Return to Transcripts main page

Lou Dobbs Tonight

David Kay Talks WMD on Capitol Hill; John Kerry Heads to Midwest, South

Aired January 28, 2004 - 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.


(BEGIN VIDEOTAPE)
DAVID KAY, FORMER CHIEF U.S. WEAPONS INSPECTOR: It turns out, we were all wrong.

KITTY PILGRIM, CNN ANCHOR (voice-over): Tonight, former weapons hunter David Kay tells Congress, the United States needs better intelligence, after the failure to find weapons of mass destruction in Iraq. Senate Intelligence Committee Chairman Pat Roberts will be my guest.

After his showing in New Hampshire, John Kerry takes his campaign to the Midwest and the South, but the other candidates show no signs of giving up the fight. I'll be joined by our panel of top political journalists.

In "Exporting America" tonight, the incredible story of a steel equipment company that is fighting the federal government and Congress to keep jobs in this country.

And Congress joins the battle to keep indecent and obscene materials from our television screens and radios. We'll have a special report.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, January 28. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a remarkable statement from the man who led the hunt for weapons of mass destruction in Iraq. David Kay today told Congress almost everyone was wrong that Saddam Hussein had biological and chemical weapons before the war. Kay said there was a fundamental failure of intelligence.

Capitol Hill correspondent Joe Johns reports.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT (voice-over): David Kay's assessment was straightforward on the intelligence that led the U.S. to war.

KAY: I deeply think that is a wrong explanation. JOHNS: Kay even predicted that, try as they might, inspectors who remain on the job searching for weapons of mass destruction in Iraq probably won't find much.

KAY: That it is highly unlikely that there were large stockpiles of deployed militarized chemical and biological weapons there.

JOHNS: Still, the hearing was frustrating for the Democrats, who came prepared to rake the administration over the coals. Kay refused to play.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Can you give us any explanation why these agencies, in retrospect, appeared to have had it right and the information that the administration used appeared to have it wrong?

KAY: It's a lot easier after the fact and after you know the truth to be selected that you were right.

JOHNS: Also helpful to the White House, Kay said there was no attempt to pressure intelligence analysts to reach certain policy conclusions.

KAY: Almost in a perverse way, I wish it had been undue influence, because we know how to correct that. We get rid of the people who in fact were exercising that.

JOHNS: The committee's top Democrat, Carl Levin, called for an outside investigation of the quality of the intelligence and the way it was used to make the case for war. Levin got an important ally in Republican Senator John McCain, who decided to support an outside probe after raising the issue with Kay.

SEN. JOHN MCCAIN (R), ARIZONA: Do you believe that we need an independent, outside investigation?

JOHNS: Kay suggested it's almost inevitable in order to insure the quality of future intelligence.

KAY: You will finally determine that it is going to take an outside inquiry, both to do it and to give yourself and the American people the confidence that you have done it.

(END VIDEOTAPE)

JOHNS: One bottom line is that Kay made distinctions between policy and intelligence. He said, if presented with the same facts, he might have made the same decisions about Iraq -- Kitty, back to you.

PILGRIM: All right, thanks very much, Joe Johns from Capitol Hill. Thanks, Joe.

The White House today insisted, the war against Saddam Hussein was justified. It also said the hunt for weapons of mass destruction is not over yet. White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, Republicans here at the White House are certainly in damage control still over David Kay's comments.

But there was almost an audible sigh of relief here at the White House when they heard David Kay deflecting some pretty tough questions, as Joe was just reporting, from Democrats trying to ask him if the White House was, in fact, manipulating some of that intelligence? But one thing that the White House did not welcome was what appeared to be agreement with Democrats from David Kay that an independent inquiry into the intelligence and what the White House knew might be necessary.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I think our position at this point, we want the Iraq Survey Group to complete the important work that it has undertaken. That work is still a work in progress. There is a new head, Charles Duelfer, of the Iraq Survey Group. We need to let him get in there and complete the work that Dr. Kay started.

(END VIDEO CLIP)

BASH: Now, the White House has dropped any predictions that weapons will actually be found. That is something that they certainly have said in the fact. And they are also pointing to the fact that Kay says that Saddam Hussein was a threat and that the war was justified.

But Democrats not just on Capitol Hill, but also on the campaign trail, those that want Mr. Bush's job, are certainly making an election-year issue out of this. Privately, some Republicans say they are concerned about that. But they also say that their polls show that Americans think that toppling Saddam Hussein was the right thing to do, weapons or not.

Now, if you're looking for some evidence that Republicans still think national security is a top issue for the president, RNC Chairman Ed Gillespie, CNN is told, will have a speech tomorrow where he will use some of the opposition research that they have been gathering over the past few months against the top Democrat in the field, John Kerry, hitting him on his defense record, we're told -- Kitty.

PILGRIM: All right, thanks very much, Dana Bash, reporting at the White House. Thank, Dana.

The chairman of the Senate Intelligence Committee, Pat Roberts, says the problem appears to be with some of the intelligence agencies, not the policy-makers.

And Senator Roberts joins me now from Capitol Hill.

And thanks very much for joining us. SEN. PAT ROBERTS (R), KANSAS: Well, thank you, Kitty.

PILGRIM: This is an enormously politicized issue at this point. And you said, really, the fault is with the intelligence and not with the policy-makers. Yet, who should bear responsibility? Or should we be beyond that?

ROBERTS: Well, I hope we should be beyond that.

What we heard from Dr. Kay is that, while there may be justification for the war, and he agreed that that was the case and that was in our national security interests, he also indicated that there are no stockpiles, or he did not expect to find any stockpiles of any munitions. And, of course, if you go on with that, every world community intelligence service assumed that Saddam had the weapons of mass destruction.

So that is, on a global scale, a massive problem with our intelligence. Now, next week, next Thursday, we are providing members of the Intelligence Committee with a report that is over 300 pages long. We have itemized all of the sources used by our intelligence community. We're going to give that to members. We hope to have a very aggressive report. And the biggest thing we can do is recommend long-term and short-term recommendations, so this kind of mistake doesn't happen again.

PILGRIM: You're doing this outside investigation, what you say will be released next week. Do you think any other investigations are warranted or should this be the final word?

ROBERTS: I would say, I would urge members to hold off on that, because I think, with the report that we're able to assemble, we've been working for seven to nine months. We have had 10 staffers, floor-to ceiling documents. It's probably the most thorough look-see or inquiry or investigation into the intelligence community in maybe 20 years.

And I think most of the questions that people have, like the questions you are asking me, will be answered in that report.

PILGRIM: You know, there may be people who split hairs on this. And David Kay said that he is convinced that we should have invaded Iraq and taken care of Saddam Hussein, and yet stockpiles of weapons and finding them highly unlikely. Do you see any discrepancy in those two statements or do you think they can coexist?

ROBERTS: Well, I think they can co-exist, from the standpoint that David Kay indicated that, had he had the same information, he would have probably gone to war.

But he warned about an Iraq that was basically falling apart, becoming a basket case of corruption and humanitarian problems and would likely be sort of a Grand Central Station for the proliferation of weapons of mass destruction. So, given that, if you accept that, obviously, the decision to go to war was the right one. PILGRIM: You know, he also said that a lot of material went to Syria before the war. What do you make of the Syrian correction and is that something we should be concerned about?

ROBERTS: Well, it is something we should be concerned about.

General Dayton is on top of that in Iraq with the Iraq Survey Group. He has quite a number of people. Of course, that's going to take the cooperation of the Syrians. That hasn't happened yet. That's a possibility. Whether it's a probability, I can't tell you. But that is at least one concept. Either they destroyed it or they shipped it out to Syria or it simple did not exist, or both.

PILGRIM: All right, thanks very much for helping us sort through it, a very complicated issue, Senator Pat Roberts.

ROBERTS: Thank you, Kitty.

PILGRIM: A dramatic victory today for President Bush's closest ally on Iraq, British Prime Minister Tony Blair. An independent inquiry today cleared Blair of any responsibility for the suicide of David Kelly. Kelly was a government weapons expert. But the head of the BBC, however, was forced to resign. Now, the inquiry blames the BBC for some of its reporting on the build-up to the war in Iraq.

Still to come, John Kerry hopes his success in New Hampshire will translate to victory in the Midwest and the South next week.

In the global war on terror, the United States is planning a major new offensive against al Qaeda. And senior Pentagon correspondent Jamie McIntyre will report.

And in "Face-Off" tonight, two contrasting views on exporting American jobs overseas.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Tonight, Democratic presidential candidates have turned their attention from New Hampshire to seven states holding primaries and caucuses next Tuesday.

And John Kerry is hoping to build on his success in New Hampshire and Iowa, but other candidates believe that they can win their first victory. And one of the most important contests next week is in South Carolina.

Frank Buckley reports from Columbia, South Carolina.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT (voice-over): John Kerry will be arriving here in South Carolina tonight with momentum, something Democratic operatives say may be even more important than the face-to-face familiarity that voters here in South Carolina are used to.

That could be bad news for Senator John Edwards, who today kicked off his run toward February 3 with a visit to South Carolina, the state in which he was born. He said that he must win here to continue. He kicked off his campaign at South Carolina State University, a predominantly African-American university. That underscores the importance of the African-American vote here.

South Carolina is the first test of the candidates among a sizable group of black voters. Up to half of the voters will be black on primary day here. It is also the first test in the South for the candidates. Front-runner John Kerry says that, in the general election, that a Democrat doesn't need to win any Southern states.

Today, I asked John Edwards if he agrees with that assessment.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I think if the Democrats and Democratic voters want to put their chances on, for the first time in American history, a Democrat getting elected without winning any Southern states, they can make that choice. It's a very risky choice.

