and certainly not the kind of news that Defense Secretary Donald Rumsfeld here at the Pentagon wants to deal with. Now, Rumsfeld aides today say he's not paying any attention to any of this, that he's moving forward.

But the well-known political operative David Gergen had plenty to say today about Donald Rumsfeld's future.

(BEGIN VIDEO CLIP)

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: I believe the president will stand by him through the remainder of this term. It would be a blow to the president, and I think an admission that he does not want to make, that things have gone more badly off the track in Iraq than anybody in the administration is now willing to acknowledge.

Will there be a new team in the second term? I think that is likely in the second term. But I think Don Rumsfeld will choose to leave on his own timetable.

(END VIDEO CLIP)

STARR: Now, Dave Gergen is a guy who knows Washington very well. And, at the end of the week, the question is, is Rumsfeld the winner or loser against Condoleezza Rice and this new program at the White House to put more control in the National Security Council over the rebuilding, reconstruction of Iraq?

Well, there's no real answer to that yet, Lou, because it's going to be one of testing the waters. Don Rumsfeld's aides say he is still in charge. The White House has publicly said that Don Rumsfeld remains in charge of the Pentagon issues involving this war. It's going to be an issue of when Condoleezza Rice decides, officials say, to exercise her authority and whether she is challenged by Rumsfeld.

But, at the end of the day, at the end of this very difficult political week for the White House and for the Pentagon, it appears that the two issues, money, how much Iraq is costing, and politics, the impact on the president's political standing, is driving as much of the issue as the security issues in Iraq -- Lou.

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

The White House insists Secretary Rumsfeld is doing an outstanding job, but, noticeably, Vice President Dick Cheney in his speech today did not mention Secretary Rumsfeld's contribution to the war against Saddam Hussein. The vice president said the United States still faces enemies who want to kill hundreds of thousands of Americans.

White House Suzanne Malveaux has the report -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, it really seems very much like the same speech, almost recycled.

We have seen different many members of the administration coming forward, making the case for postwar Iraq. But what was significant today was the fact that it was Vice President Dick Cheney. The reason why is because Democrats and many critics really saw him as the one who was pushing for the military action, that he was the one discouraging, getting involved with the U.N. Security Council and the one that was exaggerating intelligence to make the case for war.

Well, Cheney coming out very strong today before a friendly audience, the Heritage Foundation, a conservative think tank, saying, quite frankly, that the policy of international consensus conveniently amounts to a policy of doing exactly nothing. Those were his words, an all-or-nothing policy.

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Even as more evidence is found of Saddam's weapons program, critics of our actions in Iraq continue to voice other objections. And the arguments they make are helping to frame the most important debate of the post-9/11 era.

Some claim we should not have acted because the threat from Saddam Hussein was not imminent. Yet, as the president has said, since when have terrorists and tyrants announced their intentions, politely putting us on notice before they strike?

(END VIDEO CLIP)

MALVEAUX: And, of course, this campaign is going to continue throughout the weeks. We expect that we are also going to hear President Bush again and again making his case for a postwar Iraq, for the success stories.

Also, as Barbara had mentioned before, of course, this tug of war. Dr. Rice has a big job on her hands when she deals with Secretary Powell, Secretary Rumsfeld, of course, what some refer to as the elephants in the room. Of course, they have a difference of opinion on some of these matters.

In some ways, she has a great deal of power, bringing all of these agencies together, these various opinions; on the other hand, Congress making it very clear that she has a powerful, but limited role, in saying that they will not have someone administer the finances of the Iraqi reconstruction effort, at least not someone who won't go before Congress to testify. That would be Rumsfeld or Powell -- Lou.

DOBBS: Condoleezza Rice's role there, Suzanne, saying, at least publicly, that Donald Rumsfeld is in charge, saying that Condoleezza Rice is there to bring more voices together and take charge of Iraq. What is the staff saying? This looks like, first, really bad management, and, secondly, embarrassingly bad management.

MALVEAUX: Well, in terms of public relations, it has not been a good week for the White House. As you know, usually, they can keep things pretty tight, at least the disagreements.

But President Bush, a lot of others as well, saying that, yes, that it's often and it's not even rare that Dr. Rice would have Powell, as well as Rumsfeld in the same room, and that they would have quite -- be in a bit -- strong disagreements over these issues. But, at the same time, it is not usual that this comes out, that it leaks out into the public. This is something they are certainly trying to get their hands on.

It is really one of the main reasons why you see this big public relations push to make sure that the message is unified.

DOBBS: Suzanne, thank you -- Suzanne Malveaux from the White House.

Well, it's reasonable to think that the State Department would be playing a leading role in the reconstruction of Iraq, perhaps even the leading role. But critics such as author Mowbray say the State Department is often this country's worst enemy. Joel Mowbray will be joining me later to talk about his new book, "Dangerous Diplomacy." As the bureaucrat battles go on in Washington, the war in I goes on as well. Terrorists tilled two American soldiers and wounded four others in an ambush in Baghdad. The military said the soldiers were attacked after they were asked to provide humanitarian assistance.

Central Command today said 326 Americans have now been killed in Iraq; 206 troops have been killed action, 120 in accidents. Another 1,793 have been wounded or injured, more than 1,400 of them wounded in hostile fire.

The military today charged a Muslim chaplain in the U.S. Army with two counts of disobeying orders for mishandling classified information. Captain James Yee has been held for nearly a month on suspicion of espionage and aiding al Qaeda and Taliban prisoners in the U.S. Naval base at Guantanamo Bay, Cuba. Yee is one of three former workers at the base who are being investigated for possible spying and treason.

New developments in the bizarre case of an FBI bug found in the office of the mayor of Philadelphia, John Street. Mayor Street claimed that, despite the bug, authorities told him he was not under investigation. However, new information tonight that indicates that may not be the case.

Jason Carroll joins me now and has the latest for us -- Jason.

JASON CARROLL, CNN CORRESPONDENT: New developments on this one each day, Lou.

Federal government sources tell CNN that Mayor John Street is indeed the subject of a federal investigation, although, at this point, it is unclear what that investigation is all about. An aide close to the mayor calls the investigation -- quote -- "total political bull," saying it's just nothing more than a fishing expedition. The major says the only thing he's been told is that he is not a target of an investigation.

According to the Justice Department, a target is a person who prosecutors have evidence linked to a crime. A subject is a person whose conduct is within the scope of the investigation. The U.S. attorney and the FBI in Philadelphia still refuse to publicly clarify what the focus of the case is. And legal experts say, that's exactly what they should be doing.

(BEGIN VIDEO CLIP)

DANIEL MILLER, FORMER FEDERAL PROSECUTOR: In America, generally, when the government makes allegations, it has to be ready to go into court and defend them. If you are not ready to make those allegations, you shouldn't make them and you won't be obliged to go into court or in any formal process to back up those allegations. That's why silence really is golden when you are a prosecutor.

(END VIDEO CLIP)

CARROLL: A federal judge and Justice Department headquarters are required to approve the planting of any wiretap. But federal law enforcement sources tell CNN, Attorney General John Ashcroft and his top aides were not involved in the decision to bug Mayor Street just weeks before an election -- Lou.

DOBBS: This investigation, which now Mayor Street appears to be at least part, if not the target, is there any reason to expect that we are going to hear anything from either the U.S. attorney's office, the Justice Department in the coming days?

CARROLL: Well, certainly a good question, Lou.

I know that there is pressure from not only Democrats, but Republicans as well, asking either someone from the U.S. attorney's office or from the FBI to come forward and say something to clarify exactly what's going on.

DOBBS: Nearly every elected official in the state of Pennsylvania seeking that.

Jason, thanks a lot -- Jason Carroll.

Still ahead here: an astonishing admission by the conservative talk show host Rush Limbaugh about his use of painkillers. Dr. Karen Miotto, the clinical psychiatrist and addiction expert, will be joining us. And author Joel Mowbray has launched a strong attack against the U.S. State Department in his new book, "Dangerous Diplomacy." He is our guest next.

And in "News Makers" tonight, the editors of the country's leading business magazines are here to talk about movie star politics, corporate corruption, a rising stock market, and the American dream.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The State Department is supposed to represent this country's best interests around the world. But the author of a highly critical new book entitled "Dangerous Diplomacy" says the State Department is often America's worst enemy.

The author is Joel Mowbray. He joins me now -- Joel Mowbray.

I will correct that miss pronunciation before you do. Thank you, Joel, for being here.

JOEL MOWBRAY, AUTHOR, "DANGEROUS DIPLOMACY": Thank you for having me.

DOBBS: The failures of the State Department, particularly in the Middle East, are reasonably well documented. But why do you go to such lengths to criticize them across the board?

MOWBRAY: Because the patterns that you see that caused The problems in the Middle East were also prevalent in areas from things such child abduction to arms controls to visa. The State Department has a twin obsession with stability and with making friends. So they want the world to look as it always has. And they want everyone to like them, so that people sit down at the negotiating table with them.

DOBBS: You assert a case for stability meaning the support of dictators in totalitarian and oppressive governments.

MOWBRAY: Right.

DOBBS: You focus principally, again, on Saudi Arabia.

MOWBRAY: Right.

DOBBS: You don't see a change right now in the relationship, in the view in the part of the State Department, and particularly in the Near East desk, which is responsible for Saudi Arabia, toward Saudi Arabia?

MOWBRAY: I don't for the simple reason I look at the history.

Saudi Arabia is only the most recent in a long line of Middle Eastern countries. Take a look back at Iraq. There's the historical legend that we titled towards Saddam because of the Iran-Iraq war. Partially true. But what the real truth is, is that the State Department curried favor with Saddam much more after the end of the Iran-Iraq war and after the gassing of the Kurds.