BUCKLEY: Another Southern Democrat, Wesley Clark, was supposed to be campaigning here in South Carolina today. That was supposed to be his first stop. But because of a miscommunication with his air charter company, the campaign began, instead, in Oklahoma. He will be back here on Thursday, just like the rest of the candidates. They will all be here for a debate.

Frank Buckley, CNN, Columbia, South Carolina.

(END VIDEOTAPE)

PILGRIM: Howard Dean spent the day in his home state, Vermont. And tonight, there were some significant changes in his campaign staff.

Senior political correspondent Candy Crowley reports from Burlington.

And, Candy, what can you tell us about the staff changes?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, there is a new man at the top.

Roy Neel, a longtime strategist for Al Gore, served as his chief of staff both in Congress and as vice president, is going to come in and take over command of the Dean campaign. Now, the campaign had assumed that Joe Trippi, who has been running things up to now, would stay on. They wanted to move him over into media and advertising. We are told by one source inside one of the meetings today that, in fact, Trippi, when told he would report to someone else -- quote -- "flipped out" -- again, one source.

In any case, he has left campaign, we are told by a couple of sources, and is on his way back to Washington, D.C. Now, the campaign at this point is also apparently facing some financial concerns that the governor is now just becoming aware of. Some of the staff have been told there will be pay cuts this week, so, the extent of the financial problems not quite certain at this moment.

Some of the concerns now, Joe Trippi had become a major figure in this campaign. He was the one that somebody said, all lines went to Joe Trippi. He put out a daily e-mail which has taken on quite a following. They are a little bit worried about some of those that have followed the Joe Trippi e-mails and what they might do. But tonight, a very big shakeup in the Dean campaign -- Kitty.

PILGRIM: It seems to have consumed the day, Candy. But what else was Dean doing in Vermont when all the rivals are back on the campaign trail tonight?

CROWLEY: Well, part of it was to figure out what the heck to do next.

They have got these seven states coming up. There was an argument within -- the last 48 hours have been very rough inside the Dean campaign. The governor had wanted to play in all seven of the states coming up. Some of his advisers had said, no, let's zero in on some of them. So there was that conflict going on, even as Dean lost some faith in his strategists, in particular in Joe Trippi.

So that kind of took up a lot of the time. He did satellite out on to radio and TV in all seven of those states that are going to have contests next Tuesday. But, indeed, this was a day, a very precious day, considering the time between now and Tuesday, taken up trying to rejigger the staff.

PILGRIM: Candy, where does Dean go from here, which states?

(LAUGHTER)

CROWLEY: Well, the last I heard, he was headed for Michigan.

Now, interesting choice. Michigan is not one of the Tuesday states. It's, in fact, a Saturday state, then, a week from. So, the question is, why there? They do believe they have a chance there. Might it change? Maybe. Remember, they have a new top. He is then going on down to South Carolina. There's a debate there on Thursday night. So, he will be there for that -- Kitty.

PILGRIM: Thanks very much. And we know you will keep track of it. Candy Crowley, thanks.

CROWLEY: OK. Thanks.

PILGRIM: And that brings us to the topic of tonight's poll. Do you think the race for the Democratic presidential nomination is over, yes or no? Cast your vote at CNN.com/Lou and we will bring you the results later in the show.

National security is a big issue in the campaign and is likely to remain so in the months ahead. And today, the military said it is planning a spring offensive in Afghanistan against the Taliban and al Qaeda.

And senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): The Pentagon stresses that U.S. and Afghan offensive operations have never stopped even during the harsh Afghan winter when Taliban and al Qaeda remnants are believed to have hunkered down in the snowy mountains.

The latest operations code named Mountain Avalanche and Mountain Blizzard have nabbed a number of suspected Taliban operatives in the recent weeks. But anticipating increased enemy activity as the snow melts, the U.S. is gearing up for a spring offensive to defeat the Afghan insurgents as well as intensify the hunt for Osama bin Laden and his top lieutenants.

LT. COL. BRYAN HILFERTY, U.S. ARMY: I can say that Osama bin Laden, Mullah Omar and (UNINTELLIGIBLE) represent a threat to the world, and they need to be destroyed, and we believe we'll catch them in the next year.

MCINTYRE: According to the best U.S. intelligence available bin Laden is believed to be hiding in a remote and largely ungoverned area between Afghanistan and Pakistan. Pentagon officials deny published reports the U.S. offensive will send troops across the border into Pakistan.

Pakistan's pro-American president Pervez Musharraf has publicly opposed such cross-border operations and for now U.S. officials say the 11,000 U.S. troops in Afghanistan will operate on their side of the border.

The hunt for Osama bin Laden has increased urgency, because it's believed al Qaeda was behind several assassination attempts against President Musharraf, who has been a key ally in the fight against Taliban and al Qaeda. Bin Laden's capture could also benefit President Bush as he campaigns for reelection.

But pentagon officials insist, there is no political motive behind the planned offensive, just as there was nothing political about the capture of Saddam Hussein last month.

(END VIDEOTAPE)

MCINTYRE (on camera): U.S. commanders are increasingly expressing confidence that bin Laden's days are numbered. One top commander in Afghanistan predicted that bin Laden would be captured some time this year. Pentagon officials, though, are urging caution, repeating the refrain often said by Defense Secretary Rumsfeld, that, until you've got him, you don't really have him -- Kitty.

PILGRIM: Jamie, something else I wanted to ask you. There are new plans today from the Army's top general on the possibility of keeping tens of thousands of soldiers in Iraq for two more years. What can you tell us about that?

MCINTYRE: Well, the Pentagon and the Army is under some congressional pressure to consider increasing the size of the military. And today, the Army chief of staff, General Peter Schoomaker, insisted that he doesn't believe that's the way to go.

However, he did reveal that they have plans to keep as many as 30,000 troops above the authorized limits in the military over the next couple of years in order to facilitate rotation of troops in Iraq. But under Defense Secretary Rumsfeld's authorization, that would be a temporary increase, not a permanent authorized increase in end strength -- Kitty.

PILGRIM: All right, thanks very much for clearing that up for us, Jamie McIntyre, at the Pentagon.

In Afghanistan today, a suicide bomber today killed a British soldier in the capital of Kabul. Four other British troops were wounded. Now, the suicide bomber drove a taxi carrying explosives into the soldiers' vehicle. It was the second attack on an international peacekeeping force in two days. Yesterday, a suicide bomber blew himself up in front of a vehicle used by Canadian peacekeepers. One Canadian was killed. Three others were wounded.

Just ahead, crossing the line, the growing use of profanity on television. That takes center stage at one congressional hearing. Peter Viles will have more on what is being done to turn the tide.

And "Exporting America," our series of special reports, continues with a look at one company that is fighting to keep jobs in this country. Louise Schiavone will have more on the Texas-based company struggling to survive.

(COMMERCIAL BREAK)

PILGRIM: On Capitol Hill today, a congressional hearing took on a topic of great interest to many American parents, the growing use of profanity on television. What set it off was the use of the F-word on prime-time television.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

BONO, LEAD SINGER, U2: That was really, really (EXPLETIVE DELETED) brilliant.

PETER VILES, CNN CORRESPONDENT (voice-over): That was the Irish rock star Bono using the F-word on prime-time network TV. Now, bad language is common on cable, from "The Sopranos"...

(BEGIN VIDEO CLIP, ""THE SOPRANOS")

JOE PANTOLIANO, ACTOR: I'll give you a shot in the (EXPLETIVE DELETED) head, my girlfriend.

(END VIDEO CLIP)

VILES: To Ozzy Osbourne.

On broadcast TV, Fox uses the bleep to keep Paris Hilton out of trouble with the government.

(BEGIN VIDEO CLIP)

PARIS HILTON, ACTRESS: It's been sitting there a week. (EXPLETIVE DELETED) this market.

(END VIDEO CLIP)

VILES: What made Bono different was, there was no beep and it happened on regulated broadcast TV, not on cable. And so far, the FCC decided it was not indecent, because Bono wasn't talking about sex. Critics say that is typical of the FCC, that it's like Barney Fife in the old "Andy Griffith Show," a complete pushover.

L. BRENT BOZELL III, PARENTS TELEVISION COUNCIL: In the entire history of the FCC, until yesterday afternoon, I might note, this agency had never, never fined a single television station in the continental United States for broadcast indecency.

VILES: FCC Chairman Michael Powell says he wants to get tough on this, wants to revisit that Bono outburst. Yesterday, the FCC did crack down. It fined radio giant Clear Channel Communications $755,000 for broadcasting the sexually explicit routines of this guy, who is known to his listeners as -- and we are not making this up -- Bubba the Love Sponge. And, yes, Bubba did have a response.

UNIDENTIFIED MALE: Responsible broadcaster. I don't want to break the law. And I don't want to -- I just need to know what the damn law is.

(END VIDEOTAPE)

VILES: Congress, responding to the Bono outburst, is threatening to pass what you might call the George Carlin law. He had the seven words you can't say on TV. It turns out, you can say some of them on TV.

This law would make it clear that you can't say the seven words, plus one more, the eight words you can't say on TV. They would be ruled indecent and would definitely always lead to fines -- Kitty.

PILGRIM: I think would vote for eight. Thanks very much, Pete Viles.

VILES: Sure.

PILGRIM: All right, tonight's thought is actually two perspectives what has been and still is a very controversial issue, profanity.

And the first quote is: "The foolish and wicked practice of profane cursing and swearing and low that every person of sense and character detests and despises it." Those words are from George Washington.

And we give you quite a different view from another famous American. And he says: "Under certain circumstances, profanity provides a relief denied even to prayer." And that is from writer Mark Twain.

Coming up next, the fight for the Democratic presidential nomination moves into the next battleground. And we'll talk with our panel of top political journalists about the latest in the primary wars.

Plus, winter wallop. Schools, transportation in the Northeast shut down after a snowstorm drops up to a foot in some places.

That story, a great deal more. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: To the South and West, the Democratic presidential contest goes national next week, with seven states up to grabs. That includes the delegate-rich South Carolina and Missouri.

New Hampshire yesterday handed John Kerry his second big win. Howard Dean, for his part, said he was pleased by his success, the second-place showing in the state.

And joining us now for more on the big political test is our political roundtable. And here in New York, we are joined by Tom DeFrank from "The New York Daily News," Jon Meacham from "Newsweek." And joining us tonight from Washington is Karen Tumulty with "TIME" magazine.

And, Karen, since you are the farthest away, let's start with you.

And we had a little bit of a staff shakeup with the Dean campaign today. What do you make of that?

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, "TIME": Well, I think, right now, what you're seeing is Howard Dean having to go very quickly from the candidate who thought he was going to be running the national campaign, leaving everybody else picking their shots against him in these seven states next Tuesday, to looking at a severe resource crunch.

And very often what comes out of that is a staff shakeup. But it is really hard to find any political operative this season who is more identified with the mystique around the campaign than Joe Trippi who just left today as the campaign manager. He is being replaced by a long-time aide to former vice president Al Gore, Roy Neel, who in fact, was Gore's chief of staff.

So I think we're going to see a very, very different tone coming out of this campaign. In what looks like it's going to be a very difficult couple of weeks.

PILGRIM: Jon, tone change, what do you think?

JON MEACHAM, "NEWSWEEK": I think we have seen the change since I have a scream speech. It's now I whisper by Dr. Dean. I think the other thing is that, Trippy was on the cutting edge we thought was going to be transformative, which was the Dean blog was really going to redefine how Democrats and Republicans were nominated. That was a great idea until the voters got involved. And so I think Trippy is paying the price for that.

PILGRIM: Let's go to Kerry. He beat Dean by 12 percent in New Hampshire. Some of Kerry's rivals have been really running campaign in the state and Kerry has to play a bit of catch up. Do you think he's at a disadvantage?

TOM DEFRANK, "NEW YORK DAILY NEWS": No, I think he's at advantage, Kitty, Nothing succeeds like success in politics. He's two for two, everybody else is zero for two. And in the case of Clark and Dean, they have not exceeded expectations to put it mildly. So, even though the turf moves to an inhospitable part of the country given Kerry's background, I still think he has an advantage going there.

PILGRIM: And we have live pictures of him.

Let's go state by state, and this is an interesting exercise and let's start with Missouri. These are the big states that are coming up. 74 delegates up for grabs. What do you think about Missouri and I guess John Edwards is leading according to American Research Group.

MEACHAM: I'd argue that Missouri is the more interesting test case for the general election for the Democrats and for Kerry than South Carolina is. South Carolina is simply isn't competitive for the Democrats in November. President Bush is, I have done a number has been very high up there. Missouri is a border state, that will be interesting. And if Kerry can take his international security credentials down there and try to trump the idea that he's a Kennedy liberal then that's going to be the first big regional test.

PILGRIM: Karen, we have Arizona. It has 55 delegates up. I guess Kerry has about a quarter of the vote, according to just the recent polls and we all know they change by the minute.

TUMULTY: Yes, for a lot of us who have been covering the campaign, the biggest thing about Arizona is it's a lot warmer than the states we have been in, which is a relief. But beyond that, Arizona is going to be a test, along with South Carolina, of these candidate's abilities to appeal to nonwhite populations who are a very important part of the Democratic base.

There is also a big population of veterans in Arizona and so we're going to see John Kerry rolling forward with his coalition of veterans. He's also dispatching his wife to race behind Kerry to New Mexico and Arizona. She's a fluent speaker of Spanish. So they are going at these states very aggressively. But this is also, these are also places where Wes Clark actually may see his first showing. PILGRIM: You know, in South Carolina, you bring up the issue of veterans. 400,000 veterans in South Carolina. 45 delegates. Kerry says, I intend to campaign in the south. That's what his great statement was. Edwards says I'm going to win South Carolina. This looks like a big battlefield. Let me turn to Tom.

DEFRANK: Well, South Carolina is a big battlefield for Edwards. He's basically said he's got to win. And I think if doesn't win he's in trouble. The latest poll I saw showed Edwards up two to one in South Carolina.

I think the real problem -- the real break through needs to be Clark in South Carolina. And I think Kerry is doing better among veterans than General Clark, more lieutenants than four-star generals.

PILGRIM: We are showing live pictures of Oklahoma and so we are up to the minute on that. Go ahead, John, you were about to say something.

MEACHAM: Well, I think Tom is right. Ultimately you really are looking at the south and the west. If you look toward the general election, the red states have gotten redder, that is there's been a population move south and west. So Democrats who can compete in all of these states, Arizona and New Mexico, Missouri, trying to place or show in South Carolina will be able to argue that we can take the fight to Bush. Because, that's the real lesson of Kerry's two victories here. Democrats are voting with their head, not necessarily their hearts.

PILGRAM: One of the big things, and we see this in all the polls is that everyone is very concerned about jobs. With the unemployment rate at 5.7 percent, it's a very important issue for the candidates. We had Kerry coming out just saying -- outsourcing of jobs is horrible and I think we have this piece of tape and here -- let's take a look at that.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: A prosperity where we create jobs here at home and where we shut down every loophole, every incentive, every reward, that goes to some Benedict Arnold CEO or company that takes the jobs overseas.

(END VIDEO CLIP)

PILGRIM: Benedict Arnold CEO. You can't really get much stronger than that. What is your assessment. Is this going to be the hot button issue that everyone piles on.

MEACHAM: That's Yale populism, when you throw the American Revolution in. It's true in West Virginia, it's true in Ohio, I would think the rust belt is where it would play best.

PILGRIM: It also seems like an issue no one can go wrong on, because who's against jobs for Americans? DEFRANK: Well, also, as we all know, Bush has a net loss of jobs, a couple of million. That's something that the Democrats are going to hammer him on between now and November 2.

PILGRIM: Karen?

TUMULTY: These manufacturing jobs really count in the dozen or so states that are going to matter in November as John mentioned, places like West Virginia, you know, Pennsylvania, Ohio. The single issue that is likely to drive people to the polls is whether or not they are ployed in the manufacturing sector. They are really not feeling a lot richer in this part of the country, because of the stock market or some of the other economic gains that we have seen.

PILGRIM: All right. Go ahead, Tom. Last word

DEFRANK: I was going to say very quickly, we shouldn't minimize what happened in the Dean campaign today. Because turmoil in a campaign is rarely good midstream. This is a campaign in turmoil before today's turmoil. You've got an overlay of turmoil that can't be a good sign for the Dean campaign.

PILGRIM: Very early on.

We have to end it here. Tom DeFrank of the "New York Daily News," John Meacham of "Newsweek" and Karen Tumulty of "TIME" magazine, thank you all for joining us.

MEACHAM: Thank you.

PILGRIM: A reminder now, do vote in tonight's poll. And the question is, "do you think the race for the Democratic presidential nomination is over? yes or no." Cast your vote, CNN.com/lou and we'll share the results a little bit later in the show.

Coming up, "Exporting America," one American company is fighting the trend and the U.S. government to keep jobs on American soil.

And also, in tonight's "Face Off," two leading experts will share their very different views on the pros and cons of exporting American jobs overseas. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Government rules designed to help protect U.S. steel makers from cheap imports are hurting another American steel company. Louise Schiavone reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): When nearly every employee of Delta Brands found themselves protesting in front of the export-import bank in Washington, after a marathon bus ride from Irving, Texas, it was a cry for survival.

Delta Brands DBI, founded by Cuban born Sam Savariego, manufactures and exports machines that can clean up steel and slice right through it.

SAM SAVARIEGO, PRES. DELTA BRANDS INC.: We cannot survive without exports.

SCHIAVONE: At one point, DBI operated two plants and employed several hundred workers.

CHARLES HARRIS, PRODUCTION MANAGER, DELTA BRANDS: In this particular section I may have five guys (UNINTELLIGIBLE) all the time, where there used to be probably 27 guys in this one section.

SCHIAVONE: Four years ago DBI won preliminary approval from the U.S. Import Export Bank to finance the sale of machinery to Egamire (ph) a steel complex in Turkey. At the same time the steel industry was howling about steel imports and U.S. steel production job loses. Steel tariffs were rushed into place. And although Turkey was exempted from tariffs, DBI's loan was put on hold. Financing was finally killed for good when the Congressman Pat Toomey of Pennsylvania presueded Congress to bar government support for U.S. businesses nearly anything to enhance U.S. Steel production.

PETER SABA, EX-IM BANK, GENERAL COUNSEL: They've come out and said that you know, Ex-Im is prohibited. They don't see it appropriate to use taxpayer financing to support increased production in those instances.

SCHIAVONE: Cutting DBI's government support received public praise from U.S. steel producers.

REP. PETE SESSIONS (R), TEXAS: I believe the steel lobby if they are engaged in this they are really making a mistake, because we are talking about jobs in America.

SCHIAVONE: DBI says it sun fair to link them with foreign steel dumping, even their machinery was used to treat steel would it have to be retreat bid the time it made it to the United States.

(END VIDEOTAPE)

SCHIAVONE: We asked the Congressman Toomey and the American Iron and Steel Institute to comment but they didn't want to discuss it. Right now DBI has five separate transactions before the Export-Import Bank, including an application for $5 million in working capital. Waiting, says DBI means European companies with plenty of support from their government will snap up more of this business -- Kitty.

PILGRIM: Thanks very much, Louise Schiavone.

The exporting of America is the focus of tonight's face off.

Kevin Kearns says if American companies keep sending jobs overseas, unemployed Americans won't be able to buy their product. And he is president of the U.S. business and industry council. And on the other side, Dan Griswold from the Cato Institute said outsourcing jobs has actually helped some American jobs stay in business.