And as perverse as this sounds, because of the gassing of the Kurds, they forged closer alliances with Saddam, because they felt, if they didn't, that he would be eaten alive by the international community, after killing 100,000 of his own people in August of 1988.

And then look at the Taliban. The State Department didn't learn its lesson from what it did in Iraq. They embraced the Taliban. The United States, because of the State Department, was one of for governments on Earth that did not recognize the fallen Rabbani regime, the moderate Muslim government toppled by the Taliban. The other three were the United Arab Emirates, Pakistan and Saudi Arabia.

DOBBS: And, in 1988, in the case of Iraq, you point out that we came dangerously close to making a severe mistake. How did that come about?

MOWBRAY: Well, what happened was, Saddam has placed an order for 1.5 million militarized atropine injectors. These are things that allow you to inoculate yourself against nerve gas. So it can be used..

DOBBS: Some of which were found by U.S. forces in Iraq at the end of the war against them -- or major combat operations, as we now are instructed to say.

(CROSSTALK)

MOWBRAY: Well, atropine injectors can be defensive.

But if you have the atropine injectors in the same hands of the people who have the nerve gas, they can become offensive, because then the soldiers use nerve gas with relative impunity. Saddam placed an order for 1.5 million atropine injectors. And he came within a few days of actually getting the order filled and sent to him. The only reason he didn't is because -- and the State Department wanted the order to go through, but "The Washington Post" ran the story on Halabja, the first Kurdish village where 5,000 Kurds were gassed and killed in a single day in March of 1988.

DOBBS: Your reporting on visa express led to some significant changes in the way in which Saudi citizens were allowed to get visas to enter this country, the firing of one State Department official.

(CROSSTALK)

DOBBS: This secretary of state is a remarkably accomplished man, a distinguished career, both in military and public service. Is he capable, is any man capable, of changing -- or woman -- changing this department's attitude and bureaucratic conduct?

MOWBRAY: It's very difficult. The secretary of state does not even have the authority to fire a convicted felon.

Now, Secretary Shultz under Ronald Reagan used to have a very simple thing he used to try for a reform measure. When newly appointed diplomats would come into his office for the obligatory grip-and-grin, he would walk them over to his desk, where there was a globe. He would spin the globe around. And he would say, now point to your country.

And the statesman would invariably point to Spain or Thailand, to which Secretary Shultz would say, no, point to your country, reminding them where their true loyalties lie.

DOBBS: Joel Mowbray, thank you very much. The book is "Dangerous Diplomacy."

MOWBRAY: Thank you.

DOBBS: Coming up next here: A former Mister Universe is now tackling the problems of California. We will be talking with the editors of the nation's three leading business magazines about that and other stories from this extraordinary week.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Democrats seeking their party's presidential nomination made Iraq one of the top issues in their debate in Phoenix, Arizona, last night, the event designed to showcase their command of complex policy issues. But between swipes at the Bush administration, the debate also had a few lighter moments.

(BEGIN VIDEO CLIP)

AL SHARPTON (D), PRESIDENTIAL CANDIDATE: We are 48 hours away from watching an actor that couldn't win an Oscar win to be the governor of California.

(LAUGHTER)

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: If you want to live like a Republican, you got to vote for the Democrats. And we have proven it over and over again.

(APPLAUSE)

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I want this president to explain to the American people why a multimillionaire sitting by the swimming pool getting his statement each month to see how much money he's making is paying a lower tax rate than a schoolteacher, a firefighter, a secretary.

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: I think there's a fundamental difference between Republicans and Democrats on this issue, because it's simply true. The Republicans do like weapons systems and Democrats like people.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: What I want to come back to, there are two ways for you to have lower prescription drug costs. One is, you could hire Rush Limbaugh's housekeeper.

(LAUGHTER)

(APPLAUSE)

KERRY: Or you could elect me president of the United States.

SEN. JOSEPH LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: I promise you immigration reform, earned right to legalization for undocumented immigrants, temporary worker permits, and an end to the limits, the inhumane limits on family reunification.

REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: All immigrants ought to have the right to be able to gain amnesty, legalization, be protected by the Fair Labor Standards Act, just as all workers in this country ought to be protected that way.

(END VIDEO CLIP)

DOBBS: Well, the debate aside, and including, of course, the debate, it's been a remarkable news week. The people of California elected a movie star to be their next governor. The stock market hit new highs. And the trials of two alleged corporate criminals began with some startling revelations.

Joining me now are the editors of the three leading magazines in the country, Steve Shepard, editor in chief of "BusinessWeek," Bill Powell, senior writer at "Fortune," Steve Forbes, editor in chief of a magazine called "Forbes."

Thank you all for being here.

(CROSSTALK) DOBBS: Let me turn first to you, Steve.

The Democratic debate, we were watching nine candidates, Dems in the desert, as we were framing it. Did you learn anything? Is there anything possible that can come from this engagement of so many personalities in such a small amount of time?

STEVE SHEPARD, EDITOR IN CHIEF, "BUSINESSWEEK": Well, what I learned is that they are afraid of Wesley Clark. And I think the criticism that he was once a Republican won't hold any water, because Ronald Reagan was once a Democrat. So I think they are afraid of him. I think he's gathering some steam. That's what I learned.

DOBBS: And he's leading in the polls.

SHEPARD: Yes. But I don't think that one learns a lot about substance in a meaningful way.

DOBBS: Bill?

BILL POWELL, SENIOR WRITER, "FORTUNE": I think that's right. I think they are trying to cut Clark off at the pass, as it were.

But the national polls are misleading, though, Lou, as you know. He's not leading in Iowa and he's not leading New Hampshire. And if he doesn't then do well in South Carolina, if he doesn't win or at least place...

DOBBS: All politics is first local.

POWELL: Oh, absolutely.

Then you really have to ask yourself, despite the national polls, where does Wes Clark fit in? Where does he win? I don't see it.

DOBBS: Steve, they are after Wes Clark now. They were after Howard Dean. Who...

STEVE FORBES, EDITOR IN CHIEF, "FORBES": Well, that's normal.

I must confess, I did something constructive last night. I watched the Yankee-Red Sol game instead of the debate, learned a lot more there. But in terms of the debate itself, it's the accumulation of these debates where people really get some firm impressions, not just one debate in itself.

DOBBS: Who won the debate?

(CROSSTALK)

FORBES: Well, I think Kerry seemed to have done fairly well. And the fact that Clark got attacked is a sign that I think his support is going to wither. He does not have the base that a Howard Dean has. And it's going to show.

DOBBS: Do you think the fact he was attacked suggests he's going to wither. It doesn't suggest to you that's he a pretty strong puppy on the porch?

FORBES: No, because it suggests that he has a temporary lead, but he does not have the firm base that's going to be able to withstand these kind of attacks.

DOBBS: John Kerry won, in your view.

Bill, your view?

POWELL: I think Howard Dean almost by default, because he's no longer the subject of these attacks. He was not the subject of the ire. Wes Clark was.

SHEPARD: I don't think anybody wins. What you look for is if somebody is going to lose by making a gaffe or sounding particularly silly. And I don't think that happened. So we didn't learn a heck of a lot new.

(CROSSTALK)

FORBES: Actually, it was the debate before this that Kerry put himself back on the map again. He was in danger of fading away. And now he's a candidate again.

DOBBS: Well, by golly, we know who won in California.

FORBES: Big time.

DOBBS: And he won despite the revelations by "The New York Times" -- excuse me -- "The Los Angeles Times," a crowded field, if we can call 135 candidates a crowded field. Were you surprised?

SHEPARD: No. A little bit by the margin, perhaps. And I think it helps that he got more votes than the governor almost -- didn't get in the recall. So he has a little bit more claim to legitimacy than he would have had. But I think people expected him to win, so I wasn't surprised by that.

DOBBS: Were you surprised by the percentage of the Latino vote, Bill, that he received in that election, also the number of women?

POWELL: Also the women. Yes, absolutely, on both counts. If you combine the vote that he got and Tom McClintock got for both women and Latinos, I think it's over 50 percent of the women. And that is -- well, for the Republican Party, that's very encouraging news.

FORBES: It seems that the last-minute attacks on his alleged behavior backfired. People thought this was just Davis smear politics as usual. And I think it rallied support around Schwarzenegger. And I think it strengthened his hand when dealing with the Democrat legislature, because then he can say, if you don't pass my reform packages, I will go to the voters again in March and we'll pass it by referendum. You guys have lost your legitimacy.

DOBBS: Already, the governor-elect has ordered an audit of the books in California, which is sort of interesting, and bringing in, in fact Governor Jeb Bush of Florida, his budget expert.

FORBES: Good supply-side budget director.

DOBBS: Well, supply-side shouldn't influence the budget itself, should it, Steve?

FORBES: That's how you get the budget to grow, get the revenues in.

(CROSSTALK)

SHEPARD: Well, the problem here is, the ballot initiatives mandate something like 70 percent of the spending in the budget. And it only takes 50 percent of the voters to pass some spending initiative.

(CROSSTALK)

SHEPARD: It takes a supermajority of two-thirds to bray some revenue to pay for this spending that the voters seem to want. That's the fundamental problem in California. And Schwarzenegger is somehow going to have to deal with that.

POWELL: And none of that changed because of the election.

(CROSSTALK)

DOBBS: Well, there are some fundamental issues facing this economy and this president right now. And we want to come back and get your views, gentlemen, on those important issues.

We are going to take just a quick break. We will continue with "News Makers" in just a moment.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: We're back with our "News Makers."

Bill Powell, I want to turn to you.

This administration launching a major offensive, P.R. offensive, on Iraq. Is it working?

POWELL: I think it's too soon to tell.

But I think it's about time that they started to fire back, basically, because a lot of what they say, frankly, is -- there's some legitimacy to. Most of Iraq is a little bit better now than it was under Saddam Hussein. That's true. It doesn't take away from the fact that Baghdad and the Sunni Triangle is still a real problem.

But to the extent that they can get that side of the story out, it's very important. It's a story that people need to hear. DOBBS: A story we are not hearing the precise measure of. And that is this obvious rift between Secretary of Defense Rumsfeld, Condoleezza Rice and within the administration. What do you make of it, Steve?

FORBES: I think it's normal within administrations. It's one reason why we didn't go into Iraq sooner after the Afghan war in 2001, was the rift between State and Defense. And now we have it between Defense and Condoleezza Rice.

DOBBS: If this were a syllogism, a logic construction, what would be the common variable there? It's defense. And Rumsfeld appears to be upsetting a lot of powerful here, very powerful people.

FORBES: When things don't go as you expected, after the victory in that war, you have the president go on an aircraft carrier and proclaim that, virtually, the thing is over and not prepare people for what was going to happen in the aftermath.

DOBBS: Do you think that come out of defense or did that come out of his communications?

FORBES: Ironically, the Defense Department I think was more right than the State Department. State lagged in putting Iraqis in charge. State lagged in doing the de-Baathification of the country. But Rumsfeld is the one who is getting the hit for it.

SHEPARD: Well, there's still the question of whether it was proper to go in to do a preemptive war on a unilateral basis, when we haven't found weapons of mass destruction and there's no hard evidence that there was a link to any terrorist group. That's what they are going to ultimately have to answer for.

It does help if things get better, obviously. But, in the end, people are still going to ask the question, was this war necessary?

DOBBS: Was it necessary? But in the context of this rift within the administration, is it time for people to sort of examine the idea that it's been Secretary of Defense Rumsfeld saying how many troops are needed in Iraq rather than a secretary of defense being told what the policy is, what the standards are, the values that will be put into effect, and then achieving, executing those policies?

This is a remarkable position for a secretary of defense to be in, is it not?

SHEPARD: Well, we are supposed to have civilian control of the military, if that's what you mean. Yes, he's the chief policy-maker. Of course, we don't know what's going on behind the scenes with Cheney and the president. So I think that he has a lot to say, Cheney, but he's not out front on it.

FORBES: Well, let's be blunt. The White House has not been out front explaining to the American people the overall picture, the moral necessity of doing what we are doing in Iraq. And there's no way the defense secretary can move in that vacuum effectively. The president has got to do it.

POWELL: And Colin Powell would help on that score. He would help. If his voice were added to that mix, he's a very effective voice.

DOBBS: State, however, is being criticized. We just had Joel Mowbray here, "Dangerous Diplomacy" the book. My gosh, this is one criticism after another of State. It's coming within the party, not from without. The partisan rancor, you expect.

This is an administration which has held information tightly and closely. And, obviously, there's a rift between intelligence and the administration. There's an obvious rift amongst the Cabinet heads, or Cabinet secretaries, and Condoleezza Rice. This looks serious.

FORBES: This is serious, in the sense that the president has to establish policy.

Going back to the beginnings of the Republican, you had Hamilton and Jefferson at each other's throat. But, at the end of the day, Washington made policy. And this president, the White House, has got to do the same thing, punish those in CIA who are trying to subvert his policy, make it clear what your policy is.

(CROSSTALK)

DOBBS: Well, first, they have got to find out who is leaking the names of CIA operatives or officers.

FORBES: And they've got to make clear what the policy is, so that they can root them out.

SHEPARD: In the end, nothing succeeds like success. And if the policy works in Iraq and we pacify the country and get it back on its feet, it will seem to be successful. And all these intramural battles will be for nothing.

DOBBS: I think that's an interesting piece of counsel to the administration, Steve. And, as you say, the issue of policy, there's been no enunciation of policy by either the president or any one of his Cabinet secretaries about what post-Saddam Iraq should look like, other than what was stated at the beginning.

And that is, they're going to democratize not only Iraq, but the Middle East. This administration has not, at least -- you can't accuse it of setting modest goals.

Steve, Bill, Steve, thank you very much, as always.

(CROSSTALK)

DOBBS: Turning to Rush Limbaugh, Rush Limbaugh today announced he is addicted to prescription pain medication and he says he will check himself into a rehab facility. On his radio program, Limbaugh said he began taking prescription pain pills some years ago, following spinal surgery. Limbaugh has decided it is time to take action. (BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

RUSH LIMBAUGH, HOST: Immediately following this broadcast, I will check myself into a treatment center for the next 30 days to once and for all break the hold that this highly addictive medication has on me.

(END VIDEO CLIP)

DOBBS: This is Limbaugh's third time to go into rehab.

Joining me now to discuss this issue is Dr. Karen Miotto. She is an addiction expert, associate clinical professor of psychiatry at UCLA.

Doctor, good to have you with us.

DR. KAREN MIOTTO, UCLA: Thank you.

DOBBS: The painkillers, I will tell you at the outset, I was one of those people, when the story first broke, who said, I can't imagine Rush Limbaugh taking this kind of medication, because the man carries out a very difficult radio show, conducts himself superbly every day. Whether you agree or disagree with his politics, he's doing an incredible job as the host of that broadcast.

How could he function with an addiction like this?

MIOTTO: People who take opiates regularly can function. Whether they take them for pain or if they are addicted to them, they have cycles where they are more impaired or less impaired. But, certainly, people can function on this type of drug or medication.

DOBBS: This type of drug is OxyContin. It must be powerfully addictive. Is that correct?

MIOTTO: It has negative and positive reinforcement. The positive reinforcement are the effects. But when you try to stop, there's the withdrawal sickness that is a powerful negative reinforcement.

DOBBS: So it is fully a narcotic, as we laypeople would understand it?

MIOTTO: Yes, a narcotic with an addiction potential.

DOBBS: And the fact that he is addicted, checking in for a third time to try to break this habit of this drug and perhaps others, what are the odds of success?

MIOTTO: Addiction is a chronic relapsing disease. So his success goes up with his effort and his duration in treatment. But it is a relapsing disease, so it will require ongoing effort.

DOBBS: He took this drug, started taking this drug, Limbaugh says, after spinal surgery, obviously still some pain. He has had other medical problems, his hearing, for example. What can he do at this point, if he does have chronic pain, requires some relief from them and still must get away from this terrible narcotic?

MIOTTO: That's the difficult dilemma. Can he use narcotics without having problematic use? And, for some people, the answer is yes. But others really end up suffering with pain and addiction and have to find other sources to treat their pain.

DOBBS: Doctor, abuse of this drug, OxyContin and others, is relatively limited, because it isn't across the whole spectrum of our society. There's also abuse of alcohol and, of course, alcoholism. How does this drug compare to others, to alcohol, in terms of its actual impact as an addictive agent on people in the country?

MIOTTO: Well, some say that it's the hidden epidemic, because people do often obtain the medication initially from doctors. They are embarrassed about their problem. They don't seek treatment until much later in their addiction. So it's probably less in magnitude, but just as severe in consequences as alcoholism.

DOBBS: And one of the issues here -- and the doctors that we talked with today, Dr. Miotto -- is -- one of those doctors said that he was concerned because this drug does wonderful things for patients who need the drug, who are in pain and are having medical treatment and who have been properly and legally prescribed to take the medicine.

This doctor said he hates to hear something like this that's happened to Rush Limbaugh, because the predilection amongst American doctors today is not to give them sufficient pain medication. Is that your judgment as well.

MIOTTO: Well, undertreatment of pain is a terrible problem in the country. And the medical community has actually addressed this. And so I think it's terrible, because it may contribute to the undertreatment of pain, but also hopeful other people will come forward who have problematic prescription or pain medication use and seek treatment as well.

DOBBS: Dr. Miotto, we thank you very much for being with us -- Dr. Karen Miotto from UCLA. We thank you very much.

MIOTTO: Thank you.

DOBBS: Coming up next, our special report, "The Great American Giveaway." Kitty Pilgrim will report on how much money this country spends each year feeding the world -- that and a great deal more still ahead.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: We continue tonight our series of special reports, "The Great American Giveaway." This country spends more than $1 billion a year to deliver food to hungry people all over the globe. That amounts to about two-thirds of all international food aid.

Kitty Pilgrim is here now and has the report -- Kitty.

PILGRIM: Lou, in addition to U.S. government giving, the United States is one of the largest contributors to the World Food Program, which fed more than 70 (sic) people in 82 countries last year.

And there's also a plan to create a $200 million famine fund to deal with famine in developing countries.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Fourteen thousand tons of grain are being loaded onto the Doris Guenther for the second U.S. government food aid voyage this year, all marked with a prominent USA label. The ship leaves Houston tomorrow, traveling to the West Coast of Africa, with delivery for five destinations, Senegal, Ivory Coast, Ghana, Benin, and Congo.

Captain Ronald Gomez has been delivering aid for 17 years.

CAPTAIN RONALD GOMEZ, DORIS GUENTHER: There's a lot of people milling around the dock. And They're just looking at us. They just want to get a look at us.

PILGRIM: Gomez loves the work and has seen quite a few recipient countries.

GOMEZ: The areas of the world have changed. It used to be Central and South America. Now we see a lot more going to Africa and countries of -- a couple years ago, it was North Korea.

PILGRIM: More than 40 million people in sub-Saharan Africa are faced with starvation, according to the World Food Program. The United States provided more than 70 percent of financial commodity donations last year. But it's not just Africa.

ANDREW NATSIOS, USAID ADMINISTRATOR: We provided a lot of food to the poor of North Korea. And there are bags that have the American flag on them. And, in Korean, it says "gift of the American people." And if you talk to the refugees crossing the border, as I have, into China, they will say: The American people saved us from dying of starvation.