Both of our guest are our in Washington tonight. And thanks very much for joining us, gentleman.

(CROSSTALK)

PILGRIM: You know, an interesting statistic that I just came across, 1.6 million U.S. jobs expected to move offshore by 2010.

How can that be good for the American economy?

I throw that to Dan Griswold, first?

DAN GRISWOLD, TRADE ANALYST, CATO INSTITUTE: Let's not be chicken littles about this, the sky isn't falling. This is a normal part of business. There are millions of jobs turned over every year. We create jobs, eliminate job, but the United States remains the world's engine of global growth or the world's number one exporter of goods and services including information technology services. In fact we sell three much as time information technology services to the rest of the world as we buy. You know, despite all the hand wringing of the $240 billion U.S. information technology industry about 3 or 4 percent is captured by offshore outsourcing. So we remain the world's number one most sophisticated economy and this is just a way of allowing U.S. companies to save 10 to 30 percent to be more competitive in global markets. You know, if hospitals can send radiology exams to India and cut the cost in half and control spiraling health costs, what is wrong with that.

Kevin, I know you take text act opposite position or something opposite, how do you respond to that?

KEVIN KEARNS, PRESIDENT U.S. BUSINESS & INDUSTRY COUNCIL: Well, in the short run, of course, the company's bottom line looks better if you can cut your labor force and cut your labor costs by sending the jobs to India, wherever. But in the long run, what these American multinational companies are doing and high tech services and hospitals, et cetera, is they are are basically firing their customers. Certainly Japan can make all our cars, all our electronics can be made in the far east. Brazil can supply our soybeans and orange juice. Canada can supply our timber, and our wheat, et cetera, there's very little that is done here that can't be done overseas because the governments are subsidizing the foreign companies or labor is dirt cheap et cetera. And the question is, where are Americans going to work?

If you believe in standard economic theory, which I assume Mr. Griswold does, you know, there's a bubble here, that is going to burst. All these foreign companies and countries are targeted at the U.S. market, and we are firing customers left and right forcing them on to unemployment roll, forcing them into the work force altogether. The notion we are going to somehow retrain them for high tech jobs is nonsense.

PILGRIM: Let me break in here. What about retraining, I mean, that is sort of a counter-argument. OK, but we'll retrain and do different things.

KEARNS: On my Web site every day trade alert.U.S. I get e-mails from people with MAs and Ph.Ds and electrical engineering and computer science, et cetera, they say, what are you going to retrain me for? I get e-mails from people that work in textile mills that are getting their GEDs that somehow think that getting a high school equivalency degree is going to retrain them for the future. The ultimate betrayal of the American worker is this notion that somehow the retraining program is going to make the life better. The best -- let me just say this one thing. The best retraining program is a job where you work for a productive company and work your way up and increase your knowledge and your skills and get paid a higher salary. Retraining programs are a failure.

GRISWOLD: I'm not sure which country Kevin lives in. You know, we are the world's number one consumer society. Americans have more spending power than anywhere in the world. We remain the world's manufacturing powerhouse. We're manufacturing 40 percent more stuff than would he were 10 years ago. Twice as much in the 1970, we're doing it with future people because they are so much more productive. Americans have moved by the millions off of farms and factories and the good paying middle class service jobs. We remain the world's number one consumer service society. Americans are enjoying a higher standard of living than ever before. You know, trade is not the boogeyman.

PILGRIM: Dan, led me add one fact into the discussion. According to the U.S. Department of Labor a million U.S. Jobs were lost because of NAFTA since 1994. Some critics of NAFTA say it's an unfair trade agreement. The candidates, some of the candidates have come out and said we must make our trade agreements more fair.

What do you think of this?

Do you think it's a question of rejiggering agreements we sign?

Or is there a structural imbalance?

GRISWOLD: That million job figure is not accurate. About 400,000 people have applied for benefits, alleging that their jobs were lost. That's about 40,000 a year. And you know, many more Americans lose their jobs because of technology and internal competition. You look at the record of NAFTA, actually the employment rate today is lower than it was the year before NAFTA passed. Industrial manufacturing output is up 40 percent. The number of jobs in the U.S. economy is up by 10 million or more since the passage of NAFTA. Half a million manufacturing jobs were added in the first five years after NAFTA. NAFTA is not the problem. We're coming out a lingering recession, but that had nothing to do with trade. It had to do with the dot com bubble bursting. It had to do with corporate scandals and all these things. Trade is not the problem.

PILGRIM: Kevin we have not so much time left, if you could just wrap up quickly.

KEARNS: We lost 3 million manufacturing jobs since 1997. Manufacturing jobs have a multiplier effect. They create other jobs in the economy. Dan lives in a world of statistics and ivory tower theories about trade. I live in a real world where people are trying to make ends meet, keep their family together, pay a their mortgage. They are broke, the cities are broke, the states are broke, the federal government is running an enormous trade deficit, and standard economic theory says it is all going to collapse. Those holders are dollars overseas are going to dump them and we are going to have a run on the dollar and economic crisis. It is unsustainable.

PILGRIM: Gentlemen, we have to hold it there. Thank you very much for bringing this debate to our attention tonight. Kevin Kearns, and Dan Griswold, thank you.

Coming up a winter blast on an east coast closes schools, forced airlines to cancel hundreds of flights.

And meet the world's smallest cowboy. May look like monkey business to you, but to him it's a full-time job. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Now a look at news in brief. Ten Asian countries are promising to fight the bird flu as health officials warn the disease could develop into an epidemic worse than SARS. At least eight people have died from the bird flu and across Asia, millions of chickens and ducks have been either killed by the disease or slaughtered.

A federal judge in Alaska today ordered ExxonMobil to pay more than $6.5 billion in fines. The payout is to fishermen and others affected by the 1989 Exxon Valdez oil spill. ExxonMobil says it will appeal the ruling.

And the "my doom" computer worm has surpassed the "so big" bug as the latest virus outbreak ever. It has generated more than 100 million infected e-mails. The U.S. government has issued a cyber alert to warn about the virus.

Tens of thousands of people up and down the eastern seaboard are still without power tonight after the winter's storm. Airport delays, canceled train routes, just the beginning of troubles in some parts of the country.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): New York City took the brunt of it, more than ten inches fell in Central Park.

UNIDENTIFIED MALE: How else do you want to get to work this morning? It's the only way to do it.

PILGRIM: Upstate New York and New Jersey were also hit hard. To the delight of millions of kids, schools were closed along the east coast and throughout the Midwest. Hundreds of flights were canceled and ice on switches and electrical connections stopped Amtrak along the eastern corridor. All in anticipation of a one, two punch. Predictions were a coastal storm would meet the kind of weather that socked the Midwest earlier in the week. Those storms claimed 50 lives from Kansas to the Carolinas since the weekend and knocked out power for thousands. In Ohio two plows couldn't see this guy shoving. He was unharmed. And ice on the roads up to an inch thick put South Carolina in a state of emergency. The northeast was bracing for much of the same, but for true New Englanders the storm ended up being nothing more than a threat and a day off to play in the snow.

(BEGIN VIDEOTAPE)

PILGRIM: The worst of the snow is over in the east but winter storm weather and heavy snow remain in the northwest and brutally cold temperatures are expected to continue in the north central United States. The snowstorm did not stop a heavy selloff on Wall Street. The Dow tumbled 141 points. The Nasdaq lost almost 39. The S&P lost 15 and the selling accelerated after the Federal Reserve released its latest take on the economy. Christine Romans is here with that report.

CHRISTINE ROMANS, CNN CORRESPONDENT: It was the fiercest selloff for the Dow in about three months. It was heavy volume and three stocks fell for each that rose the day before and then the losses came after the Fed left interest rates unchanged but stock investors are convinced higher rates are coming.

For now, though, the Fed says low rates and sky-high worker productivity are helping the economy. The Fed thinks the jobs picture is improving. This is what it said. "Although new hiring remains subdued, other indicators suggest an improvement in the labor market."

Tell that to the fired workers at KB Toys today. It's closing 375 stores and firing 3,500 workers. That's more an a quarter of its work force. Bankrupt KB is struggling to compete with the scale of the big discount retailers, Target, Walmart, they sell far more cheap toys and china at far lower cost. 3,500 jobs lost today at KB, Kitty. Just in the past week, 24,500 job cuts announced.

PILGRIM: It's hard to see where the job improvement is going to come with those kinds of numbers. Thanks very much. Christine Romans.

Coming up, it isn't just monkey business for this little cowboy. We'll tell you about whiplash when we return, but first -- there he is.

An update on the list of companies our staff has confirmed to be exporting America. There are U.S. companies that are sending either American jobs overseas or choosing to employ cheap foreign labor instead of American workers. Tonight's additions include Brocade, Evolving Systems, GE Capital, Radioshack, Union Pacific Railroads, and World Corp. (ph).

Please keep sending us the names of companies you know to be exporting America that are not already on our list. For the complete list log on to CNN.com/lou. We'll be right back.

(COMMERCIAL BREAK) PILGRIM: Now the results of tonight's poll. 18 percent of you think the race for the Democratic presidential nomination is over. 82 of you said it is not.

Well, finally, tonight. There is one that definitely falls under the category of "you have to see it to believe it." Please meet Whiplash. He is a monkey. He is riding a Border Collie in a rodeo. This is clearly no rookie rodeo rider. In fact, Whiplash is a 15-year veteran of the rodeo circus and he was voted "entertainer of the year" by Professional Rodeo Cowboys Association. Now if you can't get enough of whiplash, you can go to his website Whiplashrides.com.

That's our show for tonight. Thanks for being with us. Tomorrow we'll be joined by Senator Carl Levin ranking Democrat of the Senate armed services committee for more on the U.S. intelligence failures in Iraq and who should take responsibility for those failures.

And General David Grange will also join us here. For all of us here, good night from New York. Anderson Cooper is next.