PILGRIM: USAID has been boosting food donations over the years, from $835 million worth in 2001 to some $1.2 billion next year.

The U.S. Department of Agriculture also sends food aid, some $600 million worth last year.

(END VIDEOTAPE)

PILGRIM: USAID points to Iraq as one of the most recent success force. More than 430 million worth of food was channeled through U.N. agencies. They call it the largest food aid mobilization and distribution operation in its history -- Lou. DOBBS: Kitty, thanks -- Kitty Pilgrim.

Well, "Exporting America" tonight. The United States' trade deficit with China widened to a record $11.7 billion in August. So far this year, the trade deficit with China is running more than 20 percent higher than a year ago. Imports from China continue to rise, as we've reported extensively on this show. And American jobs are continuing to be exported overseas.

My guest says the exportation of labor overseas can help, however, the U.S. economy. Diana Farrell is the director of the McKinsey Global Institute, which just completed a study on the subject, and joins us tonight from San Francisco.

Good to have you with us.

DIANA FARRELL, DIRECTOR, MCKINSEY GLOBAL INSTITUTE: Thank you very much.

DOBBS: The idea of a study on exporting and the relationship of outsourcing, to benefits to the American economy, many people see that as counterintuitive. What is the basic finding of your study?

FARRELL: The basic finding of our study is that the process offshoring, which has gotten a lot of publicity of date, is yet another example of the integration of the developed and developing worlds into one more richer global economy and that this represents a win-win situation for both sides.

DOBBS: A win-win situation? But the primary motivation for American corporations sending those jobs overseas, is it not, is to avail themselves of low-cost foreign labor?

FARRELL: It would probably be helpful to take a moment, as we did over the course of the study, which is parts of the McKinsey Global Institute's mission, to inform national and international policy by providing a fact base to very difficult and heated debates, like this one.

And what we tried to do was to take a dollar currently being spent in the U.S. economy and track down what happens to that dollar over time. And the first thing that happens to that dollar is, before there is any notion of offshoring it, is that the companies can provide and get a basket of goods and services for that dollar.

Now, when they choose to offshore that to another location, they continue to receive that basket of goods and services. But now, in addition, they have 58 cents of savings.

(CROSSTALK)

DOBBS: And where do the savings come from, Diana?

FARRELL: The savings come from lower-cost labor. They come from being able to do operations differently. But the bulk of that is really lower costs. (CROSSTALK)

DOBBS: What percentage of the 58-cents improvement is, if you will, on the back of an American job? That is

(CROSSTALK)

DOBBS: I understand the metrics that you are using. I understand even the expression that you are drawing here, higher bang for the buck. You can frame it a number of ways. But the bottom line is, you are talking about, instead of higher productivity, clever marketing, bright, driven strategies on the part of corporate America, you are being paid money by corporate -- corporations to advise them to do something brilliant, which is, look for a lower cost of labor, when this economy is supposed to be all about driving productivity and using technology to improve productivity, right?

(CROSSTALK)

FARRELL: Let me come back to what happens to that 58 cents.

Those are, in effect savings for the economy. And several things can happen with those savings. Thing one is that the companies who obtain those savings can now reinvest them into new ventures, into new ideas, which, in many cases, lead to job growth here and in other places as well. They can also lead to money for investors who own the stock of these companies. And, by and large, most of the households in this economy own stock.

And the profitability or the savings that companies can achieve make their ways into people's portfolios, saving for retirement, saving for the college fund of their children. And so, in some senses, the process of saving for the economy is a positive process for the economy as a whole. We are able to generate -- in fact, it is a method of achieving higher productivity. By shedding lower-valued activities, we are able to deploy and find jobs in higher-valued activities.

(CROSSTALK)

DOBBS: Diana, let me ask you this. What would be a higher-value activity, as you put it, or a higher-paying job in this country than, say, engineering, technology? What would be higher than those? Because those are jobs that are being exported overseas.

FARRELL: Some of those jobs are being exported overseas.

And yet, if you look at the pool of jobs that are being -- the majority of these jobs, they are in call center operations. They are in back office operations. And these tend to be jobs to date that have had a pretty migratory work force in the U.S. They don't have them in India.

(CROSSTALK)

DOBBS: I understand, not in India. And is McKinsey, for example, recommending to its clients that it export jobs to India, China, to some other nation? Let's say those jobs are documentation. Are they suggesting legal work? Are they suggesting engineering, work with CAD, with other high-end technology jobs? Or are you simply recommending call centers?

FARRELL: Let's come back to the bigger picture here, because I think it's important to put all of this in perspective.

The McKinsey Global Institute certainly takes advantage of the insight, knowledge and work that the entire consulting arm of McKinsey does. But our objective is to inform a very difficult and public debate at the moment. The reason it's a difficult debate is because there are some people who are being hit disproportionately hard. There's no question about it.

And if you are one of those folks that has lost their job, this is a difficult time. And no amount of economists telling you that this is an overall good thing for the economy is going to make that pain go away. However, our objective is to help us, all of us, corporate leaders, national leaders, policy-makers, understand the forest for the trees, to understand what is the overall impact of this, and, just as you had in previous years...

(CROSSTALK)

FARRELL: Let me just finish this

(CROSSTALK)

DOBBS: Certainly.

FARRELL: In previous generations, trade displacement, to a lot of pain and to a long-term gain, we now have the same sort of thing happening in services.

And I think the exciting part and part of what we write and find, in our perspective, is that the savings opportunities for the economy are so large, that it opens up opportunities for experimenting to try to alleviate the short-term pain for some of those people that get displaced, in the form of, for example, the kind of insurance ideas that Robert Litan and Lori Kletzer have been putting forth.

DOBBS: Diana Farrell, McKinsey, we thank you very much for being with us.

Can I ask you one thing, though?

FARRELL: Sure.

DOBBS: Does McKinsey recommend exporting those jobs in those categories that I just suggested? Just answer.

FARRELL: McKinsey works with companies all over the world to improve the performance of companies.

DOBBS: Is that a no or a yes? Or which is it closer to?

FARRELL: Let me just say that we work with executives to improve the performance. And to the extent that that involves making decisions that would help save money for the company, we will help accomplish that.

DOBBS: Terrific. McKinsey and Diana Farrell, we thank you very much for being here.

FARRELL: Thank you.

DOBBS: "Exporting America" is the topic of our poll question tonight. What do you believe is the driving factor behind the outsourcing of American jobs overseas, competitiveness, lower labor costs, bad trade agreements, corporate greed? Cast your vote at CNN.com/Lou. We will have the results for you coming up.

Still ahead tonight: This week marks one full year for a new bull market. Christine Romans will have that for us.

We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight.

The question: what do you believe is the driving factor behind the outsourcing of American jobs overseas. Five percent of you said competitiveness; 18 percent of you said lower labor costs; 8 percent said bad trade agreements; 72 percent just decided to say corporate greed.

On Wall Street, stocks finishing little changed on the day, the Dow down five points, the Nasdaq up 3, the S&P down two-thirds of a point. That's barely a budge, as we call it on Wall Street.

Christine Romans is here with the market for us.

CHRISTINE ROMANS, CNN CORRESPONDENT: But the week wasn't bad, the Dow and the S&P up about 1 percent, the Nasdaq up almost 2 percent. And it was two week higher in the row.

Optimism about earnings fueling the gain, Lou. Next week, 110 S&P 500 companies will report. And they're likely show more than 16 percent profit growth, fourth-quarter forecasts even better; 43 S&P 500 companies reported this week showing profit growth so far of 17 percent.

One of them, General Electric. Today, GE reported profit, 40 cents, down 2 percent. It trimmed its fourth-quarter targets and announced it's largest international purchase, $9.5 billion for Amersham, a biotech company, GE shares falling about 3 point today.

The stock exchange disclosed pay figures for two more of its executives, chief operating officers. Robert Britz and Catherine Kinney each made $2.7 million in salary and bonus last year. Each is eligible for a retirement payout of at least $22 million, the disclosure just a day after a report on the compensation of American Stock Exchange's chairman. A memo obtained by Reuters system says Salvatore Sodano took home $4.4 million last year and has more than $12 million in retirement benefits.

Now, two developments in the executive on trial file. Securities regulators have filed suit against Jack Waksal, father of jailed former CEO Sam Waksal. Patti Waksal, sister of Sam, daughter of Jack, has also been named in that suit. According to the SEC, Sam Waksal told his father about a upcoming negative regulatory decision on the company's cancer drug, Erbitux. We all know this story. Jack Waksal allegedly dumped $8 million in ImClone stock before it plugged on that tip.

And then also, Frank Quattrone, former star investment banker at CSFB, took the stand in his defense again today. Some interesting e- mails, at least painting picture of Wall Street the way it used to be, Frank Quattrone asking Michael Dell if he had any concerns or had any input into who would be named the next P.C. analyst over there.

DOBBS: These trials will go on.

ROMANS: They will.

DOBBS: All right, thank you.

That's our show for tonight. Thanks for being with us. For all of us here, a quick good night from New York. We wish you a very pleasure weekend.

END

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Addiction; Condoleezza Rice To Head Rebuilding Of Iraq>


Aired October 10, 2003 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, October 10. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.

Tonight, uncompromising words from Vice President Dick Cheney, the vice president resolute in his defense of the war against Saddam Hussein and radical Islamists. This latest salvo in the administration's escalating public relations offensive, however, does very little to disguise what appears to be a significant rift in the president's national security team.

At issue, reports on fundamental disagreements between Secretary of Defense Donald Rumsfeld and National Security Adviser Condoleezza Rice. Their differences are provoking speculation about Secretary Rumsfeld's future in the administration.