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





Midwest, South>


Aired January 28, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
DAVID KAY, FORMER CHIEF U.S. WEAPONS INSPECTOR: It turns out, we were all wrong.

KITTY PILGRIM, CNN ANCHOR (voice-over): Tonight, former weapons hunter David Kay tells Congress, the United States needs better intelligence, after the failure to find weapons of mass destruction in Iraq. Senate Intelligence Committee Chairman Pat Roberts will be my guest.

After his showing in New Hampshire, John Kerry takes his campaign to the Midwest and the South, but the other candidates show no signs of giving up the fight. I'll be joined by our panel of top political journalists.

In "Exporting America" tonight, the incredible story of a steel equipment company that is fighting the federal government and Congress to keep jobs in this country.

And Congress joins the battle to keep indecent and obscene materials from our television screens and radios. We'll have a special report.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, January 28. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight, a remarkable statement from the man who led the hunt for weapons of mass destruction in Iraq. David Kay today told Congress almost everyone was wrong that Saddam Hussein had biological and chemical weapons before the war. Kay said there was a fundamental failure of intelligence.

Capitol Hill correspondent Joe Johns reports.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CAPITOL HILL CORRESPONDENT (voice-over): David Kay's assessment was straightforward on the intelligence that led the U.S. to war.

KAY: I deeply think that is a wrong explanation. JOHNS: Kay even predicted that, try as they might, inspectors who remain on the job searching for weapons of mass destruction in Iraq probably won't find much.

KAY: That it is highly unlikely that there were large stockpiles of deployed militarized chemical and biological weapons there.

JOHNS: Still, the hearing was frustrating for the Democrats, who came prepared to rake the administration over the coals. Kay refused to play.

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: Can you give us any explanation why these agencies, in retrospect, appeared to have had it right and the information that the administration used appeared to have it wrong?

KAY: It's a lot easier after the fact and after you know the truth to be selected that you were right.

JOHNS: Also helpful to the White House, Kay said there was no attempt to pressure intelligence analysts to reach certain policy conclusions.

KAY: Almost in a perverse way, I wish it had been undue influence, because we know how to correct that. We get rid of the people who in fact were exercising that.

JOHNS: The committee's top Democrat, Carl Levin, called for an outside investigation of the quality of the intelligence and the way it was used to make the case for war. Levin got an important ally in Republican Senator John McCain, who decided to support an outside probe after raising the issue with Kay.

SEN. JOHN MCCAIN (R), ARIZONA: Do you believe that we need an independent, outside investigation?

JOHNS: Kay suggested it's almost inevitable in order to insure the quality of future intelligence.

KAY: You will finally determine that it is going to take an outside inquiry, both to do it and to give yourself and the American people the confidence that you have done it.

(END VIDEOTAPE)

JOHNS: One bottom line is that Kay made distinctions between policy and intelligence. He said, if presented with the same facts, he might have made the same decisions about Iraq -- Kitty, back to you.

PILGRIM: All right, thanks very much, Joe Johns from Capitol Hill. Thanks, Joe.

The White House today insisted, the war against Saddam Hussein was justified. It also said the hunt for weapons of mass destruction is not over yet. White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Kitty, Republicans here at the White House are certainly in damage control still over David Kay's comments.

But there was almost an audible sigh of relief here at the White House when they heard David Kay deflecting some pretty tough questions, as Joe was just reporting, from Democrats trying to ask him if the White House was, in fact, manipulating some of that intelligence? But one thing that the White House did not welcome was what appeared to be agreement with Democrats from David Kay that an independent inquiry into the intelligence and what the White House knew might be necessary.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I think our position at this point, we want the Iraq Survey Group to complete the important work that it has undertaken. That work is still a work in progress. There is a new head, Charles Duelfer, of the Iraq Survey Group. We need to let him get in there and complete the work that Dr. Kay started.

(END VIDEO CLIP)

BASH: Now, the White House has dropped any predictions that weapons will actually be found. That is something that they certainly have said in the fact. And they are also pointing to the fact that Kay says that Saddam Hussein was a threat and that the war was justified.

But Democrats not just on Capitol Hill, but also on the campaign trail, those that want Mr. Bush's job, are certainly making an election-year issue out of this. Privately, some Republicans say they are concerned about that. But they also say that their polls show that Americans think that toppling Saddam Hussein was the right thing to do, weapons or not.

Now, if you're looking for some evidence that Republicans still think national security is a top issue for the president, RNC Chairman Ed Gillespie, CNN is told, will have a speech tomorrow where he will use some of the opposition research that they have been gathering over the past few months against the top Democrat in the field, John Kerry, hitting him on his defense record, we're told -- Kitty.

PILGRIM: All right, thanks very much, Dana Bash, reporting at the White House. Thank, Dana.

The chairman of the Senate Intelligence Committee, Pat Roberts, says the problem appears to be with some of the intelligence agencies, not the policy-makers.

And Senator Roberts joins me now from Capitol Hill.

And thanks very much for joining us. SEN. PAT ROBERTS (R), KANSAS: Well, thank you, Kitty.

PILGRIM: This is an enormously politicized issue at this point. And you said, really, the fault is with the intelligence and not with the policy-makers. Yet, who should bear responsibility? Or should we be beyond that?

ROBERTS: Well, I hope we should be beyond that.

What we heard from Dr. Kay is that, while there may be justification for the war, and he agreed that that was the case and that was in our national security interests, he also indicated that there are no stockpiles, or he did not expect to find any stockpiles of any munitions. And, of course, if you go on with that, every world community intelligence service assumed that Saddam had the weapons of mass destruction.

So that is, on a global scale, a massive problem with our intelligence. Now, next week, next Thursday, we are providing members of the Intelligence Committee with a report that is over 300 pages long. We have itemized all of the sources used by our intelligence community. We're going to give that to members. We hope to have a very aggressive report. And the biggest thing we can do is recommend long-term and short-term recommendations, so this kind of mistake doesn't happen again.

PILGRIM: You're doing this outside investigation, what you say will be released next week. Do you think any other investigations are warranted or should this be the final word?

ROBERTS: I would say, I would urge members to hold off on that, because I think, with the report that we're able to assemble, we've been working for seven to nine months. We have had 10 staffers, floor-to ceiling documents. It's probably the most thorough look-see or inquiry or investigation into the intelligence community in maybe 20 years.

And I think most of the questions that people have, like the questions you are asking me, will be answered in that report.

PILGRIM: You know, there may be people who split hairs on this. And David Kay said that he is convinced that we should have invaded Iraq and taken care of Saddam Hussein, and yet stockpiles of weapons and finding them highly unlikely. Do you see any discrepancy in those two statements or do you think they can coexist?

ROBERTS: Well, I think they can co-exist, from the standpoint that David Kay indicated that, had he had the same information, he would have probably gone to war.

But he warned about an Iraq that was basically falling apart, becoming a basket case of corruption and humanitarian problems and would likely be sort of a Grand Central Station for the proliferation of weapons of mass destruction. So, given that, if you accept that, obviously, the decision to go to war was the right one. PILGRIM: You know, he also said that a lot of material went to Syria before the war. What do you make of the Syrian correction and is that something we should be concerned about?

ROBERTS: Well, it is something we should be concerned about.

General Dayton is on top of that in Iraq with the Iraq Survey Group. He has quite a number of people. Of course, that's going to take the cooperation of the Syrians. That hasn't happened yet. That's a possibility. Whether it's a probability, I can't tell you. But that is at least one concept. Either they destroyed it or they shipped it out to Syria or it simple did not exist, or both.

PILGRIM: All right, thanks very much for helping us sort through it, a very complicated issue, Senator Pat Roberts.

ROBERTS: Thank you, Kitty.

PILGRIM: A dramatic victory today for President Bush's closest ally on Iraq, British Prime Minister Tony Blair. An independent inquiry today cleared Blair of any responsibility for the suicide of David Kelly. Kelly was a government weapons expert. But the head of the BBC, however, was forced to resign. Now, the inquiry blames the BBC for some of its reporting on the build-up to the war in Iraq.

Still to come, John Kerry hopes his success in New Hampshire will translate to victory in the Midwest and the South next week.

In the global war on terror, the United States is planning a major new offensive against al Qaeda. And senior Pentagon correspondent Jamie McIntyre will report.

And in "Face-Off" tonight, two contrasting views on exporting American jobs overseas.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Tonight, Democratic presidential candidates have turned their attention from New Hampshire to seven states holding primaries and caucuses next Tuesday.

And John Kerry is hoping to build on his success in New Hampshire and Iowa, but other candidates believe that they can win their first victory. And one of the most important contests next week is in South Carolina.

Frank Buckley reports from Columbia, South Carolina.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT (voice-over): John Kerry will be arriving here in South Carolina tonight with momentum, something Democratic operatives say may be even more important than the face-to-face familiarity that voters here in South Carolina are used to.

That could be bad news for Senator John Edwards, who today kicked off his run toward February 3 with a visit to South Carolina, the state in which he was born. He said that he must win here to continue. He kicked off his campaign at South Carolina State University, a predominantly African-American university. That underscores the importance of the African-American vote here.

South Carolina is the first test of the candidates among a sizable group of black voters. Up to half of the voters will be black on primary day here. It is also the first test in the South for the candidates. Front-runner John Kerry says that, in the general election, that a Democrat doesn't need to win any Southern states.

Today, I asked John Edwards if he agrees with that assessment.

SEN. JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: I think if the Democrats and Democratic voters want to put their chances on, for the first time in American history, a Democrat getting elected without winning any Southern states, they can make that choice. It's a very risky choice.

BUCKLEY: Another Southern Democrat, Wesley Clark, was supposed to be campaigning here in South Carolina today. That was supposed to be his first stop. But because of a miscommunication with his air charter company, the campaign began, instead, in Oklahoma. He will be back here on Thursday, just like the rest of the candidates. They will all be here for a debate.

Frank Buckley, CNN, Columbia, South Carolina.

(END VIDEOTAPE)

PILGRIM: Howard Dean spent the day in his home state, Vermont. And tonight, there were some significant changes in his campaign staff.

Senior political correspondent Candy Crowley reports from Burlington.

And, Candy, what can you tell us about the staff changes?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, there is a new man at the top.

Roy Neel, a longtime strategist for Al Gore, served as his chief of staff both in Congress and as vice president, is going to come in and take over command of the Dean campaign. Now, the campaign had assumed that Joe Trippi, who has been running things up to now, would stay on. They wanted to move him over into media and advertising. We are told by one source inside one of the meetings today that, in fact, Trippi, when told he would report to someone else -- quote -- "flipped out" -- again, one source.

In any case, he has left campaign, we are told by a couple of sources, and is on his way back to Washington, D.C. Now, the campaign at this point is also apparently facing some financial concerns that the governor is now just becoming aware of. Some of the staff have been told there will be pay cuts this week, so, the extent of the financial problems not quite certain at this moment.

Some of the concerns now, Joe Trippi had become a major figure in this campaign. He was the one that somebody said, all lines went to Joe Trippi. He put out a daily e-mail which has taken on quite a following. They are a little bit worried about some of those that have followed the Joe Trippi e-mails and what they might do. But tonight, a very big shakeup in the Dean campaign -- Kitty.

PILGRIM: It seems to have consumed the day, Candy. But what else was Dean doing in Vermont when all the rivals are back on the campaign trail tonight?

CROWLEY: Well, part of it was to figure out what the heck to do next.

They have got these seven states coming up. There was an argument within -- the last 48 hours have been very rough inside the Dean campaign. The governor had wanted to play in all seven of the states coming up. Some of his advisers had said, no, let's zero in on some of them. So there was that conflict going on, even as Dean lost some faith in his strategists, in particular in Joe Trippi.

So that kind of took up a lot of the time. He did satellite out on to radio and TV in all seven of those states that are going to have contests next Tuesday. But, indeed, this was a day, a very precious day, considering the time between now and Tuesday, taken up trying to rejigger the staff.

PILGRIM: Candy, where does Dean go from here, which states?

(LAUGHTER)

CROWLEY: Well, the last I heard, he was headed for Michigan.

Now, interesting choice. Michigan is not one of the Tuesday states. It's, in fact, a Saturday state, then, a week from. So, the question is, why there? They do believe they have a chance there. Might it change? Maybe. Remember, they have a new top. He is then going on down to South Carolina. There's a debate there on Thursday night. So, he will be there for that -- Kitty.

PILGRIM: Thanks very much. And we know you will keep track of it. Candy Crowley, thanks.

CROWLEY: OK. Thanks.

PILGRIM: And that brings us to the topic of tonight's poll. Do you think the race for the Democratic presidential nomination is over, yes or no? Cast your vote at CNN.com/Lou and we will bring you the results later in the show.

National security is a big issue in the campaign and is likely to remain so in the months ahead. And today, the military said it is planning a spring offensive in Afghanistan against the Taliban and al Qaeda.

And senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): The Pentagon stresses that U.S. and Afghan offensive operations have never stopped even during the harsh Afghan winter when Taliban and al Qaeda remnants are believed to have hunkered down in the snowy mountains.

The latest operations code named Mountain Avalanche and Mountain Blizzard have nabbed a number of suspected Taliban operatives in the recent weeks. But anticipating increased enemy activity as the snow melts, the U.S. is gearing up for a spring offensive to defeat the Afghan insurgents as well as intensify the hunt for Osama bin Laden and his top lieutenants.

LT. COL. BRYAN HILFERTY, U.S. ARMY: I can say that Osama bin Laden, Mullah Omar and (UNINTELLIGIBLE) represent a threat to the world, and they need to be destroyed, and we believe we'll catch them in the next year.

MCINTYRE: According to the best U.S. intelligence available bin Laden is believed to be hiding in a remote and largely ungoverned area between Afghanistan and Pakistan. Pentagon officials deny published reports the U.S. offensive will send troops across the border into Pakistan.

Pakistan's pro-American president Pervez Musharraf has publicly opposed such cross-border operations and for now U.S. officials say the 11,000 U.S. troops in Afghanistan will operate on their side of the border.

The hunt for Osama bin Laden has increased urgency, because it's believed al Qaeda was behind several assassination attempts against President Musharraf, who has been a key ally in the fight against Taliban and al Qaeda. Bin Laden's capture could also benefit President Bush as he campaigns for reelection.

But pentagon officials insist, there is no political motive behind the planned offensive, just as there was nothing political about the capture of Saddam Hussein last month.

(END VIDEOTAPE)

MCINTYRE (on camera): U.S. commanders are increasingly expressing confidence that bin Laden's days are numbered. One top commander in Afghanistan predicted that bin Laden would be captured some time this year. Pentagon officials, though, are urging caution, repeating the refrain often said by Defense Secretary Rumsfeld, that, until you've got him, you don't really have him -- Kitty.

PILGRIM: Jamie, something else I wanted to ask you. There are new plans today from the Army's top general on the possibility of keeping tens of thousands of soldiers in Iraq for two more years. What can you tell us about that?

MCINTYRE: Well, the Pentagon and the Army is under some congressional pressure to consider increasing the size of the military. And today, the Army chief of staff, General Peter Schoomaker, insisted that he doesn't believe that's the way to go.

However, he did reveal that they have plans to keep as many as 30,000 troops above the authorized limits in the military over the next couple of years in order to facilitate rotation of troops in Iraq. But under Defense Secretary Rumsfeld's authorization, that would be a temporary increase, not a permanent authorized increase in end strength -- Kitty.

PILGRIM: All right, thanks very much for clearing that up for us, Jamie McIntyre, at the Pentagon.

In Afghanistan today, a suicide bomber today killed a British soldier in the capital of Kabul. Four other British troops were wounded. Now, the suicide bomber drove a taxi carrying explosives into the soldiers' vehicle. It was the second attack on an international peacekeeping force in two days. Yesterday, a suicide bomber blew himself up in front of a vehicle used by Canadian peacekeepers. One Canadian was killed. Three others were wounded.

Just ahead, crossing the line, the growing use of profanity on television. That takes center stage at one congressional hearing. Peter Viles will have more on what is being done to turn the tide.

And "Exporting America," our series of special reports, continues with a look at one company that is fighting to keep jobs in this country. Louise Schiavone will have more on the Texas-based company struggling to survive.

(COMMERCIAL BREAK)

PILGRIM: On Capitol Hill today, a congressional hearing took on a topic of great interest to many American parents, the growing use of profanity on television. What set it off was the use of the F-word on prime-time television.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

BONO, LEAD SINGER, U2: That was really, really (EXPLETIVE DELETED) brilliant.

PETER VILES, CNN CORRESPONDENT (voice-over): That was the Irish rock star Bono using the F-word on prime-time network TV. Now, bad language is common on cable, from "The Sopranos"...

(BEGIN VIDEO CLIP, ""THE SOPRANOS")

JOE PANTOLIANO, ACTOR: I'll give you a shot in the (EXPLETIVE DELETED) head, my girlfriend.

(END VIDEO CLIP)

VILES: To Ozzy Osbourne.

On broadcast TV, Fox uses the bleep to keep Paris Hilton out of trouble with the government.

(BEGIN VIDEO CLIP)

PARIS HILTON, ACTRESS: It's been sitting there a week. (EXPLETIVE DELETED) this market.

(END VIDEO CLIP)

VILES: What made Bono different was, there was no beep and it happened on regulated broadcast TV, not on cable. And so far, the FCC decided it was not indecent, because Bono wasn't talking about sex. Critics say that is typical of the FCC, that it's like Barney Fife in the old "Andy Griffith Show," a complete pushover.

L. BRENT BOZELL III, PARENTS TELEVISION COUNCIL: In the entire history of the FCC, until yesterday afternoon, I might note, this agency had never, never fined a single television station in the continental United States for broadcast indecency.

VILES: FCC Chairman Michael Powell says he wants to get tough on this, wants to revisit that Bono outburst. Yesterday, the FCC did crack down. It fined radio giant Clear Channel Communications $755,000 for broadcasting the sexually explicit routines of this guy, who is known to his listeners as -- and we are not making this up -- Bubba the Love Sponge. And, yes, Bubba did have a response.

UNIDENTIFIED MALE: Responsible broadcaster. I don't want to break the law. And I don't want to -- I just need to know what the damn law is.

(END VIDEOTAPE)

VILES: Congress, responding to the Bono outburst, is threatening to pass what you might call the George Carlin law. He had the seven words you can't say on TV. It turns out, you can say some of them on TV.

This law would make it clear that you can't say the seven words, plus one more, the eight words you can't say on TV. They would be ruled indecent and would definitely always lead to fines -- Kitty.

PILGRIM: I think would vote for eight. Thanks very much, Pete Viles.

VILES: Sure.

PILGRIM: All right, tonight's thought is actually two perspectives what has been and still is a very controversial issue, profanity.

And the first quote is: "The foolish and wicked practice of profane cursing and swearing and low that every person of sense and character detests and despises it." Those words are from George Washington.

And we give you quite a different view from another famous American. And he says: "Under certain circumstances, profanity provides a relief denied even to prayer." And that is from writer Mark Twain.

Coming up next, the fight for the Democratic presidential nomination moves into the next battleground. And we'll talk with our panel of top political journalists about the latest in the primary wars.

Plus, winter wallop. Schools, transportation in the Northeast shut down after a snowstorm drops up to a foot in some places.

That story, a great deal more. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: To the South and West, the Democratic presidential contest goes national next week, with seven states up to grabs. That includes the delegate-rich South Carolina and Missouri.