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

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, on a week when the White House wanted to get control of the Iraq problem, it appears there was nothing but problems, a week full of political infighting throughout the administration, and, as you say, today, a story in one of the New York papers indicating that President Bush is unhappy his national security team.

Now, true or not, that's not the kind of news that White House likes to see and certainly not the kind of news that Defense Secretary Donald Rumsfeld here at the Pentagon wants to deal with. Now, Rumsfeld aides today say he's not paying any attention to any of this, that he's moving forward.

But the well-known political operative David Gergen had plenty to say today about Donald Rumsfeld's future.

(BEGIN VIDEO CLIP)

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: I believe the president will stand by him through the remainder of this term. It would be a blow to the president, and I think an admission that he does not want to make, that things have gone more badly off the track in Iraq than anybody in the administration is now willing to acknowledge.

Will there be a new team in the second term? I think that is likely in the second term. But I think Don Rumsfeld will choose to leave on his own timetable.

(END VIDEO CLIP)

STARR: Now, Dave Gergen is a guy who knows Washington very well. And, at the end of the week, the question is, is Rumsfeld the winner or loser against Condoleezza Rice and this new program at the White House to put more control in the National Security Council over the rebuilding, reconstruction of Iraq?

Well, there's no real answer to that yet, Lou, because it's going to be one of testing the waters. Don Rumsfeld's aides say he is still in charge. The White House has publicly said that Don Rumsfeld remains in charge of the Pentagon issues involving this war. It's going to be an issue of when Condoleezza Rice decides, officials say, to exercise her authority and whether she is challenged by Rumsfeld.

But, at the end of the day, at the end of this very difficult political week for the White House and for the Pentagon, it appears that the two issues, money, how much Iraq is costing, and politics, the impact on the president's political standing, is driving as much of the issue as the security issues in Iraq -- Lou.

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

The White House insists Secretary Rumsfeld is doing an outstanding job, but, noticeably, Vice President Dick Cheney in his speech today did not mention Secretary Rumsfeld's contribution to the war against Saddam Hussein. The vice president said the United States still faces enemies who want to kill hundreds of thousands of Americans.

White House Suzanne Malveaux has the report -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, it really seems very much like the same speech, almost recycled.

We have seen different many members of the administration coming forward, making the case for postwar Iraq. But what was significant today was the fact that it was Vice President Dick Cheney. The reason why is because Democrats and many critics really saw him as the one who was pushing for the military action, that he was the one discouraging, getting involved with the U.N. Security Council and the one that was exaggerating intelligence to make the case for war.

Well, Cheney coming out very strong today before a friendly audience, the Heritage Foundation, a conservative think tank, saying, quite frankly, that the policy of international consensus conveniently amounts to a policy of doing exactly nothing. Those were his words, an all-or-nothing policy.

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Even as more evidence is found of Saddam's weapons program, critics of our actions in Iraq continue to voice other objections. And the arguments they make are helping to frame the most important debate of the post-9/11 era.

Some claim we should not have acted because the threat from Saddam Hussein was not imminent. Yet, as the president has said, since when have terrorists and tyrants announced their intentions, politely putting us on notice before they strike?

(END VIDEO CLIP)

MALVEAUX: And, of course, this campaign is going to continue throughout the weeks. We expect that we are also going to hear President Bush again and again making his case for a postwar Iraq, for the success stories.

Also, as Barbara had mentioned before, of course, this tug of war. Dr. Rice has a big job on her hands when she deals with Secretary Powell, Secretary Rumsfeld, of course, what some refer to as the elephants in the room. Of course, they have a difference of opinion on some of these matters.

In some ways, she has a great deal of power, bringing all of these agencies together, these various opinions; on the other hand, Congress making it very clear that she has a powerful, but limited role, in saying that they will not have someone administer the finances of the Iraqi reconstruction effort, at least not someone who won't go before Congress to testify. That would be Rumsfeld or Powell -- Lou.

DOBBS: Condoleezza Rice's role there, Suzanne, saying, at least publicly, that Donald Rumsfeld is in charge, saying that Condoleezza Rice is there to bring more voices together and take charge of Iraq. What is the staff saying? This looks like, first, really bad management, and, secondly, embarrassingly bad management.

MALVEAUX: Well, in terms of public relations, it has not been a good week for the White House. As you know, usually, they can keep things pretty tight, at least the disagreements.

But President Bush, a lot of others as well, saying that, yes, that it's often and it's not even rare that Dr. Rice would have Powell, as well as Rumsfeld in the same room, and that they would have quite -- be in a bit -- strong disagreements over these issues. But, at the same time, it is not usual that this comes out, that it leaks out into the public. This is something they are certainly trying to get their hands on.

It is really one of the main reasons why you see this big public relations push to make sure that the message is unified.

DOBBS: Suzanne, thank you -- Suzanne Malveaux from the White House.

Well, it's reasonable to think that the State Department would be playing a leading role in the reconstruction of Iraq, perhaps even the leading role. But critics such as author Mowbray say the State Department is often this country's worst enemy. Joel Mowbray will be joining me later to talk about his new book, "Dangerous Diplomacy." As the bureaucrat battles go on in Washington, the war in I goes on as well. Terrorists tilled two American soldiers and wounded four others in an ambush in Baghdad. The military said the soldiers were attacked after they were asked to provide humanitarian assistance.

Central Command today said 326 Americans have now been killed in Iraq; 206 troops have been killed action, 120 in accidents. Another 1,793 have been wounded or injured, more than 1,400 of them wounded in hostile fire.

The military today charged a Muslim chaplain in the U.S. Army with two counts of disobeying orders for mishandling classified information. Captain James Yee has been held for nearly a month on suspicion of espionage and aiding al Qaeda and Taliban prisoners in the U.S. Naval base at Guantanamo Bay, Cuba. Yee is one of three former workers at the base who are being investigated for possible spying and treason.

New developments in the bizarre case of an FBI bug found in the office of the mayor of Philadelphia, John Street. Mayor Street claimed that, despite the bug, authorities told him he was not under investigation. However, new information tonight that indicates that may not be the case.

Jason Carroll joins me now and has the latest for us -- Jason.

JASON CARROLL, CNN CORRESPONDENT: New developments on this one each day, Lou.

Federal government sources tell CNN that Mayor John Street is indeed the subject of a federal investigation, although, at this point, it is unclear what that investigation is all about. An aide close to the mayor calls the investigation -- quote -- "total political bull," saying it's just nothing more than a fishing expedition. The major says the only thing he's been told is that he is not a target of an investigation.

According to the Justice Department, a target is a person who prosecutors have evidence linked to a crime. A subject is a person whose conduct is within the scope of the investigation. The U.S. attorney and the FBI in Philadelphia still refuse to publicly clarify what the focus of the case is. And legal experts say, that's exactly what they should be doing.

(BEGIN VIDEO CLIP)

DANIEL MILLER, FORMER FEDERAL PROSECUTOR: In America, generally, when the government makes allegations, it has to be ready to go into court and defend them. If you are not ready to make those allegations, you shouldn't make them and you won't be obliged to go into court or in any formal process to back up those allegations. That's why silence really is golden when you are a prosecutor.

(END VIDEO CLIP)

CARROLL: A federal judge and Justice Department headquarters are required to approve the planting of any wiretap. But federal law enforcement sources tell CNN, Attorney General John Ashcroft and his top aides were not involved in the decision to bug Mayor Street just weeks before an election -- Lou.

DOBBS: This investigation, which now Mayor Street appears to be at least part, if not the target, is there any reason to expect that we are going to hear anything from either the U.S. attorney's office, the Justice Department in the coming days?

CARROLL: Well, certainly a good question, Lou.

I know that there is pressure from not only Democrats, but Republicans as well, asking either someone from the U.S. attorney's office or from the FBI to come forward and say something to clarify exactly what's going on.

DOBBS: Nearly every elected official in the state of Pennsylvania seeking that.

Jason, thanks a lot -- Jason Carroll.

Still ahead here: an astonishing admission by the conservative talk show host Rush Limbaugh about his use of painkillers. Dr. Karen Miotto, the clinical psychiatrist and addiction expert, will be joining us. And author Joel Mowbray has launched a strong attack against the U.S. State Department in his new book, "Dangerous Diplomacy." He is our guest next.

And in "News Makers" tonight, the editors of the country's leading business magazines are here to talk about movie star politics, corporate corruption, a rising stock market, and the American dream.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The State Department is supposed to represent this country's best interests around the world. But the author of a highly critical new book entitled "Dangerous Diplomacy" says the State Department is often America's worst enemy.

The author is Joel Mowbray. He joins me now -- Joel Mowbray.

I will correct that miss pronunciation before you do. Thank you, Joel, for being here.

JOEL MOWBRAY, AUTHOR, "DANGEROUS DIPLOMACY": Thank you for having me.

DOBBS: The failures of the State Department, particularly in the Middle East, are reasonably well documented. But why do you go to such lengths to criticize them across the board?

MOWBRAY: Because the patterns that you see that caused The problems in the Middle East were also prevalent in areas from things such child abduction to arms controls to visa. The State Department has a twin obsession with stability and with making friends. So they want the world to look as it always has. And they want everyone to like them, so that people sit down at the negotiating table with them.

DOBBS: You assert a case for stability meaning the support of dictators in totalitarian and oppressive governments.

MOWBRAY: Right.

DOBBS: You focus principally, again, on Saudi Arabia.

MOWBRAY: Right.

DOBBS: You don't see a change right now in the relationship, in the view in the part of the State Department, and particularly in the Near East desk, which is responsible for Saudi Arabia, toward Saudi Arabia?

MOWBRAY: I don't for the simple reason I look at the history.