New Hampshire yesterday handed John Kerry his second big win. Howard Dean, for his part, said he was pleased by his success, the second-place showing in the state.

And joining us now for more on the big political test is our political roundtable. And here in New York, we are joined by Tom DeFrank from "The New York Daily News," Jon Meacham from "Newsweek." And joining us tonight from Washington is Karen Tumulty with "TIME" magazine.

And, Karen, since you are the farthest away, let's start with you.

And we had a little bit of a staff shakeup with the Dean campaign today. What do you make of that?

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, "TIME": Well, I think, right now, what you're seeing is Howard Dean having to go very quickly from the candidate who thought he was going to be running the national campaign, leaving everybody else picking their shots against him in these seven states next Tuesday, to looking at a severe resource crunch.

And very often what comes out of that is a staff shakeup. But it is really hard to find any political operative this season who is more identified with the mystique around the campaign than Joe Trippi who just left today as the campaign manager. He is being replaced by a long-time aide to former vice president Al Gore, Roy Neel, who in fact, was Gore's chief of staff.

So I think we're going to see a very, very different tone coming out of this campaign. In what looks like it's going to be a very difficult couple of weeks.

PILGRIM: Jon, tone change, what do you think?

JON MEACHAM, "NEWSWEEK": I think we have seen the change since I have a scream speech. It's now I whisper by Dr. Dean. I think the other thing is that, Trippy was on the cutting edge we thought was going to be transformative, which was the Dean blog was really going to redefine how Democrats and Republicans were nominated. That was a great idea until the voters got involved. And so I think Trippy is paying the price for that.

PILGRIM: Let's go to Kerry. He beat Dean by 12 percent in New Hampshire. Some of Kerry's rivals have been really running campaign in the state and Kerry has to play a bit of catch up. Do you think he's at a disadvantage?

TOM DEFRANK, "NEW YORK DAILY NEWS": No, I think he's at advantage, Kitty, Nothing succeeds like success in politics. He's two for two, everybody else is zero for two. And in the case of Clark and Dean, they have not exceeded expectations to put it mildly. So, even though the turf moves to an inhospitable part of the country given Kerry's background, I still think he has an advantage going there.

PILGRIM: And we have live pictures of him.

Let's go state by state, and this is an interesting exercise and let's start with Missouri. These are the big states that are coming up. 74 delegates up for grabs. What do you think about Missouri and I guess John Edwards is leading according to American Research Group.

MEACHAM: I'd argue that Missouri is the more interesting test case for the general election for the Democrats and for Kerry than South Carolina is. South Carolina is simply isn't competitive for the Democrats in November. President Bush is, I have done a number has been very high up there. Missouri is a border state, that will be interesting. And if Kerry can take his international security credentials down there and try to trump the idea that he's a Kennedy liberal then that's going to be the first big regional test.

PILGRIM: Karen, we have Arizona. It has 55 delegates up. I guess Kerry has about a quarter of the vote, according to just the recent polls and we all know they change by the minute.

TUMULTY: Yes, for a lot of us who have been covering the campaign, the biggest thing about Arizona is it's a lot warmer than the states we have been in, which is a relief. But beyond that, Arizona is going to be a test, along with South Carolina, of these candidate's abilities to appeal to nonwhite populations who are a very important part of the Democratic base.

There is also a big population of veterans in Arizona and so we're going to see John Kerry rolling forward with his coalition of veterans. He's also dispatching his wife to race behind Kerry to New Mexico and Arizona. She's a fluent speaker of Spanish. So they are going at these states very aggressively. But this is also, these are also places where Wes Clark actually may see his first showing. PILGRIM: You know, in South Carolina, you bring up the issue of veterans. 400,000 veterans in South Carolina. 45 delegates. Kerry says, I intend to campaign in the south. That's what his great statement was. Edwards says I'm going to win South Carolina. This looks like a big battlefield. Let me turn to Tom.

DEFRANK: Well, South Carolina is a big battlefield for Edwards. He's basically said he's got to win. And I think if doesn't win he's in trouble. The latest poll I saw showed Edwards up two to one in South Carolina.

I think the real problem -- the real break through needs to be Clark in South Carolina. And I think Kerry is doing better among veterans than General Clark, more lieutenants than four-star generals.

PILGRIM: We are showing live pictures of Oklahoma and so we are up to the minute on that. Go ahead, John, you were about to say something.

MEACHAM: Well, I think Tom is right. Ultimately you really are looking at the south and the west. If you look toward the general election, the red states have gotten redder, that is there's been a population move south and west. So Democrats who can compete in all of these states, Arizona and New Mexico, Missouri, trying to place or show in South Carolina will be able to argue that we can take the fight to Bush. Because, that's the real lesson of Kerry's two victories here. Democrats are voting with their head, not necessarily their hearts.

PILGRAM: One of the big things, and we see this in all the polls is that everyone is very concerned about jobs. With the unemployment rate at 5.7 percent, it's a very important issue for the candidates. We had Kerry coming out just saying -- outsourcing of jobs is horrible and I think we have this piece of tape and here -- let's take a look at that.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY, (D-MA) PRESIDENTIAL CANDIDATE: A prosperity where we create jobs here at home and where we shut down every loophole, every incentive, every reward, that goes to some Benedict Arnold CEO or company that takes the jobs overseas.

(END VIDEO CLIP)

PILGRIM: Benedict Arnold CEO. You can't really get much stronger than that. What is your assessment. Is this going to be the hot button issue that everyone piles on.

MEACHAM: That's Yale populism, when you throw the American Revolution in. It's true in West Virginia, it's true in Ohio, I would think the rust belt is where it would play best.

PILGRIM: It also seems like an issue no one can go wrong on, because who's against jobs for Americans? DEFRANK: Well, also, as we all know, Bush has a net loss of jobs, a couple of million. That's something that the Democrats are going to hammer him on between now and November 2.

PILGRIM: Karen?

TUMULTY: These manufacturing jobs really count in the dozen or so states that are going to matter in November as John mentioned, places like West Virginia, you know, Pennsylvania, Ohio. The single issue that is likely to drive people to the polls is whether or not they are ployed in the manufacturing sector. They are really not feeling a lot richer in this part of the country, because of the stock market or some of the other economic gains that we have seen.

PILGRIM: All right. Go ahead, Tom. Last word

DEFRANK: I was going to say very quickly, we shouldn't minimize what happened in the Dean campaign today. Because turmoil in a campaign is rarely good midstream. This is a campaign in turmoil before today's turmoil. You've got an overlay of turmoil that can't be a good sign for the Dean campaign.

PILGRIM: Very early on.

We have to end it here. Tom DeFrank of the "New York Daily News," John Meacham of "Newsweek" and Karen Tumulty of "TIME" magazine, thank you all for joining us.

MEACHAM: Thank you.

PILGRIM: A reminder now, do vote in tonight's poll. And the question is, "do you think the race for the Democratic presidential nomination is over? yes or no." Cast your vote, CNN.com/lou and we'll share the results a little bit later in the show.

Coming up, "Exporting America," one American company is fighting the trend and the U.S. government to keep jobs on American soil.

And also, in tonight's "Face Off," two leading experts will share their very different views on the pros and cons of exporting American jobs overseas. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Government rules designed to help protect U.S. steel makers from cheap imports are hurting another American steel company. Louise Schiavone reports from Washington.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): When nearly every employee of Delta Brands found themselves protesting in front of the export-import bank in Washington, after a marathon bus ride from Irving, Texas, it was a cry for survival.

Delta Brands DBI, founded by Cuban born Sam Savariego, manufactures and exports machines that can clean up steel and slice right through it.

SAM SAVARIEGO, PRES. DELTA BRANDS INC.: We cannot survive without exports.

SCHIAVONE: At one point, DBI operated two plants and employed several hundred workers.

CHARLES HARRIS, PRODUCTION MANAGER, DELTA BRANDS: In this particular section I may have five guys (UNINTELLIGIBLE) all the time, where there used to be probably 27 guys in this one section.

SCHIAVONE: Four years ago DBI won preliminary approval from the U.S. Import Export Bank to finance the sale of machinery to Egamire (ph) a steel complex in Turkey. At the same time the steel industry was howling about steel imports and U.S. steel production job loses. Steel tariffs were rushed into place. And although Turkey was exempted from tariffs, DBI's loan was put on hold. Financing was finally killed for good when the Congressman Pat Toomey of Pennsylvania presueded Congress to bar government support for U.S. businesses nearly anything to enhance U.S. Steel production.

PETER SABA, EX-IM BANK, GENERAL COUNSEL: They've come out and said that you know, Ex-Im is prohibited. They don't see it appropriate to use taxpayer financing to support increased production in those instances.

SCHIAVONE: Cutting DBI's government support received public praise from U.S. steel producers.

REP. PETE SESSIONS (R), TEXAS: I believe the steel lobby if they are engaged in this they are really making a mistake, because we are talking about jobs in America.

SCHIAVONE: DBI says it sun fair to link them with foreign steel dumping, even their machinery was used to treat steel would it have to be retreat bid the time it made it to the United States.

(END VIDEOTAPE)

SCHIAVONE: We asked the Congressman Toomey and the American Iron and Steel Institute to comment but they didn't want to discuss it. Right now DBI has five separate transactions before the Export-Import Bank, including an application for $5 million in working capital. Waiting, says DBI means European companies with plenty of support from their government will snap up more of this business -- Kitty.

PILGRIM: Thanks very much, Louise Schiavone.

The exporting of America is the focus of tonight's face off.

Kevin Kearns says if American companies keep sending jobs overseas, unemployed Americans won't be able to buy their product. And he is president of the U.S. business and industry council. And on the other side, Dan Griswold from the Cato Institute said outsourcing jobs has actually helped some American jobs stay in business.

Both of our guest are our in Washington tonight. And thanks very much for joining us, gentleman.