Saudi Arabia is only the most recent in a long line of Middle Eastern countries. Take a look back at Iraq. There's the historical legend that we titled towards Saddam because of the Iran-Iraq war. Partially true. But what the real truth is, is that the State Department curried favor with Saddam much more after the end of the Iran-Iraq war and after the gassing of the Kurds.

And as perverse as this sounds, because of the gassing of the Kurds, they forged closer alliances with Saddam, because they felt, if they didn't, that he would be eaten alive by the international community, after killing 100,000 of his own people in August of 1988.

And then look at the Taliban. The State Department didn't learn its lesson from what it did in Iraq. They embraced the Taliban. The United States, because of the State Department, was one of for governments on Earth that did not recognize the fallen Rabbani regime, the moderate Muslim government toppled by the Taliban. The other three were the United Arab Emirates, Pakistan and Saudi Arabia.

DOBBS: And, in 1988, in the case of Iraq, you point out that we came dangerously close to making a severe mistake. How did that come about?

MOWBRAY: Well, what happened was, Saddam has placed an order for 1.5 million militarized atropine injectors. These are things that allow you to inoculate yourself against nerve gas. So it can be used..

DOBBS: Some of which were found by U.S. forces in Iraq at the end of the war against them -- or major combat operations, as we now are instructed to say.

(CROSSTALK)

MOWBRAY: Well, atropine injectors can be defensive.

But if you have the atropine injectors in the same hands of the people who have the nerve gas, they can become offensive, because then the soldiers use nerve gas with relative impunity. Saddam placed an order for 1.5 million atropine injectors. And he came within a few days of actually getting the order filled and sent to him. The only reason he didn't is because -- and the State Department wanted the order to go through, but "The Washington Post" ran the story on Halabja, the first Kurdish village where 5,000 Kurds were gassed and killed in a single day in March of 1988.

DOBBS: Your reporting on visa express led to some significant changes in the way in which Saudi citizens were allowed to get visas to enter this country, the firing of one State Department official.

(CROSSTALK)

DOBBS: This secretary of state is a remarkably accomplished man, a distinguished career, both in military and public service. Is he capable, is any man capable, of changing -- or woman -- changing this department's attitude and bureaucratic conduct?

MOWBRAY: It's very difficult. The secretary of state does not even have the authority to fire a convicted felon.

Now, Secretary Shultz under Ronald Reagan used to have a very simple thing he used to try for a reform measure. When newly appointed diplomats would come into his office for the obligatory grip-and-grin, he would walk them over to his desk, where there was a globe. He would spin the globe around. And he would say, now point to your country.

And the statesman would invariably point to Spain or Thailand, to which Secretary Shultz would say, no, point to your country, reminding them where their true loyalties lie.

DOBBS: Joel Mowbray, thank you very much. The book is "Dangerous Diplomacy."

MOWBRAY: Thank you.

DOBBS: Coming up next here: A former Mister Universe is now tackling the problems of California. We will be talking with the editors of the nation's three leading business magazines about that and other stories from this extraordinary week.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Democrats seeking their party's presidential nomination made Iraq one of the top issues in their debate in Phoenix, Arizona, last night, the event designed to showcase their command of complex policy issues. But between swipes at the Bush administration, the debate also had a few lighter moments.

(BEGIN VIDEO CLIP)

AL SHARPTON (D), PRESIDENTIAL CANDIDATE: We are 48 hours away from watching an actor that couldn't win an Oscar win to be the governor of California.

(LAUGHTER)

REP. RICHARD GEPHARDT (D-MO), PRESIDENTIAL CANDIDATE: If you want to live like a Republican, you got to vote for the Democrats. And we have proven it over and over again.

(APPLAUSE)

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I want this president to explain to the American people why a multimillionaire sitting by the swimming pool getting his statement each month to see how much money he's making is paying a lower tax rate than a schoolteacher, a firefighter, a secretary.

WESLEY CLARK (D), PRESIDENTIAL CANDIDATE: I think there's a fundamental difference between Republicans and Democrats on this issue, because it's simply true. The Republicans do like weapons systems and Democrats like people.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: What I want to come back to, there are two ways for you to have lower prescription drug costs. One is, you could hire Rush Limbaugh's housekeeper.

(LAUGHTER)

(APPLAUSE)

KERRY: Or you could elect me president of the United States.

SEN. JOSEPH LIEBERMAN (D-CT), PRESIDENTIAL CANDIDATE: I promise you immigration reform, earned right to legalization for undocumented immigrants, temporary worker permits, and an end to the limits, the inhumane limits on family reunification.

REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: All immigrants ought to have the right to be able to gain amnesty, legalization, be protected by the Fair Labor Standards Act, just as all workers in this country ought to be protected that way.

(END VIDEO CLIP)

DOBBS: Well, the debate aside, and including, of course, the debate, it's been a remarkable news week. The people of California elected a movie star to be their next governor. The stock market hit new highs. And the trials of two alleged corporate criminals began with some startling revelations.

Joining me now are the editors of the three leading magazines in the country, Steve Shepard, editor in chief of "BusinessWeek," Bill Powell, senior writer at "Fortune," Steve Forbes, editor in chief of a magazine called "Forbes."

Thank you all for being here.

(CROSSTALK) DOBBS: Let me turn first to you, Steve.

The Democratic debate, we were watching nine candidates, Dems in the desert, as we were framing it. Did you learn anything? Is there anything possible that can come from this engagement of so many personalities in such a small amount of time?

STEVE SHEPARD, EDITOR IN CHIEF, "BUSINESSWEEK": Well, what I learned is that they are afraid of Wesley Clark. And I think the criticism that he was once a Republican won't hold any water, because Ronald Reagan was once a Democrat. So I think they are afraid of him. I think he's gathering some steam. That's what I learned.

DOBBS: And he's leading in the polls.

SHEPARD: Yes. But I don't think that one learns a lot about substance in a meaningful way.

DOBBS: Bill?

BILL POWELL, SENIOR WRITER, "FORTUNE": I think that's right. I think they are trying to cut Clark off at the pass, as it were.

But the national polls are misleading, though, Lou, as you know. He's not leading in Iowa and he's not leading New Hampshire. And if he doesn't then do well in South Carolina, if he doesn't win or at least place...

DOBBS: All politics is first local.

POWELL: Oh, absolutely.

Then you really have to ask yourself, despite the national polls, where does Wes Clark fit in? Where does he win? I don't see it.

DOBBS: Steve, they are after Wes Clark now. They were after Howard Dean. Who...

STEVE FORBES, EDITOR IN CHIEF, "FORBES": Well, that's normal.

I must confess, I did something constructive last night. I watched the Yankee-Red Sol game instead of the debate, learned a lot more there. But in terms of the debate itself, it's the accumulation of these debates where people really get some firm impressions, not just one debate in itself.

DOBBS: Who won the debate?

(CROSSTALK)

FORBES: Well, I think Kerry seemed to have done fairly well. And the fact that Clark got attacked is a sign that I think his support is going to wither. He does not have the base that a Howard Dean has. And it's going to show.

DOBBS: Do you think the fact he was attacked suggests he's going to wither. It doesn't suggest to you that's he a pretty strong puppy on the porch?

FORBES: No, because it suggests that he has a temporary lead, but he does not have the firm base that's going to be able to withstand these kind of attacks.

DOBBS: John Kerry won, in your view.

Bill, your view?

POWELL: I think Howard Dean almost by default, because he's no longer the subject of these attacks. He was not the subject of the ire. Wes Clark was.

SHEPARD: I don't think anybody wins. What you look for is if somebody is going to lose by making a gaffe or sounding particularly silly. And I don't think that happened. So we didn't learn a heck of a lot new.

(CROSSTALK)

FORBES: Actually, it was the debate before this that Kerry put himself back on the map again. He was in danger of fading away. And now he's a candidate again.

DOBBS: Well, by golly, we know who won in California.

FORBES: Big time.

DOBBS: And he won despite the revelations by "The New York Times" -- excuse me -- "The Los Angeles Times," a crowded field, if we can call 135 candidates a crowded field. Were you surprised?

SHEPARD: No. A little bit by the margin, perhaps. And I think it helps that he got more votes than the governor almost -- didn't get in the recall. So he has a little bit more claim to legitimacy than he would have had. But I think people expected him to win, so I wasn't surprised by that.

DOBBS: Were you surprised by the percentage of the Latino vote, Bill, that he received in that election, also the number of women?

POWELL: Also the women. Yes, absolutely, on both counts. If you combine the vote that he got and Tom McClintock got for both women and Latinos, I think it's over 50 percent of the women. And that is -- well, for the Republican Party, that's very encouraging news.

FORBES: It seems that the last-minute attacks on his alleged behavior backfired. People thought this was just Davis smear politics as usual. And I think it rallied support around Schwarzenegger. And I think it strengthened his hand when dealing with the Democrat legislature, because then he can say, if you don't pass my reform packages, I will go to the voters again in March and we'll pass it by referendum. You guys have lost your legitimacy.

DOBBS: Already, the governor-elect has ordered an audit of the books in California, which is sort of interesting, and bringing in, in fact Governor Jeb Bush of Florida, his budget expert.

FORBES: Good supply-side budget director.

DOBBS: Well, supply-side shouldn't influence the budget itself, should it, Steve?

FORBES: That's how you get the budget to grow, get the revenues in.

(CROSSTALK)

SHEPARD: Well, the problem here is, the ballot initiatives mandate something like 70 percent of the spending in the budget. And it only takes 50 percent of the voters to pass some spending initiative.

(CROSSTALK)

SHEPARD: It takes a supermajority of two-thirds to bray some revenue to pay for this spending that the voters seem to want. That's the fundamental problem in California. And Schwarzenegger is somehow going to have to deal with that.

POWELL: And none of that changed because of the election.

(CROSSTALK)

DOBBS: Well, there are some fundamental issues facing this economy and this president right now. And we want to come back and get your views, gentlemen, on those important issues.

We are going to take just a quick break. We will continue with "News Makers" in just a moment.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: We're back with our "News Makers."

Bill Powell, I want to turn to you.

This administration launching a major offensive, P.R. offensive, on Iraq. Is it working?

POWELL: I think it's too soon to tell.

But I think it's about time that they started to fire back, basically, because a lot of what they say, frankly, is -- there's some legitimacy to. Most of Iraq is a little bit better now than it was under Saddam Hussein. That's true. It doesn't take away from the fact that Baghdad and the Sunni Triangle is still a real problem.

But to the extent that they can get that side of the story out, it's very important. It's a story that people need to hear. DOBBS: A story we are not hearing the precise measure of. And that is this obvious rift between Secretary of Defense Rumsfeld, Condoleezza Rice and within the administration. What do you make of it, Steve?

FORBES: I think it's normal within administrations. It's one reason why we didn't go into Iraq sooner after the Afghan war in 2001, was the rift between State and Defense. And now we have it between Defense and Condoleezza Rice.

DOBBS: If this were a syllogism, a logic construction, what would be the common variable there? It's defense. And Rumsfeld appears to be upsetting a lot of powerful here, very powerful people.

FORBES: When things don't go as you expected, after the victory in that war, you have the president go on an aircraft carrier and proclaim that, virtually, the thing is over and not prepare people for what was going to happen in the aftermath.

DOBBS: Do you think that come out of defense or did that come out of his communications?

FORBES: Ironically, the Defense Department I think was more right than the State Department. State lagged in putting Iraqis in charge. State lagged in doing the de-Baathification of the country. But Rumsfeld is the one who is getting the hit for it.

SHEPARD: Well, there's still the question of whether it was proper to go in to do a preemptive war on a unilateral basis, when we haven't found weapons of mass destruction and there's no hard evidence that there was a link to any terrorist group. That's what they are going to ultimately have to answer for.

It does help if things get better, obviously. But, in the end, people are still going to ask the question, was this war necessary?

DOBBS: Was it necessary? But in the context of this rift within the administration, is it time for people to sort of examine the idea that it's been Secretary of Defense Rumsfeld saying how many troops are needed in Iraq rather than a secretary of defense being told what the policy is, what the standards are, the values that will be put into effect, and then achieving, executing those policies?

This is a remarkable position for a secretary of defense to be in, is it not?

SHEPARD: Well, we are supposed to have civilian control of the military, if that's what you mean. Yes, he's the chief policy-maker. Of course, we don't know what's going on behind the scenes with Cheney and the president. So I think that he has a lot to say, Cheney, but he's not out front on it.

FORBES: Well, let's be blunt. The White House has not been out front explaining to the American people the overall picture, the moral necessity of doing what we are doing in Iraq. And there's no way the defense secretary can move in that vacuum effectively. The president has got to do it.

POWELL: And Colin Powell would help on that score. He would help. If his voice were added to that mix, he's a very effective voice.

DOBBS: State, however, is being criticized. We just had Joel Mowbray here, "Dangerous Diplomacy" the book. My gosh, this is one criticism after another of State. It's coming within the party, not from without. The partisan rancor, you expect.

This is an administration which has held information tightly and closely. And, obviously, there's a rift between intelligence and the administration. There's an obvious rift amongst the Cabinet heads, or Cabinet secretaries, and Condoleezza Rice. This looks serious.

FORBES: This is serious, in the sense that the president has to establish policy.

Going back to the beginnings of the Republican, you had Hamilton and Jefferson at each other's throat. But, at the end of the day, Washington made policy. And this president, the White House, has got to do the same thing, punish those in CIA who are trying to subvert his policy, make it clear what your policy is.

(CROSSTALK)

DOBBS: Well, first, they have got to find out who is leaking the names of CIA operatives or officers.

FORBES: And they've got to make clear what the policy is, so that they can root them out.

SHEPARD: In the end, nothing succeeds like success. And if the policy works in Iraq and we pacify the country and get it back on its feet, it will seem to be successful. And all these intramural battles will be for nothing.

DOBBS: I think that's an interesting piece of counsel to the administration, Steve. And, as you say, the issue of policy, there's been no enunciation of policy by either the president or any one of his Cabinet secretaries about what post-Saddam Iraq should look like, other than what was stated at the beginning.

And that is, they're going to democratize not only Iraq, but the Middle East. This administration has not, at least -- you can't accuse it of setting modest goals.

Steve, Bill, Steve, thank you very much, as always.

(CROSSTALK)

DOBBS: Turning to Rush Limbaugh, Rush Limbaugh today announced he is addicted to prescription pain medication and he says he will check himself into a rehab facility. On his radio program, Limbaugh said he began taking prescription pain pills some years ago, following spinal surgery. Limbaugh has decided it is time to take action. (BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

RUSH LIMBAUGH, HOST: Immediately following this broadcast, I will check myself into a treatment center for the next 30 days to once and for all break the hold that this highly addictive medication has on me.

(END VIDEO CLIP)

DOBBS: This is Limbaugh's third time to go into rehab.

Joining me now to discuss this issue is Dr. Karen Miotto. She is an addiction expert, associate clinical professor of psychiatry at UCLA.

Doctor, good to have you with us.

DR. KAREN MIOTTO, UCLA: Thank you.

DOBBS: The painkillers, I will tell you at the outset, I was one of those people, when the story first broke, who said, I can't imagine Rush Limbaugh taking this kind of medication, because the man carries out a very difficult radio show, conducts himself superbly every day. Whether you agree or disagree with his politics, he's doing an incredible job as the host of that broadcast.

How could he function with an addiction like this?

MIOTTO: People who take opiates regularly can function. Whether they take them for pain or if they are addicted to them, they have cycles where they are more impaired or less impaired. But, certainly, people can function on this type of drug or medication.

DOBBS: This type of drug is OxyContin. It must be powerfully addictive. Is that correct?

MIOTTO: It has negative and positive reinforcement. The positive reinforcement are the effects. But when you try to stop, there's the withdrawal sickness that is a powerful negative reinforcement.

DOBBS: So it is fully a narcotic, as we laypeople would understand it?

MIOTTO: Yes, a narcotic with an addiction potential.

DOBBS: And the fact that he is addicted, checking in for a third time to try to break this habit of this drug and perhaps others, what are the odds of success?

MIOTTO: Addiction is a chronic relapsing disease. So his success goes up with his effort and his duration in treatment. But it is a relapsing disease, so it will require ongoing effort.

DOBBS: He took this drug, started taking this drug, Limbaugh says, after spinal surgery, obviously still some pain. He has had other medical problems, his hearing, for example. What can he do at this point, if he does have chronic pain, requires some relief from them and still must get away from this terrible narcotic?

MIOTTO: That's the difficult dilemma. Can he use narcotics without having problematic use? And, for some people, the answer is yes. But others really end up suffering with pain and addiction and have to find other sources to treat their pain.

DOBBS: Doctor, abuse of this drug, OxyContin and others, is relatively limited, because it isn't across the whole spectrum of our society. There's also abuse of alcohol and, of course, alcoholism. How does this drug compare to others, to alcohol, in terms of its actual impact as an addictive agent on people in the country?

MIOTTO: Well, some say that it's the hidden epidemic, because people do often obtain the medication initially from doctors. They are embarrassed about their problem. They don't seek treatment until much later in their addiction. So it's probably less in magnitude, but just as severe in consequences as alcoholism.

DOBBS: And one of the issues here -- and the doctors that we talked with today, Dr. Miotto -- is -- one of those doctors said that he was concerned because this drug does wonderful things for patients who need the drug, who are in pain and are having medical treatment and who have been properly and legally prescribed to take the medicine.

This doctor said he hates to hear something like this that's happened to Rush Limbaugh, because the predilection amongst American doctors today is not to give them sufficient pain medication. Is that your judgment as well.

MIOTTO: Well, undertreatment of pain is a terrible problem in the country. And the medical community has actually addressed this. And so I think it's terrible, because it may contribute to the undertreatment of pain, but also hopeful other people will come forward who have problematic prescription or pain medication use and seek treatment as well.

DOBBS: Dr. Miotto, we thank you very much for being with us -- Dr. Karen Miotto from UCLA. We thank you very much.

MIOTTO: Thank you.

DOBBS: Coming up next, our special report, "The Great American Giveaway." Kitty Pilgrim will report on how much money this country spends each year feeding the world -- that and a great deal more still ahead.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: We continue tonight our series of special reports, "The Great American Giveaway." This country spends more than $1 billion a year to deliver food to hungry people all over the globe. That amounts to about two-thirds of all international food aid.

Kitty Pilgrim is here now and has the report -- Kitty.

PILGRIM: Lou, in addition to U.S. government giving, the United States is one of the largest contributors to the World Food Program, which fed more than 70 (sic) people in 82 countries last year.

And there's also a plan to create a $200 million famine fund to deal with famine in developing countries.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Fourteen thousand tons of grain are being loaded onto the Doris Guenther for the second U.S. government food aid voyage this year, all marked with a prominent USA label. The ship leaves Houston tomorrow, traveling to the West Coast of Africa, with delivery for five destinations, Senegal, Ivory Coast, Ghana, Benin, and Congo.

Captain Ronald Gomez has been delivering aid for 17 years.

CAPTAIN RONALD GOMEZ, DORIS GUENTHER: There's a lot of people milling around the dock. And They're just looking at us. They just want to get a look at us.

PILGRIM: Gomez loves the work and has seen quite a few recipient countries.