(CROSSTALK)

PILGRIM: You know, an interesting statistic that I just came across, 1.6 million U.S. jobs expected to move offshore by 2010.

How can that be good for the American economy?

I throw that to Dan Griswold, first?

DAN GRISWOLD, TRADE ANALYST, CATO INSTITUTE: Let's not be chicken littles about this, the sky isn't falling. This is a normal part of business. There are millions of jobs turned over every year. We create jobs, eliminate job, but the United States remains the world's engine of global growth or the world's number one exporter of goods and services including information technology services. In fact we sell three much as time information technology services to the rest of the world as we buy. You know, despite all the hand wringing of the $240 billion U.S. information technology industry about 3 or 4 percent is captured by offshore outsourcing. So we remain the world's number one most sophisticated economy and this is just a way of allowing U.S. companies to save 10 to 30 percent to be more competitive in global markets. You know, if hospitals can send radiology exams to India and cut the cost in half and control spiraling health costs, what is wrong with that.

Kevin, I know you take text act opposite position or something opposite, how do you respond to that?

KEVIN KEARNS, PRESIDENT U.S. BUSINESS & INDUSTRY COUNCIL: Well, in the short run, of course, the company's bottom line looks better if you can cut your labor force and cut your labor costs by sending the jobs to India, wherever. But in the long run, what these American multinational companies are doing and high tech services and hospitals, et cetera, is they are are basically firing their customers. Certainly Japan can make all our cars, all our electronics can be made in the far east. Brazil can supply our soybeans and orange juice. Canada can supply our timber, and our wheat, et cetera, there's very little that is done here that can't be done overseas because the governments are subsidizing the foreign companies or labor is dirt cheap et cetera. And the question is, where are Americans going to work?

If you believe in standard economic theory, which I assume Mr. Griswold does, you know, there's a bubble here, that is going to burst. All these foreign companies and countries are targeted at the U.S. market, and we are firing customers left and right forcing them on to unemployment roll, forcing them into the work force altogether. The notion we are going to somehow retrain them for high tech jobs is nonsense.

PILGRIM: Let me break in here. What about retraining, I mean, that is sort of a counter-argument. OK, but we'll retrain and do different things.

KEARNS: On my Web site every day trade alert.U.S. I get e-mails from people with MAs and Ph.Ds and electrical engineering and computer science, et cetera, they say, what are you going to retrain me for? I get e-mails from people that work in textile mills that are getting their GEDs that somehow think that getting a high school equivalency degree is going to retrain them for the future. The ultimate betrayal of the American worker is this notion that somehow the retraining program is going to make the life better. The best -- let me just say this one thing. The best retraining program is a job where you work for a productive company and work your way up and increase your knowledge and your skills and get paid a higher salary. Retraining programs are a failure.

GRISWOLD: I'm not sure which country Kevin lives in. You know, we are the world's number one consumer society. Americans have more spending power than anywhere in the world. We remain the world's manufacturing powerhouse. We're manufacturing 40 percent more stuff than would he were 10 years ago. Twice as much in the 1970, we're doing it with future people because they are so much more productive. Americans have moved by the millions off of farms and factories and the good paying middle class service jobs. We remain the world's number one consumer service society. Americans are enjoying a higher standard of living than ever before. You know, trade is not the boogeyman.

PILGRIM: Dan, led me add one fact into the discussion. According to the U.S. Department of Labor a million U.S. Jobs were lost because of NAFTA since 1994. Some critics of NAFTA say it's an unfair trade agreement. The candidates, some of the candidates have come out and said we must make our trade agreements more fair.

What do you think of this?

Do you think it's a question of rejiggering agreements we sign?

Or is there a structural imbalance?

GRISWOLD: That million job figure is not accurate. About 400,000 people have applied for benefits, alleging that their jobs were lost. That's about 40,000 a year. And you know, many more Americans lose their jobs because of technology and internal competition. You look at the record of NAFTA, actually the employment rate today is lower than it was the year before NAFTA passed. Industrial manufacturing output is up 40 percent. The number of jobs in the U.S. economy is up by 10 million or more since the passage of NAFTA. Half a million manufacturing jobs were added in the first five years after NAFTA. NAFTA is not the problem. We're coming out a lingering recession, but that had nothing to do with trade. It had to do with the dot com bubble bursting. It had to do with corporate scandals and all these things. Trade is not the problem.

PILGRIM: Kevin we have not so much time left, if you could just wrap up quickly.

KEARNS: We lost 3 million manufacturing jobs since 1997. Manufacturing jobs have a multiplier effect. They create other jobs in the economy. Dan lives in a world of statistics and ivory tower theories about trade. I live in a real world where people are trying to make ends meet, keep their family together, pay a their mortgage. They are broke, the cities are broke, the states are broke, the federal government is running an enormous trade deficit, and standard economic theory says it is all going to collapse. Those holders are dollars overseas are going to dump them and we are going to have a run on the dollar and economic crisis. It is unsustainable.

PILGRIM: Gentlemen, we have to hold it there. Thank you very much for bringing this debate to our attention tonight. Kevin Kearns, and Dan Griswold, thank you.

Coming up a winter blast on an east coast closes schools, forced airlines to cancel hundreds of flights.

And meet the world's smallest cowboy. May look like monkey business to you, but to him it's a full-time job. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Now a look at news in brief. Ten Asian countries are promising to fight the bird flu as health officials warn the disease could develop into an epidemic worse than SARS. At least eight people have died from the bird flu and across Asia, millions of chickens and ducks have been either killed by the disease or slaughtered.

A federal judge in Alaska today ordered ExxonMobil to pay more than $6.5 billion in fines. The payout is to fishermen and others affected by the 1989 Exxon Valdez oil spill. ExxonMobil says it will appeal the ruling.

And the "my doom" computer worm has surpassed the "so big" bug as the latest virus outbreak ever. It has generated more than 100 million infected e-mails. The U.S. government has issued a cyber alert to warn about the virus.

Tens of thousands of people up and down the eastern seaboard are still without power tonight after the winter's storm. Airport delays, canceled train routes, just the beginning of troubles in some parts of the country.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): New York City took the brunt of it, more than ten inches fell in Central Park.

UNIDENTIFIED MALE: How else do you want to get to work this morning? It's the only way to do it.

PILGRIM: Upstate New York and New Jersey were also hit hard. To the delight of millions of kids, schools were closed along the east coast and throughout the Midwest. Hundreds of flights were canceled and ice on switches and electrical connections stopped Amtrak along the eastern corridor. All in anticipation of a one, two punch. Predictions were a coastal storm would meet the kind of weather that socked the Midwest earlier in the week. Those storms claimed 50 lives from Kansas to the Carolinas since the weekend and knocked out power for thousands. In Ohio two plows couldn't see this guy shoving. He was unharmed. And ice on the roads up to an inch thick put South Carolina in a state of emergency. The northeast was bracing for much of the same, but for true New Englanders the storm ended up being nothing more than a threat and a day off to play in the snow.

(BEGIN VIDEOTAPE)

PILGRIM: The worst of the snow is over in the east but winter storm weather and heavy snow remain in the northwest and brutally cold temperatures are expected to continue in the north central United States. The snowstorm did not stop a heavy selloff on Wall Street. The Dow tumbled 141 points. The Nasdaq lost almost 39. The S&P lost 15 and the selling accelerated after the Federal Reserve released its latest take on the economy. Christine Romans is here with that report.

CHRISTINE ROMANS, CNN CORRESPONDENT: It was the fiercest selloff for the Dow in about three months. It was heavy volume and three stocks fell for each that rose the day before and then the losses came after the Fed left interest rates unchanged but stock investors are convinced higher rates are coming.

For now, though, the Fed says low rates and sky-high worker productivity are helping the economy. The Fed thinks the jobs picture is improving. This is what it said. "Although new hiring remains subdued, other indicators suggest an improvement in the labor market."

Tell that to the fired workers at KB Toys today. It's closing 375 stores and firing 3,500 workers. That's more an a quarter of its work force. Bankrupt KB is struggling to compete with the scale of the big discount retailers, Target, Walmart, they sell far more cheap toys and china at far lower cost. 3,500 jobs lost today at KB, Kitty. Just in the past week, 24,500 job cuts announced.

PILGRIM: It's hard to see where the job improvement is going to come with those kinds of numbers. Thanks very much. Christine Romans.

Coming up, it isn't just monkey business for this little cowboy. We'll tell you about whiplash when we return, but first -- there he is.

An update on the list of companies our staff has confirmed to be exporting America. There are U.S. companies that are sending either American jobs overseas or choosing to employ cheap foreign labor instead of American workers. Tonight's additions include Brocade, Evolving Systems, GE Capital, Radioshack, Union Pacific Railroads, and World Corp. (ph).

Please keep sending us the names of companies you know to be exporting America that are not already on our list. For the complete list log on to CNN.com/lou. We'll be right back.

(COMMERCIAL BREAK) PILGRIM: Now the results of tonight's poll. 18 percent of you think the race for the Democratic presidential nomination is over. 82 of you said it is not.

Well, finally, tonight. There is one that definitely falls under the category of "you have to see it to believe it." Please meet Whiplash. He is a monkey. He is riding a Border Collie in a rodeo. This is clearly no rookie rodeo rider. In fact, Whiplash is a 15-year veteran of the rodeo circus and he was voted "entertainer of the year" by Professional Rodeo Cowboys Association. Now if you can't get enough of whiplash, you can go to his website Whiplashrides.com.

That's our show for tonight. Thanks for being with us. Tomorrow we'll be joined by Senator Carl Levin ranking Democrat of the Senate armed services committee for more on the U.S. intelligence failures in Iraq and who should take responsibility for those failures.

And General David Grange will also join us here. For all of us here, good night from New York. Anderson Cooper is next.

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





Midwest, South>