GOMEZ: The areas of the world have changed. It used to be Central and South America. Now we see a lot more going to Africa and countries of -- a couple years ago, it was North Korea.

PILGRIM: More than 40 million people in sub-Saharan Africa are faced with starvation, according to the World Food Program. The United States provided more than 70 percent of financial commodity donations last year. But it's not just Africa.

ANDREW NATSIOS, USAID ADMINISTRATOR: We provided a lot of food to the poor of North Korea. And there are bags that have the American flag on them. And, in Korean, it says "gift of the American people." And if you talk to the refugees crossing the border, as I have, into China, they will say: The American people saved us from dying of starvation.

PILGRIM: USAID has been boosting food donations over the years, from $835 million worth in 2001 to some $1.2 billion next year.

The U.S. Department of Agriculture also sends food aid, some $600 million worth last year.

(END VIDEOTAPE)

PILGRIM: USAID points to Iraq as one of the most recent success force. More than 430 million worth of food was channeled through U.N. agencies. They call it the largest food aid mobilization and distribution operation in its history -- Lou. DOBBS: Kitty, thanks -- Kitty Pilgrim.

Well, "Exporting America" tonight. The United States' trade deficit with China widened to a record $11.7 billion in August. So far this year, the trade deficit with China is running more than 20 percent higher than a year ago. Imports from China continue to rise, as we've reported extensively on this show. And American jobs are continuing to be exported overseas.

My guest says the exportation of labor overseas can help, however, the U.S. economy. Diana Farrell is the director of the McKinsey Global Institute, which just completed a study on the subject, and joins us tonight from San Francisco.

Good to have you with us.

DIANA FARRELL, DIRECTOR, MCKINSEY GLOBAL INSTITUTE: Thank you very much.

DOBBS: The idea of a study on exporting and the relationship of outsourcing, to benefits to the American economy, many people see that as counterintuitive. What is the basic finding of your study?

FARRELL: The basic finding of our study is that the process offshoring, which has gotten a lot of publicity of date, is yet another example of the integration of the developed and developing worlds into one more richer global economy and that this represents a win-win situation for both sides.

DOBBS: A win-win situation? But the primary motivation for American corporations sending those jobs overseas, is it not, is to avail themselves of low-cost foreign labor?

FARRELL: It would probably be helpful to take a moment, as we did over the course of the study, which is parts of the McKinsey Global Institute's mission, to inform national and international policy by providing a fact base to very difficult and heated debates, like this one.

And what we tried to do was to take a dollar currently being spent in the U.S. economy and track down what happens to that dollar over time. And the first thing that happens to that dollar is, before there is any notion of offshoring it, is that the companies can provide and get a basket of goods and services for that dollar.

Now, when they choose to offshore that to another location, they continue to receive that basket of goods and services. But now, in addition, they have 58 cents of savings.

(CROSSTALK)

DOBBS: And where do the savings come from, Diana?

FARRELL: The savings come from lower-cost labor. They come from being able to do operations differently. But the bulk of that is really lower costs. (CROSSTALK)

DOBBS: What percentage of the 58-cents improvement is, if you will, on the back of an American job? That is

(CROSSTALK)

DOBBS: I understand the metrics that you are using. I understand even the expression that you are drawing here, higher bang for the buck. You can frame it a number of ways. But the bottom line is, you are talking about, instead of higher productivity, clever marketing, bright, driven strategies on the part of corporate America, you are being paid money by corporate -- corporations to advise them to do something brilliant, which is, look for a lower cost of labor, when this economy is supposed to be all about driving productivity and using technology to improve productivity, right?

(CROSSTALK)

FARRELL: Let me come back to what happens to that 58 cents.

Those are, in effect savings for the economy. And several things can happen with those savings. Thing one is that the companies who obtain those savings can now reinvest them into new ventures, into new ideas, which, in many cases, lead to job growth here and in other places as well. They can also lead to money for investors who own the stock of these companies. And, by and large, most of the households in this economy own stock.

And the profitability or the savings that companies can achieve make their ways into people's portfolios, saving for retirement, saving for the college fund of their children. And so, in some senses, the process of saving for the economy is a positive process for the economy as a whole. We are able to generate -- in fact, it is a method of achieving higher productivity. By shedding lower-valued activities, we are able to deploy and find jobs in higher-valued activities.

(CROSSTALK)

DOBBS: Diana, let me ask you this. What would be a higher-value activity, as you put it, or a higher-paying job in this country than, say, engineering, technology? What would be higher than those? Because those are jobs that are being exported overseas.

FARRELL: Some of those jobs are being exported overseas.

And yet, if you look at the pool of jobs that are being -- the majority of these jobs, they are in call center operations. They are in back office operations. And these tend to be jobs to date that have had a pretty migratory work force in the U.S. They don't have them in India.

(CROSSTALK)

DOBBS: I understand, not in India. And is McKinsey, for example, recommending to its clients that it export jobs to India, China, to some other nation? Let's say those jobs are documentation. Are they suggesting legal work? Are they suggesting engineering, work with CAD, with other high-end technology jobs? Or are you simply recommending call centers?

FARRELL: Let's come back to the bigger picture here, because I think it's important to put all of this in perspective.

The McKinsey Global Institute certainly takes advantage of the insight, knowledge and work that the entire consulting arm of McKinsey does. But our objective is to inform a very difficult and public debate at the moment. The reason it's a difficult debate is because there are some people who are being hit disproportionately hard. There's no question about it.

And if you are one of those folks that has lost their job, this is a difficult time. And no amount of economists telling you that this is an overall good thing for the economy is going to make that pain go away. However, our objective is to help us, all of us, corporate leaders, national leaders, policy-makers, understand the forest for the trees, to understand what is the overall impact of this, and, just as you had in previous years...

(CROSSTALK)

FARRELL: Let me just finish this

(CROSSTALK)

DOBBS: Certainly.

FARRELL: In previous generations, trade displacement, to a lot of pain and to a long-term gain, we now have the same sort of thing happening in services.

And I think the exciting part and part of what we write and find, in our perspective, is that the savings opportunities for the economy are so large, that it opens up opportunities for experimenting to try to alleviate the short-term pain for some of those people that get displaced, in the form of, for example, the kind of insurance ideas that Robert Litan and Lori Kletzer have been putting forth.

DOBBS: Diana Farrell, McKinsey, we thank you very much for being with us.

Can I ask you one thing, though?

FARRELL: Sure.

DOBBS: Does McKinsey recommend exporting those jobs in those categories that I just suggested? Just answer.

FARRELL: McKinsey works with companies all over the world to improve the performance of companies.

DOBBS: Is that a no or a yes? Or which is it closer to?

FARRELL: Let me just say that we work with executives to improve the performance. And to the extent that that involves making decisions that would help save money for the company, we will help accomplish that.

DOBBS: Terrific. McKinsey and Diana Farrell, we thank you very much for being here.

FARRELL: Thank you.

DOBBS: "Exporting America" is the topic of our poll question tonight. What do you believe is the driving factor behind the outsourcing of American jobs overseas, competitiveness, lower labor costs, bad trade agreements, corporate greed? Cast your vote at CNN.com/Lou. We will have the results for you coming up.

Still ahead tonight: This week marks one full year for a new bull market. Christine Romans will have that for us.

We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The results of our poll tonight.

The question: what do you believe is the driving factor behind the outsourcing of American jobs overseas. Five percent of you said competitiveness; 18 percent of you said lower labor costs; 8 percent said bad trade agreements; 72 percent just decided to say corporate greed.

On Wall Street, stocks finishing little changed on the day, the Dow down five points, the Nasdaq up 3, the S&P down two-thirds of a point. That's barely a budge, as we call it on Wall Street.

Christine Romans is here with the market for us.

CHRISTINE ROMANS, CNN CORRESPONDENT: But the week wasn't bad, the Dow and the S&P up about 1 percent, the Nasdaq up almost 2 percent. And it was two week higher in the row.

Optimism about earnings fueling the gain, Lou. Next week, 110 S&P 500 companies will report. And they're likely show more than 16 percent profit growth, fourth-quarter forecasts even better; 43 S&P 500 companies reported this week showing profit growth so far of 17 percent.

One of them, General Electric. Today, GE reported profit, 40 cents, down 2 percent. It trimmed its fourth-quarter targets and announced it's largest international purchase, $9.5 billion for Amersham, a biotech company, GE shares falling about 3 point today.

The stock exchange disclosed pay figures for two more of its executives, chief operating officers. Robert Britz and Catherine Kinney each made $2.7 million in salary and bonus last year. Each is eligible for a retirement payout of at least $22 million, the disclosure just a day after a report on the compensation of American Stock Exchange's chairman. A memo obtained by Reuters system says Salvatore Sodano took home $4.4 million last year and has more than $12 million in retirement benefits.

Now, two developments in the executive on trial file. Securities regulators have filed suit against Jack Waksal, father of jailed former CEO Sam Waksal. Patti Waksal, sister of Sam, daughter of Jack, has also been named in that suit. According to the SEC, Sam Waksal told his father about a upcoming negative regulatory decision on the company's cancer drug, Erbitux. We all know this story. Jack Waksal allegedly dumped $8 million in ImClone stock before it plugged on that tip.

And then also, Frank Quattrone, former star investment banker at CSFB, took the stand in his defense again today. Some interesting e- mails, at least painting picture of Wall Street the way it used to be, Frank Quattrone asking Michael Dell if he had any concerns or had any input into who would be named the next P.C. analyst over there.

DOBBS: These trials will go on.

ROMANS: They will.

DOBBS: All right, thank you.

That's our show for tonight. Thanks for being with us. For all of us here, a quick good night from New York. We wish you a very pleasure weekend.

END

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Addiction; Condoleezza Rice To Head Rebuilding Of Iraq>